Freddie Mac 2012 Annual Report Download - page 109

The table below provides summary information about the composition of Segment Earnings (loss) for this segment for
2012 and 2011.
Table 19 — Segment Earnings Composition — Single-Family Guarantee Segment
Year Ended December 31, 2012
Segment Earnings
Management and
Guarantee Income(1) Credit Expenses(2)
Amount
Average
Rate(3) Amount
Average
Rate(3)
Net
Amount(4)
(dollars in millions, rates in bps)
Year of origination:(5)
2012 ................................................................ $ 525 27.1 $ (142) 6.7 $ 383
2011 ................................................................ 792 29.7 (214) 8.1 578
2010 ................................................................ 794 29.7 (292) 10.5 502
2009 ................................................................ 738 29.6 (221) 8.9 517
2008 ................................................................ 330 27.6 (50) 5.3 280
2007 ................................................................ 312 20.2 (1,064) 77.6 (752)
2006 ................................................................ 192 19.4 (673) 66.1 (481)
2005 ................................................................ 221 19.7 (643) 55.4 (422)
2004 and prior ........................................................ 485 21.1 69 (2.8) 554
Total ............................................................... $4,389 25.9 $ (3,230) 19.0 $ 1,159
Administrative expenses ............................................... (890)
Net interest income (expense) ............................................ (147)
Other non-interest income and expenses, net ................................. (286)
Segment Earnings (loss), net of taxes ...................................... $ (164)
Year Ended December 31, 2011
Segment Earnings
Management and
Guarantee Income(1) Credit Expenses(2)
Amount
Average
Rate(3) Amount
Average
Rate(3)
Net
Amount(4)
(dollars in millions, rates in bps)
Year of origination:(5)
2011 ................................................................ $ 362 21.2 $ (93) 6.5 $ 269
2010 ................................................................ 763 22.4 (339) 9.6 424
2009 ................................................................ 713 20.6 (385) 10.9 328
2008 ................................................................ 382 23.4 (1,169) 86.2 (787)
2007 ................................................................ 368 18.6 (4,432) 242.8 (4,064)
2006 ................................................................ 227 17.7 (3,387) 248.8 (3,160)
2005 ................................................................ 257 17.5 (2,116) 135.8 (1,859)
2004 and prior ........................................................ 575 18.7 (969) 28.5 (394)
Total ............................................................... $3,647 20.2 $(12,890) 71.5 $ (9,243)
Administrative expenses ............................................... (888)
Net interest income (expense) ............................................ (23)
Other non-interest income and expenses, net ................................. 154
Segment Earnings (loss), net of taxes ...................................... $(10,000)
(1) Includes amortization of delivery fees of $1.7 billion and $1.2 billion for 2012 and 2011, respectively. For 2012, includes the effect of the legislated 10
basis point increase in guarantee fees that became effective April 1, 2012, as well as an additional increase in guarantee fees that became effective in the
fourth quarter of 2012.
(2) Consists of the aggregate of the Segment Earnings provision for credit losses and Segment Earnings REO operations expense. Historical rates of average
credit expenses may not be representative of future results. In 2012, we enhanced our method of allocating credit expenses by loan origination year.
Prior period amounts have been revised to conform to the current period presentation.
(3) Calculated as the amount of Segment Earnings management and guarantee income or credit expenses, respectively, divided by the sum of the average
carrying values of the single-family credit guarantee portfolio and the average balance of our single-family HFA initiative guarantees.
(4) Calculated as Segment Earnings management and guarantee income less credit expenses.
(5) Segment Earnings management and guarantee income is presented by year of guarantee origination, whereas credit expenses are presented based on year
of loan origination.
As of December 31, 2012, loans originated after 2008 have, on a cumulative basis, provided management and guarantee
income that has exceeded the credit-related and administrative expenses associated with these loans. Nevertheless, various
factors, such as continued high unemployment rates, future declines in home prices, or negative impacts of HARP loans
(which may not perform as well as other refinance mortgages, due in part to the high LTV ratios of the loans), could require
us to incur expenses on these loans beyond our current expectations.
104 Freddie Mac