Year-end inventory of foreclosed residences held by FNMA (Fannie Mae) dropped for the first time in since the great housing recession of the 21st century. In 2011, REO inventory dropped 27% to approximately 118,500. Given that 23% of the REO inventory held by Fannie Mae is located in California, followed by Florida at 11.5%, this is definitely a good sign, provided new foreclosure filings and repossessions don't ramp back up the REO inventory levels.
Also of note, Fannie Mae SOLD more REOs than it took in. More specifically, the report indicated that in 2011, Fannie Mae acquired nearly 200,000 properties but it sold more than 243,000.
An important caveat, is that total repossessions (aka foreclosures) of REOs declined nearly 24%, but that was due mostly to the slowdown caused by servicers correcting affidavit and other documentation problems. What was lacking from their report was any forecast of the potential uptick in foreclosure and foreclosure filing activity as the Robo-signing induced slowdown fades.
Sales of REOs by Fannie Mae indicated that on average, properties sold for slightly more than half of the unpaid principal balance. In 2011, REO net sales price equaled roughly 55% of the UPB on the loan, down from 57% the year before. In 2006, it was 83%.
Michael Hobbs, PahRoo Appraisal & Consultancy
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