Lawler on Fannie and Freddie Results, REO Inventory Increases in Q3

From economist Tom Lawler:

Fannie Q3 Highlights: GAAP Net Income $8.7 Billion; Dividend Payment to Treasury in December $8.6 Billion, Bringing Cumulative Payments to $113.9 Billion; SF REO Inventory Up on Slower Dispositions Due to “Overall Market Conditions”


Fannie Mae reported that its GAAP net income in the quarter ended September 30, 2013 was $8.7 billion, and that its “GAAP” net worth at the end of September was $11.6 billion, which under the term of the “revised” senior preferred dividend agreement means that Fannie will make a $8.6 billion dividend payment to the Treasury in December. That payment will make cumulative dividend payments to the Treasury of bout $113.9 billion. The Treasury’s senior preferred stock amount will remain at $117.1 billion. Fannie’s cumulative cash Treasury draws totaled $116.1 billion.


On the SF REO front, here are some summary stats on Fannie’s activity.

Fannie SF REO Activity

 
Acquisitions
Dispositions
Inventory

Q3/09
40,959
31,299
72,275

Q4/09
47,189
33,309
86,155

Q1/10
61,929
38,095
109,989

Q2/10
68,838
49,517
129,310

Q3/10
85,349
47,872
166,787

Q4/10
45,962
50,260
162,489

Q1/11
53,549
62,814
153,224

Q2/11
53,697
71,202
135,719

Q3/11
45,194
58,297
122,616

Q4/11
47,256
51,344
118,528

Q1/12
47,700
52,071
114,157

Q2/12
43,783
48,674
109,266

Q3/12
41,884
43,925
107,225

Q4/12
41,112
42,671
105,666

Q1/13
38,717
42,934
101,449

Q2/13
36,106
40,635
96,920

Q3/13
37,353
33,332
100,941




Fannie’s SF REO inventory increased from the end of June to the end of September, mainly as a result of a “surprisingly” large slowdown in REO dispositions. Fannie attributed the sharp drop in the sale of REO properties to “overall market conditions.”


Fannie Mae also reported that its internal “national” home price index, which is a repeat-sales index that (1) includes both Fannie-Freddie acquisitions and available public deed data; (2) excludes foreclosure transactions; and (3) in housing-unit weighted, was up by 9.4% over the 12 months ending in September.

Fannie and Freddie REO Click on graph for larger image.


CR Note: Here is a graph of Fannie and Freddie REO. This was the first quarterly increase since 2010.


From Lawler: Freddie Q3 Highlights: GAAP Net Income $30.5 Billion, $23.9 Billion of Which Reflects Release of Valuation Allowance Against Net Deferred Tax Asset; Dividend Payment To Treasury in December $30.4 Billion


Freddie Mac reported that its GAAP net income in the quarter ended September 30, 2013 was $30.5 billion, $23.9 billion of which was related to a release of the company’s valuation allowing against its net deferred tax asset. This release, in turn, reflected the company’s massively improved earnings outlook. Freddie’s GAAP net worth at the end of September was $33.4 billion, which under the term of the “revised” senior preferred dividend agreement means that Freddie will make a $30.4 billion dividend payment to the Treasury in December. That payment will make cumulative dividend payments to the Treasury of about $71.345 billion, versus cumulative previous cash draws from Treasury of $71.336 billion. The Treasury’s senior preferred stock amount will remain at $72.3 billion.


On the SF REO front, here are some summary stats on Freddie’s activity.

Freddie SF REO Activity

 
Acquisitions
Dispositions
Inventory

Q3/09
24,373
17,939
41,133

Q4/09
24,749
20,835
45,047

Q1/10
29,412
20,628
53,831

Q2/10
34,662
26,315
62,178

Q3/10
39,053
26,334
74,897

Q4/10
23,771
26,589
72,079

Q1/11
24,707
31,627
65,159

Q2/11
24,788
29,348
60,599

Q3/11
24,378
25,381
59,596

Q4/11
24,758
23,819
60,535

Q1/12
23,805
25,033
59,307

Q2/12
20,033
26,069
53,271

Q3/12
20,302
22,660
50,913

Q4/12
18,672
20,514
49,071

Q1/13
17,881
18,984
47,968

Q2/13
16,418
19,763
44,623

Q3/13
19,441
16,945
47,119




Freddie’s SF REO inventory increased last quarter, “as foreclosure activity increased in judicial foreclosure states and disposition activity moderated.”


Freddie also showed that its “national” home-price index, a repeat-transactions index that (1) uses only Fannie/Freddie transactions; (2) uses repeat purchase transactions and some refinance transactions; and (3) is value weighted with state weights based on the share of Freddie’s SF mortgage portfolio, increased by 10.8% over the 12 months ending in September.

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