Fannie Mae 2010 Annual Report Download - page 174

Problem Loan Management and Foreclosure Prevention
Unfavorable economic conditions have caused continued increases in our multifamily serious delinquency rate
and the level of defaults. Since delinquency rates are a lagging indicator, even if the market shows some
improvement, we expect to incur additional credit losses. We periodically refine our underwriting standards in
response to market conditions and enact proactive portfolio management and monitoring which are each
designed to keep credit losses to a low level relative to our multifamily guaranty book of business.
Problem Loan Statistics
Table 48 provides a comparison of our multifamily serious delinquency rates for loans with and without credit
enhancement in our multifamily guaranty book of business. We classify multifamily loans as seriously
delinquent when payment is 60 days or more past due. We include the unpaid principal balance of multifamily
loans that we own or that back Fannie Mae MBS and any housing bonds for which we provide credit
enhancement in the calculation of the multifamily serious delinquency rate.
Table 48: Multifamily Serious Delinquency Rates
Percentage of
Book
Outstanding
Serious
Delinquency
Rate
Percentage of
Book
Outstanding
Serious
Delinquency
Rate
Percentage of
Book
Outstanding
Serious
Delinquency
Rate
2010 2009 2008
As of December 31,
Multifamily loans:
Credit enhanced . . . . . . . . . . . . 89% 0.67% 89% 0.54% 86% 0.26%
Non-credit enhanced . . . . . . . . . 11 1.01 11 1.33 14 0.54
Total multifamily loans . . . . . 100% 0.71% 100% 0.63% 100% 0.30%
Table 49 provides a comparison of our multifamily serious delinquency rates for loans acquired through DUS
lenders and loans acquired through non-DUS lenders.
Table 49: Multifamily Concentration Analysis
Percentage of
Book
Outstanding
Serious
Delinquency
Rate
Percentage of
Book
Outstanding
Serious
Delinquency
Rate
Percentage of
Book
Outstanding
Serious
Delinquency
Rate 2010 2009 2008
Percentage of
Multifamily
Credit
Losses For the
Year Ended
December 31,
2010 2009 2008
As of December 31,
DUS small balance loans
(1)
....... 8% 0.55% 7% 0.47% 7% 0.24% 7% 9% 15%
DUS non small balance loans
(2)
. . . . 70 0.56 69 0.38 66 0.24 61 77 66
Non-DUS small balance loans
(1)
. . . 10 1.47 11 1.16 13 0.52 10 11 10
Non-DUS non small balance
loans
(2)
.................. 12 0.97 13 1.54 14 0.37 22 3 9
(1)
Loans with unpaid principal balances less than or equal to $3 million except in high cost markets where they are loans
with unpaid principal balances less than or equal to $5 million.
(2)
Loans with unpaid principal balances greater than $3 million except in high cost markets where they are loans with
unpaid principal balances greater than $5 million.
The weak economic environment negatively affected serious delinquency rates across our multifamily guaranty
book of business, with all loan sizes experiencing higher delinquencies. The multifamily serious delinquency
rate increased as of December 31, 2010 compared with December 31, 2009, even as market conditions began
to stabilize throughout the year, as delinquency rates are a lagging indicator. The DUS loans in our guaranty
book of business have a lower rate of delinquencies when compared with the total book of business while the
non-DUS loans are experiencing a higher rate of delinquencies.
169