Monday, May 23, 2011

Fannie, Freddie, FHA and PLS Real Estate Owned

by Calculated Risk on 5/23/2011 07:56:00 PM

There was a theme today - mortgage delinquencies and REO (lender Real Estate Owned).

Although the FHA hasn't released their March data online yet, housing economist Tom Lawler obtained a copy and sent me the data. He also sent me an estimate of the Private Label Securities (PLS) REO inventory (from Barclays Capital). We can now update the Q1 graph with the final FHA data.

The combined REO inventory for Fannie, Freddie and the FHA decreased to 287,380 at the end of Q1, from a record 295,307 units at the end of Q4. The REO inventory increased 37% compared to Q1 2010 (year-over-year comparison).

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

The REO inventory for the "Fs" increased sharply in 2010, but may have peaked in Q4 2010. The Fs acquired 101,997 REO units in Q1, but sold 110,023. Both are records, and the numbers will probably increase all year.

The second graph includes the data for the Fs and adds Private Label Securities (PLS).

Fannie Freddie FHA PLS REO InventoryThe PLS blew up first because it contained the worst of the worst loans; poorly underwritten subprime and Alt-A.

Also the PLS wasn't set up to effectively manage REO and they just dumped houses on the market. Usually house prices are sticky downwards - prices decline, but slowly. However this dump of REOs led to what Tom Lawler called "destickification" with house prices falling rapidly in many low end areas with high foreclosure rates.

Now about half of the REOs are owned by the Fs and they are little more careful in releasing REO to the market.

Note: We still need to add REO for bank and thrifts based on the FDIC Q1 QBP that will probably be released this week.

Earlier on delinquencies and REO:
Mortgage Delinquencies by Loan Type
The Foreclosure Pipeline
Delinquency Graphs