With insights from Wes Iseley, Senior Managing Director at Carrington

While foreclosure filings are ticking up and speculation around a return to REO is gaining steam, Wes Iseley, Senior Managing Director at Carrington Holding Company, believes the data tells a very different story.

Carrington is among the top five servicers of government-backed mortgages in the U.S., with a significant portfolio of FHA, VA, and USDA loans. That gives Iseley a clear window into how the system actually functions—and why the market today looks nothing like it did in 2008.

Today’s Mortgage Market: Government-Backed and Controlled

In 2008, private-label and subprime loans made up 25% of the market—fueling the flood of REO properties. Today, that figure is just 1–2%. The rest—over 90%—are backed by Fannie Mae, Freddie Mac, or Ginnie Mae.

That means nearly all foreclosure activity is governed by strict servicing handbooks. Servicers don’t control how loans are handled—they follow government protocols.

Why Most Delinquencies Don’t Go REO

Rather than ending up in REO, most delinquent government loans go through CWCOT (Claims Without Conveyance of Title) or similar auction-based channels. These strategies are designed to move assets quickly while minimizing inventory.

Even among loans that go into foreclosure, only about 10–15% reach the final stage. The majority are resolved through:

• Streamlined loan modifications with minimal documentation
  
  
• Significant homeowner equity, enabling fast sales
  
  
• Assumable FHA/VA loans with 2–4% rates, often passed to family or buyers
  
  

What It Means for REO Professionals Moving Forward

According to Iseley, a large-scale REO surge isn’t likely—unless home values drop sharply and equity evaporates, which is “still years away, if it happens at all.”

• Don’t wait on a wave—focus on the niche opportunities that do exist (CWCOT, short sales, assumable loans), but remain ready for REOs as they do hit
  
  
• Understand the rules of the government-backed servicing playbook—that’s where 90% of the market operates
  
  
• Get closer to the servicers and investors working in government-backed portfolios—they’ll drive the next cycle of opportunity

REOX will continue surfacing insights like these—from inside the institutions shaping the market—for members looking to stay informed, agile, and ready for whatever comes next. 

For now, the takeaway is clear: Understanding how the system really works may be your sharpest edge.

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