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REAL ESTATE OWNED, NET
 9 Months Ended
Sep. 30, 2018
Real Estate [Abstract]  
REAL ESTATE OWNED, NET
REAL ESTATE OWNED, NET

The following table presents the changes in REO for the three and nine months ended September 30, 2018 and 2017 (in thousands):
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2018
 
2017
 
2018
 
2017
Balance, beginning of the period
$
473

 
$
2,427

 
$
360

 
$
11,081

Additions from loan foreclosures
—

 
—

 
502

 
46

Additions from capitalized costs
—

 
—

 
—

 
54

Proceeds from dispositions of REO
(90
)
 
(961
)
 
(385
)
 
(11,382
)
Gain on sale of REO
8

 
30

 
74

 
1,953

Valuation adjustments in the period
(27
)
 
—

 
(187
)
 
(256
)
Balance, end of the period
$
364

 
$
1,496

 
$
364

 
$
1,496



REO properties are recorded at the estimated fair value of the property, less expected selling costs, establishing a new cost basis.  Subsequently, REO properties are carried at the lower of the new cost basis or updated fair market values, based on updated appraisals of the underlying properties, as received.  Valuation allowances on the carrying value of REO may be recognized based on updated appraisals or on management’s authorization to reduce the selling price of a property. At September 30, 2018 and December 31, 2017, the Company had $46,000 and $0, respectively, of foreclosed one- to four-family residential real estate properties held as REO. The recorded investment in one- to four-family residential loans in the process of foreclosure was $901,000 at September 30, 2018 compared with $2.0 million at December 31, 2017.