Fannie Mae 2007 Annual Report Download - page 96

Table 12: Allowance for Loan Losses and Reserve for Guaranty Losses
2007 2006 2005 2004 2003
As of December 31,
(Dollars in millions)
Changes in loss reserves:
Allowance for loan losses:
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 340 $ 302 $ 349 $ 290 $ 216
Provision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 658 174 124 174 187
Charge-offs
(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (407) (206) (267) (321) (270)
Recoveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 70 96 131 72
Increase from the reserve for guaranty losses
(2)
................. — — — 75 85
Ending balance
(3)
........................................ $ 698 $340 $302 $349 $290
Reserve for guaranty losses:
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 519 $ 422 $ 396 $ 313 $ 223
Provision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,906 415 317 178 178
Charge-offs
(4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,782) (336) (302) (24) (7)
Recoveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 18 11 4 4
Decrease to the allowance for loan losses
(2)
. . . . . . . . . . . . . . . . . . . . — — — (75) (85)
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,693 $ 519 $ 422 $ 396 $ 313
Combined loss reserves:
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 859 $ 724 $ 745 $ 603 $ 439
Provision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,564 589 441 352 365
Charge-offs
(1)(4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,189) (542) (569) (345) (277)
Recoveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 88 107 135 76
Ending balance
(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,391 $ 859 $ 724 $ 745 $ 603
Allocation of loss reserves:
Balance at end of each period attributable to:
Single-family . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,318 $ 785 $ 647 $ 644 $ 516
Multifamily . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 74 77 101 87
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,391 $ 859 $ 724 $ 745 $ 603
Loss reserve ratios:
Percent of combined allowance and reserve for guaranty losses in each
category to related guaranty book of business:
(5)
Single-family . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.13% 0.03% 0.03% 0.03% 0.03%
Multifamily . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.05 0.06 0.06 0.09 0.08
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.12 0.04 0.03 0.03 0.03
(1)
Includes accrued interest of $128 million, $39 million, $24 million, $29 million and $29 million for the years ended
December 31, 2007, 2006, 2005, 2004 and 2003, respectively.
(2)
Includes decrease in reserve for guaranty losses and increase in allowance for loan losses due to the purchase of
delinquent loans from MBS trusts. Effective with our adoption of SOP 03-3 on January 1, 2005, we record seriously
delinquent loans purchased from Fannie Mae MBS trusts at the lower of acquisition cost or fair value at the date of
purchase. We no longer record an increase in the allowance for loan losses and reduction in the reserve for guaranty
losses when we purchase these loans.
(3)
Includes $39 million, $28 million and $22 million as of December 31, 2007, 2006 and 2005, respectively, for acquired
loans subject to the application of SOP 03-3.
(4)
Includes charges recorded at the date of acquisition of $1.4 billion, $204 million and $251 million in 2007, 2006 and
2005, respectively, for acquired loans subject to the application of SOP 03-3 where the acquisition cost exceeded the
fair value of the acquired loan.
(5)
Represents ratio of combined allowance and reserve balance by loan type to the guaranty book of business by loan
type.
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