PERSON OF THE WEEK: Brent Taggart is senior vice president of the client management group at real estate owned (REO) asset management firm Green River Capital (GRC).
MortgageOrb interviewed Taggart to get his views on the growing REO-to-rental market – including whether REO-to-rental securitization is truly viable or just a passing fad.
Q: Where do you see the REO-to-Rental market headed in the next year? How about over the next five years?
Taggart: This has emerged as a large business. We are seeing more and more companies entering this marketplace and other companies that are contemplating this line of business. The business as a whole is not a new concept as local buyers have been doing this for years. The new marketplace includes the large national aggregators. We have seen the ramp-up in the purchase, repairing and the rental of assets. The basis of the model for REO-to-rental is a long-term strategy versus a flip. I see more REO-to-rental securitizations happening in the near future and this becoming a long-term market.
Q: Why do you think the industry is turning to component services more now? Will that trend continue?
Taggart: Yes, this trend will continue – and what follows are the reasons why:
1.) Component servicers are typically specialists that manage certain areas of a process versus the entire process;
2.) It is typically a staffing solution as well if there are inconsistent flow volumes in that area; and
3.) It is expensive to hire someone to manage component services if there is not a consistent product.
Q: Can you describe how technology is crucial to your company's clients?
Taggart: Transparency is key. Allowing our clients to have access to our systems is a huge benefit to them. It also creates the ability to manage assets more efficiently. We are always looking for ways to increase efficiency and productivity through our technology offerings.
Q: What are you hearing about the possibility of an REO or REO-to-rental securitization?
Taggart: It's here! The Deutsche Bank/invitation homes securitization was just completed, and there are other investors in the marketplace that are inquiring on how to structure their own deals as well. I think we will see more of these deals in the market in the near future.
Q: What is your assessment of the state of the short sale market?
Taggart: We still see lots of borrowers who are interested in doing a short sale. The availability of component services has increased the number of people interested in short sales while shortening the timeline to completion. Real estate agents are now interested in doing short sales and showing them because they are closing assets faster than previously because of the cooperation from companies such as GRC.