The one-two punch of economic crisis coupled with housing slump has burdened banks with a larger responsibility for managing the distressed properties that are quickly starting to crowd their books. With REO Optimizer, Conexxus hopes to alleviate some of the burden.
Released publicly in July, this document management product helps mortgage lenders capture key documents related to their distressed holdings electronically and stores them in an online searchable platform, enabling prospective buyers and investors to easily search properties. In turn, this helps speed up decision making and, according the bank that's been using it, increases the ultimate value of the sale. "We recognized this problem [of managing distressed property documentation] was getting bigger, not smaller [18 months ago]," says Bruce Dearing, svp at the Bank of North Georgia, the first lender to use REO Optimizer.
The problem isn't just getting bigger for the Bank of North Georgia. As of June 30, 2009, there were 300 U.S. banks with more than $100 million in distressed properties.
Although it seems prescient, Jeff Reibel, founder and CEO of the Lousville, Ky. process automation software company, says that when the idea emerged for this new product the commercial real estate market was already showing signs of weakness. By incorporating critical property data - which may include surveys, construction plans, zoning and septic information - with more than 15 search filters, banks are able to give interested investors a clearer picture of what's on the table. "[Investors] can find assets they like faster, the pricing is better and they go under contract sooner," says Joe Sumner, the Bank of North Georgia's vp of residential assets. The disposition time for selling these properties has shortened from more than 120 days to 30 to 45 days, according to Sumner. And, in addition, investors are paying higher prices because they are receiving more accurate information on what they're getting, he adds.