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Navy Federal Credit Union • 2013 Financial Section
29
2013 ANNUAL REPORT
The following table provides a summary of the cash flows exchanged between Navy Federal and
transferees on all loans previously transferred with recourse during the years ended December 31, 2013
and 2012:
(dollars in thousands)  
Cash from sale of mortgage loans and
mortgage-backed securities $ 6,435,728 $ 5,167,415
Repurchase of previously transferred loans 13,697 19,106
Contractual servicing fees received 71,824 61,753
Total $  $
NOTE 9:
Navy Federal obtains real estate owned (REO) through foreclosure proceedings or when a delinquent
borrower chooses to transfer a mortgaged property in lieu of foreclosure. Navy Federal recognizes
foreclosure expenses as incurred.
REO is initially recorded at fair value less estimated costs to sell (e.g., brokers’ commissions, legal
expenses, title transfer fees, and closing costs) and classified as held-for-sale. Navy Federal utilizes Broker
Price Opinions (BPOs) to estimate the fair market value of REOs. A BPO considers the value of similar
surrounding properties, sales trends in the neighborhood, an estimate of any of the costs associated
with getting the property ready for sale, and/or the cost of any needed repairs. Navy Federal evaluates
reasonableness by obtaining multiple BPOs on REO properties. After acquisition, REO is carried at lower
of cost or fair value less costs to sell. Holding costs such as insurance, maintenance, taxes, and utility
costs are expensed as incurred. Holding gains and losses are included in Other non-interest expense in
the Consolidated Statements of Income.
The cumulative total balances of REO at December 31, 2013 and 2012 were as follows:
(dollars in thousands)  
Real estate owned (REO) $ 29,932 $ 32,187
Holding period losses (8,529) (16,943)
REO balance, end of period $  $