Freddie Mac 2014 Annual Report Download - page 69

64 Freddie Mac
We recognized $1.7 billion, $1.9 billion, and $152 million of gains on sales of available-for-sale securities during 2014,
2013, and 2012, respectively. The gains during 2014 primarily resulted from sales related to our structuring activity. The gains
during 2013 primarily resulted from sales related to our 2013 Conservatorship Scorecard goal to sell 5% of less liquid
mortgage-related assets.
Other Income (Loss)
The table below summarizes the significant components of other income (loss).
Table 18 — Other Income (Loss)
Year Ended December 31,
2014 2013 2012
(in millions)
Other income (loss):
Non-agency mortgage-related securities settlements $ 6,084 $ 5,501 $ —
Gains (losses) on mortgage loans 731 (336) 1,010
Recoveries on loans acquired with deteriorated credit quality(1) 203 261 380
Guarantee-related income, net(2) 266 400 343
All other 760 824 457
Total other income (loss) $ 8,044 $ 6,650 $ 2,190
(1) Primarily relates to loans acquired with deteriorated credit quality prior to 2010. Consequently, our recoveries on these loans will generally decline over
time.
(2) Primarily relates to securitized mortgage loans where we have not consolidated the securitization trusts on our consolidated balance sheets.
Non-Agency Mortgage-Related Securities Settlements
Non-agency mortgage-related securities settlements were $6.1 billion, $5.5 billion, and $0 in 2014, 2013, and 2012,
respectively. We received proceeds from ten settlements in 2014 and seven settlements in 2013. We had no settlements in 2012.
For information on the settlements in 2014, see “NOTE 15: CONCENTRATION OF CREDIT AND OTHER RISKS — Non-
Agency Mortgage-Related Security Issuers.”
Gains (Losses) on Mortgage Loans
We recognized gains (losses) on mortgage loans of $0.7 billion, $(0.3) billion, and $1.0 billion in 2014, 2013, and 2012,
respectively. Gains (losses) on mortgage loans primarily represents fair value gains and losses on multifamily loans between the
time we acquire them and the time we securitize them through K Certificate transactions. During that time, we carry the loans
at fair value. The gains in 2014 and 2012 were mainly due to a decrease in interest rates and tightening spreads, while the losses
in 2013 were primarily due to an increase in interest rates.
During 2014, 2013, and 2012 we sold $21.3 billion, $28.3 billion, and $20.8 billion, respectively, in UPB of multifamily
loans primarily through K Certificate transactions. We also sold seriously delinquent single-family loans (with an aggregate
UPB of $0.6 billion) in a pilot transaction completed in the third quarter of 2014. This sale did not have a material effect on our
financial results. 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.
All Other
All other income (loss) includes income recognized from transactional fees, fees assessed to our servicers for technology
use and late fees or other penalties, changes in fair value of STACR debt notes, and other miscellaneous income. All other
income remained relatively unchanged from 2013 to 2014 as: (a) a decline in the compensatory fees we charged servicers that
failed to meet our loan foreclosure timelines and higher costs associated with the common securitization platform in 2014; were
offset by (b) gains on STACR debt notes carried at fair value in 2014, compared to losses in 2013. In November 2014, we
announced an extension of foreclosure timelines in our guidelines for 47 states or other jurisdictions and temporarily suspended
compensatory fee assessments in four jurisdictions. These changes will result in lower compensatory fees in the future. The
increase in 2013 from 2012 was primarily due to higher compensatory fees assessed on servicers that failed to meet our loan
foreclosure timelines.
Non-Interest Expense
The table below summarizes the components of non-interest expense.
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