Freddie Mac 2012 Annual Report Download - page 159

The table below presents foreclosure and short sale rate information for loans in our single-family credit guarantee
portfolio based on year of origination.
Table 53 — Single-Family Credit Guarantee Portfolio Foreclosure and Short Sale Rates
As of December 31,
2012 2011 2010
Year of Loan Origination
Percentage
of Portfolio
Foreclosure and
Short Sale
Rate(1)
Foreclosure and
Short Sale
Rate(1)
Foreclosure and
Short Sale
Rate(1)
2012 ......................................................... 22% <0.01% N/A N/A
2011 ......................................................... 14 0.06 —% N/A
2010 ......................................................... 15 0.20 0.05 —%
2009 ......................................................... 12 0.34 0.17 0.04
Combined — 2009 to 2012 ...................................... 63 0.17 0.08 0.02
2008 ......................................................... 6 3.26 2.23 1.26
2007 ......................................................... 7 9.74 7.49 4.92
2006 ......................................................... 5 8.66 6.95 5.00
2005 ......................................................... 6 5.11 4.07 2.95
Combined — 2005 to 2008 ...................................... 24 6.87 5.35 3.66
2004 and prior(2) ................................................. 13 1.20 1.04 0.88
Total ........................................................ 100%
(1) Calculated for each year of origination as the number of loans that have proceeded to foreclosure transfer or short sale and resulted in a credit loss,
excluding any subsequent recoveries, during the period from origination to December 31, 2012, 2011, and 2010, respectively, divided by the number of
loans originated in that year that were acquired in our single-family credit guarantee portfolio.
(2) The foreclosure and short sale rate presented for loans originated in 2004 and prior represents the rate associated with loans originated in 2000 through
2004.
Loans originated from 2005 through 2008 have experienced higher foreclosure and short sale rates as compared to our
historical experience. We attribute this performance to a number of factors, including: (a) the expansion of credit terms under
which loans were underwritten during these years; (b) an increase in the origination and our purchase of interest-only and
Alt-A mortgage products in these years; and (c) an environment of persistently high unemployment, decreasing home sales,
and broadly declining home prices in the period following the loans’ origination.
Multifamily Mortgage Credit Risk
To manage our multifamily mortgage portfolio credit risk, we focus on several key areas: (a) underwriting standards and
processes we believe to be prudent; (b) selling significant portions of the expected credit risk through subordination by
issuance of our multifamily K Certificates; (c) portfolio diversification, particularly by product and geographical area; and
(d) portfolio management activities, including loss mitigation and use of credit enhancements. We monitor the loan
performance, the underlying properties and a variety of mortgage loan characteristics that may affect the default experience
on our multifamily mortgage portfolio, such as DSCR, LTV ratio, geographic location, payment type, and loan maturity. See
“BUSINESS — Our Business Segments — Multifamily Segment” for information on our multifamily underwriting standards.
See “NOTE 15: CONCENTRATION OF CREDIT AND OTHER RISKS” for more information about the loans in our
multifamily mortgage portfolio.
154 Freddie Mac