Freddie Mac 2014 Annual Report Download - page 111

106 Freddie Mac
Table 47 — Credit Concentrations in the Single-Family Credit Guarantee Portfolio
As of December 31,
2014 2013
Alt-A
UPB Non Alt-A UPB Total UPB Alt-A UPB Non Alt-A UPB Total UPB
(in billions)
Geographic distribution:
Arizona, California, Florida, and Nevada(1) $ 21 $ 413 $ 434 $ 23 $ 399 $ 422
Illinois, Michigan, and Ohio(2) 3 169 172 4 172 176
New York and New Jersey(3) 7 138 145 7 138 145
All other states 19 895 914 23 887 910
Book year category(4):
New single-family book — 994 994 — 888 888
HARP and other relief refinance loans(4) — 331 331 — 342 342
2005-2008 Legacy single-family book 42 176 218 48 220 268
Pre-2005 Legacy single-family book 8 114 122 9 146 155
Year Ended December 31,
2014 2013
Alt-A Non Alt-A Total Alt-A Non Alt-A Total
(in millions)
Credit Losses
Geographic distribution:
Arizona, California, Florida, and Nevada(1) $ 275 $ 1,145 $ 1,420 $ 802 $ 1,438 $ 2,240
Illinois, Michigan, and Ohio(2) 80 582 662 158 773 931
New York and New Jersey(3) 102 313 415 56 106 162
All other states 170 1,252 1,422 231 1,224 1,455
Book year category(4):
New single-family book — 97 97 — 135 135
HARP and other relief refinance loans(4) — 299 299 — 348 348
2005-2008 Legacy single-family book 597 2,596 3,193 1,190 2,688 3,878
Pre-2005 Legacy single-family book 30 300 330 57 370 427
(1) Represents the four states that had the largest cumulative declines in home prices during the housing crisis that began in 2006, as measured using
Freddie Mac’s home price index.
(2) Represents selected states in the North Central region that have experienced adverse economic conditions since 2006.
(3) Represents two states with a judicial foreclosure process in which there are a significant number of seriously delinquent loans within our single-family
credit guarantee portfolio.
(4) The New single-family book reflects loans originated since 2008. HARP and other relief refinance loans are presented separately rather than in the year
that the refinancing occurred (from 2009 to 2014). All other refinance loans are presented in the year that the refinancing occurred.
We also hold investments in non-agency mortgage-related securities backed by single-family Alt-A loans. At
December 31, 2014 and 2013, we held investments of $6.0 billion and $11.0 billion in UPB, respectively, of non-agency
mortgage-related securities backed by Alt-A and other mortgage loans. Approximately 4% and 5% of these securities were
categorized as investment grade at December 31, 2014 and 2013, respectively. The credit performance of loans underlying
these securities deteriorated significantly since 2008. We categorize our investments in non-agency mortgage-related securities
as Alt-A if the securities were identified as such based on information provided to us when we entered into these transactions.
For more information on our exposure to Alt-A mortgage loans through our investments in non-agency mortgage-related
securities, see “CONSOLIDATED BALANCE SHEETS ANALYSIS — Investments in Securities.”
Managing Problem Loans
Our single-family loss mitigation strategy emphasizes early intervention by servicers in delinquent mortgages and
provides alternatives to foreclosure. Our servicers have an active role in our efforts to manage problem loans, as we rely on
them to perform loan workout activities as well as foreclosures on loans that they service for us. Our single-family loss
mitigation activities include providing our servicers with default management programs designed to help them manage non-
performing loans more effectively and to assist borrowers in maintaining home ownership, or facilitate foreclosure alternatives.
We require our servicers first to evaluate problem loans for a repayment or forbearance plan before considering modification. If
a borrower is not eligible for a modification, our seller/servicers pursue other borrower-assistance options before considering
foreclosure. Our servicers may also contact borrowers that are eligible for the relief refinance initiative, particularly where we
believe the borrowers have been adversely affected by declines in home prices, to provide assistance in initiating the refinance
process.
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