In this article, we are going to look at the trend in Bank ORE (Other Real Estate Owned).  ORE is generally created when a Bank forecloses on a loan. These foreclosures can consist of single family homes, land, construction, multiple family homes and shopping centers among others.   The national trend (shown below) shows growth over the last five years, however, we may have begun a leveling off period as indicated by the last three quarters.  

ORE in Billions

Years	March	June	September	December
2007	5.19	5.62	6.77	8.34
2008	10.33	12.08	16.42	19.60
2009	21.97	25.49	29.10	34.12
2010	39.37	44.13	47.78	47.67
2011	47.96

  While the peak may be leveling off, the mix of foreclosed property and the sheer size is daunting.    

The total ORE has grown substantially over the years.  It is interesting that the mix of assets has changed over the years.  Note that in 2007 the “1-4 family residential” was almost half of the total (44% of total) but in 2011 “Construction and Land” is the largest (35.50% of total).   The amount and mix of ORE will have an impact for years to come.

 

ORE Mix (In Billions and as a Percentage of the Total)

	2007		2011
Loan Types	In Billions	% Mix	In Billions	% Mix
Const & Land	0.45	8.59	17.02	35.50
Farmland	0.07	1.28	0.42	0.87
1-4 Family Residential	2.29	44.08	11.47	23.91
Multi-Family	0.33	6.38	2.32	4.83
Non-Farm Non-Res	1.02	19.76	10.17	21.21
Foreclosed GNMA Loans	0.96	18.43	6.35	13.24
ORE in Foreign Offices	0.08	1.48	0.21	0.44
Total Other Real Estate Owned	5.19	100.00	47.96	100.00