Another sign that the housing market slowed down during the fourth quarter: Fannie Mae, the nation’s largest mortgage guarantor, saw demand for foreclosed properties dip at the end of the year.
Fannie reported last week an $84 billion annual profit for 2013 on the backs of large home-price gains and a series of one-time legal and accounting benefits. But the report also showed that its inventory of foreclosed homes increased for the second straight quarter as it begins to take back more properties in Florida and other states where foreclosures have been tied up in courts.
And the report showed that the prices Fannie received on those properties, as a share of the underlying mortgage balances, declined slightly from the prior quarter for the first time in 2½ years.
Between higher prices and higher interest rates, “we've seen demand for [foreclosed] properties soften a bit,” said Timothy Mayopoulos, Fannie’s chief executive, in a conference call with reporters last week. “We’re not necessarily concerned about that, but the rate of increase [in home prices] has been slowing down.”
Foreclosed properties aren't rising in a significant way, and there are no real signs that a much vaunted “shadow” inventory of foreclosures is set to pour onto housing markets. Delinquencies continue to fall, suggesting that the increase in foreclosure stems from old loans that have been stuck in delinquent-loan purgatory for years. While some 9.3% of loans guaranteed by Fannie between 2005 and 2008 were at least 90 days past due at the end of last year, just 0.33% of loans made since 2009 are seriously delinquent.
Still, the report offers the latest clue that reduced affordability is leading housing markets to downshift from the sales frenzy of one year ago. Foreclosed properties have been bid up aggressively over the past two years by investors, including institutional buyers that have acquired tens of thousands of properties with the goal of converting them into rentals. “I think what you’re seeing is less interest on the part of institutional buyers,” said Mr. Mayopoulos. “Some of that demand has diminished.”
Fannie’s annual report showed that the geographic composition of its foreclosed-property inventory is also changing. Even though Florida accounts for just 6% of all loans guaranteed by Fannie, it accounted for 21% of homes acquired through foreclosure last year, up from 14% in 2012 and 7% in 2011. Its inventory of Florida homes grew 44% last year.
Meanwhile, California accounts for around one fifth of loans backed by Fannie, but it accounted for just 4% of foreclosures acquired by the company last year, down from 9% in 2012 and 14% in 2011. Its inventory of California homes fell 45%, and its inventory of Arizona homes fell 37%.
California and Arizona are among states with a so-called “nonjudicial” foreclosure process, in which banks take back properties through an administrative process and don’t have to go to court. For homes that completed foreclosure last year, loans in Arizona hadn't made any payments in 431 days, while loans in California hadn't made payments in 560 days.
Florida, meanwhile, has a judicial foreclosure process in which banks must go to court to take back properties. Lenders have struggled in many cases to properly document their ownership of those loans or to satisfy other state requirements, leading to lengthy delays. In Florida, loans that completed foreclosure last year hadn't made any payments for an average 1,226 days, according to Fannie. NTIMIRAOS
Another sign that the housing market slowed down during the fourth quarter: Fannie Mae, the nation’s largest mortgage guarantor, saw demand for foreclosed properties dip at the end of the year.
Fannie reported last week an $84 billion annual profit for 2013 on the backs of large home-price gains and a series of one-time legal and accounting benefits. But the report also showed that its inventory of foreclosed homes increased for the second straight quarter as it begins to take back more properties in Florida and other states where foreclosures have been tied up in courts.
And the report showed that the prices Fannie received on those properties, as a share of the underlying mortgage balances, declined slightly from the prior quarter for the first time in 2½ years.
Between higher prices and higher interest rates, “we've seen demand for [foreclosed] properties soften a bit,” said Timothy Mayopoulos, Fannie’s chief executive, in a conference call with reporters last week. “We’re not necessarily concerned about that, but the rate of increase [in home prices] has been slowing down.”
Foreclosed properties aren't rising in a significant way, and there are no real signs that a much vaunted “shadow” inventory of foreclosures is set to pour onto housing markets. Delinquencies continue to fall, suggesting that the increase in foreclosure stems from old loans that have been stuck in delinquent-loan purgatory for years. While some 9.3% of loans guaranteed by Fannie between 2005 and 2008 were at least 90 days past due at the end of last year, just 0.33% of loans made since 2009 are seriously delinquent.
Still, the report offers the latest clue that reduced affordability is leading housing markets to downshift from the sales frenzy of one year ago. Foreclosed properties have been bid up aggressively over the past two years by investors, including institutional buyers that have acquired tens of thousands of properties with the goal of converting them into rentals. “I think what you’re seeing is less interest on the part of institutional buyers,” said Mr. Mayopoulos. “Some of that demand has diminished.”
Fannie’s annual report showed that the geographic composition of its foreclosed-property inventory is also changing. Even though Florida accounts for just 6% of all loans guaranteed by Fannie, it accounted for 21% of homes acquired through foreclosure last year, up from 14% in 2012 and 7% in 2011. Its inventory of Florida homes grew 44% last year.
Meanwhile, California accounts for around one fifth of loans backed by Fannie, but it accounted for just 4% of foreclosures acquired by the company last year, down from 9% in 2012 and 14% in 2011. Its inventory of California homes fell 45%, and its inventory of Arizona homes fell 37%.
California and Arizona are among states with a so-called “nonjudicial” foreclosure process, in which banks take back properties through an administrative process and don’t have to go to court. For homes that completed foreclosure last year, loans in Arizona hadn't made any payments in 431 days, while loans in California hadn't made payments in 560 days.
Florida, meanwhile, has a judicial foreclosure process in which banks must go to court to take back properties. Lenders have struggled in many cases to properly document their ownership of those loans or to satisfy other state requirements, leading to lengthy delays. In Florida, loans that completed foreclosure last year hadn't made any payments for an average 1,226 days, according to Fannie. NTIMIRAOS