This piece originally appeared in the March 2022 edition of DS News magazine, online now .
The Federation of REO Certified Experts (FORCE)  is the Five Star Institute’s REO member organization, comprised of certified and experienced REO agents, with the goal to focus on the improvement of REO agent performance through lender and servicer driven education. FORCE serves as a conduit of communication between the REO agent/broker community, and the servicing shops in which they serve.
Through investment in oversight, education, and communication delivery, the REO servicing industry can obtain tangible, bottom line benefits when using FORCE to address their brokerage needs.
FORCE’s Advisory Council is a group of leaders tasked with expanding influence guiding all Federation members in forging productive and meaningful relationships with lenders, servicers, REO and distressed asset management companies, and investors.
DS News had a chance to chat with FORCE Advisory Council Chair Jim Hastings  and Vice Chairman Steven Pagano  to discuss the state of the industry, goals of FORCE for 2022, and what the Federation plans to bring to its membership.
Hastings began selling real estate in 1983, and in 1984, obtained his first REO client, Fannie Mae. He earned a bachelor’s degree in real estate from Arizona State University in 1988, and opened Hastings Brokerage Ltd. In 1993, first in Arizona, and then in California, Nevada, and Ohio. He is the Co-Founder of Broker Brain , a web-based REO tracking system. He has served on multiple FORCE Advisory Councils, REALTOR Professional Standards Committee, BOA Las Vegas Vendor Advisory Council, BOA National Short Sale Roundtable, Fannie Mae Vendor Advisory Board, Freddie Mac’s SmartTank, Nevada Foreclosure Mediation Program’s Advisory Panel, and is currently a Nevada Affordable Housing Assistance Corporation Board of Director.
Pagano, Owner of Pagano Properties , has been a member of the Five Star FORCE Advisory Board since 2017. He has more than 20 years in the banking sector, and over 10 years servicing REO clients. Pagano specializes in all aspects of the default market transaction, including asset valuation and preservation, cash for keys, marketing, inspection, etc. In addition to working with REO, short sale, HUD, estate sales, judicial, and private equity firms, he is also a speaker for investment groups with a focus on real estate.
How has the landscape been in terms of default marketplace so far? Has it been as bad as anticipated?
Hastings: Do you know we had the higher default rates at the top of the COVID-19 pandemic than during the Great Recession? Fifty percent of the 90 days mortgage lates—when forbearance ends—have no plan. Often people think when forbearance ends, they get back on their feet and everything is fine. That’s not always how forbearance ends. Sometimes they just ran out of time and it’s over. But we do know that people exiting forbearance have, on average, 30% more equity than when they went into forbearance.
What were some of the trends that you saw in the market from March 2020 onward?
Hastings: Hyperinflation was a big one. The Federal Reserve, for years and years, has tracked new home construction, and they’re into a benchmark of hitting one million homes built a year. For a long time, that simply hasn’t been happening. Buyers then fight over what’s left, and that causes values to fluctuate.
In Vegas alone, hyperinflation has caused real estate values to over triple in the last 10 years. Hyperinflation does not end well. The reason we are concerned about inflation is because it throws things out of sync. If we have inflation, higher interest rates, and a depreciation in real estate values, we are in for trouble. In the 1980s, we experienced inflation and real estate values were dropping, historically, when you inflate, your inflation is going to raise the value of your house as well.
Pagano: That is where the biggest hit will occur, the people who have maxed out their loan’s value. At that point, they cannot really cover all those payments. And once inflation hits, I think that’s where Jim is really painting a very accurate picture here, people are into their home for 107% or 120%. Some just leave their keys on the table, and that’s what they did the last housing crisis.
What has been your weapon of choice in terms of technology in handling your REO workflow?
Pagano: Some clients are going to use RES.NET, Equator, Pyramid … there’s any number of platforms available. It’s always a good idea to make sure that you’re aware of how your client really wants you to communicate. Personally, I prefer the least amount of touches in a lot of instances, but some of our clients love to get on the phone. They want you to call and be interactive. Others don’t mind an email, and some will text me after hours.
You always want to make sure that you are communicating in the client’s space in the way that they want to be communicated with because it just makes things easier for them.
Hastings: There is broker-side software, and there is client-seller-side software. REO sellers use a system that they choose. You need to be literate on them: Equator, HomeSteps Connect, Pyramid, RES.NET, etc. Then there are the brokers who do a higher volume who will have their own internal software to manage their flow in their office. That’s what Broker Brain is—a user-friendly, web-based property asset management system and REO software created with real estate brokers in mind.
We built Broker Brain as a system to go and scrape some of those other systems, so it integrates both together. Because there are issues in some of those systems when you’re doing high volume that may cost a ton of time. But like Steve mentioned, we all must use whatever seller system the client wants. If they want their hamburger with onions, that’s what they will get.
