Fannie, Freddie pick up short-sale pace

REO inventory nears 200,000

By Inman News, Monday, August 9, 2010.

Inman News



Fannie Mae and Freddie Mac were more willing to sign off on short sales during the second quarter but continued to repossess homes faster than they could sell them, according to the companies' latest regulatory filings.



Fannie and Freddie finished the second quarter with a combined inventory of bank-owned (REO) homes of 191,500 properties, with both companies posting double-digit growth.



Fannie Mae, which reported a $1.2 billion net loss for the second quarter, said REO inventory was up nearly 18 percent compared to the first quarter of 2009, rising to 129,310 homes as of June 30.



The increase in REO inventory would have been steeper without the 21,515 short sales and deeds-in-lieu of foreclosure completed during the second quarter, a 24 percent increase from the first quarter of 2009.



But Fannie Mae said the percentage of REO inventory that it could actually put on the market declined from a year ago, in most cases because homes are still within legal redemption periods, are still occupied, or are being repaired.



Freddie Mac, in reporting a $4.7 billion second-quarter net loss, said its REO inventory hit 62,190 properties at the end of June, up 79 percent from a year ago.



Freddie Mac reported signing off on 12,498 short sales during the quarter, a 30 percent increase from the previous quarter and four times as many short sales as the 3,093 approved during the first quarter of 2009.



The mortgage guarantor still acquired more properties during the second quarter (34,667) than its servicers disposed of (26,316), with the number of properties acquired rising 18 percent from the previous quarter and 58 percent from a year ago.

http://www.eugenemills.com/ - Eugene.Mills@CENTURY21.com

Eugene Mills

July's Lehigh Valley Real Estate Market Update reports sales down by 48% (yikes!), with the average sale price down 1.4%. For all the latest details, check out the FREE REPORT at http://www.EugeneMills.com/listings.html

Eugene Mills CENTURY 21 Pinnacle

Credit Suisse shows us 27 billion in high risk loans are resetting in June 2011. Think about that number - that's in (only) 1 month next year. Option ARMS are the majority of that 27, at 18 billion resetting in June 2011. These are the "smart pay" / "pick a pay" loans that had us scratching our heads at the settlement table wondering why anyone thought this was a good idea. The answer was simple... Values would continue to increase, so it makes sense to take a ridiculously low minimum monthly payment now. Worst case scenario is you have to sell in a few years before the balloon is due and you'll pocket a nice chunk of change for your efforts. Understandable, savvy, and responsible, right?




We know what happened though. It went the other way. Values are down, so in most cases, refinancing is out. If a mortgage payment or two are a little late, the damage to a homeowner's credit score also negates refinancing as an option.



Loan modification is the next logical step. After all, the Government is offering all types of programs right now to help homeowners, like "HAFA" (Home Affordable Foreclosure Alternatives), and HR 3648, the "Mortgage Forgiveness Debt Relief Act of 2007". A statistic homeowners should know is that about 1 in 10 homeowners will fit into the perfect loan modification model that the banks are currently approving. Out of that 1 in 10? 55% will be back in default within 6 months.



A point I'd like to stress to any homeowner experiencing financial hardship is that there is help available, for free. CENTURY 21 Pinnacle helps homeowners understand thier rights and options, for free. We never charge a homeowner any fee for this service.

Eugene Mills

Struggling with an unaffordable mortgage?  I can help you right now, for FREE.  Learn your rights and options - E-mail me at Eugene.Mills@CENTURY21.com  Has Lehigh Valley Real Estate STABILIZED? All the details at http://www.EugeneMills.com/listings.html - Click FREE REPORT