Freddie Mac 2009 Annual Report Download - page 259

Table 7.1 — Mortgage Loans
2009 2008
December 31,
(in millions)
Single-family
(1)
:
Conventional
Fixed-rate ......................................................................... $ 49,458 $ 35,070
Adjustable-rate . ..................................................................... 2,310 2,136
Total conventional . . . ............................................................... 51,768 37,206
FHA/VA — Fixed-rate . . . ............................................................... 1,588 548
U.S. Department of Agriculture Rural Development and other federally guaranteed loans . . . .................. 1,522 1,001
Total single-family ..................................................................... 54,878 38,755
Multifamily
(1)
:
Conventional
Fixed-rate ......................................................................... 71,936 65,319
Adjustable-rate . ..................................................................... 11,999 7,399
Total conventional . . . ............................................................... 83,935 72,718
U.S. Department of Agriculture Rural Development . . . ........................................... 3 3
Total multifamily . ..................................................................... 83,938 72,721
Total unpaid principal balance of mortgage loans .................................................. 138,816 111,476
Deferred fees, unamortized premiums, discounts and other cost basis adjustments . . ........................ (9,317) (3,178)
Lower of cost or fair value adjustments on loans held-for-sale . . ..................................... (188) (17)
Allowance for loan losses on mortgage loans held-for-investment ..................................... (1,441) (690)
Total mortgage loans, net of allowance for loan losses . . . ........................................... $127,870 $107,591
(1) Based on unpaid principal balances and excludes mortgage loans traded, but not yet settled.
During the years ended December 31, 2009 and 2008, we redesignated, or transferred loans of approximately
$10.6 billion and $— billion in unpaid principal balance from held-for-sale mortgage loans to the held-for-investment
category. The majority of these loans were originally purchased with the expectation of subsequent securitization as a PC;
however, we now expect to hold these on our consolidated balance sheets. We transferred loans of $0.9 billion in unpaid
principal balance from held-for-investment mortgage loans to the held-for-sale category during the year ended December 31,
2009. For loans designated as held-for-sale, we evaluate the lower of cost or fair value for such loans each period by
aggregating loans based on the mortgage product type. However, the evaluation of the lower of cost or fair value is
performed at the date of transfer for each individual loan in the event of redesignation to held-for-investment. We recognized
lower of cost or fair value adjustments at the time of transfer of $438 million during the year ended December 31, 2009.
Loan Loss Reserves
We maintain an allowance for loan losses on mortgage loans that we classify as held-for-investment on our consolidated
balance sheets and a reserve for guarantee losses for mortgage loans that underlie our issued PCs and Structured Securities,
collectively referred to as loan loss reserves. Loan loss reserves are generally established to provide for credit losses when it
is probable that a loss has been incurred. For loans subject to accounting standards for loans and debt securities acquired
with deteriorated credit quality, loan loss reserves are only established when it becomes probable that we will be unable to
collect all cash flows which we expected to collect when we acquired the loan.
We also provide for credit losses on our financial guarantees of interest associated with PCs and Structured Securities
where the underlying mortgage loans are delinquent and we are required to make payment of interest to the security holders.
This amount is included in other liabilities on our consolidated balance sheets and totaled $2.0 billion and $0.5 billion as of
December 31, 2009 and 2008, respectively.
256 Freddie Mac