Freddie Mac 2014 Annual Report Download - page 233

228 Freddie Mac
Table 16.5 — Quantitative Information about Non-Recurring Level 3 Fair Value Measurements
December 31, 2014
Total
Fair
Value
Level 3
Fair
Value
Predominant
Valuation
Technique(s)
Unobservable Inputs
Type Range Weighted
Average
(dollars in millions)
Non-recurring fair value measurements
Mortgage loans $ 8,962 $ 8,962
Internal model Historical sales
proceeds $3,000 - $896,519 $162,556
Internal model Housing sales index 38 - 294 bps 82 bps
Third-party appraisal Property value $11 million -
$44 million $31 million
Income capitalization(1) Capitalization rates 6%- 9% 7%
REO, net(2) $ 1,665 $ 1,665
Internal model Historical sales
proceeds $3,008 - $896,519 $154,165
Internal model Housing sales index 38 - 294 bps 82 bps
December 31, 2013
Total
Fair
Value
Level 3
Fair
Value
Predominant
Valuation
Technique(s)
Unobservable Inputs
Type Range Weighted
Average
(dollars in millions)
Non-recurring fair value measurements
Mortgage loans $ 515 $ 515
Income capitalization(1) Capitalization rates 6% - 9% 7%
Third-party appraisal Property value $4 million -
$44 million $27 million
REO, net(2) $ 1,837 $ 1,837 Internal model
Historical average sales
proceeds per property
by state $17,500-
$318,391 $105,508
(1) The predominant valuation technique used for multifamily mortgage loans. Certain loans in this population are valued using other techniques, and the
capitalization rate for those is not represented in the “Range” or “Weighted Average” above.
(2) The national average REO disposition severity ratio for our REO properties was 34.7% and 36.5% for the years ended December 31, 2014 and 2013,
respectively.
Fair Value of Financial Instruments
The table below presents the carrying value and estimated fair value of our financial instruments as of December 31,
2014 and 2013.
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