REAL ESTATE OWNED, NET

3 Months Ended

Mar. 31, 2020

The following table presents the changes in REO for the three months ended March 31, 2020 and 2019 (in thousands):



	Three Months Ended March 31,
	2020		2019
Balance, beginning of the period	$	814	$	2,611
Additions from loan foreclosures	1,588		—
Balance, end of the period	$	2,402	$	2,611

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. The Company had $727,000 of foreclosed one- to four-family residential real estate properties held as REO at March 31, 2020 and $48,000 at December 31, 2019. The recorded investment in one- to four-family residential loans in the process of foreclosure was $313,000 at March 31, 2020 compared with $1.5 million at December 31, 2019.