Wednesday, May 09, 2012

Lawler: REO inventory of "the F's" and PLS

by Bill McBride on 5/09/2012 02:55:00 PM

CR Note: Earlier I posted a graph of REO inventory (lender Real Estate Owned) for the Fs (Fannie, Freddie and the FHA). Economist Tom Lawler has added estimates for PLS (private label securities).

From Tom Lawler:

Below is a chart showing SF REO inventories of Fannie, Freddie, private-label ABS, and FHA. The March FHA number is estimated, as for some reason FHA has not yet released the March report to the FHA commissioner. FHA’s SF REO inventory as shown in this monthly report declined to 30,005 at the end of February from 32,170 at the end of December. Data in the FHA Outlook report, however, suggested that SF property conveyances, which had been running extremely low (relative to the number of SDQ loans), spiked up sharply in March, and probably significantly exceeded sales, As a result, I’m assuming March’s FHA SF REO inventory is about the same as December’s.

Fannie Freddie FHA PLS REO Inventory Click on graph for larger image in new window.

More from CR: When the FDIC's Q1 quaterly banking profile is released in a couple of weeks, I'm sure Tom will add an estimate for REO at FDIC-insured institutions. This is not all REO: In addition to the FDIC-insured institution REO, this excludes non-FHA government REO (VA, USDA, etc.), credit unions, finance companies, non-FDIC-insured banks and thrifts, and a few other categories.

REO inventories have declined over the last year. This was a combination of more sales and fewer acquisitions due to the slowdown in the foreclosure process.

The FHA is seeing an increase in delinquencies (Fannie and Freddie are seeing a decrease), and this will probably mean more FHA REO. And this is grim, from Bloomberg: FHA New Foreclosures Jump as Modified Loans Default (ht Mike In Long Island, Brian)

The number of Federal Housing Administration-insured home loans entering foreclosure jumped in March after half the mortgages it modified to ease repayment terms were in default again a year or more later.

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