How did you change your operational structure to serve your client base at the height of the pandemic?
Hastings: My client base is almost 100% REO-based. The pandemic was the first time in my life I ever had a sabbatical. I’ve never had time off in all my years in the industry, so I was able to speak with REO sellers and other REO brokers. We all got time to make needed changes and it was really fun. We took this time to go through our entire network, and we cleaned everything up. We cleaned up our systems and procedures and eliminated multiple things that were no longer needed. We spent our time basically honing our craft.
Pagano: My experience was very similar to Jim’s. Between traveling back and forth between New York and Hawaii, I was always real busy, almost 100% in REO space. Like Jim, I managed to take a little bit of time off. It was my first break ever. We used that opportunity to keep on top of our profiles, seeking out who we can partner with. We also took advantage of trying to research some technologies to give us added client benefits. Things that our clients or that other REO agents might not be doing.
What is FORCE doing to for its membership as the industry changes and the market begins to heat up?
Pagano: FORCE is always on top of things … now, more than ever. With the current board, everybody is mindful of the situation that a lot of REO brokers are currently in.
What it comes down to, at the end of the day, is everybody who’s involved with FORCE is looking for a new way to find business or re-establish their business. I’ve told people this in the past too, and it’s worth repeating … it’s a lot easier to keep the accounts you already have, than it is to go out and find new ones.
It really comes down to performance and making sure that your current client roster is happy, and that you’re doing everything you can to make sure that you exceed their expectations.
With the leadership of Jim [Hastings] as Advisory Council Chair of FORCE, there are a bunch of interesting things coming forth this year that people will find very interesting, informative, and huge value-adds to our group.
Hastings: FORCE is developing a list of the different clients that handle the seller side REO where you sign up, manage, and can see what systems they use. Our FORCE membership has broad access to everything available out there. FORCE is also planning a great deal of training in the months ahead, covering a range of topics from HUD and the USDA.
We just did some training on how to become a USDA-certified broker and are planning a master series of webinars. We are looking at webinars on repairing REO properties, and another on BPOs [broker price opinions].
What caused you to join FORCE, and eventually grow into your current roles with the Council?
Hastings: For me, it gave me a platform. I had these thoughts in my head, and FORCE gave me a chance to express them. FORCE gives me a platform to use my gifts and talents. My participation in FORCE drives a place where I can share my gifts and talents for the greater good, and that’s a big part of who I am. I just want to make sure people get bang for their buck. I want to give them tips and tools that they can take home and put into place right now.
Pagano: My involvement with FORCE pretty much mirrors what Jim says, but I would say that what drove me to my involvement was when I found out just how deep the relationships you establish go. This is a very small niche community.
What sets FORCE apart from other such trade associations?
Hastings: What sets FORCE apart is that we have the annual Five Star Conference that works around us, which is a much different thing. We have the backing of more of a complete trade industry.
What is FORCE going to offer in 2022 that can generate interest in membership?
Hastings: FORCE provides a unique sense of community. All the people on the board now are very approachable, and everybody is humble. Everybody could be asked anything at any time, and everybody is usually available.
Pagano: I think everybody on our board is capable, ready, willing, and able to be a mentor to anybody looking for assistance. If you’re open to learning and are open-minded, FORCE is here to help.
The very first broker I dealt with gave me so much information and truly showed me how to navigate this field. The only thing she said was, “Steve, you just have to keep paying it forward.” I keep that in my head every day.
Hastings: People generally don’t always pay it forward. I personally don’t recommend anyone to any of my clients that I don’t know well. I have been selling REO for almost 40 years. There are many things myself, Steve, and the rest of the Advisory Panel will pass on to others on the FORCE that will help them grow in the industry.
Pagano: I think this next REO cycle will be a pretty good run, about 40% of the flow of the Great Recession, and we will help our members prepare.
Hastings: I think that the good brokers out there can really help their REO sellers and buyers make good decisions. That’s why we have taught on understanding changes in the Federal Reserve, so they better know interest rate trends. Understanding key indicators in the markets as to cycle timing. Ways to put your REO sellers and buyers in the best place possible. We on the Advisory Panel have been refining our craft over the years and being around this knowledge is invaluable.
Any closing comments?
Pagano: I think now is a good time to keep people positive. I think a lot of people in our space throughout the country have probably been a little discouraged with the lack of business. If we can give them anything to hang their hat on and keep them optimistic and forward-thinking, they must realize that the worst is over and there are a lot of good opportunities on the horizon for most of us.
Hastings: Our best is yet to come. We are really going to be very efficient in the REO space moving forward. People really need to focus on that because of the oppressive nature of the pandemic. That’s not what’s going on behind the scenes. The repaired REO coming out with some REO sellers will blow your mind with the quality you’re going to see. You are about to see some of the best REO to date soon.