Fannie Mae 2007 Annual Report Download - page 156

Nonperforming Loans
We classify conventional single-family and multifamily loans held in our mortgage portfolio, including
delinquent single-family loans purchased from MBS trusts, as nonperforming and place them on nonaccrual
status at the earlier of when payment of principal and interest is three months or more past due according to
the loan’s contractual terms (unless we have recourse against the seller of the loan in the event of default) or
when, in our opinion, collectability of interest or principal on the loan is not reasonably assured. We continue
to accrue interest on nonperforming loans that are federally insured or guaranteed by the U.S. government.
Table 44 provides statistics on nonperforming single-family and multifamily loans as of the end of each year
of the five-year period ending December 31, 2007.
Table 44: Nonperforming Single-Family and Multifamily Loans
2007 2006 2005 2004 2003
As of December 31,
(Dollars in millions)
Nonperforming loans:
Nonaccrual loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,343 $5,961 $8,356 $7,987 $7,742
Troubled debt restructurings
(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,765 1,086 661 816 673
Total nonperforming loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,108 $7,047 $9,017 $8,803 $8,415
Interest on nonperforming loans:
Interest income forgone
(2)
............................... $ 215 $ 163 $ 184 $ 188 $ 192
Interest income recognized during year
(3)
.................... 328 295 405 381 376
Accruing loans past due 90 days or more
(4)
.................... $ 204 $ 147 $ 185 $ 187 $ 225
(1)
Troubled debt restructurings include loans whereby the contractual terms have been modified that result in concessions
to borrowers experiencing financial difficulties.
(2)
Forgone interest income represents the amount of interest income that would have been recorded during the year on
nonperforming loans as of December 31 had the loans performed according to their contractual terms.
(3)
Represents interest income recognized during the year on loans classified as nonperforming as of December 31.
(4)
Recorded investment of loans as of December 31 that are 90 days or more past due and continuing to accrue interest
include loans insured or guaranteed by the U.S. government and loans where we have recourse against the seller of the
loan in the event of a default.
Foreclosure and REO Activity
Foreclosure and REO activity affect the level of credit losses. Table 45 below provides information, by region,
on our foreclosure activity for the years ended December 31, 2007, 2006 and 2005. Regional REO acquisition
and charge-off trends generally follow a pattern that is similar to, but lags, that of regional delinquency trends.
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