Freddie Mac 2015 Annual Report Download - page 108

Management's Discussion and Analysis Risk Management | SF Credit Risk
Freddie Mac 2015 Form 10-K 106
The table below presents the concentration of loans in each geographic region by current LTV ratio.
December 31, 2015
CLTV Ratio <= 80% CLTV Ratio > 80% to 100% CLTV Ratio > 100% All Loans
% of Portfolio SDQ Rate % of Portfolio SDQ Rate % of Portfolio SDQ Rate % of Portfolio SDQ Rate
North
Central 13% 0.73% 3% 1.91% 1% 6.23% 17% 1.13%
Northeast 20 1.28% 5 3.55% 1 13.35% 26 2.04%
Southeast 12 1.08% 3 2.54% 1 7.15% 16 1.57%
Southwest 10 0.76% 2 1.45% — 6.47% 12 0.88%
West 25 0.52% 3 1.96% 1 5.34% 29 0.79%
Total 80% 0.87% 16% 2.41% 4% 8.08% 100% 1.32%
December 31, 2014
CLTV Ratio <= 80% CLTV Ratio > 80% to 100% CLTV Ratio > 100% All Loans
% of Portfolio SDQ Rate % of Portfolio SDQ Rate % of Portfolio SDQ Rate % of Portfolio SDQ Rate
North
Central 12% 0.86% 4% 2.37% 1% 6.77% 17% 1.48%
Northeast 20 1.67% 5 4.98% 1 15.21% 26 2.81%
Southeast 11 1.44% 3 3.28% 2 9.27% 16 2.40%
Southwest 10 0.96% 2 2.06% — 6.98% 12 1.16%
West 23 0.67% 4 2.70% 2 6.23% 29 1.23%
Total 76% 1.13% 18% 3.21% 6% 9.06% 100% 1.88%
Credit Losses and Recoveries
Charge-offs were higher in 2015 than in 2014 primarily due to our adoption on January 1, 2015 of an
FHFA advisory bulletin that changed when we deem a loan to be uncollectible. We expect the level of
charge-offs in 2016 to be lower than 2015 as we continue our loss mitigation activities and our efforts to
sell seriously delinquent single-family loans. See "Change in Estimate" in Note 1 for information about our
adoption of the FHFA advisory bulletin and its effect on charge-offs and credit losses.
The tables below contain certain credit performance metrics of our single-family credit guarantee portfolio.
Year Ended December 31,
(dollars in millions) 2015 2014 2013
Charge-offs, gross $ 5,163 $4,972 $9,225
Recoveries (717) (1,258) (4,313)
Charge-offs, net 4,446 3,714 4,912
REO operations expense (income) 334 205 (124)
Total credit losses $ 4,780 $3,919 $4,788
Total credit losses (in bps) 28.1 23.4 28.8
As of December 31,
2015 2014 2013
Payment Status:
One month past due 1.37%1.52%1.73%
Two months past due 0.42%0.49%0.57%
Seriously delinquent 1.32%1.88%2.39%
Credit loss recoveries during 2015, 2014, and 2013 included $0 billion, $0.3 billion, and $2.1 billion,
respectively, related to settlement agreements with certain sellers that released specified loans from