WHY IT’S RIGHT TO SELL REO LISTINGS
All of us in the REO business are pretty busy nowadays. With foreclosures making up almost one in five of all real estate transactions last year (and over half of all sales in such hard-hit areas as Stockton, California), and another large wave of mortgage defaults predicted by experts, it’s clear that the number of REO listings aren’t going to start shrinking soon.
But as the government continues to debate halting or, at least, postponing foreclosures and public opinion looks down on lenders clamping down on mortgage defaults, should the REO professional feel any guilt over making a living from selling REOs?
If you are an REO vendor who gets regularly ribbed about your line of work, you might want to print out a copy of a Wall Street Journal editorial from January 31st and have it ready to hand out. The piece, written by former REO broker Ramsey Su, makes a compelling case for letting foreclosures proceed as the best outcome possible for both struggling homeowners and frustrated lending institutions.
Since many homeowners are underwater to the tune of hundreds of thousands of dollars, Su makes the point that it does them no good to try and stick it out. Borrowers who walk away from their homes are not only able to wipe the slate clean, but can also rent cheaply, build their credit back up and eventually buy again, instead of enduring the constant stress of trying to make payments they can’t afford on a house that’s worth half as much as when they bought it. Su calls those people “mortgage slaves.”
Another fact is that most homeowners facing foreclosure in recent weeks have been more like renters than homeowners. They barely had any equity in their homes, due to the easy credit that helped lead to this housing crisis, and really aren’t losing that much by defaulting on their mortgages. Things were different back in the days of the Great Depression – homeowners then dealt with much stricter loaning practices that meant shorter mortgages with larger down payments. In other words, they had much more actually invested in their homes.
The only way to get the housing industry – and the economy – back on its feet is to let the toxic mortgages die, instead of artificially prolonging everyone’s agony. REO Agents do a service by selling abandoned homes, keeping the housing market alive, and helping neighborhoods survive.
The professional association I founded, ASREOS (the American Society of REO Specialists) is designed to give REO professionals the resources they need to do the best possible job. Please feel free to find out more about ASREOS and what it has to offer at http://www.asreos.com .
