WASHINGTON — Credit unions could capture a bigger portion of the historically large market for distressed properties if they could consistently approve mortgage applications in less than 30 days, according to a mortgage finance executive.
Thomas Popik, a research partner with Campbell Research, told CU mortgage executives attending ACUMA's Regional Workshop that REO and distressed property sales take between 30-35% of the overall market, compared to between 1%-2% in more normal times. In short sales, in particular, Popik told the meeting that mortgage servicers are requiring 30-day turnaround times on seller financing that force many deals to fail.
“If credit unions could shorten those times because they control the underwriting process and timelines, they could obtain a significant market advantage in the REO market,” Popik told the group.
But as large as the market for distressed properties has become, only the short sales and properties that are considered move-in ready are really in the mortgage market.
Distressed properties and damaged REO are often sold for cash, because they could not qualify.