Freddie Mac 2014 Annual Report Download - page 213

208 Freddie Mac
Table 15.1 — Concentration of Credit Risk — Single-Family Credit Guarantee Portfolio
December 31, 2014 December 31, 2013 Percent of Credit Losses(1)
Twelve Months Ended
Percentage of
Portfolio(1)
Serious
Delinquency
Rate Percentage of
Portfolio(1)
Serious
Delinquency
Rate December 31,
2014 December 31, 2013
Year of Origination
2014 12% 0.02% N/A N/A —% N/A
2013 16 0.06 16% 0.01% — —%
2012 14 0.09 16 0.04 — —
2011 6 0.26 8 0.18 — —
2010 6 0.46 7 0.39 1 1
2009 6 0.92 7 0.88 2 2
Subtotal - New single-family book 60 0.24 54 0.24 3 3
HARP and other relief refinance loans(2) 20 0.75 21 0.64 8 7
2005 to 2008 Legacy single-family book 13 7.59 16 8.77 81 81
Pre-2005 Legacy single-family book 7 3.10 9 3.24 8 9
Total 100% 1.88% 100% 2.39% 100% 100%
Region(3)
West 29% 1.23% 28% 1.73% 13% 24%
Northeast 26 2.81 26 3.23 26 15
North Central 17 1.48 18 1.81 22 23
Southeast 16 2.40 16 3.42 35 35
Southwest 12 1.16 12 1.36 4 3
Total 100% 1.88% 100% 2.39% 100% 100%
State
Arizona, California, Florida, and Nevada(4) 26% 1.91% 26% 3.01% 36% 47%
Illinois, Michigan, and Ohio(5) 10 1.70 11 2.11 17 19
New York and New Jersey(6) 9 4.62 9 5.11 11 3
All other 55 1.53 54 1.85 36 31
Total 100% 1.88% 100% 2.39% 100% 100%
(1) Within these columns, "—" represents less than 0.5%.
(2) 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.
(3) Region designation: West (AK, AZ, CA, GU, HI, ID, MT, NV, OR, UT, WA); Northeast (CT, DE, DC, MA, ME, MD, NH, NJ, NY, PA, RI, VT, VA,
WV); North Central (IL, IN, IA, MI, MN, ND, OH, SD, WI); Southeast (AL, FL, GA, KY, MS, NC, PR, SC, TN, VI); Southwest (AR, CO, KS, LA,
MO, NE, NM, OK, TX, WY).
(4) 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.
(5) Represents selected states in the North Central region that have experienced adverse economic conditions since 2006.
(6) 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.
Credit Performance of Certain Higher Risk Single-Family Loan Categories
Participants in the mortgage market often characterize single-family loans based upon their overall credit quality at the
time of origination, generally considering them to be prime or subprime. Many mortgage market participants classify single-
family loans with credit characteristics that range between their prime and subprime categories as Alt-A because these loans
have a combination of characteristics of each category, may be underwritten with lower or alternative income or asset
documentation requirements compared to a full documentation mortgage loan, or both. However, there is no universally
accepted definition of subprime or Alt-A. Although we discontinued new purchases of mortgage loans with lower
documentation standards for assets or income beginning March 1, 2009, we continued to purchase certain amounts of these
mortgages in cases where the loan was either: (a) purchased pursuant to a previously issued other guarantee commitment;
(b) part of our relief refinance initiative; or (c) in another refinance mortgage initiative and the pre-existing mortgage (including
Alt-A loans) was originated under less than full documentation standards. In the event we purchase a refinance mortgage and
the original loan had been previously identified as Alt-A, such refinance loan may no longer be categorized or reported as Alt-A
in the table below because the new refinance loan replacing the original loan would not be identified by the seller/servicer as an
Alt-A loan. As a result, our reported Alt-A balances may be lower than would otherwise be the case had such refinancing not
occurred.
Although we do not categorize single-family mortgage loans we purchase or guarantee as prime or subprime, we
recognize that there are a number of mortgage loan types with certain characteristics that indicate a higher degree of credit risk.
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