Fannie Mae 2007 Annual Report Download - page 157

Table 45: Single-Family and Multifamily Foreclosed Properties
2007 2006 2005
For the Year Ended December 31,
Single-family foreclosed properties (number of properties):
Beginning of year inventory of single-family foreclosed properties (REO)
(1)
. . . . . . . 25,125 20,943 18,361
Acquisitions by geographic area:
(2)
Midwest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,303 16,128 11,777
Northeast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,811 2,638 2,405
Southeast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,352 9,280 9,470
Southwest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,942 7,958 8,099
West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,713 576 809
Total properties acquired through foreclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . 49,121 36,580 32,560
Dispositions of REO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (40,517) (32,398) (29,978)
End of year inventory of single-family foreclosed properties (REO)
(1)
. . . . . . . . . . . 33,729 25,125 20,943
Carrying value of single-family foreclosed properties (dollars in millions)
(3)
. . . . . . . $ 3,440 $ 1,999 $ 1,642
Single-family foreclosure rate
(4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3% 0.2% 0.2%
Multifamily foreclosed properties (number of properties):
Ending inventory of multifamily foreclosed properties (REO) . . . . . . . . . . . . . . . . . 9 8 8
Carrying value of multifamily foreclosed properties (dollars in millions)
(3)
........ $ 43 $ 49 $ 51
(1)
Includes deeds in lieu of foreclosure.
(2)
See footnote 8 to Table 41 for states included in each geographic region.
(3)
Excludes foreclosed property claims receivables, which are reported in our consolidated balance sheets as a component
of “Acquired property, net.”
(4)
Estimated based on the total number of properties acquired through foreclosure as a percentage of the total number of
loans in our conventional single-family mortgage credit book of business as of the end of each respective year.
The number of single-family properties acquired through foreclosure rose by 34% in 2007, compared with
12% in 2006. The increase in foreclosures in 2007 and 2006 was driven by the housing market downturn and
the continued impact of weak economic conditions in the Midwest, particularly Ohio, Indiana and Michigan.
The Midwest accounted for approximately 20% of the loans in our conventional single-family mortgage credit
book of business during the three-year period ended December 31, 2007; however, this region accounted for
approximately 41%, 44% and 36% of the single-family properties acquired through foreclosure in 2007, 2006
and 2005, respectively. During 2007, we also experienced a significant increase in the number of properties
acquired through foreclosure in California, Florida, Nevada and Arizona, which are states that previously
experienced rapid increases in home prices and are now experiencing sharp declines in home prices. Given the
sharp rise in serious delinquency rates in these states, which is a leading indicator of potential future
foreclosures, we expect continued increases in foreclosures in these states in 2008.
The continued weakness in regional economic conditions in the Midwest and the continued housing market
downturn and decline in home prices on a national basis have resulted in a higher percentage of our mortgage
loans that transition from delinquent to foreclosure status, as well as a faster transition from delinquent to
foreclosure status, particularly for loans originated in 2006 and 2007. In addition, the combined effect of the
disruption in the subprime market, the decline in home prices and near record levels of unsold properties have
slowed the sale of, and reduced the sales prices of, our foreclosed single-family properties. We expect the
level of foreclosures, as well as the average length of time required to dispose of these properties, to increase
further in 2008 as compared with 2007.
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