One Centralized Approach To REO Title Issues.

Instead of working with thousands of state and county offices, foreclosure departments have seen higher efficiency in working with one office who knows their client's needs for the whole nation, thus allowing for better service and a sense of urgency.

If asset managers took a survey of the No. 1 problem holding up the resale of a nonperforming asset, it would be REO title issues, according to the C.J. Gehlke, president and founder of REO Nationwide in Newport Beach, Calif.

In fact, 30% of all REO closings are held up due to title issues that need to be cured, she says. The most common issues include that the borrower is still in title (including the foreclosing mortgage and all other junior liens because the foreclosure deed is not of record due to lengthy recording times by county recorder offices) and senior liens that have been paid are still of record, including indemnity agreements.

Other issues include problems like the fact that the foreclosing beneficiary/assignment chain is broken, the tax lien certificates and assets are being wiped out by tax sales, there are probate proceedings and improper recording documents, including the foreclosing mortgage was never recorded. There are different state-by-state recording requirements regarding foreclosure deed language and affidavits. Some mobile homes are not affixed to the land and are considered personal property. Time delays can also result when dealing with requirements through the Bureau of Indian Affairs in California, Arizona, New Mexico, Florida and Montana, adds Ms. Gehlke.

"Time is of the essence," she says. "These problems usually make foreclosure and REO managers feel as if they are constantly firefighting because dealing with all of the above so often makes them feel as if they are surrounded by many, many problems."

Although these problems may seem independent of each other, there are strong links of cause and effect between them, which means REO managers have to deal with the many problems because at the core there are only one or two causes.

"In other words, underlying any given situation there are actually only one or two core problems that are the cause for all the others which are really undesirable effects or unavoidable derivatives of the core problem," she said. By solving the core problem you in turn solve all the undesirable effects associated with that core problem.