Friday, March 09, 2012

Freddie Mac: REO inventory declines 16% in 2011

by Bill McBride on 3/09/2012 04:27:00 PM

This morning Freddie Mac reported results for Q4 and all of 2011. Freddie reported that they acquired 98,631 REO in 2011 (Real Estate Owned via foreclosure or deed-in-lieu), down from a record 128,238 in 2010.

Fannie disposed of a record 110,175 REO, up from 101,206 in 2010. Since Freddie disposed of more REO than they acquired, Freddie's REO inventory fell 16% in 2011.

Here is a table for the last two years:





Freddie Mac REO Acquisitions and Dispositions
20112010
Acquisitions98,631128,238
Dispositions110,175101,206
Net-11,54427,032

This has been true for most lenders - they sold more REO than they acquired in 2011 - not just Fannie, Freddie and the FHA.

The following graph shows REO inventory for Fannie, Freddie and the FHA.

Fannie, Freddie, FHA REO Click on graph for larger image.

REO inventory for Freddie increased slightly in Q4, but declined 16% in 2011. The combined REO inventory for Fannie, Freddie and the FHA declined 28.5% in 2011.

A few comments from Freddie:
Our single-family REO acquisitions in 2011 were most significant in the states of California, Michigan, Georgia, Florida, and Arizona, which collectively represented 43% of total REO acquisitions based on the number of properties. These states collectively represented 48% of total REO acquisitions in 2010. The states with the most properties in our REO inventory as of December 31, 2011 were Michigan and California. At December 31, 2011, our REO inventory in Michigan and California comprised 12% and 10%, respectively, of total REO property inventory, based on the number of properties.
And on the REO-to-rental program:
On August 10, 2011, FHFA, in consultation with Treasury and HUD, announced a request for information seeking input on new options for sales and rentals of single-family REO properties held by Freddie Mac, Fannie Mae and FHA. According to the announcement, the objective of the request for information was to help address current and future REO inventory. The request for information solicited alternatives for maximizing value to taxpayers and increasing private investment in the housing market, including approaches that support rental and affordable housing needs. We are participating in discussions with FHFA and other agencies with respect to this initiative. It is too early to determine the impact this initiative may have on the levels of our REO property inventory, the process for disposing of REO property or our REO operations expense.