Freddie Mac 2012 Annual Report Download - page 173

January 1, 2009, we have entered into three negotiated agreements and have released repurchase obligations with 70 other
seller/servicers who were either no longer in business or no longer approved as our seller/servicers, at December 31, 2012.
Table 64 — Loans Released from Repurchase Obligations(1)
As of December 31, 2012
Year of origination: UPB
Percentage of
Single-family
Credit Guarantee
Portfolio
(in billions)
Negotiated agreements:
2008 ............................................................................... $ 14.8 0.9%
2007 ............................................................................... 35.4 2.2
2006 ............................................................................... 27.6 1.7
2005 ............................................................................... 25.3 1.5
2004 and prior ........................................................................ 17.8 1.1
Subtotal ............................................................................ 120.9 7.4
Other released loans:(2)
2010 through 2012 ..................................................................... 0.6 <0.1
2009 ............................................................................... 8.4 0.5
2008 ............................................................................... 8.0 0.5
2007 ............................................................................... 13.4 0.8
2006 ............................................................................... 7.6 0.5
2005 and prior ........................................................................ 8.7 0.5
Total ............................................................................... $167.6 10.2%
(1) Consists of all loans, excluding relief refinance mortgages, released from certain repurchase obligations since January 1, 2009. See “Mortgage Credit
Risk — Single-Family Mortgage Credit Risk — Single-Family Loan Workouts and the MHA Program — Relief Refinance Mortgage and the Home
Affordable Refinance Program” for further information.
(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, 2012.
A significant portion of our single-family mortgage loans are serviced by several large seller/servicers. Our top two
single-family loan servicers, Wells Fargo Bank, N.A. and JPMorgan Chase Bank, N.A., serviced approximately 26% and
12%, respectively, of our single-family mortgage loans as of December 31, 2012, and together serviced approximately 38%
of our single-family mortgage loans. Because we are the master servicer and delegate the primary servicing function to our
servicers, if our servicers lack appropriate process controls, experience a failure in their controls, or experience an operating
disruption in their ability to service mortgage loans, our business and financial results could be adversely affected. We also
continue to be adversely affected by the length of the foreclosure timeline, particularly in states that require a judicial
foreclosure process, which has provided challenges to our seller/servicers because they have had to change their processes
for compliance with regulations in each jurisdiction. See “RISK FACTORS — Operational Risks — We have incurred, and
will continue to incur, expenses and we may otherwise be adversely affected by delays and deficiencies in the foreclosure
process” and “BUSINESS — Regulation and Supervision — Legislative and Regulatory Developments —Developments
Concerning Single-Family Servicing Practices.”
We also are exposed to the risk that seller/servicers might fail to service mortgages in accordance with our contractual
requirements, resulting in increased credit losses. For example, our seller/servicers have an active role in our loss mitigation
efforts, including under the servicing alignment initiative and the MHA Program, and therefore, we also have exposure to
them to the extent a decline in their performance results in a failure to realize the anticipated benefits of our loss mitigation
plans. During 2012, we made changes to our monitoring program under which we pay incentives to servicers that exceed
certain performance standards with respect to servicing delinquent loans and also allow for the assessment of certain fees to
compensate us for deficiencies in servicer performance. These fees are recorded in other expenses, and other income,
respectively, within our consolidated statements of comprehensive income. These fees were not significant to our
consolidated financial results for 2012.
Residential Capital LLC (“ResCap”) and a number of its subsidiaries, including GMAC Mortgage, LLC and Residential
Funding Company, LLC (with GMAC Mortgage, LLC, collectively, “GMAC”), filed for bankruptcy in the U.S. Bankruptcy
Court for the Southern District of New York on May 14, 2012. ResCap and GMAC are direct or indirect subsidiaries of Ally
Financial Inc. GMAC serviced (either as a servicer or a subservicer) approximately 3% of our single-family mortgage loans
as of December 31, 2012. In March 2010, we entered into an agreement with GMAC, under which GMAC 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. We
continued to purchase loans from GMAC after January 1, 2009; Ally Bank (a subsidiary of Ally Financial Inc.) is liable for
168 Freddie Mac