Real Estate Owned

9 Months Ended

Sep. 30, 2015

Real Estate [Abstract]

Real Estate Owned

Real Estate Owned

At September 30, 2015, the Company had 110 REO properties with an aggregate carrying value of $14.5 million. At December 31, 2014, the Company had 46 REO properties with an aggregate carrying value of $5.5 million. During the three and nine months ended September 30, 2015, the Company acquired 13 residential properties, for approximately $1.7 million, in connection with the acquisition of residential whole loans.

During the three and nine months ended September 30, 2015, the Company reclassified 39 and 87 mortgage loans to REO at an aggregate estimated fair value of $5.9 million and $12.9 million, respectively at the time of transfer. Such transfers occur when the Company takes possession of the property by foreclosing on the borrower or completes a “deed-in-lieu of foreclosure” transaction.

At September 30, 2015, $11.8 million of residential real estate property was held by the Company that was acquired either through a completed foreclosure proceeding or from completion of a deed-in-lieu of foreclosure or similar legal agreement. In addition, formal foreclosure proceedings were in process with respect to $14.1 million of residential whole loans at carrying value and $292.4 million of residential whole loans at fair value at September 30, 2015.

During the three and nine months ended September 30, 2015, the Company sold 17 and 36 REO properties for consideration of $1.7 million and $3.7 million, realizing net gains of approximately $129,000 and net losses of approximately $102,000, respectively, which are included in Other, net on the Company’s consolidated statements of operations. In addition, following an updated assessment of liquidation amounts expected to be realized that was performed on all REO held at the end of the third quarter of 2015, an adjustment of approximately $560,000 was recorded to reflect certain REO properties at the lower of cost or estimated fair value, bringing the total of such adjustments for the nine month period ended September 30, 2015 to $1.9 million.

The following table presents the activity in the Company’s REO for the three and nine months ended September 30, 2015. The Company did not have REO during the three and nine months ended September 30, 2014.

(In Thousands)	Three Months Ended   September 30, 2015			Nine Months Ended   September 30, 2015
Balance at beginning of period	$	8,857		$	5,492
Adjustments to record at lower of cost or fair value	(560		)	(1,939		)
Transfer from residential whole loans (1)	5,892			12,894
Purchases and capital improvements	2,052			2,052
Disposals	(1,716		)	(3,974		)
Balance at end of period	$	14,525		$	14,525

(1)  Includes net gain recorded on transfer of approximately $110,000 and $704,000, respectively, for the three and nine months ended September 30, 2015.

Real estate owned is included in Prepaid and other assets in the Company’s consolidated balance sheets.