Monday, May 10, 2010

Gov REO's up 22% in the first quarter

The combined REO (Real Estate Owned) inventory for Fannie, Freddie and the FHA increased by 22% in Q1 2010 from Q4 2009. The REO inventory (foreclosed homes) increased 59% compared to Q1 2009 (year-over-year comparison).

Even with all the delays in foreclosure, the REO inventory has increased sharply over the last three quarters, from 135,868 at the end of Q2 2009, to 153,007 in Q3 2009, 172,357 at the end of Q4 2009 and now 209,500 at the end of Q4 2010.

These are new records for all three agencies.................................

This does not count REO inventory from private lenders. I'm still not seeing much of an increase around here. The total inventory has been climbing slowly but it's sure not as high as I would have thought. Of course it does take a few weeks to a few months for the lenders to get those REO properties on the market. I was looking at one home that got foreclose on in early Feb and it just hit the market last week. That's nearly a 3 month gap from the foreclosure to the home hitting the market.

Now here's a bit from 60 minutes on mortgage walk aways.

Watch CBS News Videos Online

Watch CBS News Videos Online


Neudi said...

Queue Talking Heads! Theme song for those underwater!

Tyrone said...

Remember all the articles and videos on how safe and sound Fannie and Freddie were?


I vote 'no confidence'. More gold and silver.

Kris said...

Nice blogpost. Really looking forward for good result of Loan Modification. Thanks for sharing the video

Damian said...

Yep, a no confidence vote for me as well. best protein supplement

theyenguy said...

The Governeent REO Chart is helpful in that it helps one see the signficant rise.

As for REO inventory from private lenders, I wonder, is it mostly sub prime, as opposed to Option Arms? I think so. In other words, if one goes searching through Government REOs, it could be that one will find properties in low FICO neighborhoods, like Englewood Chicago, 60621. Neighborhoods that someone who is reading this blog probably would not like to live in.

I read the related article and fuond the quote: "Private label securities and banks and thrifts hold an even larger number of REOs" Well maybe not. Maybe the larger number is a past historical book or carrying value, and not a numeric value.

Dr. Housing Bubble writes in article Housing Never Really Improved, “In fact, if you look at the above chart it seems that if you leveraged yourself with multiple mortgages, banks might wait to move on you, while if you only had one mortgage backed by a GSE, you’re out.”

Partyboy comments: "That’s true. In my old hood, there were several people who were walking away as the homes hit 30, 40, even 50% underwater status. Those of us who had a single loan were out in about six to nine months (pretty fast given the norm at that time) but those who had multiple loans/refinances stayed without paying for up to two years. I didn’t understand why and didn’t care but I thought that was strange."

This means to me that the banks are letting squatters in high FECO neighborhoods squat, and not going REO, so that its relatively harder to find a bank REO in an upscale neighborhood. The banks under FASB 157 are not foreclosing as they want to preserve their balance sheet values.

But soon a black swan event is coming, when the stock and bond markets go down bad, and the Treasury Auctions fail, then there will be a liquidity evaporation, and mortgage lending will cease, and the squatters will be evicted. The mortgage investment age will end and the solyent green age will begin where people lease instead of buy properties. The age of entitlement -- the entitlement to squat and the entitlement to an interest deduction and the entitlement to a 96.5% LTV loan is just about over; the only thing one will be entitled to is harsh authoritarian rule!