Fannie Mae 2010 Annual Report Download - page 172

as of December 31, 2010, approximately 27% of our properties that we were unable to market for sale were in
redemption status, which lengthens the time a property is in our REO inventory by an average of two to six
months. Additionally, as of December 31, 2010, approximately 40% of our properties that we were unable to
market for sale were in occupied status, which lengthens the time a property is in our REO inventory by an
average of one to two months.
As shown in Table 47 we have experienced a disproportionate share of foreclosures in certain states as
compared to their share of our guaranty book of business. This is primarily because these states have had
significant home price depreciation or weak economies, and in the case of California and Florida specifically,
a significant number of Alt-A loans.
Table 47: Single-Family Acquired Property Concentration Analysis
Percentage of
Book
Outstanding
(1)
Percentage of
Properties
Acquired
by Foreclosure
(2)
Percentage of
Book
Outstanding
(1)
Percentage of
Properties
Acquired
by Foreclosure
(2)
Percentage of
Book
Outstanding
(1)
Percentage of
Properties
Acquired
by Foreclosure
(2)
December 31, 2010 December 31, 2009 December 31, 2008
As of For The Year Ended As of For The Year Ended As of For The Year Ended
States:
Arizona, California, Florida
andNevada......... 28% 36% 28% 36% 27% 27%
Illinois, Indiana, Michigan
andOhio........... 11 17 11 20 11 25
(1)
Calculated based on the unpaid principal balance of loans, where we have detailed loan-level information, for each
category divided by the unpaid principal balance of our single-family conventional guaranty book of business.
(2)
Calculated based on the number of properties acquired through foreclosure during the period divided by the total
number of properties acquired through foreclosure.
Although we have expanded our loan workout initiatives to help borrowers stay in their homes, our
foreclosure levels for 2010 were higher than 2009 as a result of the continued adverse impact that the weak
economy and high unemployment have had on the financial condition of borrowers. As described in
“Executive Summary,” a number of our single-family mortgage servicers have recently halted foreclosures in
some or all states after discovering deficiencies in their processes relating to the execution of affidavits in
connection with the foreclosure process. Although the foreclosure pause has negatively affected our
foreclosure timelines and increased the number of our REO properties that we are unable to market for sale,
we cannot yet predict the full impact on our REO inventory and our credit-related expenses.
Multifamily Mortgage Credit Risk Management
The credit risk profile of our multifamily mortgage credit book of business is influenced by: the structure of
the financing; the type and location of the property; the condition and value of the property; the financial
strength of the borrower and lender; market and sub-market trends and growth; and the current and anticipated
cash flows from the property. These and other factors affect both the amount of expected credit loss on a
given loan and the sensitivity of that loss to changes in the economic environment. We provide information on
our credit-related expenses and credit losses in “Consolidated Results of Operations—Credit-Related
Expenses.”
While our multifamily mortgage credit book of business includes all of our multifamily mortgage-related
assets, both on- and off-balance sheet, our guaranty book of business excludes non-Fannie Mae multifamily
mortgage-related securities held in our portfolio for which we do not provide a guaranty. Our multifamily
guaranty book of business consists of: multifamily mortgage loans held in our mortgage portfolio; Fannie Mae
MBS held in our portfolio or by third parties; and other credit enhancements that we provide on mortgage
assets.
The credit statistics reported below, unless otherwise noted, pertain only to a specific portion of our
multifamily guaranty book of business for which we have access to detailed loan-level information. We
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