Freddie Mac 2009 Annual Report Download - page 262

Table 7.5 provides changes in the accretable balance acquired under financial guarantees and accounted for in
accordance with accounting standards for loans and debt securities acquired with deteriorated credit quality.
Table 7.5 — Changes in Accretable Balance
2009 2008
Year Ended
December 31,
(in millions)
Beginning balance . . . ...................................................................... $3,964 $2,407
Additions from new acquisitions ................................................................ 6,847 2,938
Accretion during the period . . . ................................................................ (653) (372)
Reductions
(1)
............................................................................. (360) (481)
Change in estimated cash flows
(2)
............................................................... (186) 59
Reclassifications (to) from nonaccretable difference
(3)
................................................. (1,129) (587)
Ending balance............................................................................ $8,483 $3,964
(1) Represents the recapture of losses previously recognized due to borrower repayment or foreclosure on the loan.
(2) Represents the change in expected cash flows due to troubled debt restructurings or change in prepayment assumptions of the related loans.
(3) Represents the change in expected cash flows due to changes in credit quality or credit assumptions. The reclassification amount for 2009 primarily
results from revisions to: (1) the effect of home price changes on borrower behavior and (2) the impact of loss mitigation actions.
Delinquency Rates
Table 7.6 summarizes the delinquency performance for mortgage loans held on our consolidated balance sheets as well
as those underlying our PCs, Structured Securities and other mortgage-related financial guarantees and excludes that portion
of Structured Securities backed by Ginnie Mae Certificates and financial guarantees backed by HFA bonds.
Table 7.6 — Delinquency Performance
2009 2008 2007
At December 31,
Delinquencies:
Single-family:
(1)
Non-credit-enhanced portfolio
(2)
Delinquency rate ........................................................... 3.00% 1.26% 0.45%
Total number of delinquent loans . ............................................... 305,840 127,569 44,948
Credit-enhanced portfolio
(2)
Delinquency rate ........................................................... 8.17% 3.79% 1.62%
Total number of delinquent loans . ............................................... 168,903 85,719 34,621
Total portfolio, excluding Structured Transactions
Delinquency rate . ...................................................... 3.87% 1.72% 0.65%
Total number of delinquent loans . . . . ........................................ 474,743 213,288 79,569
Structured Transactions
(3)
:
Delinquency rate ........................................................... 9.44% 7.23% 9.86%
Total number of delinquent loans . ............................................... 24,086 18,138 14,122
Total single-family portfolio:
Delinquency rate ........................................................... 3.98% 1.83% 0.76%
Total number of delinquent loans . ............................................... 498,829 231,426 93,691
Multifamily:
Delinquency rate
(4)
........................................................... 0.16% 0.03% 0.01%
Net carrying value of delinquent loans (in millions) . . ................................... $ 163 $ 30 $ 10
(1) Based on the number of mortgages 90 days or more delinquent or in foreclosure. Delinquencies on mortgage loans underlying certain Structured
Securities, long-term standby commitments and Structured Transactions may be reported on a different schedule due to variances in industry practice.
(2) Excluding Structured Transactions.
(3) Structured Transactions generally have underlying mortgage loans with higher risk characteristics but may provide inherent credit protections from
losses due to underlying subordination, excess interest, overcollateralization and other features.
(4) Multifamily delinquency performance is based on net carrying value of mortgages 90 days or more delinquent or in foreclosure rather than on a unit
basis, and includes multifamily Structured Transactions.
Throughout 2009, we have worked with our single-family seller/servicers to help distressed homeowners by
implementing a number of steps that include extending foreclosure timelines and additional efforts to modify and restructure
loans. Currently, we are primarily focusing on initiatives that support the MHA Program. Borrowers must complete a trial
period under HAMP before the modification becomes effective. For each successful modification completed under HAMP,
we will pay our servicers a $1,000 incentive fee when they originally modify a loan and an additional $500 incentive fee if
the loan was current when it entered the trial period (i.e., where default was imminent but had not yet occurred). In addition,
servicers will receive up to $1,000 for any modification that reduces a borrower’s monthly payment by 6% or more, in each
of the first three years after the modification, as long as the modified loan remains current. Borrowers whose loans are
modified through HAMP will accrue monthly incentive payments that will be applied annually to reduce up to $1,000 of
their principal, per year, for five years, as long as they are making timely payments under the modified loan terms, which we
will recognize as charge-offs against the outstanding balance of the loan. HAMP applies to loans originated on or before
January 1, 2009, and borrowers’ requests for such modifications will be considered until December 31, 2012. Based on
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