REO

At the REO Lab at the 2015 Five Star Conference and Expo on Friday in Dallas, industry experts discussed how to get ahead and stay informed and equipped to take on the new REO marketplace.

The former plan to engage code enforcement in order to avoid citations from the city was for servicers and field services providers to make a pitch to the city officials in which the property was located. But the cities are in a different position because revenues are down due to lower property values.

REO sales are down by 80 percent from their peak six years ago, but there are still plenty of affordable buying opportunities for homebuyers, according to a commentary by Chris Bowden, Freddie Mac's SVP of HomeSteps, the GSE's real estate sales unit.

REO sales accounted for 6 percent of total home sales in June, which was the lowest level since September 2007 when they made up 5.2 percent of all home sales in the country. REO sales hit their peak in January 2009, when they accounted for 27.9 percent of all home sales. According to CoreLogic, the continued shift away from REO sales is driving home price appreciation, since REO properties typically sell at a larger discount than short sales do.

May 2015's cash sales share of nearly 32 percent was down by 31 percent from the peak of 46.5 percent recorded in January 2011. CoreLogic estimates that if the cash sales share continues to decline at the same rate as it did in May 2015, the cash sales share should fall back down to its pre-crisis level of 25 percent by the middle of 2017.

Of that 9.9 percent distressed sales share reported for May 2015, REO sales accounted for 6.4 percent of all home sales, the lowest share for REO since October 2007, when it was reported at 6 percent.

The Senators cited a recent report by the National Fair Housing Alliance (NFHA) which alleged that REO properties in minority-dominated neighborhoods were more than twice as likely to have deficiencies such significant amounts of trash and debris, and unsecured, broken, or damaged doors than REO properties in predominantly white neighborhoods.

As has historically been the case, REO sales had the largest cash sales share in March, followed by resales (34.5 percent), short sales (31.6 percent), and new home sales (14.9 percent). All those numbers represented declines from February, according to CoreLogic.

March's distressed sales share was the lowest percentage for any March since 2007. According to CoreLogic, distressed sales usually experience a month-over-month decline in March due to seasonality; this past March, the distressed sales share fell by 1.9 percentage points from February. According to CoreLogic, 8.4 of home sales were REO (real estate-owned) transactions in March 2015, while 3.7 percent were short sales, totaling 12.1 percent.

In CoreLogic's May 2015 MarketPulse released earlier this week, Boesel examined the question of whether or not REO share was headed back toward "a more normal level." Its most recently measured rate of 10 percent is far below the share at the worst of the crisis, which was 28 percent. In some metros, the REO share got as high as 70 percent at the worst of the crisis.