Technology for Managing Vacant REO Properties.(Managing REO)

Byline: Rich Rollins

The REO problem sweeping America is now a full-scale epidemic and cities across the country are looking for ways to hold foreclosing lenders' corporate feet to the fire to take care of the vacant properties they now own.

There aren't enough property managers out there to remedy the problem of overseeing all the empty houses, with potentially over two million REOs waiting to happen, and cities, quick to realize the dangers, are developing huge penalties for properties left unattended. How huge? The Wall Street Journal reported on the trend not long ago and found that municipalities from Rhode Island to California are looking to fine lenders up to $1,000 per day for properties that are insufficiently maintained.

It's a case of adding insult to injury, because lenders, servicers and investors are already suffering financially on REOs, especially in urban neighborhoods. Vagrants look for dark properties and take up residence as squatters. Drug dealers use them as transaction sites and labs. Thieves strip them of valuable metals, right down to ripping open the walls in order to get to the copper plumbing. Destruction is rampant and even a broken window can lead to all kinds of problems, from structural damage resulting from leaks to liability suits from invaders who become injured. If power is turned off, squatters often start fires, even if a fireplace is not available, and if a gas leak is present, disaster can be the result.

Apart from physical damage to individual properties, vacant and deteriorating properties have devastating effects on neighborhoods. Well-maintained properties take enormous value hits, sometimes leading to more ...