Wednesday, May 24, 2017 – Case Study: $46 Million Dollar Impact in First Ten Months
HOW A TOP 10 NATIONAL BANK SIGNIFICANTLY RAISED MARKET RATE PERFORMANCE ON REO DISPOSITION THE SITUATION
A top ten national bank was looking to accelerate asset disposition, reduce holding costs and limit liability. It also wanted new operational efficiencies that reduced internal P&L labor, complied to OCC consent order, and streamlined noncore business practices. The lender began by consolidating its REO disposition business to a single vendor.
That vendor was Chronos Solutions, which offered services spanning the entire mortgage lifecycle, including every service required for REO asset management and disposition. After assessing the lender’s operational processes, Chronos Solutions laid out short-term and long-term strategic goals and presented a road map to achieve them.
Chronos Solutions began by refocusing the lender’s online auction disposition and alternative asset liquidation strategies. The effect was nearly a 50% reduction in portfolio age within a matter of months. It did detailed analysis and reporting on daily, weekly and monthly timetables, which resulted in virtually day-to-day operational level controls of each asset. The daily monitoring of valuation, Cash for Keys, evictions, and other programs helped minimize risk and exposure as well. Chronos Solutions used its proven service providers to handle the HOA Risk, Title and Auction functionalities internally and reduced delays and hand offs by maintaining direct control over the process.
Chronos Solutions was able to help the client take an REO asset portfolio and cut carrying costs by more $19.2 million and reduce aging by more than 90 days on 4,288 assets acquired since June 2016. A sales to value execution ratio of 102.2% was also achieved, exceeding their 92% ratio by more 1,000 basis points, and increasing asset returns by $24.54 million on 2,454 liquidations by the end of first quarter 2017. The bank has recognized operational full-time employee (FTE) savings of $3.2 million, by reducing internal support head count by 40-plus employees. Total hard economic impact achieved for the bank is currently in excess of $46.9 million in the first ten months of managing the entire portfolio for the bank. In addition to the benefits outlined above, the bank also benefited from reduced service fees by bundling services such as HOA, Title and Auctions, resulting in an average per service savings of 15% over other providers.
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