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HARP loans, which constituted 11% of our single-family book of business, had a weighted average FICO credit score at
origination of 731 compared with 744 for loans in our single-family book of business overall.
Loans we acquire under Refi Plus and HARP represent refinancings of loans that are already in our guaranty book of
business. The credit risk associated with the newly acquired loans essentially replaces the credit risk on the loans that we
already held prior to the refinancing. These loans have higher risk profiles and higher serious delinquency rates than the other
loans we have acquired since the beginning of 2009. However, we expect these loans will perform better than the loans they
replace because HARP and Refi Plus loans should either reduce the borrowers’ monthly payments or provide more stable
terms than the borrowers’ old loans (for example, by refinancing into a mortgage with a fixed interest rate instead of an
adjustable rate).
The percentage of our acquisitions that are refinanced loans, including loans acquired under our Refi Plus initiative, which
includes HARP, has continued to decline. HARP loans constituted approximately 6% of our total single-family acquisitions in
2014, compared with approximately 14% of total single-family acquisitions in 2013 and 16% in 2012. We expect the volume
of refinancings under HARP to continue to decline, due to a decrease in the population of borrowers with loans that have high
LTV ratios who are willing to refinance and would benefit from refinancing.
For information on the serious delinquency rates and current mark-to-market LTV ratios as of December 31, 2014 and 2013
of single-family loans we acquired under HARP and Refi Plus, compared with other single-family loans we have acquired,
see “Table 33: Selected Credit Characteristics of Single-Family Conventional Guaranty Book of Business, by Acquisition
Period.”
Alt-A Loans
We classify certain loans as Alt-A so that we can discuss our exposure to Alt-A loans in this Form 10-K and elsewhere.
However, there is no universally accepted definition of Alt-A loans. Our single-family conventional guaranty book of
business includes loans with some features that are similar to Alt-A loans that we have not classified as Alt-A because they do
not meet our classification criteria.
We do not rely solely on our classifications of loans as Alt-A to evaluate the credit risk exposure relating to these loans in our
single-family conventional guaranty book of business. For more information about the credit risk characteristics of loans in
our single-family guaranty book of business, see “Table 36: Risk Characteristics of Single-Family Conventional Business
Volume and Guaranty Book of Business,” “Note 3, Mortgage Loans” and “Note 16, Concentrations of Credit Risk.”
Our exposure to Alt-A loans included in our single-family conventional guaranty book of business, based on the classification
criteria described in this section, does not include (1) our investments in private-label mortgage-related securities backed by
Alt-A loans or (2) resecuritizations, or wraps, of private-label mortgage-related securities backed by Alt-A mortgage loans
that we have guaranteed. See “Note 5, Investments in Securities” for more information on our exposure to private-label
mortgage-related securities backed by Alt-A loans. As a result of our decision to discontinue the purchase of newly originated
Alt-A loans, except for those that represent the refinancing of a loan we acquired prior to 2009, we expect our acquisitions of
Alt-A mortgage loans to continue to be minimal in future periods and the percentage of the book of business attributable to
Alt-A to continue to decrease over time.
We have classified a mortgage loan as Alt-A if and only if the lender that delivered the loan to us classified the loan as Alt-A,
based on documentation or other features. The unpaid principal balance of Alt-A loans included in our single-family
conventional guaranty book of business of $116.6 billion as of December 31, 2014, represented approximately 4% of our
single-family conventional guaranty book of business.
Jumbo-Conforming and High-Balance Loans
The outstanding unpaid principal balance of our jumbo-conforming and high-balance loans was $145.0 billion, or 5.2% of
our single-family conventional guaranty book of business as of December 31, 2014 compared with $142.3 billion, or 5.0% of
our single-family conventional guaranty book of business as of December 31, 2013. The standard conforming loan limit for a
one-unit property was $417,000 in 2014 and 2013. From 2008 to 2011, our loan limits were higher in specified high-cost
areas, reaching as high as $729,750 for one-unit properties; however, our loan limits for loans originated after September 30,
2011 decreased in specified high-cost areas to an amount not to exceed $625,500 for one-unit properties. Our current loan
limits apply to all new acquisitions; therefore, we cannot refinance any of our existing loans that are above our current loan
limits. See “Business—Our Charter and Regulation of Our Activities—Charter Act—Loan Standards” for additional
information on our loan limits.