Freddie Mac 2014 Annual Report Download - page 181

176 Freddie Mac
Table 5.4 — TDR Activity, by Segment
Year Ended December 31,
2014 2013
Number of Loans
Post-TDR
Recorded
Investment Number of Loans
Post-TDR
Recorded
Investment
(dollars in millions)
Single-family:(1)
20 and 30-year or more, amortizing fixed-rate 68,186 $ 10,172 101,538 $ 16,014
15-year amortizing fixed-rate 7,189 528 11,671 825
Adjustable-rate 1,849 285 3,604 574
Alt-A, interest-only, and option ARM 9,112 1,865 17,770 3,941
Total Single-family 86,336 12,850 134,583 21,354
Multifamily 2 15 8 98
Total 86,338 $ 12,865 134,591 $ 21,452
(1) The pre-TDR recorded investment for single-family loans initially classified as TDR during the years ended December 31, 2014 and 2013 was $12.8
billion and $21.2 billion, respectively.
The measurement of impairment for single-family TDRs is based on the excess of our recorded investment in the loan
over the present value of the loan’s expected future cash flows. For multifamily loans, we use an estimate of the fair value of
the loan’s collateral rather than the present value of expected future cash flows to determine the amount of impairment. Our
process for determining the appropriate allowance for loan losses for both single-family and multifamily loans considers the
impact that our loss mitigation activities, such as loan restructurings, have on probabilities of default. For single-family loans
evaluated individually and collectively for impairment that have been modified, the probability of default is affected by the
incidence of redefault that we have experienced on similar loans that have completed a modification. For multifamily loans, the
incidence of redefault on loans that have been modified does not directly affect the allowance for loan losses as our multifamily
loans are generally evaluated individually for impairment based on the fair value of the underlying collateral.
The table below presents the volume of our TDR modifications that experienced payment defaults (i.e., loans that became
two months delinquent or completed a loss event) during the applicable periods and had completed a modification during the
year preceding the payment default. The table presents loans based on their original product category before modification and
excludes loans subject to other loss mitigation activity. Substantially all of our completed single-family loan modifications
classified as a TDR during 2014 resulted in a modified loan with a fixed interest rate. However, many of these fixed-rate loans
include provisions for the reduced interest rates to remain fixed for the first five years of the modification and then increase at a
rate of up to one percent per year until the interest rate has been adjusted to the market rate that was in effect at the time of the
modification.
Table 5.5 — Payment Defaults of Completed TDR Modifications, by Segment(1)
Year Ended December 31,
2014 2013
Number of Loans
Post-TDR
Recorded
Investment(2) Number of Loans
Post-TDR
Recorded
Investment(2)
(dollars in millions)
Single-family:
20 and 30-year or more, amortizing fixed-rate 19,101 $ 3,384 14,964 $ 2,766
15-year amortizing fixed-rate 645 62 471 52
Adjustable-rate 332 61 237 50
Alt-A, interest-only, and option ARM 2,357 564 2,256 587
Total single-family 22,435 $ 4,071 17,928 $ 3,455
Multifamily — $ — — $ —
(1) Represents TDR loans that experienced a payment default during the period and had completed a modification during the year preceding the payment
default.
(2) Represents the recorded investment at the end of the period in which the loan was modified and does not represent the recorded investment as of
December 31.
In addition to modifications, loans may be initially classified as TDRs as a result of other loss mitigation activities (i.e.,
repayment plans, forbearance agreements, or trial period modifications). During the years ended December 31, 2014 and 2013,
9,538 and 8,473, respectively, of such loans (with a post-TDR recorded investment of $1.4 billion for both periods) experienced
a payment default within a year after the loss mitigation activity occurred.
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