Fannie Mae 2014 Annual Report Download - page 136

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Table 43: Single-Family Foreclosed Properties
For the Year Ended December 31,
2014 2013 2012
Single-family foreclosed properties (number of properties):
Beginning of period inventory of single-family foreclosed properties (REO)(1) .103,229 105,666 118,528
Acquisitions by geographic area:(2)
Midwest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,013 39,113 50,583
Northeast. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,337 13,235 12,008
Southeast. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,647 57,090 58,411
Southwest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,437 18,923 28,541
West. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,203 16,023 24,936
Total properties acquired through foreclosure(1) . . . . . . . . . . . . . . . . . . . . . . . . 116,637 144,384 174,479
Dispositions of REO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (132,803)(146,821)(187,341)
End of period inventory of single-family foreclosed properties (REO)(1) . . . . . . . 87,063 103,229 105,666
Carrying value of single-family foreclosed properties (dollars in millions). . . . . . $ 9,745 $ 10,334 $ 9,505
Single-family foreclosure rate(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.67 %0.82 %0.99 %
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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 10 to “Table 36: Risk Characteristics of Single-Family Conventional Business Volume and Guaranty Book of Business”
for states included in each geographic region.
(3) 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 lengthy foreclosure
timelines in a number of states, have resulted in a reduction in the number of REO acquisitions and fewer dispositions in
2014 compared with 2013 and 2012.
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. Additionally, before we market our foreclosed properties, we may choose to
repair them in order to maximize the sales price and increase the likelihood that an owner occupant will purchase. The
percentage of properties we repair prior to marketing has increased as a result of market demand and our continued focus on
stabilizing neighborhoods and increasing opportunities for owner occupants to purchase. We repaired approximately 67,000
properties from our single-family REO inventory at an average cost of approximately $7,900 per property during 2014 and
repaired approximately 66,000 properties at an average cost of approximately $6,700 per property during 2013 compared
with repairs of approximately 84,000 properties at an average cost of approximately $6,100 per property during 2012.
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,
some nonprofit organizations and public entities may submit offers and purchase properties without competition from
investors. Approximately 75,000 of the 133,000 single-family properties we sold in 2014 were purchased by owner
occupants, nonprofit organizations or public entities.
We currently lease properties to tenants who occupied the properties before we acquired them into our REO inventory and to
eligible borrowers who executed a deed-in-lieu of foreclosure, which can minimize disruption by providing additional time to
find alternate housing, help stabilize local communities, provide us with rental income, and support our compliance with
federal and state laws protecting tenants in foreclosed properties. As of December 31, 2014, over 1,300 tenants leased our
REO properties.
We continue to manage our REO inventory to minimize costs and maximize sales proceeds. However, we are unable to
market and sell a large portion of our inventory, primarily due to occupancy and state or local redemption or confirmation
periods, which extends the amount of time it takes to bring our properties to a marketable state and eventually dispose of
them. This results in higher foreclosed property expenses, which include costs related to maintaining the property and
ensuring that the property is vacant.