Over the past month, foreclosure-to-REO (F2R) transition rates rose significantly across sectors and vintages and in the negative amortization and Alt-B space, Barclays Capital analysts said. This is the second month it increased.

According to Barclays' figures, the higher F2R and lower liquidation rates resulted in a 4.6% month-over-month spike in REO inventory to 646,000, the largest rise since July 2008, and a clear reversal of the 16-month trend of declining REO stock.

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