Are banks holding back from foreclosing, or selling their REO inventory?
Only those who work on the inside know for sure, but here's some anecdotal evidence to consider.
On April 22nd I started receiving emails from Countrywide regarding their REO properties. They were in the 'pre-listing' stage, which includes duties that I don't normally handle:
1. Getting occupants to vacate
2. Coordinate repairs
3. Pay for utilities
Getting occupants to vacate the premises includes the cash-for-keys program, where Countrywide will offer to pay $2,500 to occupants who move and clean in two weeks. It is a generous program if you ask me, they can deliver a three-day notice to vacate to any former owner (tenants get a minimum 30 days), yet they are willing to give then two weeks and $2,500? They don't offer it to everyone, and it seems haphazard as to who gets it, but it doesn't sound like evidence from a company that is looking to hold back on selling the properties.
Speaking of holding back, the properties assigned to me were all foreclosed just a few days before - and I thought, "yippee, these guys are really on it!" That thought was a bit premature.
Since the end of April when I had 20 properties sent to me, only three have made it to market. Another one got rescinded (stand-by, this one will be a story in itself) and three others have extenuating circumstances why they have stalled. But literally the other 13 are sitting vacant, waiting for Countrywide's asset managers to give me the green light to put them on the market.
I think they are overwhelmed - there have 60 asset managers at their servicing facility in Simi Valley, each with 100+ files on their desk. The majority of these mortgages are ones they sold to Deutsche Bank and HSBC, both foreign entities. Countrywide is just their servicing agent, meaning they collect the monthly payments, and handle the foreclosure proceedings. There isn't much incentive for them to not be expediting the sales, unless the banks that actually own the properties are telling them to stall. But why would Deutsche Bank or HSBC want to stall - they can't be waiting for a bailout, who is going to give them a hand? The U.S. Government? No way.
A large part of the overwhelm is from the old-fashioned processing. When I put the Oceanside half-duplex on the market and received seven offers, the Countrywide asset manager addressed each one, which meant she had to print out our 12-page offer form, add their 17-pager, and then sign each by hand.
That's a total of 203 pages for initials or signatures, then re-scan them, and upload them back onto the website where I can access them. If you are great at your job, that would still take you an hour or two to process - no surprise that they are buried.
To compound their problems, the market is hot for REO listings. They are probably getting dozens of offers every day that need attention. Yet in my Oceanside case they made it a point to formally answer every offer in writing - even the low ones that I told her had no chance (the agents who told me they wouldn't change their offer when we countered requesting highest-and-best).
Once we got the first one into escrow, the closing process has been pretty smooth. The problem seems to be the lack of proper staffing to handle the workload in getting the properties from trustee sale to accepted offer.
Take today for an example - early this morning I emailed each asset manager on every property I have ready to go to market, encouraging them to take action. I didn't get one return email all day.
When I first got my list of twenty properties in the span of about ten days, I thought, "Golly, I'd like to sell 20 of these every month!" Now I'm just wondering if I can get this group done by the end of summer.