Freddie Mac 2009 Annual Report Download - page 119

The table below presents activities related to purchases of loans under financial guarantees, at our option, for 2009 and
2008.
Table 36 — Changes in Loans Purchased Under Financial Guarantees
(1)
Unpaid Principal
Balance
Purchase
Discount
Loan Loss
Reserves Net Investment
2009
(in millions)
Beginning balance . . . ............................................. $ 9,522 $(3,097) $(80) $ 6,345
Purchases of loans . . . ............................................. 10,824 (6,618) — 4,206
Provision for credit losses ........................................... — — (36) (36)
Principal repayments . ............................................. (580) 426 7 (147)
Troubled debt restructurings . . . ...................................... (744) 313 6 (425)
Property acquisitions, transferred to REO ................................ (973) 376 21 (576)
Ending balance
(2)
................................................ $18,049 $(8,600) $(82) $ 9,367
Unpaid Principal
Balance
Purchase
Discount
Loan Loss
Reserves Net Investment
2008
(in millions)
Beginning balance . . . ............................................. $ 7,001 $(1,767) $ (2) $ 5,232
Purchases of loans . . . ............................................. 5,570 (2,308) — 3,262
Provision for credit losses ........................................... — — (89) (89)
Principal repayments . ............................................. (768) 263 2 (503)
Troubled debt restructurings . . . ...................................... (175) 49 1 (125)
Property acquisitions transferred to REO. ................................ (2,106) 666 8 (1,432)
Ending balance
(2)
................................................ $ 9,522 $(3,097) $(80) $ 6,345
(1) Consists of seriously delinquent or modified loans purchased, at our option, in performance of our financial guarantees and in accordance with
accounting standards for loans and debt securities acquired with deteriorated credit quality.
(2) Includes loans that have subsequently returned to current status under the original loan terms.
As of December 31, 2009, the cure rates for delinquent or modified loans purchased out of PCs during 2009 and 2008
were approximately 66% and 46%, respectively. The cure rate is the percentage of loans purchased with or without
modification under our financial guarantee that have returned to less than 90 days past due or have been paid off, divided by
the total loans purchased from PCs under our financial guarantee. Our cure rates for loans purchased out of PCs during 2009
and 2008 are not directly comparable to rates in prior years due to the impact of our operational changes for purchasing
delinquent loans made in December 2007. As a result of these operational changes, since December 2007, we have
principally purchased loans that have undergone significant loss mitigation efforts prior to our purchase. Consequently, we
also began purchasing an increasing number of foreclosed single-family properties directly out of PC pools during these
years as compared to before 2008. Although our operational change decreased the number of loans we would have otherwise
purchased, it had no effect on our loss mitigation efforts nor does it change the ultimate credit losses upon resolution of the
loan. Those mortgages that remained in the pools and reperformed or proceeded to foreclosure during 2009 are not included
in these cure rate statistics. During 2008 and 2009, past due loans that remain delinquent were purchased from the pools at
dates generally later than before our operational change.
116 Freddie Mac