Property preservation is among the key processes in the mortgage business value chain. It refers to all the activities that help maintain a foreclosed property (or one nearing foreclosure) to remain economically viable. A robust property preservation capability can help you save hundreds of thousands of dollars in audit effort, compliance burden, facility restoration challenges, etc. Unfortunately, this often remains one of the most neglected aspects of mortgage, despite its potential to be modernized.
Challenges in Property Preservation Today
The reasons for investing in technologies that aid in preservation are very clear. First, mortgage businesses and property preservation companies operate in a highly dynamic regulatory environment. For example, the US Department of Housing and Urban Development recently issued a mandate that changes the contingencies around property protection and preservation reimbursement.
There are diverse global codes, state laws, and industry requirements to comply with, which in turn increases your reliance on hyper-local property experts. Second, a typical mortgage provider will work with numerous vendors to carry out preservation tasks in different states. This calls for a lot of effort in streamlining and executing orders, with careful monitoring at every step.
Vendors, too, must work with local contractors to document the damage, assess bids, and initiate repairs while maintaining a detailed audit trail. The risk of delays or data errors is very high, which can cost the mortgage provider in the long term. Cutting-edge technologies like workflow automation, modernized data infrastructure, automated document reviews, chatbots, and even blockchain and IoT can go a long way in addressing these challenges.
Also read: Top Tech Trends Reshaping the Mortgage Industry in 2022: A Definitive Guide
Top 6 Property Preservation Technologies in 2022-23
The consolidation of data and workflows is the first step toward simplifying property preservation and removing the inefficiencies that exist today. This is possible thanks to:
1. Workflow automation
Workflow management and automation tools allow mortgage companies to orchestrate multiple tasks and work with multiple stakeholders from the same platform. Property preservation is essentially an on-field activity that involves in-person inspections, assessments, and audits. A workflow management and automation tool can help collect and communicate these status updates in one place. Mortgage companies can benefit from real-time notifications for work orders, repair bids, red flags, etc., and act on them immediately.
2. Modernized data infrastructure
Alongside workflow automation, a modernized data infrastructure can help increase your visibility into property conditions across different regions. Highly sophisticated analytics systems can utilize this database to predict future outcomes, such as the possibility of claim denial. Comprehensive data on different preservation vendors can also help decide which ones are the most prone to risk. Housing property data in a consolidated warehouse allows mortgage companies to benefit from metadata analysis, easier audits, and knowledge sharing.
3. Automated document reviews
Given its information-intensive nature, nearly every process in the mortgage value chain can gain from automated document reviews — and property preservation is no different. From mortgage servicers outlining work orders to vendors submitting proposals, and sub-contractors making their bids, there are reams of information to go through, which typically exists in fragmented and non-standardized documents. Automation has the ability to implement a consistent system with indexed data fields and better searchability.
4. Vendor management chatbots
Automation can play a role in vendor screening, communication, and collaboration as well. There are several thousands of property preservation specialists in the US, all of whom meet different criteria and have varying degrees of experience. A chatbot can make it easier to collect information from prospective vendors and conduct first-level screening automatically through a conversational interface. It would ensure that only the most qualified vendors are shortlisted when outsourcing property preservation.
5. Internet of Things (IoT)
IoT devices can reduce the level of human intervention needed in property preservation. Currently, field executives need to personally visit and assess the property in question, which will change in two ways with the implementation of IoT:
- Smart appliances and facility management technology pre-installed in the property can record vital information on utilities systems, electrical infrastructure, HVAC, etc.
- IoT devices like drones and industrial-grade augmented reality glasses can help property preservation specialists remotely assess the condition of an REO asset.
Finally, blockchain is possibly the most disruptive technology to transform property preservation. It can store all the data relevant to a property on a decentralized ledger, in the form of a smart contract. This contract will be automatically updated as new stakeholders enter the value chain, with complete transparency and zero risk of fraud. It would also ensure that sensitive property information remains encrypted for greater security.
Also read: Features of Blockchain That Can Benefit the Servicing Sector
Discover a Tech-Empowered Property Preservation System
Property preservation no longer needs to be a cost and effort-intensive function for mortgage services. It can turn into a genuine profit center by maintaining the pristine conditions of foreclosed properties to be able to generate value in today’s dynamic marketplace.
That is why large organizations like Fannie Mae are already using cutting-edge tools and applications to get real-time property data, identify inspection needs, guide inspectors on the field, and process property appraisal data to prioritize the work. These are just some of the benefits that you can expect from a tech-empowered property preservation system.
At Nexval, we work with the country’s top mortgage providers and servicing companies to transform processes and enable maximum efficiency. Our team of 1000+ SMEs is backed by decades of industry experience and research in technologies like automation, IoT, and data centralization. Are you eager to know how this could help your property preservation function? Speak with our Tech Gurus to know more.
Frequently Asked Questions About Property Preservation
Q1. How can technology ensure compliance in property preservation?
Next-gen technologies like workflow automation, vendor management chatbots, and automated document reviews can help in ensuring compliance as a technology-led system can simplify and expedite the creation of reports and updating statuses in real-time through a centralized repository after inspection and preservation work. Through algorithms of pre-built orders, the system can flag issues like duplicate bids, non-geo-tagged photos, and more. Vendors can also use this system to perform a target vendor-based review, instead of a time-consuming manual review.
Q2. Apart from property preservation, which mortgage process can benefit from blockchain technology?
The servicing sector can benefit from blockchain technology in many ways for reducing operational burden, meeting regulatory requirements, simplifying the borrower experience, and diversifying into new payment mediums.
Also read: Features of Blockchain That Can Benefit the Servicing Sector
Q3. What is included in the property preservation services offered by Nexval?
Nexval’s property preservation services include debris removal, securing the property, winterization and de-winterization, snow removal, lawn maintenance, processing damage claims, processing code violations, eviction management, property management, disposition services, and title and REO closing services.