Reverse Mortgage Solutions (RMS) is rolling out a new asset management division to assist lenders with the unique process of disposing of REO properties from reverse mortgage loans. The company says it has one goal with the new division, to be the premier REO provider for reverse mortgage lenders.
Calling it a “niche within a niche”, Bob Yeary, Chairman of RMS, said the reverse mortgage REO process is very different than the “forward” business.
Run separately from its servicing business, RMS Asset Management Solutions (RAMS) built out new systems and teams of asset mangers, brokers, and vendors to help dispose of REO properties. “We have a national network of companies and individuals that expeditiously sell and support the sale of the REO,” said Marc Helm, President of RMS.
Until recently, lenders sold the majority of HECMs to Fannie Mae, which manages the process for loans in its portfolio. However, as the industry has shifted from selling to Fannie Mae to utilizing Ginnie Mae’s HMBS program, Ginnie Mae issuers now bear the responsibility and risks associated with managing the REO process.
During an interview at the Texas Association of Mortgage Bankers Conference in Dallas, Yeary said the key to a successful REO sale process is the ability to move quickly once you get marketable title. Helm added that “you have six months to market a property before an appraisal based claims is necessitated with FHA.”
Unlike the typical forward REO property, lenders can’t continue to lower the price in order to dispose of the property because the lender is required to sell the property at its then-appraised value. If the issuer files an appraisal-based claim with FHA, the issuer may incur expenses after the claim is paid including closing costs, property and preservation expenses, and tax and insurance payments that FHA will not be required to reimburse.
Using RMS’ experience as a GNMA approved issuer, RAMS is already representing four companies who felt it was better to let them handle the unique process. “It’s a business you want to turn over to the professionals who understand the process,” Helm said.