Mid-February saw another press release pointing to rising foreclosure activity across the industry, something our…
Success, to a large degree, comes down to learning from our mistakes and from the good examples we find around us. The trick is finding good models to learn from.
Southwest Airlines is a well-studied, often benchmarked organization. This is not surprising given that at one point, it delivered forty-four consecutive years of profitability, without ever facing a layoff. Unheard of for the air travel industry.
What I’ve learned about Southwest is that the primary contributor to their success is their deep understanding of the correlation between the cost of empty, idle airplanes and profitability.
What Southwest has been able to do better than any other competitor is to completely align, from top to bottom and across every function, to get planes safely on the ground, emptied, loaded and back in the air as quickly and as efficiently as possible. Everything from the types of planes they buy and how they service them, to the hubs from which they operate, the types of people they hire and the process they use to load their planes is designed to achieve this objective.
In fact, while many have tried, no other airline has yet to figure out how to load its passengers more efficiently than Southwest’s method.
So what does this have to do with REO?
Well, like empty, idle airplanes, a vacant property is an expensive and depreciating asset. Not only is the cost on the books of the title owners, an idle property can further depreciate from weather conditions, vandalism and poor maintenance negatively impacting the value of the property as well as other properties in the surrounding area.
The challenges for Servicers is to turn properties on behalf of their clients as quickly and as cost efficiently as possible. Navigating the market conditions, workflows, title issues and engaging all relevant parties to make this happen is challenging enough for a single property.
Multiply that times the number of assets in a given portfolio and you have a web of complexity and a volume of activities requiring your attention at every moment of every day.
Making sense of it requires us to focus on a few key questions:
- What are the best practices you have found best accelerate the disposition of properties, while maintaining a fair price and reducing loss severity?
- Which variables most impact your ability to close a property in the required time frame?
- Which attributes of a property, such as location, property condition, title issues, or anomalies about the property, put the timing and sale price of the asset most at risk?
- What makes your role more difficult than it should be?
- Where do you wish you had better options and support to respond to these challenges?
Are you willing to share your insights, either by email () or through a call, related to the above questions? I’d be very open to having that conversation.