Freddie Mac 2012 Annual Report Download - page 100

million in 2011 and $819 million in 2010. The decline in 2012, compared to 2011, was primarily due to: (a) income
recognized in 2011 related to proceeds received from an agreement with Bank of America with respect to repurchase
obligations; and (b) income recognized in 2011 related to a settlement with Taylor, Bean & Whitaker (TBW), one of our
former seller/servicers. The decline in 2011, compared to 2010, was primarily due to: (a) gains recognized in 2010 due to the
recognition of income related to mortgage-servicing rights associated with TBW, and (b) the negative impact in 2011 of the
correction of certain prior period accounting errors not material to our financial statements. The largest correction in 2011
related to an error associated with the accrual of interest income for certain impaired mortgage-related securities during 2010
and 2009.
Non-Interest Expense
The table below summarizes the components of non-interest expense.
Table 14 — Non-Interest Expense
Year Ended December 31,
2012 2011 2010
(in millions)
Administrative expenses:
Salaries and employee benefits ............................................................. $ 810 $ 832 $ 895
Professional services ..................................................................... 361 270 297
Occupancy expense ...................................................................... 57 62 64
Other administrative expense ............................................................... 333 342 341
Total administrative expenses ............................................................ 1,561 1,506 1,597
REO operations expense .................................................................... 59 585 673
Other expenses ........................................................................... 573 392 662
Total non-interest expense ................................................................... $2,193 $2,483 $2,932
Administrative Expenses
Administrative expenses increased during 2012 compared to 2011 due to an increase in professional services expense.
Professional services expense increased as a result of initiatives we are pursuing under the Conservatorship Scorecard and
other FHFA-mandated strategic initiatives.
Administrative expenses decreased in 2011 compared to 2010, largely due to a reduction in the number of employees as
part of cost reduction measures.
We believe the various FHFA-mandated strategic initiatives we are pursuing will likely continue to require significant
resources and thus continue to affect our level of administrative expenses going forward.
REO Operations Expense
The table below presents the components of our REO operations expense, and information about REO inventory and
REO dispositions.
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