Freddie Mac 2009 Annual Report Download - page 169

The success of modifications under HAMP is uncertain and dependent on many factors, including borrower awareness
of the program, the ability to obtain income documentation from borrowers, resources of our servicers to execute the
process, and the employment status and financial condition of the borrower. Borrowers who have insufficient income, do not
complete the documentation requirements or have vacated the property will not be able to cure their delinquency through
HAMP.
In order to allow our mortgage servicers time to implement our more recent modification programs and provide
additional relief to troubled borrowers, we temporarily suspended all foreclosure transfers of occupied homes from
November 26, 2008 through January 31, 2009 and from February 14, 2009 through March 6, 2009. We also temporarily
suspended the eviction process for occupants of foreclosed homes from November 26, 2008 through April 1, 2009.
Beginning March 7, 2009, we began suspension of foreclosure transfers of owner-occupied homes where the borrower may
be eligible to receive a loan modification under the MHA Program. The MHA Program further restricts foreclosure while the
borrower is being evaluated for HAMP and during the borrower’s trial period. We also suspended evictions between
December 19, 2009 and January 3, 2010. We continued to pursue loss mitigation options with delinquent borrowers during
these temporary suspension periods; however, we also continued to proceed with the initiation and other, pre-closing steps in
the foreclosure process.
We require multifamily seller/servicers to manage mortgage loans they have sold to us in order to mitigate potential
losses. For loans over $1 million, servicers must generally submit an annual assessment of the mortgaged property to us
based on the servicer’s analysis of financial and other information about the property. If a borrower is in distress, we may
offer a foreclosure alternative to the borrower. For example, we may modify the terms of a multifamily mortgage loan,
which gives the borrower an opportunity to bring the loan current and retain ownership of the property. Because the
activities of multifamily seller/servicers are an important part of our loss mitigation process, we rate their performance
regularly and may conduct on-site reviews of their servicing operations to confirm compliance with our standards.
Other Developments
Various state and local governments have been taking actions that could delay or otherwise change their foreclosure
processes. These actions could increase our expenses, including by potentially delaying the final resolution of delinquent
mortgage loans and the disposition of non-performing assets.
Credit Performance
Delinquencies
We report single-family delinquency rate information based on the number of loans that are 90 days or more past due
and those in the process of foreclosure. For multifamily loans, we report delinquency rates based on net carrying values of
mortgage loans 90 days or more past due and those in the process of foreclosure. Mortgage loans whose contractual terms
have been modified under agreement with the borrower are not counted as delinquent for purposes of reporting delinquency
rates if the borrower is less than 90 days delinquent under the modified terms.
Our single-family and multifamily delinquency rate includes all single-family and multifamily loans that we own and
those that are collateral for our PCs and Structured Securities, except as follows:
• We exclude that portion of our Structured Securities backed by Ginnie Mae Certificates and HFA bonds because these
securities do not expose us to meaningful amounts of credit risk due to the guarantee or credit enhancements provided
on these securities by the U.S. government.
• We exclude Structured Transactions, except as indicated, because these are backed by non-Freddie Mac securities and,
consequently, we do not service the underlying loans and therefore lack the data necessary to closely track
delinquency associated with loan characteristics. Many of our Structured Transactions are credit enhanced through
subordination and are not representative of the loans for which we have primary, or first loss, exposure. Structured
Transactions represented approximately 1% of our total mortgage portfolio at both December 31, 2009 and
December 31, 2008.
See “NOTE 7: MORTGAGE LOANS AND LOAN LOSS RESERVES — Table 7.6 — Delinquency Performance” to
our consolidated financial statements for the delinquency performance of our single-family and multifamily mortgage
portfolios, including Structured Transactions.
Temporary actions to suspend foreclosure transfers of occupied homes as well as the longer foreclosure process
timeframes of certain states (including Florida) caused our delinquency rates to increase more rapidly in 2009 than they
would have otherwise, as loans that would have been foreclosed have instead remained in delinquent status. In general,
suspension or delays of foreclosure transfers and any imposed delays in the foreclosure process by regulatory or
governmental agencies will cause our delinquency rates to rise. Our single-family delinquency rates are also adversely
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