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Altisource CRO Talks Microbubbles

John Vella, CRO of Altisource speaks with Brianna Gilpin, Online Editor of DS News and MReport

John Vella, CRO of Altisource speaks with Brianna Gilpin, Online Editor of DS News and MReport

John Vella is a 30-year real estate industry veteran who has served in a number of C-level roles at companies throughout the real estate and mortgage industry during his career. Prior to joining Altisource [1], Vella was EVP of Special Servicing for GMAC/Rescap. Previously, he held roles as President and CEO of EMC Mortgage Corporation (a subsidiary of JPMorgan Chase); CEO of Household Automotive; Chief Sales Officer of Option One Mortgage and Director at Freddie Mac and the FDIC.

Vella spoke with DS News at the 2017 Five Star Conference and Expo on the challenges servicers are experiencing in the market as well as the possibility of regional microbubbles following the recent hurricanes in Texas and Florida.

 

Q: What are some of the hot topics and perhaps challenges that servicers are concerned with today?

A lot of energy is being spent on the storms in Florida and Texas. We, as a vendor, are working with our clients to help them assess what the exposure is and making sure that their properties are getting secured. We have people out in the field updating information so that we can help the servicers and ultimately help the borrowers.

Many discussions are about the direction that's going to be given from the agencies on what the options are for loss mitigation and property preservation. Additionally, coming up with data that everyone could look at to work and assess what everyone's exposure is for their investors. There are many good ideas—now it's just getting those ideas and putting them into action.

Q: Have there been concerns regarding innovation in the servicing space?

Yes—budgets are tight in servicer’s operations these days. A lot of money and time has been spent on compliance and shoring up the operations, and the industry has done a very good job—from a compliance standpoint—of getting out the consent orders, ensuring that their operations are sound and in compliance. Concerning people working with tighter budgets—how can you still get things done? That means being more efficient, utilizing technology a little bit differently, and coming up with new innovative ideas to help move their business forward.

Q: How do you feel about the possibility of microbubbles in Houston following the moratorium?

There will be microbubbles, and there are going to be implications for all the markets, even when it comes to the real estate movement, as far as buying and selling real estate. But I think the major issues are going to be unemployment and the self-employed borrowers—the local businesses. It will impact the ability to pay, their ability to get to work if their cars were flooded and no longer working. Loss mitigation is going to be a big issue. Ultimately the borrower and the impact on the borrower is a big issue.

Q: How does that break down further?

So, the properties themselves—we know what happens when a property is exposed to mold and not properly treated. The value of that home obviously declines, which declines home values in the local market, which could cause a bubble. Then when it comes to new financing in these hard-hit areas, there will be more risk pricing, which could impact the ability to get loans in those local areas that have a propensity for flooding, propensity for storm damage. That could impact the market, as well.