Freddie Mac 2010 Annual Report Download - page 144

regional serious delinquency trends of our single-family credit guarantee portfolio. See “Table 52 — Single-Family Credit
Guarantee Portfolio by Attribute Combinations” for information about regional serious delinquency rates.
Table 55 — REO Activity by Region
(1)
2010 2009 2008
December 31,
(number of properties)
REO Inventory
Beginning property inventory ....................................................... 45,052 29,346 14,394
Adjustment to beginning balance
(2)
.................................................... 1,340 — —
Properties acquired by region:
Northeast ................................................................... 11,022 7,529 5,125
Southeast ................................................................... 35,409 19,255 10,725
North Central. . . .............................................................. 29,550 19,946 13,678
Southwest ................................................................... 14,092 8,942 5,686
West....................................................................... 36,843 29,440 15,317
Total properties acquired ....................................................... 126,916 85,112 50,531
Properties disposed by region:
Northeast ................................................................... (8,490) (5,663) (3,846)
Southeast ................................................................... (26,082) (15,678) (8,239)
North Central. . . .............................................................. (22,349) (15,549) (10,548)
Southwest ................................................................... (11,044) (7,142) (5,155)
West....................................................................... (33,250) (25,374) (7,791)
Total properties disposed ....................................................... (101,215) (69,406) (35,579)
Ending property inventory . . ........................................................ 72,093 45,052 29,346
(1) See endnote (8) to “Table 52 — Single-Family Credit Guarantee Portfolio by Attribute Combinations” for a description of these regions.
(2) Represents REO assets associated with previously non-consolidated mortgage trusts recognized upon adoption of the amendment to the accounting
standard for consolidation of VIEs on January 1, 2010.
Our REO property inventory increased 60% during 2010 and 54% during 2009, in part due to increased levels of
foreclosures associated with borrowers that did not qualify for or that did not successfully complete a modification or short
sale. During 2009, we experienced a significant increase in the number of seriously delinquent loans in our single-family
credit guarantee portfolio. However, due to the effect of HAMP, our suspensions of foreclosure transfers and other programs,
many of these loans did not transition to REO until 2010 or have not yet transitioned to REO. We expect our REO
acquisitions to continue to increase in 2011. However, the pace of our REO acquisitions slowed during the fourth quarter of
2010 and could continue to be affected by delays in the foreclosure process, including delays related to concerns about
deficiencies in foreclosure documentation practices. We temporarily suspended certain foreclosure proceedings, REO sales
and eviction proceedings for our REO properties for certain servicers in the fourth quarter of 2010 due to these concerns, but
we resumed REO sales in November 2010.
As discussed in “Loan Workout Activities,” we have implemented several initiatives designed to assist troubled
borrowers avoid foreclosure. We temporarily suspended foreclosure transfers in 2009 on owner-occupied homes where the
borrower may be eligible to receive a loan modification under the MHA Program; however, for seriously delinquent
borrowers, we continued with steps in the foreclosure process up to, but stopping short of, a foreclosure sale of the property.
The MHA Program restricts foreclosure activities when a borrower is being evaluated for HAMP and during a borrower’s
trial period. Our suspension or delay of foreclosure transfers and any delay in foreclosures that might be imposed by
regulatory or governmental agencies result in a temporary decline in REO acquisitions and slow the rate of growth of our
REO inventory. In July 2008, we also extended the period of time in which we required seller/servicers to complete the
foreclosure process on our loans. This was done with respect to certain states where the normal timeframe for foreclosure is
relatively short, and was intended to provide more time to evaluate the possibilities for a loan workout solution. Due to
temporary suspensions and other factors, the average length of time for foreclosure of a Freddie Mac loan significantly
increased in recent years. The nationwide average for completion of a foreclosure (as measured from the date of the last
scheduled payment made by the borrower) on our single-family delinquent loans, excluding those underlying our Other
Guarantee Transactions, was 448 days and 370 days for foreclosures completed during 2010 and 2009, respectively.
Our single-family REO acquisitions during 2010 and 2009 were most significant in the states of California, Florida,
Arizona, Michigan, Georgia, and Illinois. The West region represented approximately 29% of the new REO acquisitions
during 2010, based on the number of units, and the highest concentration in that region is in California. At December 31,
2010, our REO inventory in California comprised 11% of total REO property inventory, based on the number of properties.
Although we have increased our resource capacity necessary to maintain and dispose of the progressive increase in our REO
acquisitions and inventory over the last two years, we are limited in our disposition efforts by the capacity of the market to
absorb large numbers of foreclosed properties. A portion of our REO properties are: (a) located in jurisdictions that require a
period of time after foreclosure during which the borrower may reclaim the property; or (b) occupied and we have begun the
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