Academic journal article ABA Banking Journal

Four Tips for REO Relief

Academic journal article ABA Banking Journal

Four Tips for REO Relief

Article excerpt

What's the best way to handle nonperforming real estate or real estate owned?

If you answered, "get it off the books at any price," you'd be in the majority. But it may cost you. In many cases, applying several seldom-used strategies can significantly increase a distressed project's eventual sales price.

According to Patrick Vedra, managing director of Carwin Advisors, financial institutions don't always recognize the ways they can protect and maximize the value of non-performing developments and/or raw land for which they have become reluctant owners. Carwin is a restructuring and turnaround advisor for real estate projects. It works with banks, hedge funds, and private equity groups. Vedra offers these suggestions:

DON'T WAIT! Acting quickly can create significant opportunities to recover and preserve value, so treat the foreclosed property the same way you would if you were a potential purchaser. Have a checklist--gather due diligence information to help you understand all the sources of the property's value, future expenses, and risks. This doesn't often occur when a property moves to the REO side of the bank.

STOP THE BLEEDING. Until you know exactly what you own and its condition--and take appropriate steps--market value will likely deteriorate every day. …

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