Fannie Mae 2013 Annual Report Download - page 140

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modification performance was greater for our HAMP modifications than for our non-HAMP modifications, we began in
September 2010 to include trial periods for our non-HAMP modifications.
There is significant uncertainty regarding the ultimate long term success of our current modification efforts. We believe the
performance of our workouts will be highly dependent on economic factors, such as unemployment rates, household wealth
and income and home prices. Modifications, even those with reduced monthly payments, may also not be sufficient to help
borrowers with second liens and other significant non-mortgage debt obligations. FHFA, other agencies of the U.S.
government or Congress may ask us to undertake new initiatives to support the housing and mortgage markets should our
current modification efforts ultimately not perform in a manner that results in the stabilization of these markets. See “Risk
Factors” for a discussion of efforts we may be required or asked to undertake and their potential effect on us.
REO Management
Foreclosure and REO activity affect the amount of credit losses we realize in a given period. Table 48 displays our
foreclosure activity, by region, for the periods indicated. Regional REO acquisition and charge-off trends generally follow a
pattern that is similar to, but lags, that of regional delinquency trends.
Table 48: Single-Family Foreclosed Properties
For the Year Ended December 31,
2013 2012 2011
Single-family foreclosed properties (number of properties):
Beginning of period inventory of single-family foreclosed properties (REO)(1) . . 105,666 118,528 162,489
Acquisitions by geographic area:(2)
Midwest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,113 50,583 45,167
Northeast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,235 12,008 9,858
Southeast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,090 58,411 51,153
Southwest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,923 28,541 44,675
West. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,023 24,936 48,843
Total properties acquired through foreclosure(1) . . . . . . . . . . . . . . . . . . . . . . . . . 144,384 174,479 199,696
Dispositions of REO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (146,821)(187,341)(243,657)
End of period inventory of single-family foreclosed properties (REO)(1). . . . . . . . . 103,229 105,666 118,528
Carrying value of single-family foreclosed properties (dollars in millions)(3) . . . . . $ 10,334 $ 9,505 $ 9,692
Single-family foreclosure rate(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.82 %0.99 %1.13 %
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(1) Includes acquisitions through deeds-in-lieu of foreclosure. Also includes held for use properties, which are reported in our consolidated
balance sheets as a component of “Other assets.”
(2) See footnote 9 to “Table 39: Risk Characteristics of Single-Family Conventional Business Volume and Guaranty Book of Business” 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 or deeds-in-lieu of foreclosure as a percentage of the
total number of loans in our single-family guaranty book of business as of the end of each respective period.
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 in 2013 compared with 2012 and 2011.
Neighborhood stabilization is a core principle in our approach to managing our REO inventory. As a result, we seek to keep
properties in good condition and, where appropriate, repair them to make them more marketable. Our goal is to obtain the
highest price possible for the properties we sell. We repaired approximately 66,000 properties from our single-family REO
inventory at an average cost of approximately $6,700 per property during 2013 and repaired approximately 84,000 properties
at an average cost of approximately $6,100 per property during 2012 compared with repairs of approximately 90,000
properties at an average cost of approximately $6,200 per property during 2011.
Repairing REO properties increases sales to owner occupants and increases financing options for REO buyers. In addition,
we encourage homeownership through our First Look™ marketing period. During this First Look period, owner occupants,