Freddie Mac 2014 Annual Report Download - page 172

167 Freddie Mac
derecognize our investments in the beneficial interests issued by the trust and recognize the assets and liabilities of the trust at
fair value. During the years ended December 31, 2014, 2013, and 2012, this activity resulted in a decrease in investment
securities and a decrease in debt securities of consolidated trusts of $0.4 billion, $2.2 billion, and $4.6 billion, respectively.
NOTE 4: MORTGAGE LOANS AND LOAN LOSS RESERVES
We own both single-family mortgage loans, which are secured by one to four unit residential properties, and multifamily
mortgage loans, which are secured by properties with five or more residential rental units. Our single-family loans are
predominantly first lien, fixed-rate mortgages secured by the borrower’s primary residence. For a discussion of our significant
accounting policies regarding our mortgage loans and loan loss reserves, see “NOTE 1: SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES."
The table below summarizes the types of loans on our consolidated balance sheets as of December 31, 2014 and 2013.
Table 4.1 — Mortgage Loans
December 31, 2014 December 31, 2013
Unsecuritized
Held By
Consolidated
Trusts Total Unsecuritized
Held By
Consolidated
Trusts Total
(in millions)
Single-family:
Fixed-rate
Amortizing $ 105,560 $ 1,431,872 $ 1,537,432 $ 113,597 $ 1,402,841 $ 1,516,438
Interest-only 939 3,298 4,237 1,476 4,826 6,302
Total fixed-rate 106,499 1,435,170 1,541,669 115,073 1,407,667 1,522,740
Adjustable-rate
Amortizing 1,353 68,632 69,985 1,935 65,429 67,364
Interest-only 3,191 20,373 23,564 4,576 23,841 28,417
Total adjustable-rate 4,544 89,005 93,549 6,511 89,270 95,781
Other Guarantee Transactions — 7,042 7,042 — 8,431 8,431
FHA/VA and other governmental 473 3,139 3,612 553 3,354 3,907
Total single-family 111,516 1,534,356 1,645,872 122,137 1,508,722 1,630,859
Multifamily:
Fixed-rate 43,632 524 44,156 50,701 444 51,145
Adjustable-rate 9,321 — 9,321 8,467 — 8,467
Other governmental 3 — 3 3 — 3
Total multifamily 52,956 524 53,480 59,171 444 59,615
Total UPB of mortgage loans 164,472 1,534,880 1,699,352 181,308 1,509,166 1,690,474
Deferred fees, unamortized premiums, discounts
and other cost basis adjustments (3,366) 26,098 22,732 (4,817) 23,745 18,928
Fair value adjustments on loans held-for sale 257 — 257 6 — 6
Allowance for loan losses on mortgage loans held-
for-investment (18,877) (2,884) (21,761) (21,612) (3,006) (24,618)
Total mortgage loans, net $ 142,486 $ 1,558,094 $ 1,700,580 $ 154,885 $ 1,529,905 $ 1,684,790
Mortgage loans, net:
Held-for-investment $ 130,118 $ 1,558,094 $ 1,688,212 $ 146,158 $ 1,529,905 $ 1,676,063
Held-for-sale 12,368 — 12,368 8,727 — 8,727
Total mortgage loans, net $ 142,486 $ 1,558,094 $ 1,700,580 $ 154,885 $ 1,529,905 $ 1,684,790
During 2014 and 2013, we purchased $252.7 billion and $412.9 billion, respectively, in UPB of single-family mortgage
loans, and $2.4 billion and $1.3 billion, respectively, in UPB of multifamily loans that were classified as held-for-investment.
Our sales of multifamily mortgage loans occur primarily through the issuance of multifamily K Certificates, which we
categorize as Other Guarantee Transactions. During 2014 and 2013, we sold $21.3 billion and $28.3 billion, respectively, of
held-for-sale multifamily mortgage loans. See “NOTE 14: FINANCIAL GUARANTEES” for more information on our
issuances of Other Guarantee Transactions.
In April 2014, we received FHFA's approval for a pilot transaction to sell certain seriously delinquent unsecuritized
single-family loans held on our consolidated balance sheet. In connection with this transaction, during the second quarter of
2014, we reclassified $0.9 billion in recorded investment of mortgage loans from held-for-investment to held-for-sale. We
subsequently reclassified certain of these loans back to held-for-investment during the second and third quarters of 2014. We
completed the sale in the third quarter of 2014. In January 2015, we received FHFA approval to execute additional such sales.
In connection with this approval, we reclassified $1.4 billion in recorded investment of mortgage loans from held-for-
investment to held-for-sale during the first quarter of 2015, which did not have a material effect on our financial results. For
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