reo and technology · 2007. 2. 8. · • reduce reo inventory and losses • better data means...

Welcome ToWelcome To

REO and TechnologyREO and TechnologyBeyond the SpreadsheetBeyond the Spreadsheet

Presentation SpeakersPresentation Speakers

Bob SuhreBob SuhreAssistant Vice President, REOChase Home Finance

Eric PatrickEric PatrickChief Technical OfficerQuandis, Inc

Duke OlrichDuke OlrichPresidentDRI Management Systems, Inc

Jerry ReedJerry ReedGroup Senior Vice PresidentWorld Savings

Jerry ReedJerry ReedGroup Senior Vice President

World Savings

REO TechnologyREO Technology

•• What you need depends on your What you need depends on your objectives…objectives…

•• A business viewA business view

Technology and MeTechnology and Me

•• World 25, REO 22 yearsWorld 25, REO 22 years•• Onset of REO to now; 17,000 +/Onset of REO to now; 17,000 +/-- properties; properties;

policies/procedurespolicies/procedures•• Technology: 8Technology: 8½½ x 11” to today’s methodsx 11” to today’s methods•• Unique feel for the need for REO TechnologyUnique feel for the need for REO Technology

World’s History and CultureWorld’s History and Culture

•• Highly profitable Highly profitable –– quality over quantityquality over quantity•• Portfolio lenderPortfolio lender•• Intimate transactional feel (appraising, Intimate transactional feel (appraising,

underwriting, servicing, disposition) i.e. “one underwriting, servicing, disposition) i.e. “one loan at a time”loan at a time”

World’s History and CultureWorld’s History and Culture

•• Added technology must support company and Added technology must support company and dept objectives:dept objectives:

•• Furthering financial performance of companyFurthering financial performance of company•• Minimize REO inventory and lossesMinimize REO inventory and losses•• Maximize net sales proceedsMaximize net sales proceeds•• Minimize holding and marketing costsMinimize holding and marketing costs•• Using REO data and experience to train loan group Using REO data and experience to train loan group

((OrigOrig, , ApprAppr, U/W) on how to minimize bad loans, U/W) on how to minimize bad loans

•• Our study Our study -- four vendors, six monthsfour vendors, six months

Our REO Technology Requirements:Our REO Technology Requirements:

1.1. Must be easy to utilizeMust be easy to utilize•• Comfort breeds utilizationComfort breeds utilization•• Expandable staffing concept (REO Mgrs vs. REO Expandable staffing concept (REO Mgrs vs. REO

Sales Associates)Sales Associates)•• Simplifies training taskSimplifies training task•• Our tight approval chain for repairs, pricing, Our tight approval chain for repairs, pricing,

negotiations is detailed and ongoingnegotiations is detailed and ongoing


2.2. Must be scalable in capabilitiesMust be scalable in capabilities•• REO is expansion, contractionREO is expansion, contraction•• Historical volumes (# properties, $)Historical volumes (# properties, $)•• Future potentialFuture potential


2.2. Must be scalable in capabilitiesMust be scalable in capabilities•• Remote connectivity mandatory for inspections, Remote connectivity mandatory for inspections,

reporting, marketing, and disposition (WIFI) reporting, marketing, and disposition (WIFI) functionsfunctions•• CAR data (60%, 75%, sales cycle impact)CAR data (60%, 75%, sales cycle impact)•• We regularly visit properties to touch and feelWe regularly visit properties to touch and feel


3.3. Platform (core program) must facilitate Platform (core program) must facilitate standardization of process yet be flexible for standardization of process yet be flexible for customization needscustomization needs

•• Work flow oriented Work flow oriented --“Life of an REO”“Life of an REO”•• Exceptional detail capabilityExceptional detail capability


3.3. Platform (core program) must facilitate Platform (core program) must facilitate standardization of process yet be flexible for standardization of process yet be flexible for customization needscustomization needs

•• Productivity measures drive customization needsProductivity measures drive customization needs•• SP vs. AV (marketing effectiveness)SP vs. AV (marketing effectiveness)•• Gain vs. loss per deal (financial uniqueness)Gain vs. loss per deal (financial uniqueness)•• Turnover of inventory ($ in vs. out)Turnover of inventory ($ in vs. out)•• OthersOthers


4.4. Analytical and reporting capabilities must be Analytical and reporting capabilities must be extensiveextensive

•• Must have strong interface ability with other Must have strong interface ability with other systems (i.e. CPI on a daily basis)systems (i.e. CPI on a daily basis)

•• Highly granular data fields inclusive of every piece Highly granular data fields inclusive of every piece of info about a loan during its life and afterlifeof info about a loan during its life and afterlife


