When pandemic-related forbearance programs end, servicers will be faced with default inventory

HousingWire sat down with Hubzu Vice President of Auctions Travis Britsch to discuss how COVID-19 may change the foreclosure auction landscape and how Altisource’s solutions help streamline the foreclosure auction process.

HousingWire: What are some of the latest changes in the foreclosure auction process and how is Altisource helping solve for them?

Travis Britsch: Foreclosures have been around forever and it seems that very little has changed until recently. Many of the old laws governing how and when a foreclosure sale may be conducted are still in place, which is potentially preventing all buyers in the market from being aware of and participating in the foreclosure auction.

This then leads to less-than-maximum competitive bidding at the foreclosure auction and less-than-maximum sales price, leaving lenders and potentially even the borrower short.

Luckily, we are starting to see states like Ohio and Florida adopt new streamlined methods of conducting auctions even if they are still part of an overall judicial foreclosure system. These two states support the use of online bidding platforms – like Hubzu – that not only market the foreclosure sales nationwide to maximize buyer exposure but also provide transparent and easy-to-use bidding websites so qualified buyers located anywhere can participate in one or multiple auctions simultaneously.

Additionally, we believe that COVID-19 will accelerate the adoption of online bidding across other states.

Some of the other key changes that we enabled over the past five years are the Claims Without Conveyance of Title (CWCOT) foreclosure auctions program and data-backed foreclosure credit bid strategies —both of which are helping improve the overall success rate of foreclosure sales. In fact, the nationwide third-party sale rate at foreclosure auctions jumped from 32% in 2015 to over 48% in 2019.

HW: How do Altisource’s solutions help streamline the traditionally complex process of foreclosure auctions?

TB: Through its Hubzu and Equator businesses, Altisource is streamlining the foreclosure auction process with advanced marketing, technology and data-driven decision engines.

Hubzu invests heavily in extensive multichannel marketing for each and every foreclosure sale, targeting buyers through informative email campaigns, display advertising, search engine marketing and robust syndication to top aggregator sites frequently searched by real estate buyers and especially investors. Through this significant marketing investment, we are seeing an increase in traffic at the foreclosure sales.

Hubzu and Equator are also currently providing — and will be providing even more in the future — foreclosure technology that syncs internal auction operations with foreclosure attorneys nationwide, as well as with servicers and the auctioneers at the county courthouse.

This allows for quick and efficient communications, relaying auction status updates and bidding instructions (credit bids) as well as providing real-time results of the sale back to the foreclosure attorneys and servicers after the auction has ended.

Before the auction takes place, Hubzu and Equator are providing servicers and lenders with data-driven decision modeling that allows them to make informed decisions as to credit bid amounts based upon their overarching strategies. Furthermore, these models take into account local market conditions, valuations of the property in foreclosure, and actual and expected costs leading up to the foreclosure and into the REO stage.

Utilizing an experienced auction provider will be extremely important when the pandemic-related moratoriums and forbearance programs end and servicers are dealing with a deluge of default inventory.

With more than a decade of innovation in the auction space, Altisource has a wealth of experience efficiently marketing default properties. Getting this inventory to sell quickly at third-party auctions is vital for preventing additional losses.

HW: How do you help sellers get the widest audience and best possible results in their foreclosure auctions?

TB: Through our massive scale and multichannel marketing efforts, Hubzu is engaging buyers at a local, regional, national and, to some extent, even international level.

Hubzu’s marketing investments include making sure that each foreclosure sale it advertises is done so at the highest quality possible. To do this, we often – at our own expense – acquire high-quality professional photography of the property in foreclosure.

Where access to the property is not possible, we work with nationwide vendors to obtain drone photography of all angles of the house and the surrounding neighborhood. This is added to the extensive amount of property-specific data we acquire through public databases and MLS listings from across the nation.

As previously mentioned, Hubzu also syndicates each foreclosure sale directly to many of the nation’s leading real estate websites, including paid premium placement on Zillow, Trulia, Homes.com, Foreclosure.com, RealtyTrac and several other sites. Hubzu also invests heavily in search engine marketing, display advertising and retargeting marketing techniques in addition to targeted email campaigns to over 1.8 million Hubzu registered users.

All of these marketing efforts help amplify exposure of each foreclosure auction event to the largest possible buyer base and help actively drive them to the auctions to engage in the competitive bidding.

HW: How do servicers benefit from Altisource’s long experience in the industry?

TB: Altisource was founded during a recession, and that experience will apply to what may be similar economic circumstances in the near future resulting from the COVID-19 pandemic. We are experienced in navigating a complex market like we’re seeing today and have been providing professional real estate services for 11 years.

Furthermore, Altisource is comprised of many industry experts with even greater experience. Servicers benefit from this by being able to tap into our deep-seated knowledge base and innovative and change-driven focus on the way real estate is bought and sold (foreclosure or otherwise). The massive amounts of transactional data points that are utilized build extensive foundational platforms that drive efficient operations and performance-enhancing liquidation strategies.

Over the years, sellers have used Hubzu to help them sell over 225,000 residential assets. Hubzu has acquired a registered user base of over 1.8 million users and has millions of data points through Equator and MLS feeds from all around the United States.

All these factors allow Altisource to provide extremely robust, end-to-end, transparent and high-performing foreclosure auction services.

HW: In what ways do you think COVID-19 will change the foreclosure auction landscape?

TB: COVID-19 very quickly impacted the real estate market, particularly foreclosures. The implementation of the CARES Act and related eviction and foreclosure moratoriums resulted in record lows of foreclosure inventory, as homeowners who were impacted financially by the pandemic were given more time and assistance.

These moratoriums were recently extended again until at least the end of August and while theoretically they may save some borrowers from being foreclosed upon, we do anticipate that there will eventually be a surge in foreclosure volume.

The continued extension of the moratoriums will add to the overall backlog of inventory, and the longer that backlog grows, the longer the recovery time will be for the housing market and mortgage industry.

Visit here for more information on Hubzu Foreclosure Auction Services.

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