Freddie Mac 2010 Annual Report Download - page 137

The number of modified loans in our single-family credit guarantee portfolio has been increasing and such loans
comprised approximately 2.1% and 0.9% of our single-family credit guarantee portfolio as of December 31, 2010 and 2009,
respectively. Table 49 presents the reperformance rate of modified single-family loans in each of the last five quarterly
periods.
Table 49 — Reperformance Rates
(1)
of Modified Single-Family Loans
HAMP loan modifications: 3Q 2010 2Q 2010 1Q 2010 4Q 2009 3Q 2009 2Q 2009
Quarter of Loan Modification Completion
(2)
Time since modification–
3 to 5 months ............................................... 93% 94% 95% 94% 96% —
6 to 8 months ............................................... 91% 93% 93% 93% —
9 to 11 months . . . . . . ........................................ 90% 91% 93% —
12 to 14 months . . . . . ........................................ 88% 92% —
15 to 17 months . . . . . ........................................ 91% —
18 to 20 months . . . . . ........................................ —
Non-HAMP loan modifications: 3Q 2010 2Q 2010 1Q 2010 4Q 2009 3Q 2009 2Q 2009
Quarter of Loan Modification Completion
(2)
Time since modification–
3 to 5 months ............................................... 93% 93% 94% 90% 88% 73%
6 to 8 months ............................................... 86% 87% 82% 78% 64%
9 to 11 months . . . . . . ........................................ 81% 77% 72% 60%
12 to 14 months . . . . . ........................................ 75% 69% 58%
15 to 17 months . . . . . ........................................ 67% 57%
18 to 20 months . . . . . ........................................ 55%
Total (HAMP and non-HAMP): 3Q 2010 2Q 2010 1Q 2010 4Q 2009 3Q 2009 2Q 2009
Quarter of Loan Modification Completion
(2)
Time since modification–
3 to 5 months ............................................... 93% 94% 95% 92% 89% 73%
6 to 8 months ............................................... 90% 92% 88% 79% 64%
9 to 11 months . . . . . . ........................................ 88% 85% 74% 60%
12 to 14 months . . . . . ........................................ 82% 71% 58%
15 to 17 months . . . . . ........................................ 68% 57%
18 to 20 months . . . . . ........................................ 55%
(1) Represents the percentage of loans that are current or less than three monthly payments past due. Excludes those loan modification activities for which
the borrower has started the required process, but the modification has not been made permanent, or effective, such as loans in the trial period under
HAMP.
(2) Loan modifications are recognized as completed in the quarterly period in which the servicer has reported the modification as effective and the
agreement has been accepted by us, which in certain cases may be delayed by a backlog in servicer processing of modifications.
The redefault rate is the percentage of our modified loans that became seriously delinquent, transitioned to REO, or
completed a loss-producing foreclosure alternative. As of December 31, 2010, the redefault rate for all our single-family loan
modifications (including those under HAMP) completed during 2010, 2009, and 2008 was 8%, 38%, and 50%, respectively.
Many of the borrowers that received modifications in 2008 and 2009 were negatively affected by worsening economic
conditions, including high unemployment rates during the last two years. As of December 31, 2010, the redefault rate for
loans modified under HAMP in 2010 and 2009 was approximately 7% and 11%, respectively. These redefault rates may not
be representative of the future performance of loans, including those modified under HAMP, as only a short period of time
has elapsed since the modifications were effective. We believe the redefault rate for loans modified in 2010 and 2009,
including those modified under HAMP, is likely to increase, particularly since the housing and economic environments
remain challenging.
Our servicers have a key role in the success of our loan workout activities, including the HAMP process. The majority
of our HAMP efforts have been primarily focused with our larger seller/servicers, which service the majority of our loans,
and variations in their approaches may cause fluctuations in HAMP processing volumes. The significant increases in
seriously delinquent loan volume and the challenging conditions of the mortgage market during 2009 and 2010 placed a
strain on the loan workout resources of many of our mortgage servicers. To the extent servicers do not complete loan
modifications with eligible borrowers or are unable to facilitate the increasing volume of foreclosures, our credit losses could
increase.
In order to allow our mortgage servicers time to implement our more recent modification programs and provide
additional relief to troubled borrowers, we implemented several temporary suspensions of all foreclosure transfers of
occupied homes during certain periods of the last two years. The MHA Program further restricts foreclosure while the
borrower is being evaluated for HAMP and during the borrower’s trial period. 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.
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