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Friday, February 21, 2014

Fannie Results, REO Inventory increases in Q4

by Calculated Risk on 2/21/2014 12:46:00 PM

From Fannie Mae: Fannie Mae Reports Comprehensive Income of $84.8 Billion for 2013 and $6.6 Billion for Fourth Quarter 2013

Fannie Mae reported annual net income for 2013 of $84.0 billion, which includes the release of the company’s valuation allowance against its deferred tax assets, and annual pre-tax income for 2013 of $38.6 billion.

Fannie Mae will pay Treasury $7.2 billion in dividends in March 2014. With the March dividend payment, Fannie Mae will have paid a total of $121.1 billion in dividends to Treasury in comparison to $116.1 billion in draw requests since 2008. Dividend payments do not offset prior Treasury draws.
...
While Fannie Mae expects to be profitable for the foreseeable future, the company does not expect to repeat its 2013 financial results, as those results were positively affected by the release of the company’s valuation allowance against its deferred tax assets, a significant increase in home prices during the year, and the large number of resolutions the company reached relating to representation and warranty matters and servicing matters.
emphasis added
Here are some summary stats on Fannie’s single family REO activity.

Fannie SF REO Activity
AcquisitionsDispositionsInventory
Q3/0940,959 31,299 72,275
Q4/0947,189 33,309 86,155
Q1/1061,92938,095 109,989
Q2/1068,83849,517 129,310
Q3/1085,34947,872 166,787
Q4/1045,96250,260 162,489
Q1/1153,54962,814 153,224
Q2/1153,69771,202 135,719
Q3/1145,19458,297 122,616
Q4/1147,25651,344 118,528
Q1/1247,70052,071 114,157
Q2/1243,78348,674 109,266
Q3/1241,88443,925 107,225
Q4/1241,11242,671 105,666
Q1/1338,71742,934 101,449
Q2/1336,10640,635 96,920
Q3/1337,35333,332 100,941
Q4/1332,20829,920 103,229

Fannie and Freddie REO Click on graph for larger image.

Here is a graph of Fannie REO. This was the second consecutive quarterly increase in REO.

Fannie’s SF REO inventory increased in Q4 mostly because of a decline in REO dispositions.  Fannie reported the decline in acquisitions was related to long time lines in certain states (judicial foreclosure process).  It is unclear why there was a sharp decline in dispositions over the last two quarters.