Freddie Mac 2015 Annual Report Download - page 111

Management's Discussion and Analysis Risk Management | SF Credit Risk
Freddie Mac 2015 Form 10-K 109
Engaging in Loss Mitigation Activities
Servicers perform loss mitigation activities as well as foreclosures on loans that they service for us. Our
loss mitigation strategy emphasizes early intervention by servicers in delinquent loans and offers
alternatives to foreclosure by providing servicers with default management programs designed to manage
non-performing loans more effectively and to assist borrowers in maintaining home ownership or to
facilitate foreclosure alternatives. In recent years, our ability to engage in loss mitigation activities has
been adversely affected by delays, including those due to increases in foreclosure process timeframes,
general constraints on servicer capacity that affect the rate at which servicers modify or foreclose upon
loans, and court backlogs in states that require a judicial foreclosure process.
We offer a variety of borrower assistance programs, including refinance programs for certain eligible
loans and loan workout activities for struggling borrowers. Our loan workouts include both home retention
options and foreclosure alternatives. We also engage in transfers of servicing on and sales of non-
performing loans.
The relief refinance program (including HARP) and HAMP, which are discussed below, will end in
December 2016. However, pursuant to the 2016 Conservatorship Scorecard, we are developing loss
mitigation options for borrowers, including loan modifications, and a refinance program for loans with high
LTV ratios.
We are the compliance agent for Treasury for certain foreclosure avoidance activities under HAMP.
Among other duties, as the program compliance agent, we conduct examinations and review servicer
compliance with the published requirements for the program.
Relief Refinance Program
As part of our loss mitigation activities, servicers contact borrowers that are eligible for the relief refinance
initiative. In recent years, our relief refinance program has been one of our more significant borrower
assistance programs. Our relief refinance initiative allows eligible homeowners whose loans we already
own or guarantee to refinance with more favorable terms (such as reduction in payment, reduction in
interest rate, extension of amortization term, or movement to a more stable loan) and without the need to
obtain additional mortgage insurance. Our relief refinance program includes HARP, the portion of our
relief refinance initiative for loans with LTV ratios above 80%.
The following table includes information about the performance of our relief refinance mortgage portfolio.
As of December 31,
2015 2014
(dollars in millions) UPB Loan Count SDQ Rate UPB Loan Count SDQ Rate
Above 125% Original LTV $ 28,241 157,035 1.38% $ 30,233 162,299 1.36%
Above 100% to 125% Original LTV 59,305 323,795 1.20%66,091 346,220 1.19%
Above 80% to 100% Original LTV 97,375 567,201 0.86% 109,618 609,239 0.93%
80% and below Original LTV 117,677 942,183 0.36% 125,158 957,435 0.36%
Total $ 302,598 1,990,214 0.72% $ 331,100 2,075,193 0.75%
These loans have continued to perform well relative to loans with similar characteristics in the Legacy
single-family book.