Freddie Mac 2010 Annual Report Download - page 138

Credit Performance
Delinquencies
Unless otherwise noted, we report single-family serious delinquency rate information based on the number of loans that
are three monthly payments or more past due or in the process of foreclosure, as reported by our seller/servicers. For
multifamily loans, we report delinquency rates based on UPB of mortgage loans that are two monthly payments or more past
due or in the process of foreclosure. Mortgage loans whose contractual terms have been modified under agreement with the
borrower are not counted as delinquent as long as the borrower is current under the modified terms. In addition, Multifamily
loans are not counted as delinquent if the borrower has entered into a forbearance agreement and is abiding by the terms of
the agreement, whereas single-family loans for which the borrower has been granted forbearance will continue to reflect the
past due status of the borrower, if applicable. As of December 31, 2010, approximately $0.1 billion of multifamily loans had
been granted forbearance and were not included in delinquency amounts.
Our single-family and multifamily delinquency rates include all single-family and multifamily loans that we own, that
are collateral for Freddie Mac securities, and that are covered by our other guarantee commitments, except financial
guarantees that are backed by either Ginnie Mae Certificates or 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. In 2010, we began to include loans underlying Other Guarantee Transactions in both our multifamily and
single-family delinquency rates, which generally resulted in higher reported rates. Where applicable, prior period data
throughout this report has been revised to conform with the current presentation.
Some of our workout and other loss mitigation activities create fluctuations in our single-family serious delinquency
statistics. For example, loans that we report as delinquent before they enter the HAMP trial period continue to be reported as
delinquent for purposes of our delinquency reporting until the modifications become effective and the loans are removed
from delinquent status. However, under many of our non-HAMP modifications, the borrower would return to a current
payment status sooner, because these modifications do not have trial periods. Consequently, the volume, timing, and type of
loan modifications impact our reported serious delinquency rate. In addition, there may be temporary timing differences, or
lags, in the reporting of payment status and modification completion due to differing practices of our servicers that can affect
our delinquency reporting.
Temporary actions to suspend foreclosure transfers of occupied homes, the longer foreclosure process timeframes of
certain states, process requirements of HAMP, and general constraints on servicer capacity caused our single-family serious
delinquency rates to increase more rapidly in 2009 than they would have otherwise, as loans that would have completed a
workout or been foreclosed upon have instead remained in a delinquent status. These factors also caused our single-family
delinquency rates to be higher in 2010 than they otherwise would have been. Delays in the foreclosure process relating to the
concerns about deficiencies in foreclosure practices could have a similar effect on our single-family serious delinquency
rates.
Table 50 presents delinquency rates for our single-family credit guarantee and multifamily mortgage portfolios.
Table 50 — Delinquency Rates
Percentage
of Portfolio
Delinquency
Rate
(1)
Percentage
of Portfolio
Delinquency
Rate
(1)
Percentage
of Portfolio
Delinquency
Rate
(1)
2010 2009 2008
December 31,
Single-family:
Non-credit-enhanced . . . . ........................ 85% 3.01% 84% 3.02% 82% 1.27%
Credit-enhanced . .............................. 15 8.27 16 8.68 18 4.27
Total single-family credit guarantee portfolio
(2)
............ 100% 3.84 100% 3.98 100% 1.83
Multifamily:
Non-credit-enhanced . . . . ........................ 80% 0.12 87% 0.07 87% 0.02
Credit-enhanced . .............................. 20 0.85 13 1.03 13 0.21
Total multifamily mortgage portfolio ................... 100% 0.26 100% 0.20 100% 0.05
(1) In 2010, we began to include loans underlying Other Guarantee Transactions in our reported delinquency rates. Prior period delinquency rates have been
revised to conform to the current year presentation.
(2) As of December 31, 2010 and December 31, 2009, approximately 61.3% and 49.2%, respectively, of the single-family loans reported as seriously
delinquent were in the process of foreclosure.
Serious delinquency rates of our single-family credit guarantee portfolio declined slightly to 3.84% as of December 31,
2010 from 3.98% as of December 31, 2009. Serious delinquency rates for interest-only and option ARM products, which
together represented approximately 6% of our total single-family credit guarantee portfolio at December 31, 2010, increased
to 18.4% and 21.2% at December 31, 2010, respectively, compared with 17.6% and 17.9% at December 31, 2009,
135 Freddie Mac