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62 with the ACA being replaced are both positive aspects for the consumers as it relates to the mortgage/real estate markets. Dodd-Frank will let banks create new loan products to get more consumers back into homes without the insane regulatory environment we see today. e ACA being redesigned and lowering the costs that have spiraled out of control in the past two years will improve consumer's cash flow. In 2017 we should see continued price ap- preciation. We will continue to see historic low inventory levels of SFR properties. e start of interest rate increases which should drive some fist time buyers to get off the fence and buy. Valuations will continue to be challenged in many markets where investors have been in the "fix and flip" space because of the length of time held along with some of the larger investors having the ability to move markets quickly when they begin to buy and sell again. ASSET DISPOSITION SHAWN MILLER Director of Business Development, Hudson & Marshall e residential mortgage default space has evolved and diversified in 2016. ese changes have been driven by many variables, but the two core fundamentals have been basic supply and demand economics. e U.S. and International market demand continues to remain strong for U.S. residential property and continues to absorb much of the residential foreclosure supply at strong returns. e ownership demographic of residential loans and REO has shifted with the increased demand from sellers and buyers of non-perform- ing and re-performing loan pools. is ownership shift, coupled with strong market demand, has driven different strategies to optimize returns for the portfolio. e growth and value-add of utilizing third- party auction companies for foreclosure auctions has allowed servicers to increase third-party sale conversions while yielding strong returns. By engaging established and experienced real estate auction companies, foreclosure sales benefit from a significantly larger and more robust buyer pool versus the traditional foreclosure sale process. is increased demand, bundled with the efficiencies and auction experience sup- plied by a third-party auction provider, drives strong results. It has proven to be an effective disposition strategy. e updates to FHA's Claims without Conveyance of Title program, and similar program adoptions by several other government guaranteed loan programs, have validated the value of engaging third-party auction companies. As REO supply stabilizes, auction companies are educating the investor demographic about foreclosure auction op- portunities and the value-add of expanding their acquisition strategy. As it relates to REO dispositions, there has been a tremendous shift in methodology and strategy to maximize recovery for each property. Historically, REO dispositions were divided between conventional and alternative strategies. Conventional would be the most traditional approach of engaging the most qualified listing broker to market and sell the asset through the traditional channels including—but not limited to—the multiple listing service, signage, broker networking and various marketing mediums. Alternative would include donations, bulk/ pool and auction. With more stabilized REO supply levels and healthy market demand, many REO sellers are leveraging both conventional and auction strategies simultaneously. By taking a multi-channel approach, sellers benefit from the value-add of both strategies and two very large, expansive buyer pools. is approach has yielded an increase in overall execution, cycle- times, and offer activity—especially within markets benefiting from strong price apprecia- tion. By immediately engaging a multi-channel disposition approach at REO intake, sellers will receive a direct pulse on market demand, pricing generated through a transparent offer submis- sion process and benefit from a date-certain for sale. At the conclusion of the multi-channel marketing program, the ownership will have all the information to make an educated business decision to sell the asset in its current condi- tion, continue the eviction process if applicable or choose to create additional value through a repair strategy. If a repair strategy is elected, the multi-channel disposition approach is then engaged at completion to ensure the property is exposed to all buyer demographics and yields the most return. ere is a different approach for every seller to optimize the return of their foreclosure and REO portfolios based upon numerous factors and goals. With the evolution of the convention- al brokerage and auction strategies, coupled with overall market conditions, sellers have several powerful options to leverage multiple disposition channels or the option to leverage all disposition strategies simultaneously. ASSET DISPOSITION MIN LEE ALEXANDER SVP Real Estate Services, Altisource To be successful in today's mortgage servicing environ- ment, banks and financial institutions must adapt their late-stage default and REO asset disposi- tion strategies for increasing compliance requirements, increasing holding costs, and decreasing foreclosure rates. In short, they must be able to do much more with much less. is requirement presents a new challenge for most banks. How can a business maintain fully compliant, consumer-centric, and sustain- able operations while managing declining portfolios? Without heavy investment in new technology and service team infrastructure, most banks will not be able to achieve this feat EXPERT OPINION "In 2017 we should see continued price appreciation. We will continue to see historic low inventory levels of SFR properties." –BRIAN MINGHAM EXPERT OPINION "This ownership shif t, coupled with strong market demand, has driven dif ferent strategies to optimize returns for the por t folio." –SHAWN MILLER

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