Freddie Mac 2010 Annual Report Download - page 216

Table 6.3 summarizes the delinquency rates of mortgage loans within our single-family credit guarantee and multifamily
mortgage portfolios.
Table 6.3 — Delinquency Rates
(1)
December 31, 2010 December 31, 2009
Delinquencies:
Single-family:
Non-credit-enhanced portfolio
Serious delinquency rate . . ................................................... 2.97% 3.00%
Total number of seriously delinquent loans ......................................... 296,397 305,840
Credit-enhanced portfolio
Serious delinquency rate . . ................................................... 7.83% 8.17%
Total number of seriously delinquent loans ......................................... 144,116 168,903
Total portfolio, excluding Other Guarantee Transactions
Serious delinquency rate . . . ............................................... 3.73% 3.87%
Total number of seriously delinquent loans ...................................... 440,513 474,743
Other Guarantee Transactions:
(2)
Serious delinquency rate . . ................................................... 9.86% 9.44%
Total number of seriously delinquent loans ......................................... 21,926 24,086
Total single-family:
Serious delinquency rate . . . . ................................................... 3.84% 3.98%
Total number of seriously delinquent loans . . ......................................... 462,439 498,829
Multifamily:
(3)
Delinquency rate ............................................................ 0.26% 0.20%
UPB of delinquent loans (in millions) .............................................. $ 288 $ 200
(1) Single-family mortgage loans whose contractual terms have been modified under agreement with the borrower are not counted as seriously delinquent if
the borrower is less than three monthly payments past due under the modified terms. Serious delinquencies on single-family mortgage loans underlying
certain REMICs and Other Structured Securities, Other Guarantee Transactions, and other guarantee commitments may be reported on a different
schedule due to variances in industry practice. 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.
(2) Other Guarantee Transactions generally have underlying mortgage loans with higher risk characteristics but some Other Guarantee Transactions may
provide inherent credit protections from losses due to underlying subordination, excess interest, overcollateralization and other features.
(3) Multifamily delinquency performance is based on UPB of mortgage loans that are two monthly payments or more past due or those in the process of
foreclosure and includes multifamily Other Guarantee Transactions. Excludes mortgage loans whose contractual terms have been modified under an
agreement with the borrower as long as the borrower is less than two monthly payments past due under the modified contractual terms.
We continue to implement a number of initiatives to modify and restructure loans, including the MHA Program. Our
implementation of the MHA Program, for our loans, includes the following: (a) an initiative to allow mortgages currently
owned or guaranteed by us to be refinanced without obtaining additional credit enhancement beyond that already in place for
the loan (our relief refinance mortgage); (b) an initiative to modify mortgages for both homeowners who are in default and
those who are at risk of imminent default (HAMP); and (c) an initiative designed to permit borrowers who meet basic
HAMP eligibility requirements to sell their homes in short sales or to complete a deed in lieu transaction (HAFA). As part of
accomplishing these initiatives, we pay various incentives to servicers and borrowers. We will bear the full costs associated
with these workout alternatives on mortgages that we own or guarantee and will not receive a reimbursement for any
component from Treasury. These initiatives slowed the rate of growth in single-family REO assets on our consolidated
balance sheets during 2010 and 2009; however, the number and amount of individually impaired loans increased due to
higher volumes of TDRs. We can not currently estimate whether, or the extent to which, costs incurred in the near term from
HAMP or other MHA Program efforts may be offset, if at all, by the prevention or reduction of potential future costs of loan
defaults and foreclosures due to these initiatives.
Loan Modifications
We rely on our single-family seller/servicers to contact borrowers who are in default or imminent default and to pursue
loan modifications, based on our guidelines and the borrower’s qualifications. When a borrower is considered for a loan
modification, our seller/servicers obtain information on income, assets, and other borrower obligations to determine new loan
terms. Under HAMP, the goal of a single-family loan modification is to reduce the borrowers’ monthly mortgage payments
to a specified percentage of borrower’s gross monthly income (31% for HAMP loans), which may be achieved through a
combination of changes in the loans terms, including interest rate reductions, term extensions and principal forbearance.
Although HAMP contemplates that some servicers will also make use of principal reduction to achieve reduced payments for
borrowers, we have only used forbearance of principal and have not used principal forgiveness in modifying our loans.
HAMP requires that each borrower complete a trial period during which the borrower will make monthly payments
based on the estimated amount of the modification payments. Trial periods are required for at least three months. After the
final trial-period payment is received by our seller/servicer and the borrower has provided necessary documentation, the
borrower and servicer will enter into the modification.
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