REO Inventories Still Rising at GSEs

Fannie Mae's and Freddie Mac's acquisition of foreclosed properties jumped 25% in the third quarter to a 9,167 monthly rate and the GSEs' inventory of real estate owned also jumped by 25%, according to their regulator, the Federal Housing Finance Agency. The mortgage giants held 95,550 REO properties as of Sept. 30, compared to 76,150 at the end of the second quarter. The latest data also show that the government-sponsored enterprises started 47,100 foreclosures in October, up from 41,000 in September and completed 17,000 foreclosure sales, up from 15,600 in September. Meanwhile, the Fannie and Freddie delinquency rates also continue to rise. But FHFA says loan modifications are increasing. "Loan modifications completed increased to 5,639 for October from a monthly average of 4,475 for the third quarter - an increase of 26%," the regulator says in a report to Congress. The two companies own or guarantee 30.6 million mortgages. In an attached letter, FHFA director James Lockhart said he met with the some of the largest trustees and servicers of private-label Alt-A and subprime mortgage securities on Dec. 23. "As a result of the discussion, the group agreed to work on a set of best practices and alternatives to eliminate as many of the barriers to modifying loans as possible and to encourage public and private participants to work together to eliminate obstacles," Mr. Lockhart says in the Jan. 16 letter.