HUD Deploys New Risk Management Tool to Manage REO Inventory

""HUD"":http://www.hud.gov recently deployed a new risk management tool developed by ""Walzak Consulting Inc."":http://www.rjbwalzak.com, a Florida-based provider of consulting services on operational and enterprise risk management for both the origination and servicing of loans.
[IMAGE] HUD will use the company's REO Performance Evaluation Model in its Management and Marketing III (M&M III) program for HUD field service manager and asset manager contractors who oversee the maintenance and sales of foreclosed FHA homes.

The model measures and tracks the performance of HUD's REO vendors in meeting and following the department's contractual requirements and operational procedures.

""HUD wanted to do a better job of managing its REO properties to get a better return,"" said Rebecca Walzak,

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president of Walzak Consulting. ""The Performance Evaluation Model measures how well HUD's REO vendors perform against the department's guidelines. Did the vendors take the required steps, and if not, how did their performance impact HUD's REO inventory and return on assets?""

Walzak says HUD will use the model to create incentives for its REO partners. The better vendors perform in a reliable manner and at lower costs, the more properties they get to manage for the federal agency.

Because the M&M III program has specific requirements for how REO vendors are to manage, maintain, market, and sell foreclosed ""Federal Housing Administraion"":http://www.fha.gov (FHA) single-family homes, HUD required a model to measure how effectively the vendors followed its guidelines, whether costs were reasonable, and if reliability was sufficient.

The Performance Evaluation Model was adjusted by Walzak Consulting specifically for HUD's needs. The model allows HUD to see what drives the results when measuring vendor performance and how the contractor program should be changed.

Walzak Consulting partnered with ""MasterServ Financial"":http://masterservfinancial.com/ of Pennsylvania in developing the technology component of the REO Performance Evaluation Model. MasterServ Financial develops analytics and technology for the financial services industry.