This piece originally appeared in the December 2021 edition of DS News magazine, online now.
Mike Rawls has served as CEO of Xome since January 2020. Prior to joining Xome, Rawls was the EVP of Servicing for Mr. Cooper Group, where he held operational responsibility for the company’s entire servicing portfolio. Since joining the company in 2000, Rawls has served in several leadership positions, including as President of Champion Mortgage and senior roles in the company’s originations channels. Previously, Rawls held leadership roles at Banc One Financial Services from 1997–1999 and at Household Financial Services from 1991–1997. He received a B.A. in business management from Virginia Wesleyan College.
Rawls recently spoke with DS News about the current industry landscape, the auction process, and how homeowners who need to sell can make sure they’re not leaving equity on the table.
Editor’s note: A version of this interview originally appeared in an episode of Five Star’s DS5: Inside the Industry webcast.
How does the current equity landscape compare to what we were looking at during the mortgage crisis of 2008?
Great question. I think the GSEs and FHA have done a really nice job in developing workout programs that are easy to understand for customers, easier to fulfill this time around for servicers, and that’ll certainly help homeowners exiting forbearance. But without question, the biggest differentiator between today and what we saw in 2008 is just a record level of equity.
The latest numbers that I’m seeing are that possibly as many as 90% of homeowners have more than 10% equity this time around, and for those that haven’t been able to recover from an income standpoint, it’s going to afford them the opportunity to sell their property and cover the full payoff of the mortgage without having to come out of pocket. Obviously, in 2008, what we saw was completely the opposite, with a vast number of borrowers underwater on their mortgages.
Could you tell us a little bit more about what role home equity is playing in helping homeowners now that are exiting forbearance plans?
First, many customers, after demonstrating the ability to repay, they’re obviously going to have the opportunity to go through the modification process. But many will also have the opportunity to refinance their loan, given the level of equity that we’re seeing. For others, that equity’s going to allow them to sell their home, to be able to cover closing costs, real estate agent commissions, the full mortgage payoff, all without coming out of pocket. It’s really going to look a lot different than what we saw on prior cycles. Those homeowners that decide that selling is in their best interest, it’s solutions like Xpert Seller by Xome that can help connect them with real estate agents and a team of experts who can quickly help them navigate that selling process.
What are some ways that the auction process is helping to ensure that homeowners who are in the position to sell their homes are not leaving any equity on the table?
Whether homeowners want to take advantage of their home’s current market price appreciation or they’re just ineligible for modification options for whatever reason, auction is a transparent and efficient way to buy and sell real estate. The clearest advantage is homeowners can see and compare all their offers in real time as soon as they come in. This is ideal in any situation, but given the time-sensitive nature of an exit from forbearance or a pending foreclosure action, it makes even more sense in that situation.
Again, this is where offerings like Xome’s Xpert Seller program come into play. Our new program is designed to connect these homeowners with local real estate agents and guide them through the entire process, from marketing their home all the way through the sale process itself. It’s designed to help homeowners make fully informed decisions through the entire process. In our current market, homeowners in many areas are likely to see competitive bidding on their property with sale prices going 5% to 10% above list price.
The auction platform thrives in a competitive market. It helps homeowners maximize a sale price and allows them to cash in more of that equity. That complete transparency, that platform is great for all the parties.
From a servicer standpoint, the Xpert Seller program also helps create capacity. When you think of the level of exits that we’re seeing with customers coming out of forbearance, there’s going to be a lot of work put on the servicers’ plates. This program allows our team of experts to take that customer from real estate agent selection, all the way through the closing of the transaction, taking the work off the servicer’s plate. The clear advantage is just the transparency that the auction process affords. All offers from a much wider audience of interested buyers are presented in real-time, so we ensure fairness in that process and help those homeowners maximize their equity.