Freddie Mac 2009 Annual Report Download - page 63

ultimate resolution of the conservatorship. We discuss this program in further detail in “MHA PROGRAM AND OTHER
EFFORTS TO ASSIST THE U.S. HOUSING MARKET.”
The MHA Program includes:
•Home Affordable Modification Program, or HAMP, which commits U.S. government, Freddie Mac and Fannie Mae
funds to help eligible homeowners avoid foreclosure and keep their homes through mortgage modifications. We are
working with servicers and borrowers to pursue modifications under HAMP, which requires that each borrower
complete a trial period of three months or longer before the modification becomes effective. Based on information
provided by the MHA Program administrator, we had assisted more than 143,000 borrowers, of whom more than
129,000 had made their first payment under the trial period and nearly 14,000 completed modification in the HAMP
process as of December 31, 2009. FHFA reported that approximately 171,000 loans were in active trial periods or
were modified under HAMP as of December 31, 2009, which includes loans in the trial period regardless of the first
payment date and includes modifications that are pending the borrower’s acceptance.
•Home Affordable Refinance Program, which gives eligible homeowners with loans owned or guaranteed by Freddie
Mac or Fannie Mae an opportunity to refinance into loans with more affordable monthly payments and fixed-rate
terms. During 2009, we began offering the Freddie Mac Relief Refinance Mortgage
SM
, which is our implementation
of the Home Affordable Refinance Program for our loans. In July 2009, we announced that borrowers who have
mortgages with current LTV ratios of up to 125% would be allowed to participate in this program and we began
purchasing these loans on October 1, 2009. As of December 31, 2009, we had assisted approximately
169,000 borrowers by purchasing loans totaling $35 billion in unpaid principal balance under this initiative, including
approximately 86,000 loans with LTV ratios above 80%.
Since most of our HAMP-related costs are incurred over time and we do not know what our results would have been
without this program, it is not possible for us to predict the net impact of HAMP participation on our financial results.
Without this program, we may have modified many HAMP eligible loans under our own programs without the borrower
completing a trial period and without providing borrower incentive fees and non-recurring servicer incentive fees.
Consequently, the timing of modifications and foreclosure transfers would have been different in many cases, which,
depending on market prices for REO properties and modified loans, would provide differing financial results and these
results could have been better or worse than we experienced in 2009. To the extent our borrowers participate in HAMP in
large numbers, it is likely that the costs we incur could be substantial. Freddie Mac will bear the full cost of the monthly
payment reductions related to modifications of loans we own or guarantee, and all servicer and borrower incentive fees. We
will not receive any reimbursement from Treasury associated with costs incurred or losses recognized from our HAMP
activities. In addition, we continue to devote significant internal resources to the implementation of the various initiatives
under the MHA Program. It is not possible at present to estimate whether, and the extent to which, costs, incurred in the near
term, will be offset, if at all, by the prevention or reduction of potential future costs of loan defaults and foreclosures due to
these initiatives.
Our Other Efforts to Assist the U.S. Housing Market
Our other efforts to assist the U.S. housing market include the following:
• during 2009, we purchased or guaranteed $548.4 billion in unpaid principal balance of mortgages and mortgage-
related securities for our total mortgage portfolio. This amount included $475.4 billion of newly issued PCs and
Structured Securities. Our purchases and guarantees of single-family mortgage loans provided financing for
approximately 2.2 million conforming single-family loans in 2009, of which approximately 79% consisted of
refinancings, as compared to 59% refinancings in 2008. We also remain a key source of liquidity for the multifamily
market with purchases or guarantees of mortgages that financed approximately 253,000 multifamily units in 2009;
• we continued to help borrowers stay in their homes or sell their properties through our other programs. For example,
we completed a total of more than 65,000 loan modifications (including a portion of completed HAMP modifications)
and approximately 55,000 repayment plans and forbearance agreements during 2009. We also continued to help
borrowers sell their properties by completing more than 22,000 pre-foreclosure sales in 2009;
• we have entered into standby commitments to purchase single-family and multifamily mortgages from a financial
institution that provides short-term loans, known as warehouse lines of credit, to mortgage originators. In October
2009, we announced a pilot program to help our single-family and multifamily seller/servicers obtain warehouse lines
of credit by providing standby purchase commitments to warehouse lenders;
• in October 2009, we announced our participation in the Housing Finance Agency Initiative, which is a collaborative
effort of Treasury, FHFA, Freddie Mac, and Fannie Mae to provide support to state and local housing finance agencies
so that such agencies can continue to meet their mission of providing affordable financing for both single-family and
60 Freddie Mac