Fannie Mae 2014 Annual Report Download - page 135

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Table 42 displays the percentage of our single-family loan modifications completed during 2013 and 2012 that were current
or paid off one year after modification, as well as the percentage of our single-family loan modifications completed during
2012 that were current or paid off two years after modification.
Table 42: Percentage of Single-Family Loan Modifications That Were Current or Paid Off at One and Two Years
Post-Modification(1)
2013 2012
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
One Year Post-Modification
HAMP modifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . 83% 83% 84% 83% 82% 82% 81% 79%
Non-HAMP modifications. . . . . . . . . . . . . . . . . . . . . . . . 71 71 72 73 74 74 72 70
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 73 74 75 76 76 75 73
Two Years Post-Modification
HAMP modifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . 81% 80% 80% 78%
Non-HAMP modifications. . . . . . . . . . . . . . . . . . . . . . . . 72 72 71 71
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 74 75 73
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(1) Excludes loans that were classified as subprime ARMs that were modified into fixed-rate mortgages. Modifications do not reflect loans
currently in trial modifications.
Approximately 55% of our performing loan modifications include a reduction in the borrower’s interest rate that is fixed for
an initial period and may be followed by one or more annual interest rate increases. The majority of these modifications with
rate resets are scheduled to have their first interest rate resets in 2015. These interest rate increases could adversely affect the
performance of these modifications. See “Table 37: Single-Family Adjustable-Rate Mortgage and Rate Reset Modifications
by Year” in “Credit Portfolio Summary—Mortgage Rate Resets” for additional information on the timing of these initial
interest rate resets.
There is significant uncertainty regarding the ultimate long term success of our modification efforts. We believe the
performance of our workouts will be highly dependent on economic factors, such as unemployment rates, household wealth
and income, and home prices. Modifications, even those with reduced monthly payments, may also not be sufficient to help
borrowers with second liens and other significant non-mortgage debt obligations. FHFA, other agencies of the U.S.
government or Congress may ask us to undertake new initiatives to support the housing and mortgage markets should our
current modification efforts ultimately not perform in a manner that results in the stabilization of these markets. See “Risk
Factors” for a discussion of efforts we may be required or asked to undertake and their potential effect on us.
REO Management
Foreclosure and REO activity affect the amount of credit losses we realize in a given period. Table 43 displays our
foreclosure activity, by region, for the periods indicated. Regional REO acquisition and charge-off trends generally follow a
pattern that is similar to, but lags, that of regional delinquency trends.