Fannie Mae 2010 Annual Report Download - page 371

Multifamily Loan Borrowers
Numerous factors affect a multifamily borrower’s ability to repay his or her loan and the value of the property
underlying the loan. The most significant factors affecting credit risk are rental vacancy rates and
capitalization rates for the mortgaged property. Vacancy rates vary among geographic regions of the United
States. The average mortgage amounts for multifamily loans are significantly larger than those for single-
family borrowers and, therefore, individual defaults for multifamily borrowers can be more significant to us.
However, these loans, while individually large, represent a small percentage of our total loan portfolio. Our
multifamily geographic concentrations have been consistently diversified over both years ended December 31,
2010 and 2009, with our largest exposure in the Western region of the United States, which represented 34%
of our multifamily guaranty book of business. Except for California and New York, no other significant
concentrations existed in any states as of December 31, 2010 and 2009. As of December 31, 2010, 27% and
13% of the gross unpaid principal balance of our portfolio of multifamily mortgage loans held by us or
securitized in Fannie Mae MBS was located in California and New York, respectively. As of December 31,
2009, 27% and 14% of the gross unpaid principal balance of our portfolio of multifamily mortgage loans held
by us or securitized in Fannie Mae MBS was located in California and New York, respectively.
As part of our multifamily risk management activities, we perform detailed loan reviews that evaluate
borrower and geographic concentrations, lender qualifications, counterparty risk, property performance and
contract compliance. We generally require servicers to submit periodic property operating information and
condition reviews, allowing us to monitor the performance of individual loans. We use this information to
evaluate the credit quality of our portfolio, identify potential problem loans and initiate appropriate loss
mitigation activities.
The following table displays the regional geographic concentration of single-family and multifamily loans in
our mortgage portfolio and those loans held or securitized in Fannie Mae MBS as of December 31, 2010 and
2009.
2010 2009 2010 2009
As of December 31, As of December 31,
Percentage of
Conventional
Single-Family Guaranty
Book of Business
(2)
Percentage of
Multifamily Guaranty
Book of Business
(3)
Geographic Concentration
(1)
Midwest................................. 15% 16% 8% 9%
Northeast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 19 22 23
Southeast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 24 20 19
Southwest ............................... 15 15 16 15
West ................................... 27 26 34 34
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% 100% 100% 100%
(1)
Midwest includes IL, IN, IA, MI, MN, NE, ND, OH, SD, WI; Northeast includes CT, DE, ME, MA, NH, NJ, NY, PA,
PR, RI, VT, VI; Southeast includes AL, DC, FL, GA, KY, MD, NC, MS, SC, TN, VA, WV; Southwest includes AZ,
AR, CO, KS, LA, MO, NM, OK, TX, UT; West include AK, CA, GU, HI, ID, MT, NV, OR, WA and WY.
(2)
Consists of the portion of our single-family conventional guaranty book of business for which we have detailed loan
level information, which constituted over 99% and 98% of our total single-family conventional guaranty book of
business as of December 31, 2010 and 2009, respectively.
(3)
Consists of the portion of our multifamily guaranty book of business for which we have detailed loan level
information, which constituted 99% and 98% of our total multifamily guaranty book of business as of December 31,
2010 and 2009, respectively.
F-113
FANNIE MAE
(In conservatorship)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)