As a savvy real estate investor, I will say IMB is very foolish and conservative in its REO operation.
IMB is the one who has been more willing to put out more REOs in its website than others. However, nobody in financial service is taking the advantage of Internet to treat its website as a marketing channel to get rid of REO. You name one for me if you know. (p.s. there are traditional reasons for that: public image and self-protection. I don't want to get into the detail about that.)
US Bank is one of the most aggressive banks to reduce its REO price to cope with the future price trend. In stead of dreaming the top dollars at 2005-2006 peak price, US Bank is positioning itself at a market edge to set a realistic price for others to follow. If you know RE appraisal business, you know US Bank is a leader so smart to do market price setting. Nobody can have a better chance to easily get a better price than US Bank.
For examples, US Bank took in a Southern Californian REO at foreclosure minimum bid of $380K (the previous sale price is $520K) on 07-13-2007 and immediately priced it for $347.9K on the market, regardless of a fact that the next door was sold at $440K right before the foreclosure. After two months, it dropped to $324.9K. The first price reduction of $50K is about 15 percent off its listing price. (p.s. It's available yesterday. But to me, its price is still too high for an investor.) I also witnessed it took in a Texan REO at $82K in the last May, priced it for $49K and had it sold for $37K in last October.
In Texas and California, I saw that US Bank has acting as a real businessman, not a lousy and conservative banker, with very good sense to deal with its REO inventory. But still it sticks to its real conventional channels and has never treated its website as a selling place, too. Go to US bank site at https://usbankhomemortgage/reo/reoReport.asp#CA and you will see there is ONLY ONE REO property listed in CA that is in central California. Nothing in Southern CA. I can show you ten times more than that it has had in San Gabriel Vally, southern CA.
As I said before, I am a trash digger who doesn't mind to dig, dig, and finally dig a gold nugget out of many dumpsters scattered around many places. But why all the banks have to make it a hassle to their potential customers by processing its disposal of REO in a so-called conventional "BPO" or a bureaucratic "assets management"? Why they don't see the Internet advantage of money saving method?
Okay, I believe that they are a real patriotic hero trying to "add" more red tapes, "create" more jobs and "consume" more papers to figurely increase our Gross Domestic Production. But those "productions" won't improve our "productivity" or "efficiency" to compete with others or add a real "constructive value" to our GNP. They are in fact purely a "consummated " waste in terms of global natural resources or our national strength.
Back to the REO strategy, IMB is too passive and conservative that I don't like what I saw at all. I can do much better than that to make a non-performing asset (by name, it is an asset. it is really a debt in fact) back into a real performing asset! But IMB's operation on REO tells me that IMB may not have an urgent liquidity issue or IMB is trying to bluff itself to cover up such a disastrous pressure. I have no reason to believe that IMB is too stupid to see a credit crunch is coming toward them, if there is one. However, I do believe that IMB has to sent its REO asset managers for an advanced learning course.
But it is the personality of Mike Perry and his "balance sheet recession" mindset (prepare to conserve cash, to "minimize losses", not to "maximize profit".) It seems to me that Mike has been long ready to be responsive to IMB's possible loan loss and liquidity crisis, if any, from his previous experience. He is doing what he believes is right in a broad banking perspective. I don't blame him and I trust him on banking business that is why I bought a stock first time in all my life on Dec. 21: it's IMB at $5.91.
I wish IMB stock price could be lower further for me to buy more. So Mr. Cramer, may I ask you do a better job to create a "strong sell" for IMB, please.
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