Freddie Mac 2011 Annual Report Download - page 136

with financial consequences or with stated remedies for non-compliance, as part of the annual renewals of our contracts
with them. As of December 31, 2011, our 13 largest seller/servicers, which hold more than 81% of all outstanding
repurchase requests, are subject to the revised contract terms. We continue to review loans and pursue our rights to issue
repurchase requests to our counterparties, as appropriate.
Our estimate of recoveries from seller/servicer repurchase obligations is considered in our allowance for loan losses
as of December 31, 2011 and December 31, 2010; however, our actual recoveries may be different than our estimates. See
“NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Allowance for Loan Losses and Reserve for
Guarantee Losses” for further information. We believe we have appropriately provided for these exposures, based upon
our estimates of incurred losses, in our loan loss reserves at December 31, 2011 and December 31, 2010; however, our
actual losses may exceed our estimates.
The table below summarizes the percentage of our single-family credit guarantee portfolio by year of loan origination
that is subject to agreements releasing loans from certain repurchase obligations, including TBW and other defaulted
counterparties. Since January 1, 2009, we have entered into three negotiated agreements (including the agreements with
GMAC and Bank of America discussed below) and have released repurchase obligations with 27 other seller/servicers
who were either no longer in operation or no longer approved as our seller/servicers, at December 31, 2011.
Table 40 — Loans Released from Repurchase Obligations
(1)
Year of origination: UPB
Percentage of Single-family
Credit Guarantee Portfolio
As of December 31, 2011
(in billions)
Negotiated agreements:
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21.8 1.2%
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.2 2.8
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.0 2.2
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.5 2.0
2004 and prior. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.4 1.3
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165.9 9.5
Other released loans:
(2)
2011 and 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 ⬍0.1
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5 0.7
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4 0.6
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.3 0.9
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8 0.5
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 0.4
2004 and prior. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 0.2
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $222.8 12.8%
(1) Consists of all loans released from certain repurchase obligations since January 1, 2009.
(2) Consists of loans associated with seller/servicers who were either no longer in business or no longer approved as our seller/servicers at,
December 31, 2011. We received or, in some cases, expect to receive cash totaling approximately $0.1 billion from the FDIC or other third parties
for the release of related loans from servicing obligations for defaulted seller/servicers.
GMAC Mortgage, LLC and Residential Funding Company, LLC (collectively GMAC), indirect subsidiaries of Ally
Financial Inc. (formerly, GMAC Inc.), are seller/servicers that together serviced and subserviced for an affiliated entity
approximately 4% of the single-family loans in our single-family credit guarantee portfolio as of December 31, 2011. In
March 2010, we entered into an agreement with GMAC, under which they made a one-time payment to us for the partial
release of repurchase obligations relating to loans sold to us prior to January 1, 2009. The partial release does not affect
any of GMAC’s potential repurchase obligations for loans sold to us by GMAC after January 1, 2009, nor does it affect
the ability to recover amounts associated with failure to comply with our servicing requirements. This agreement did not
have a material impact on our 2011 or 2010 consolidated statements of income and comprehensive income. Ally
Financial Inc. recently stated that the protracted period of adverse developments in the mortgage finance and credit
markets has adversely affected Residential Capital LLC’s business, liquidity, and its capital position and has raised
substantial doubt about Residential Capital LLC’s ability to continue as a going concern. Residential Capital LLC is the
parent company of Residential Funding Company, LLC, one of our mortgage servicers. For information on our exposure
to institutional counterparties, see “RISK FACTORS — Competitive and Market Risks — We depend on our institutional
counterparties to provide services that are critical to our business, and our results of operations or financial condition
may be adversely affected if one or more of our institutional counterparties do not meet their obligations to us.”
On December 31, 2010, we entered into an agreement with Bank of America, N.A., and two of its affiliates, BAC
Home Loans Servicing, LP and Countrywide Home Loans, Inc., to resolve our currently outstanding and future claims for
repurchases arising from the breach of representations and warranties on certain loans purchased by us from Countrywide
131 Freddie Mac