Freddie Mac 2012 Annual Report Download - page 154

Credit Performance
Delinquencies
We report single-family serious delinquency rate information based on the number of loans that are three monthly
payments or more past due or in the process of foreclosure, as reported by our servicers. Mortgage loans that have been
modified are not counted as seriously delinquent as long as the borrower is less than three monthly payments past due under
the modified terms. Single-family loans for which the borrower is subject to a forbearance agreement or a repayment plan
will continue to reflect the past due status of the borrower. To the extent our borrowers participate in the HFA unemployment
assistance initiatives and the full contractual payment is made by an HFA, a borrower’s mortgage delinquency status will
remain static and will not fall into further delinquency.
Our single-family delinquency rates include all single-family loans that we own, that back Freddie Mac securities, and
that are covered by our other guarantee commitments, except Freddie Mac financial guarantees that are backed by either
Ginnie Mae Certificates or HFA bonds due to the credit enhancements provided on them by the U.S. government.
Some of our workout and other loss mitigation activities create fluctuations in our delinquency statistics. For example,
single-family loans that we report as seriously delinquent before they enter a modification trial period continue to be reported
as seriously delinquent for purposes of our delinquency reporting until the modifications become effective and the loans are
removed from delinquent status by our servicers. Consequently, the volume and timing of loan modifications impact our
reported serious delinquency rate. In addition, there may be temporary timing differences, or lags, in the reporting of
payment status and modification completion due to differing practices of our servicers that can affect our delinquency
reporting.
Our serious delinquency rates have been affected by delays, including those due to increases in foreclosure process
timeframes, general constraints on servicer capacity (which affects the rate at which servicers modify or foreclose upon
loans), and court backlogs (in states that require a judicial foreclosure process). These delays lengthen the period of time in
which loans remain in seriously delinquent status, as the delays extend the time it takes for seriously delinquent loans to be
modified, foreclosed upon or otherwise resolved and thus transition out of seriously delinquent status. As a result, we believe
our single-family serious delinquency rates were higher in 2012 and 2011 than they otherwise would have been.
Many of the seriously delinquent loans that remained in our single-family credit guarantee portfolio at December 31,
2012 have been delinquent for a considerable period of time, particularly in states with a judicial foreclosure process. Loans
that have been delinquent for more than six months are more challenging to resolve as many of these borrowers are not
eligible for modifications and are in geographic areas where the foreclosure process is subject to judicial review or has
lengthened. As of December 31, 2012 and 2011, the percentage of seriously delinquent loans that have been delinquent for
more than six months was 73% and 70%, respectively. As of December 31, 2012 and 2011, the percentage of seriously
delinquent loans located in states with a judicial foreclosure process that have been delinquent for more than one year was
61% and 57%, respectively, and the percentage delinquent for more than two years was 37% and 27%, respectively. As of
December 31, 2012 and 2011, the percentage of seriously delinquent loans located in states with a non-judicial foreclosure
process that have been delinquent for more than one year was 36% and 35%, respectively, and the percentage delinquent for
more than two years was 15% and 11%, respectively.
149 Freddie Mac