FHA REO inventory is down ... but stay tuned

Source: Calculated Risk

FHA released the December Report to the FHA commissioner, and according to the report FHA’s SF REO inventory plunged to 32,170 at the end of December – the lowest REO property count since December 2007, and 47% lower than at the end of December 2010. Here is a table derived from the latest and past reports. I don’t rightly know what the “adjustments” category is, save that it is needed to make the report “stock/flow” consistent.

The level of property conveyances is astonishingly low, especially given the rising level of seriously delinquent FHA-insured SF loans (711,082 at the end of December, up from 598,140 at the end of December 2010).

The report also showed a continuation of the recent downward trend in FHA loan modification activity.

It is not clear why both property conveyances AND loss mitigation activity slowed so dramatically in the latter part of last year, but the sharp slowdown in problem loan “resolutions” contributed to the significant rise in the number of seriously delinquent FHA-insured SF loans in the second half of last year.

There has been a sharp decline in REO inventory over the last year and FHA REO is at the lowest level since 2007.

Fannie and Freddie should report Q4 REO next week, and will probably report further declines in REO too.

URL to original article: http://www.builderonline.com/builder-pulse/fha-reo-inventory-is-down-----but-stay-tuned.aspx?cid=BP:021512:JUMP

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