Analysts at Keefe, Bruyette & Woods noted in a recent report they expect both Fannie Mae and Freddie Mac to sell their real estate-owned properties more meaningfully if the GSEs can do so at levels that are in line with current carrying values on the companies balance sheets. At the end of the third quarter, Fannie held approximately 107,000 REO properties, worth an estimated $16.1 billion, assuming a purchase price of $150,000 per property. Freddie held some 51,000 REOs, equivalent to $7.6 billion assuming the same purchase price. KBW observed that there is room for improvement in how Fannie and Freddie move their REOs. We believe that the GSEs will be unwilling for political reasons to take meaningful upfront losses to sell REO properties, even if it makes longer-term sense from an economic perspective, said KBW.