Fannie Mae 2012 Annual Report Download - page 311

FANNIE MAE
(In conservatorship)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
F-77
balance of our single-family conventional mortgage loans held or securitized in Fannie Mae MBS as of December 31, 2012
and 2011 were located, no other significant concentrations existed in any state.
To manage credit risk and comply with legal requirements, we typically require primary mortgage insurance or other credit
enhancements if the current LTV ratio (i.e., the ratio of the unpaid principal balance of a loan to the current value of the
property that serves as collateral) of a single-family conventional mortgage loan is greater than 80% when the loan is
delivered to us. We may also require credit enhancements if the original LTV ratio of a single-family conventional mortgage
loan is less than 80%. As of December 31, 2012, approximately 36% of our single-family conventional guaranty book of
business consists of loans with an estimated mark-to-market LTV greater than 80% compared with approximately 44% as of
December 31, 2011.
Multifamily Loan Borrowers
Numerous factors affect a multifamily borrower’s ability to repay the loan and the value of the property underlying the loan.
The most significant factors affecting credit risk are rental rates and capitalization rates for the mortgaged property. Rental
rates vary among geographic regions of the United States. The average unpaid principal balance for multifamily loans is
significantly larger than 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 guaranty book
of business. Our multifamily geographic concentrations have been consistently diversified over the years ended
December 31, 2012 and 2011, with our largest exposure in the Western region of the United States, which represented 32%
and 34% of our multifamily guaranty book of business as of December 31, 2012 and 2011, respectively. Except for California
and New York, no other significant concentrations existed in any states as of December 31, 2012 and 2011. As of
December 31, 2012, 25% and 13% of the gross unpaid principal balance of multifamily mortgage loans held by us or
securitized in Fannie Mae MBS were located in California and New York, respectively. As of December 31, 2011, 26% and
13% of the gross unpaid principal balance of our portfolio of multifamily mortgage loans held by us or securitized in Fannie
Mae MBS were 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 mortgage 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, 2012 and 2011.
Geographic Concentration(1)
Percentage of Conventional
Single-Family Guaranty Book
of Business(2) Percentage of Multifamily
Guaranty Book of Business(3)
As of December 31, As of December 31,
2012 2011 2012 2011
Midwest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 %15 %8%8%
Northeast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 19 21 21
Southeast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 24 21 20
Southwest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 15 18 17
West. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 27 32 34
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 %100 %100 %100 %
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(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, MS, NC, SC, TN, VA, WV; Southwest includes AZ, AR, CO, KS, LA, MO, NM, OK,
TX, UT; West includes 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% of our total single-family conventional guaranty book of business as of December 31, 2012 and 2011.