Fannie Mae 2014 Annual Report Download - page 120

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As of December 31, 2013
% of Single-
Family
Conventional
Guaranty Book
of Business(1)
Current
Estimated Mark-
to-Market LTV
Ratio(2)
Current
Estimated Mark-
to-Market LTV
Ratio >100%(3)
Serious
Delinquency
Rate(4)
2009-2013 acquisitions, excluding HARP and other Refi
Plus loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 % 61 % * % 0.23 %
HARP loans(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 91 25 0.84
Other Refi Plus loans(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 53 * 0.31
2005-2008 acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 86 27 9.32
2004 and prior acquisitions. . . . . . . . . . . . . . . . . . . . . . . . 8 50 3 3.52
Total Single-Family Book of Business. . . . . . . . . . . . . . 100 % 67 % 7 % 2.38 %
__________
* Represents less than 0.5%.
(1) Calculated based on the aggregate unpaid principal balance of single-family loans for each category divided by the aggregate unpaid
principal balance of loans in our single-family conventional guaranty book of business as of December 31, 2014 and 2013.
(2) The aggregate estimated mark-to-market LTV ratio is based on the unpaid principal balance of the loans as of the end of the applicable
period divided by the estimated current value of the properties, which we calculate using an internal valuation model that estimates
periodic changes in home value. Excludes loans for which this information is not readily available.
(3) The current estimated mark-to-market LTV ratio greater than 100% is based on the unpaid principal balance of the loans with mark-to-
market LTV ratios greater than 100% for each category as of the end of the applicable period divided by the aggregate unpaid principal
balance of loans for each category in our single-family conventional guaranty book of business as of December 31, 2014 and 2013.
(4) The serious delinquency rates for loans acquired in more recent years will be higher after the loans have aged, but we do not expect
them to approach the levels of the December 31, 2014 serious delinquency rates of loans acquired in 2005 through 2008.
(5) HARP loans, which we began to acquire in 2009, have LTV ratios at origination in excess of 80%. In the fourth quarter of 2012, we
revised our presentation of the data to reflect all loans under our Refi Plus program with LTV ratios at origination in excess of 80% as
HARP loans. Previously we did not reflect loans that were backed by second homes or investor properties as HARP loans.
(6) Other Refi Plus loans, which we began to acquire in 2009, includes all other Refi Plus loans that are not HARP loans.
Beginning with loans delivered in 2013, and in conjunction with our new representation and warranty framework that is
discussed below, we have made changes in our quality control process that move the primary focus of our quality control
reviews from the time a loan defaults to shortly after the loan is delivered to us. We have implemented new tools to help
identify loans delivered to us that may not have met our underwriting or eligibility guidelines and use these tools to help
select discretionary and random samples of performing loans for quality control reviews shortly after delivery. Our quality
control includes reviewing and recording underwriting defects noted in the file, and determining if the loan met our
underwriting and eligibility guidelines. We also use these reviews to provide lenders with earlier feedback on underwriting
defects. We derive an eligibility defect rate from our random reviews, which represents the proportion of loans in the sample
population with underwriting defects that would make them potentially ineligible for delivery to us. The eligibility defect rate
does not necessarily indicate how well the loans will ultimately perform. Instead, we use it to estimate the percentage of loans
we acquired that potentially had a significant error in the underwriting process.
As of February 12, 2015, the eligibility defect rate for our single-family non-Refi Plus loan acquisitions in 2013 was 1.52%.
Because of enhancements to the sampling methodology of our random reviews that we implemented in 2013, the eligibility
defect rate for our 2013 loan acquisitions is not directly comparable to the “significant findings rate” we reported on our
acquisitions in prior periods. We continue to work with lenders to reduce the number of defects identified.
We continue to actively pursue our contractual rights associated with outstanding repurchase requests. Failure by a mortgage
seller or servicer to repurchase a loan or to otherwise make us whole for our losses may result in the imposition of certain
sanctions including, but not limited to:
• requiring the posting of collateral,
• denying transfer of servicing requests or denying pledged servicing requests,
• modifying or suspending any contract or agreement with a lender, or
• suspending or terminating a lender or imposing some other formal sanction on a lender.
If we are unable to resolve our repurchase requests, either through collection or additional remedies, we will not recover the
losses we have recognized on the associated loans. The unpaid principal balance of our outstanding repurchase requests was