Auctions Touted as Way to Reduce Neighborhood Blight.(Managing REO)

Byline: Jennifer Harmon

New York-Default servicers have an opportunity to change the current real estate marketplace that is seeing a rise in REO and blighted homes as a result of foreclosures.

If borrowers are facing default, and if they are willing to participate, the servicer should help them get the properties sold pre-foreclosure, according to Dean Williams, chairman and chief executive of the auction firm Williams & Williams, Tulsa, Okla. He said the company will have a big presence at the MBA servicing conference with its senior vice president of national sales and REO, Elsa Lewis, speaking on one of the panels.

aThis would benefit the investor, who they ultimately serve,a Mr. Williams told MSN. aIn the end, everybody is going to benefit if these homes are treated immediately via auction. It would change the market to less blight to practically no blight.a

Lenders and servicers have normally thought of auctioning as an alternative tool, one that is used here and there on a selected basis, to liquidate real estate-owned assets. Traditionally, their approach to auction companies is as vendors. aServicers have thought of auctions in this way: 'Iall use it when I give up on everything else.a Maybe that was reflective of how they function. A liquidation strategy, the way it fits. When auction is being used as a liquidation strategy vs. a retail strategy, then it gets liquidation results. Weare focused on using our auctions to be retail, hence, the number of bidders we have per auction.a

It is in REO management where there is systemic flow of vacant real estate, whether anybody likes it or not, added Mr. Williams. aSome donat like to talk about REO, they like to talk about keeping people in their homes and all those good things. But then here it is, and the ...