Navy Federal Credit Union 2012 Annual Report Download - page 33

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Navy Federal Credit Union46
GNMA mortgages
2012 2011
Constant prepayment rate(1) 8.6% 12.2%
Anticipated credit losses(2) 0 0
Weighted average life 6.28 years 5.82 years
(1) CPR is based on the average of the CPRs for all of the GNMA securities.
(2) Ginnie Mae securities are explicitly backed by the federal government; therefore, there are
no anticipated credit losses.
GNMA mortgages
(dollars in thousands) 2012 2011
Constant prepayment rate
Adverse fair value change of 10% $ 7,166 $ 12,813
Adverse fair value change of 20% 13,929 24,664
Continuing Involvement
In addition to retained servicing on loans transferred through securitizations or sales transactions,
Navy Federal has continuing involvement with certain loans pursuant to provisions that allow for
or require transferred loans to be reacquired.
In connection with the sale of loans to FNMA and FHLMC, Navy Federal has made representations
and warranties that the loans sold meet certain requirements. These representations relate to type
of collateral, underwriting standards, validity of certain borrower representations in connection with
the loan, and the use of the GSE’s standard legal documentation. Navy Federal may be, and has been,
required to repurchase loans and/or indemnify FNMA and FHLMC and other investors for losses
due to material breaches of these representations and warranties.
The following table provides a summary of the cash flows exchanged during the years ended
December 31, 2012 and 2011 between Navy Federal and transferees on loans previously transferred
with continuing involvement:
(dollars in millions) 2012 2011
Cash from sale of mortgage loans and mortgage-backed securities $ 5,167 $ 2,948
Repurchase of previously transferred loans 19 9
Contractual servicing fees received 62 58
Total $ 5,248 $ 3,015