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74 I N D U S T R Y I N S I G H T / K E L L Y C O N L E Y POST-FORECLOSURE SALE PROPERTY INVENTORIES Over the past years, mortgage servicers have experienced substantial reductions in post-foreclosure sale property inventories given lower levels of nonperforming loans, higher purchase volumes, and stronger employment levels. During this period, servicers have developed and refined various property disposition strategies relative to assets held in portfolio (to be liquidated from servicer REO inventories), as well as assets that will ultimately be conveyed back to insurers or investors for property liquidation after the completion of a foreclosure sale. While the management of liquidation processes may vary from servicer to servicer the end goal is the same–effectuate liquidation strategies and expedite third-party property sales to minimize neighborhood blight and reduce the operational and holding risks associated with distressed-property management. While servicers are charged with appropriately managing property inventories in accordance with investor/insurer requirements regardless of the party that will ultimately liquidate the properties, the liquidation of HUD-insured properties presents added layers of administrative coordination post-foreclosure sale. Servicers with post-foreclosure sale assets that are insured by HUD are charged with conveying properties to HUD (for property liquidation), in acceptable condition or selling to third-party buyers under HUD's Claims Without Conveyance Of Title (CWCOT) program. Ensuring that properties are in conveyable condition requires tight management of the eviction, title, and property condition remediation processes, so that these properties can be transferred to HUD for liquidation. is conveyance-path process can be costly (for servicers and for HUD) due to various operational and holding risks that can be greatly diminished under successful third- party property liquidation efforts. Given the inherent risks of the conveyance path, the HUD CWCOT third-party liquidation process provides a more cost-effective and less-risky alternative to conveyance. BROAD CWCOT PROGRAM HIGHLIGHTS Optimization of the CWCOT program reduces servicers' post-foreclosure sale property inventories, decreasing the risk of holding and ultimately conveying properties to HUD for property liquidation through successful and qualifying third-party sales. Upon completion of qualified third-party sales, related insurance claims may be filed through HUD to retrieve qualified unpaid principal balance deficit totals as well as reimbursable expenses. Program participation not only reduces the ultimate impact of the FHA insurance fund While the management of liquidation processes may vary, the end- goal is the same—effectuate liquidation strategies and expedite third party property sales to minimize neighborhood blight and reduce the operational and holding risks associated with distressed-property management. UNLOADING INVENTORY