Real Estate Owned

6 Months Ended

Jun. 30, 2016

Real Estate [Abstract]

Real Estate Owned

Real Estate Owned

At June 30, 2016, the Company had 328 REO properties with an aggregate carrying value of $56.8 million. At December 31, 2015, the Company had 182 REO properties with an aggregate carrying value of $28.0 million.

During the three and six months ended June 30, 2016, the Company reclassified 128 and 266 mortgage loans to REO at an aggregate estimated fair value less estimated selling costs of $22.7 million and $45.0 million, respectively, at the time of transfer. During the three and six months ended June 30, 2015, the Company reclassified 23 and 48 mortgage loans to REO at an aggregate estimated fair value less estimated selling costs of $3.6 million and $7.0 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 June 30, 2016, $54.7 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 $23.9 million of residential whole loans at carrying value and $456.6 million of residential whole loans at fair value at June 30, 2016.

During the three and six months ended June 30, 2016, the Company sold 72 and 122 REO properties for consideration of $10.0 million and $16.2 million, realizing net gains of approximately $598,000 and $1.1 million, respectively. During the three and six months ended June 30, 2015, the Company sold 14 and 19 REO properties for consideration of $1.4 million and $2.0 million, realizing net losses of approximately $204,000 and $231,000, respectively. These amounts 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 second quarters of 2016 and 2015, a downward adjustment of approximately $1.2 million and $1.4 million was recorded to reflect certain REO properties at the lower of cost or estimated fair value as of June 30, 2016 and June 30, 2015, respectively.

The following table presents the activity in the Company’s REO for the three and six months ended June 30, 2016 and 2015:

(In Thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Balance at beginning of period	$	43,291		$	8,333		$	28,026		$	5,492
Adjustments to record at lower of cost or fair value	(1,219		)	(1,379		)	(2,996		)	(1,379		)
Transfer from residential whole loans (1)	22,711			3,554			44,991			7,002
Purchases and capital improvements	1,379			—			1,789			—
Disposals	(9,378		)	(1,651		)	(15,026		)	(2,258		)
Balance at end of period	$	56,784		$	8,857		$	56,784		$	8,857

(1)  Includes net gain recorded on transfer of approximately $1.3 million and $309,000, respectively, for the three months ended June 30, 2016 and 2015, respectively, and approximately $1.7 million and $594,000 for the six months ended June 30, 2016 and 2015, respectively.

Real estate owned is included in Other assets in the Company’s consolidated balance sheets.