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» VISIT US ONLINE @ DSNEWS.COM 15 buyer, who is usually able to completely renovate it within three months and either sell it to an end-user or rent it," said Josh Cantwell, CEO of Freeland Lending, a Cleveland, Ohio-based company that lends money to home flippers. Cantwell noted that investors are motivated to perform "residential redevelopment" as quickly as possible to provide the best return. "You are under the pressure of creating a return. When you're under the pressure of creating an ROI, you are going to work hard to put that property back in service." FASTER RETURN TO OWNER-OCCUPANTS However, the time to resell after foreclosure auction is not the whole story. A foreclosed home often has a longer journey beyond just the initial resale before it finally returns to the retail market—particularly when it comes to homes that go down the REO path. Among nearly 7,000 properties that reverted to the lender in the three months ending in February 2018 and then subsequently resold, only 48% were owner-occupied one year later, according to an analysis of Auction.com and Collateral Analytics data. By contrast, 74% of properties that sold to third-party investors at the foreclosure auction and then subsequently resold were owner-occupied one year later. While it should not be overlooked that at least some of these REO properties are selling directly to owner-occupants, the majority of these REO sales are going to investors. at means a much longer path to owner-occupancy. e 52% of reverted assets that sold to nonowner-occupants (investors) will take about 171 additional days (the average time it takes an investor to rehab and resell even without listing for sale) to get into the hands of an owner- occupant. at means the entire timeline, from foreclosure to owner-occupancy, for those properties is around 392 days—199 days longer than it takes for the majority of third-party purchases to return to owner-occupancy. While the owner-occupancy rate is not the only measure of a stabilized neighborhood, it's an important one. By that measure, neighborhood stabilization is more quickly and comprehensively being achieved through sales to third-party foreclosure buyers than it is through lender repossessions. TIME IS THE ENEMY OF STABILIZATION e longer a property takes to get into the hands of an owner-occupant or a tenant, the longer that property will be sitting vacant. Vacant properties also pose the most danger to destabilizing a neighborhood, according to James Rokakis, former Cuyahoga County, Ohio, Treasurer and Director of the Western Reserve Land Conservancy, an organization that focuses on transforming vacant, unsafe, and unproductive properties throughout Ohio into useful ones. "We want these properties as quickly as possible repurposed," said Rokakis, who helped launch the Cuyahoga County Land Bank, which became a model for more than 50 land banks throughout the state. "e longer a property remains vacant, the more likely it is that that property will be vandalized." Daren Blomquist is VP of Market Economics at Auction.com. In this role, Blomquist analyzes and forecasts complex macro- and microeconomic data trends within the marketplace and greater industry to provide value to both buyers and sellers using the Auction.com platform. Blomquist's reports and analysis have been cited by thousands of media outlets nationwide—including all the major news networks and leading publications such as the Wall Street Journal, the New York Times, and USA Today. Blomquist has been quoted in hundreds of national and local publications and has appeared on many national network broadcasts, including CBS, ABC, CNN, CNBC, FOX Business, and Bloomberg. e bridge from distressed property to owner- occupied property often requires eviction and extensive rehab, processes that require, time, money, and expertise that may not be the core function of mortgage servicers. e data shows that local real estate investors can perform the same eviction and rehab functions much faster, returning those distressed properties to the retail market more efficiently. THE LEADER IN DEFAULT SERVICING NEWS Help shape the next issue of DS News. Drop us a line at Editor@DSNews.com.

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