4.4. Analytical and reporting capabilities must be Analytical and reporting capabilities must be extensiveextensive

•• Depth of reporting capability a mustDepth of reporting capability a must•• Explain REO operations to Senior MgmtExplain REO operations to Senior Mgmt•• Serve as training device for Origination, U/W, Appraisal, Serve as training device for Origination, U/W, Appraisal,

Operations to minimize bad loansOperations to minimize bad loans


5.5. Must be cost effective in two ways:Must be cost effective in two ways:•• Implementation and usage costs:Implementation and usage costs:

•• Core and customization costsCore and customization costs•• Expansion costs in futureExpansion costs in future


5.5. Must be cost effective in two ways:Must be cost effective in two ways:•• Opportunity costs:Opportunity costs:

•• Reduce REO inventory and lossesReduce REO inventory and losses•• Better data means better knowledge. “Musts” include:Better data means better knowledge. “Musts” include:

•• Daily forecasting of intake vs. sales (# props, $) and lossesDaily forecasting of intake vs. sales (# props, $) and losses•• Gain/(loss) scenario for pricing and negotiationsGain/(loss) scenario for pricing and negotiations•• Detailed individual property management, marketing and Detailed individual property management, marketing and

revenue expense detailsrevenue expense details•• Track workflow daily task completion for each propertyTrack workflow daily task completion for each property

ConclusionConclusion

Bob SuhreBob SuhreAssistant Vice President, REO

Chase Home Finance

Utilization of a Grading System for the Utilization of a Grading System for the REO ProcessREO Process

•• Streamline the REO processStreamline the REO process•• Added flexibility for marketingAdded flexibility for marketing•• Increase workflow without loss of controlIncrease workflow without loss of control

Grade Parameters for Marketing Strategy Grade Parameters for Marketing Strategy List Price ApprovalList Price Approval

•• There are three different mechanisms utilized to There are three different mechanisms utilized to determine each authority leveldetermine each authority level•• Grade Minimum/Maximum List Price RangeGrade Minimum/Maximum List Price Range•• Approval LevelsApproval Levels•• Repair LimitsRepair Limits


•• A grade is assigned to each property, from AA grade is assigned to each property, from A--D D based on VBAMbased on VBAM

•• Authority levels are set based on % of the Authority levels are set based on % of the Market Value or Market Value less a dollar Market Value or Market Value less a dollar amountamount


•• Authority Levels can be set for each property Authority Levels can be set for each property gradegrade•• Can choose to utilize an Authority Level for all property Can choose to utilize an Authority Level for all property

gradesgrades

•• Authority Levels can be set for repair limits for Authority Levels can be set for repair limits for each property gradeeach property grade

Grade Parameters for Marketing Strategy Grade Parameters for Marketing Strategy List Price ReductionsList Price Reductions

•• There are two different mechanisms that can be There are two different mechanisms that can be utilized to determine authority level for List Price utilized to determine authority level for List Price ReductionsReductions•• List Price reductions by assigned Property Grade (VBAM) List Price reductions by assigned Property Grade (VBAM)

based on the Minimum/Maximums for each gradebased on the Minimum/Maximums for each grade•• Property Value Parameters Property Value Parameters -- these parameters are the these parameters are the

lesser of the percentage and/or dollar amount for each lesser of the percentage and/or dollar amount for each gradegrade

Grade Parameters for the Offer Approval Grade Parameters for the Offer Approval ProcessProcess

•• There are two different mechanisms that can be There are two different mechanisms that can be utilized to determine each authority level for utilized to determine each authority level for Offer acceptance and/or counter:Offer acceptance and/or counter:•• Offer acceptance by Property Grade Minimum/MaximumOffer acceptance by Property Grade Minimum/Maximum•• Property Value ParametersProperty Value Parameters--these parameters are the these parameters are the

lesser of the percentage and/or dollar amount for each lesser of the percentage and/or dollar amount for each gradegrade

Duke OlrichDuke OlrichPresident

DRI Management Systems, Inc

Solution for You NowSolution for You Now

•• AddAdd--on systemson systems•• Broker InterfacesBroker Interfaces•• Attorney InterfacesAttorney Interfaces•• Web ServicesWeb Services•• Invoice paying entitiesInvoice paying entities

Solution for You NowSolution for You Now

•• InIn--house systemshouse systems•• Occupancy and EvictionOccupancy and Eviction•• Listing AnalysisListing Analysis•• Reserve CalculationsReserve Calculations•• Repair ManagementRepair Management•• Offer ManagementOffer Management•• Approval ManagementApproval Management•• Closing and Write offClosing and Write off

REO and TechnologyREO and TechnologyBeyond the SpreadsheetBeyond the Spreadsheet

The EndThe End

reo and technology · 2007. 2. 8. · • reduce reo inventory and losses • better data means...

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