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Fannie and Freddie Results in Q1: REO inventory declines, “Lower demand for foreclosed properties”


From Fannie Mae:

• Fannie Mae reported net income of .3 billion, the company’s ninth consecutive quarterly profit, and comprehensive income of .7 billion for the first quarter of 2014.
• Fannie Mae’s financial results for the first quarter of 2014 included .1 billion in revenue from legal settlements relating to private-label securities lawsuits.
• Fannie Mae expects to pay Treasury .7 billion in dividends in June 2014. With the expected June dividend payment, Fannie Mae will have paid a total of 6.8 billion in dividends to Treasury in comparison to 6.1 billion in draw requests since 2008. Dividend payments do not offset prior Treasury draws.

The continued decrease in the number of our seriously delinquent single-family loans, as well as the slower pace of completed foreclosures we are experiencing due to lengthy foreclosure timelines in a number of states, have resulted in a reduction in the number of REO acquisitions, while the lower demand for foreclosed properties has resulted in fewer REO dispositions in the first quarter of 2014 as compared with the first quarter of 2013.
emphasis added

From Freddie Mac:

• First quarter 2014 net income was .0 billion – the company’s tenth consecutive quarter of positive earnings, compared to .6 billion in the fourth quarter of 2013
• First quarter 2014 comprehensive income was .5 billion, compared to .8 billion in the fourth quarter of 2013

• Recent level of earnings is not sustainable over the long term, and earnings may be volatile from period to period
Treasury Draws and Dividend Payments at March 31, 2014
• Based on March 31, 2014 net worth of .9 billion, the company’s June 2014 dividend obligation will be .5 billion, bringing total cash dividends paid to Treasury to .3 billion
• Senior preferred stock held by Treasury remains .3 billion, as dividend payments do not reduce prior Treasury draws

In 1Q14, REO inventory declined primarily due to lower single-family foreclosure activity as a result of Freddie Mac’s loss mitigation efforts and a declining amount of delinquent loans.

Fannie and Freddie REO Click on graph for larger image.

Here is a graph of Fannie and Freddie REO.

REO inventory decreased in Q1 for both Fannie and Freddie.

Delinquencies are falling, but there are still a large number of properties in the foreclosure process with long time lines in judicial foreclosure states.

Fannie noted there was less demand for foreclosed properties.
Calculated Risk

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