Response to HUD, FHFA & Department of Treasury RFI from 08/10/11

Who we are: BidOnRealty.com, LLC ,a Florida based limited liability company. Mitchell Gover, Founder and CEO. 3208 E. Colonial Dr. #151 Orlando, FL 32803 (407) 381-1211 We are a start- up company formed in September 2010.

What we do: We offer a completely online price negotiating platform for real estate transactions formulated to work within the existing Realtor driven, MLS (Multiple Listing Service) framework. Our system enables Realtors to hold their own online auctions for their listings without an auctioneer involved, and without having to forfeit any of their sales commissions. The system includes a customizable (listing agents and sellers determine minimum bid, reserve, and auction start/stop time) online auction, a paperless Make Offer feature, and a Buy Now feature similar to Ebay.

How it works relative to the stated objectives of the RFI: First and foremost, the objective of the RFI is to find ways to reduce the REO portfolios of the Enterprises and FHA in a cost-effective manner. The BidOnRealty.com system was designed to do precisely that. It enables sellers, in this case HUD and the Enterprises, to use a systematic method to sell their assets for the highest possible net returns in the shortest time frame possible. This system and method can be implemented immediately, and it uses the existing infrastructure of Asset Management companies, and REO specialist real estate agents.

First, an example of the current broken system: The method used currently for REO disposition typically goes something like this: REO asset is assigned by loan servicer to an Asset Management company. Asset Management company has a local real estate agent perform a BPO (Broker Price Opinion). The local real estate agent doing the BPO hopes to get the listing of that property, so he/she is often optimistic about what the value of the asset is. The asset manager hires that local agent to list the property for sale in the local MLS. Many times, the optimistic price does not reflect current market conditions, so the property does not sell. Generally, the price is reduced on the listing every 30 days, and if it hasnt sold in 90-120 days, the listing is pulled from the listing agent and given to one of several large, national auction companies. When that happens, the seller goes from paying a typical 6% sales commission to a 10% commission to the auction company. The auction company reduces the co-brokerage commission paid to any cooperating agents to 1%, effectively eliminating any participation from the real estate community in the sale of that property. The auction company also typically charges the buyer of the property a 5% Buyer premium upon sale of the property at auction. In addition, the ballroom-style, mass marketed auction normally attracts

bottom feeder type buyers who keep prices down. So, when a property does not sell via a conventional listing with a local Realtor, there is at minimum, a 9% decrease in the net return to the seller. It is actually closer to 25% due to the low prices realized via this method. A BidOnRealty.com example: REO asset is assigned by loan servicer to an Asset Management company. REO asset is assigned by the asset manager to a participating BidOnRealty.com listing agent. The agent lists the property in their local MLS at 10% - 20% below current market. They clearly indicate to the public that the listed price is a minimum bid in an upcoming auction. They can also invite interested buyers to make an offer on the property via our paperless Make Offer system before the auction starts, or utilize the Buy Now feature. Specifically: A realistic BPO comes in at $100,000. The listing agent lists the property at $85,000 in the MLS. The minimum bid in the auction would be set at $85,000. The reserve in the auction could be set at $98,000. The Make Offer range would be set to $98,000 and higher, and the Buy Now price could be set at $103,000. So, the low listed price generates a lot of interest in the property and therefore a greater likelihood of interested bidders. We recommend that the auction be run on days 25-30 of the listing period. A buyer could make an offer on the property at any time via the paperless Make Offer feature if they do not want to wait for the auction to start. Or they could utilize the Buy Now feature, which would cancel the auction. Regardless, the sales contract is not written until after a successful Make Offer, Buy Now indication, or the auction has concluded and a reserve price has been met. This saves countless hours of needless paper chasing by the asset manager, the Realtors involved, and buyers. Why it works: Transparency. The bidding process is completely transparent. Buyers can clearly see what they must bid in order to secure the property. This eliminates solicitation of highest and best offers in multiple offer situations. One contract is written with the winning bidder at the end of the auction or if a paperless offer was accepted or the Buy Now feature was utilized. Cost-effectiveness. We never charge the seller a penny. Our fees are derived from a small listing fee to upload to our system (by the asset manager or listing agent) and from a 1% Buyers Assurance Fee charged to a buyer if, and only if, the online auction module is used to arrive at the final contract price. Motivation. When the listings of REO properties are kept in the MLS driven, Realtor oriented system, there is a much greater likelihood of a positive outcome. All properties will sell if the price is right. Until now, the Realtor community was unable to effectively utilize the auction method of sale.

When can it be done? Immediately. The infrastructure is already in place i.e., asset managers and Realtors. We can train asset managers and Realtors quickly on the use of our system. We could start in a given market, preferably Orlando, and refine the model to best suit the needs of HUD and the Enterprises. The Broader Issues While one of the objectives of the RFI is to solicit input regarding conversion of REO to rental properties with participation of HUD and the Enterprises, we believe this should be avoided entirely. REO properties, by their very nature, attract investors. If HUD and the Enterprises deem a market underserved with available rental properties, which is often the case in high foreclosure areas, REO assets in those markets can easily be transitioned to rentals in the private sector. This can be done by making the properties more attractive to private investors via attractive financing terms. For example, maximum LTVs could be increased for investors securing financing through the Enterprises or HUD. An increase in the number of allowable financed units by the Enterprises for investors could be utilized. Fannies HomePath and Freddies HomeSteps program could be expanded to investors. HUD could extend the 203(k) program to investors, with special consideration given to re-habs done with energy efficient materials. Restrictions on re-sale flips could be added when investors utilize these programs, in order to encourage investors to hold these properties as rentals. In short, the same method that got us into this mess can get us out. The reason (at least in part) that there are a lot of foreclosures is because a few years ago, somebody who had never paid a bill on time in his life, and who couldnt prove his income, could go and buy a property with little or no money down. The mortgage industry is remarkably adept at pushing every loan program and guideline to its limits. HUD and the Enterprises can use that to their advantage by making a few simple lending guideline changes and providing incentives to credit-worthy borrowers to take these properties off the backs of the taxpayers. In Summary We do not believe that a massive government-private joint venture or partnership is necessary for the real estate market to recover. What is needed, is a more efficient, transparent and fair way to transition the REO inventory from HUD and the Enterprises back into the private sector. Our online price negotiation platform accomplishes exactly that. With our system, every asset is sold within 30 days and at the highest possible price. That is what the taxpayers want. That is what the taxpayers deserve. We have been in discussions with Mr. Dan Walker, Assistant Director, Institution and Asset Sales with the FDIC regarding our platform. As part of that process, we have already registered with Central Contractor Registration. The FDIC is considering a test of our system in a specific market (most likely Orlando).