Freddie Mac 2014 Annual Report Download - page 119

114 Freddie Mac
Table 53 — Single-Family REO Property Status
As of December 31,
2014 2013
(percent of properties)
Available for sale 28% 30%
Pending settlement of sale(1) 15 14
Pre-listing(2) 11 10
Unable to market:
Redemption period 12 11
Occupied (waiting for eviction or vacancy) 15 18
Under repair and other(3) 19 17
Subtotal — unable to market 46 46
Total 100% 100%
(1) Consists of properties where we have an executed sales contract and settlement has not yet occurred.
(2) Consists of properties that are not being actively marketed because we are evaluating the property condition or determining our sale strategy.
(3) Includes properties where we are preparing the property for sale and properties where marketing is on hold, including where we are involved in
litigation or other legal and regulatory issues concerning the property.
As shown in the table above, a significant portion of the properties in our REO inventory is unable to be marketed
because the properties are in the process of being repaired, remain occupied, or are located in states with a redemption period
(particularly in the states of Illinois, Michigan, and Minnesota). A redemption period is a post-foreclosure period during which
borrowers may reclaim a foreclosed property. This can increase the average holding period of our inventory. Though it varied
significantly in different states, the average holding period of our single-family REO properties, excluding any redemption
period, was 226 days and 209 days for our REO dispositions during 2014 and 2013, respectively. Our expanded use of auction
sales in 2014 helped to reduce the portion of our inventory that is unable to be marketed.
Multifamily Mortgage Credit Risk Framework
To manage the credit risk in our multifamily mortgage portfolio, we focus on several key areas: (a) using prudent
standards and processes with a prior approval underwriting approach on the substantial majority of loans we purchase or
guarantee; (b) selling the expected credit risk to private investors that hold the subordinated tranches in our multifamily K
Certificate and similar transactions; (c) portfolio diversification, particularly by product and geographic area; and (d) portfolio
management activities, including loss mitigation. We monitor the loan performance, the underlying properties and a variety of
mortgage loan characteristics that may affect the default experience on our multifamily mortgage portfolio, such as DSCR,
LTV ratio, geographic location, payment type, and loan maturity. For more information on our underwriting standards for
multifamily loans we acquire or guarantee, see "BUSINESS — Our Business — Our Business Segments — Multifamily
Segment — Underwriting Requirements and Quality Control Standards." See “NOTE 5: IMPAIRED LOANS” for information
about loss mitigation activities that we have classified as TDRs and the subsequent performance of these loans.
Multifamily Mortgage Credit Risk Profile
The table below provides certain attributes of our multifamily mortgage portfolio at December 31, 2014 and 2013.
Table 54 — Multifamily Mortgage Portfolio — by Attribute
UPB at Delinquency Rate(1) at
December 31, 2014 December 31, 2013 December 31, 2014 December 31, 2013
(dollars in billions)
Mortgage Portfolio:
Legal Structure:
Unsecuritized loans $ 53.0 $ 59.2 0.02% 0.08%
K-Certificates 76.2 59.8 0.01 0.07
Other Freddie Mac mortgage-related securities 4.8 4.8 0.66 0.59
Other guarantee commitments 9.3 9.0 — —
Total $ 143.3 $ 132.8 0.04% 0.09%
Unsecuritized loans, excluding held-for-sale
loans:(2)
Original LTV ratio:
Below 75% $ 30.3 $ 36.7 0.04% 0.09%
75% to 80% 9.8 13.0 — 0.10
Above 80% 0.7 0.7 — —
Total $ 40.8 $ 50.4 0.03% 0.09%
Weighted average LTV ratio at origination 68% 68%
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