Q/A with Min Alexander of Altisource
By MBA Insights Staff
February 12, 2018
Min Alexander is Senior Vice President of Real Estate Services with Altisource. She manages a $6 billion residential real estate portfolio of more than 50,000 assets annually and plays a core role in Altisource's growth plans. She leads 500 employees across business units in the U.S., Europe and Asia and oversaw the expansion of the Altisource national brokerage from 34 states in 2012 to 49 states plus Washington, D.C. in 2016. Alexander also spearheaded a number of Altisource's innovation programs, including Altisource's Asset Renovation Program, its institutional short sale program for bank and servicer clients to increase non-foreclosure resolutions, and its foreclosure auction and CWCOT second chance auction services on the Hubzu platform.
MBA INSIGHTS: Why is it a good time for mortgage servicers to reconsider how they treat their REO assets and, in particular, their FHA Claims Without Conveyance of Title (CWCOT) assets?
MIN ALEXANDER, ALTISOURCE: There are two factors driving the growing relevance of CWCOT programs: 1) anticipated growth in FHA loans and the related default volumes that will accompany the growth and 2) limited supply in the housing market.
Anticipated Growth in FHA Loans. According to Altisource's inaugural Default Servicing Survey of over 200 mortgage default servicing professionals, nearly three-quarters of servicing professionals surveyed in June 2017 predicted that FHA/VA loan volumes would increase within their organizations in the next 12 to 24 months, and 41 percent believed FHA loans will offer their organizations the most portfolio growth over the same time period. However, as the issuance of FHA loans grows, so does the potential increase in the volume of default assets, and, therefore optimizing disposition strategies to reduce timelines and increase proceeds is critical for servicers seeking the most efficient approach.
Limited Supply. As the housing market continues its recovery and demand continues to outstrip supply, buyers are in search of affordable home purchasing opportunities. Servicers can leverage the CWCOT Second Chance program to move properties back to the market and avoid conveyance timelines and costs.
INSIGHTS: What are the advantages of the CWCOT program?
ALEXANDER: FHA's goal in developing the CWCOT program in 1987 was to help build stronger communities by preserving the condition and accelerating the sale of its real estate owned properties. To accomplish FHA's objectives, the CWCOT program provides the servicer with two primary claim channels: third-party sale at foreclosure auction (or, in the early stages of REO, as a so-called "second chance" auction) and conveyance to HUD. By encouraging third-party purchasers to acquire these homes earlier in the default process, homes can be reoccupied much sooner, decreasing holding costs and financial risk for servicers while preventing REO stigma in communities.
INSIGHTS: What are some "pain points" that hinder servicers' CWCOT programs?
ALEXANDER: The CWCOT program requires servicers to add a third-party vendor into their default disposition process, creating additional compliance costs and potential challenges. Pain points may include ensuring that any foreclosure sale meets statutory requirements surrounding pricing and marketing a property as well as carefully vetting vendors' competency in managing an effective control framework. Servicers must also evaluate whether their vendors' technology and systemic workflow controls minimize errors, which can prove costly for a program as highly regulated and governed as CWCOT.
INSIGHTS: How can servicers use data to better manage their CWCOT assets pipeline?
ALEXANDER: Data plays a significant role in helping servicers make smarter decisions and optimize their CWCOT outcomes. That said, data is only useful so far as servicers are able to interpret it and translate it into action--not just relying on an iterative process that boils down to: "Try this, and if it doesn't work, then try this." Synthesizing and analyzing data in a meaningful, actionable way can improve decision-making and help servicers take a more holistic view of their CWCOT programs--for example, allowing them to adjust their strategy for handling each of their assets versus taking a blanket approach. This ultimately helps minimize costs, improve compliance and move REO inventory more quickly.
INSIGHTS: What are some basic steps servicers can take to more effectively manage their CWCOT pipeline?
ALEXANDER: Servicers have several options available to help manage their CWCOT portfolio, including:
--Utilizing more holistic, decision tree-based asset management strategies to proactively model expected outcomes for more timely and optimal decisioning;
--Leveraging online technology platforms with transaction capabilities that allow servicers to more effectively market their properties to prospective buyers and, ultimately, sell their assets more quickly;
--Developing a deep understanding of CWCOT disposition strategies, focusing on the second chance sale versus conveyance tradeoffs to reduce holding costs and timelines; and
--Continuously analyzing real estate markets to plan proactively for increasing distressed inventory before inventory spikes occur.
To learn more about CWCOT, download Altisource's white paper, New Opportunities for Servicers to Optimize CWCOT Disposition Strategies, click http://clp.altisource.com/l/84982/2017-11-02/8x3krl.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA Insights welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at firstname.lastname@example.org; or Michael Tucker, editorial manager, at email@example.com.)