Freddie Mac 2012 Annual Report Download - page 242

The table below summarizes the types of loans on our consolidated balance sheets as of December 31, 2012 and 2011.
Table 4.1 — Mortgage Loans
December 31, 2012 December 31, 2011
Unsecuritized
Held by
Consolidated
Trusts Total Unsecuritized
Held by
Consolidated
Trusts Total
(in millions)
Single-family:(1)
Fixed-rate
Amortizing ............................... $131,061 $1,356,030 $1,487,091 $153,177 $1,418,751 $1,571,928
Interest-only .............................. 2,445 8,874 11,319 3,184 14,758 17,942
Total fixed-rate ........................... 133,506 1,364,904 1,498,410 156,361 1,433,509 1,589,870
Adjustable-rate
Amortizing ............................... 2,630 67,067 69,697 3,428 68,362 71,790
Interest-only .............................. 7,323 31,590 38,913 10,376 43,655 54,031
Total adjustable-rate ....................... 9,953 98,657 108,610 13,804 112,017 125,821
Other Guarantee Transactions .................... — 10,407 10,407 — 12,776 12,776
FHA/VA and other governmental ................. 1,285 3,062 4,347 1,494 3,254 4,748
Total single-family ............................. 144,744 1,477,030 1,621,774 171,659 1,561,556 1,733,215
Multifamily:(1)
Fixed-rate .................................. 66,384 448 66,832 69,647 — 69,647
Adjustable-rate .............................. 10,182 — 10,182 12,661 — 12,661
Other governmental ........................... 3 — 3 3 — 3
Total multifamily ............................... 76,569 448 77,017 82,311 — 82,311
Total UPB of mortgage loans ...................... 221,313 1,477,478 1,698,791 253,970 1,561,556 1,815,526
Deferred fees, unamortized premiums, discounts and
other cost basis adjustments ................... (5,376) 23,373 17,997 (6,125) 10,926 4,801
Fair value adjustments on loans held-for-sale(2) ........ 266 — 266 195 — 195
Allowance for loan losses on mortgage loans held-for-
investment ................................ (25,788) (4,919) (30,707) (30,912) (8,351) (39,263)
Total mortgage loans, net ......................... $190,415 $1,495,932 $1,686,347 $217,128 $1,564,131 $1,781,259
Mortgage loans, net:
Held-for-investment ........................... $176,177 $1,495,932 $1,672,109 $207,418 $1,564,131 $1,771,549
Held-for-sale ................................ 14,238 — 14,238 9,710 — 9,710
Total mortgage loans, net ......................... $190,415 $1,495,932 $1,686,347 $217,128 $1,564,131 $1,781,259
(1) Based on UPB and excluding mortgage loans traded, but not yet settled.
(2) Consists of fair value adjustments associated with multifamily mortgage loans for which we have made a fair value election.
During 2012 and 2011, we purchased $420.0 billion and $316.3 billion, respectively, in UPB of single-family mortgage
loans and $1.1 billion and $2.7 billion, respectively, in UPB of multifamily loans that were classified as held-for-investment
at purchase. Our sales of multifamily mortgage loans occur primarily through the issuance of multifamily K Certificates,
which we categorize as Other Guarantee Transactions. See “NOTE 9: FINANCIAL GUARANTEES” for more information
on our issuances of Other Guarantee Transactions. We did not have significant reclassifications of mortgage loans into held-
for-sale from held-for-investment during 2012. We did not sell any held-for-investment loans during 2012.
Credit Quality of Mortgage Loans
We evaluate the credit quality of single-family loans using different criteria than the criteria we use to evaluate
multifamily loans. The current LTV ratio is one key factor we consider when estimating our loan loss reserves for single-
family loans. As estimated current LTV ratios increase, the borrower’s equity in the home decreases, which negatively
affects the borrower’s ability to refinance or to sell the property for an amount at or above the balance of the outstanding
mortgage loan. A second-lien mortgage also reduces the borrower’s equity in the home, and has a similar negative effect on
the borrower’s ability to refinance or sell the property for an amount at or above the combined balances of the first and
second mortgages. As of December 31, 2012 and 2011, approximately 14% and 15%, respectively, of loans in our single-
family credit guarantee portfolio had second-lien financing by third parties at the time of origination of the first mortgage.
However, borrowers are free to obtain second-lien financing after origination, and we are not entitled to receive notification
when a borrower does so. Therefore, it is likely that additional borrowers have post-origination second-lien mortgages. For
further information about concentrations of risk associated with our single-family and multifamily mortgage loans, see
“NOTE 15: CONCENTRATION OF CREDIT AND OTHER RISKS.”
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