Freddie and Fannie REO's on the rise (Except the Midwest!!)

GSE REO Portfolio Near 100,000

According to 10-Q filings with the Securities and Exchange Commission (SEC), Freddie Mac’s portfolio is nearly 35,000 properties, while Fannie Mae’s is closing in on double that figure at nearly 64,000. Fannie’s REO portfolio nearly doubled from the first half of 2008 compared to H109. Fannie held 33,729 properties during H108. The number of properties increased in all regions of the US except the "Midwest, which experienced a decrease from 15,265 to 14,626 properties", but the rate of growth in the two portfolios has declined. Freddie acknowledges it expects to experience further losses from REO properties: “While temporary suspensions of foreclosure transfers and recent loan modification efforts reduced the rate of growth in our charge-offs and REO acquisitions during the second quarter of 2009, our provision for credit losses includes expected losses on those foreclosures currently suspended,” the Freddie filing said. Freddie said its pool of Alt-A interest-only loans, as well as 2006 and 2007 vintage loans comprise the biggest share of its portfolio and “continue to be larger contributors to our worsening credit statistics than other, more traditional loan groups,” because of factors like declining home prices.

Freddie’s REO properties are concentrated in the West region of the country, and homes there comprised 27% of the unpaid principal balances of Freddie’s single-family mortgage portfolio as of June 30, 2009, but accounted for 46% of its REO acquisitions in the first half of 2009.