Sunday, February 21, 2016

Fannie and Freddie: REO inventory declined in Q4, Down 34% Year-over-year

by Bill McBride on 2/21/2016 11:11:00 AM

Fannie and Freddie reported results this week. Here is some information on Real Estate Owned (REOs).

From Fannie Mae: Fannie Mae Reports Net Income of $11.0 Billion and Comprehensive Income of $10.6 Billion for 2015

Fannie Mae reported annual net income of $11.0 billion and annual comprehensive income of $10.6 billion in 2015. For the fourth quarter of 2015, Fannie Mae reported net income of $2.5 billion and comprehensive income of $2.3 billion. The company reported a positive net worth of $4.1 billion as of December 31, 2015, resulting in a dividend obligation to Treasury of $2.9 billion, which the company expects to pay in March 2016.
Fannie Mae reported the number of REO declined to 57,253 at the end of 2015 compared to 87,063 at the end of 2014.

And from Freddie Mac: Freddie Mac Reports Net Income of $6.4 Billion for Full-Year 2015; Comprehensive Income of $5.8 Billion
Freddie Mac today reported net income of $6.4 billion for the full-year 2015, compared to net income of $7.7 billion for the full-year 2014. The company also reported comprehensive income of $5.8 billion for the full-year 2015, compared to comprehensive income of $9.4 billion for the full-year 2014.
Freddie Mac reported the number of REO (Real Estate Owned) declined to 17,004 at the end of 2015 compared to 25,768 at the end of 2014.

Fannie and Freddie REO Click on graph for larger image.

Here is a graph of Fannie and Freddie Real Estate Owned (REO).

REO inventory decreased in Q4 for both Fannie and Freddie, and combined inventory is down 34% year-over-year.   For Freddie, this is the lowest level of REO since Q4 2007.  For Fannie, this is the lowest level since Q2 2008.

Delinquencies are falling, but there are still a large number of properties in the foreclosure process with long time lines in judicial foreclosure states.