Freddie Mac 2012 Annual Report Download - page 249

When we remove mortgage loans from PC trusts, we reclassify the loans from mortgage loans held-for-investment by
consolidated trusts to unsecuritized mortgage loans held-for-investment and record an extinguishment of the corresponding
portion of the debt securities of the consolidated trusts. We removed $29.6 billion and $44.1 billion in UPB of loans from PC
trusts (or purchased delinquent loans associated with other guarantee commitments) during the years ended December 31,
2012 and 2011, respectively.
The table below summarizes the delinquency rates of mortgage loans within our single-family credit guarantee and
multifamily mortgage portfolios.
Table 5.3 — Delinquency Rates(1)
December 31, 2012 December 31, 2011
Single-family:
Non-credit-enhanced portfolio (excluding Other Guarantee Transactions):
Serious delinquency rate ......................................................... 2.62% 2.80%
Total number of seriously delinquent loans ............................................ 244,533 273,184
Credit-enhanced portfolio (excluding Other Guarantee Transactions):
Serious delinquency rate ......................................................... 6.83% 7.56%
Total number of seriously delinquent loans ............................................ 90,747 120,622
Other Guarantee Transactions:(2)
Serious delinquency rate ......................................................... 10.60% 10.54%
Total number of seriously delinquent loans ............................................ 17,580 20,328
Total single-family:
Serious delinquency rate ........................................................... 3.25% 3.58%
Total number of seriously delinquent loans .............................................. 352,860 414,134
Multifamily:(3)
Non-credit-enhanced portfolio:
Delinquency rate ............................................................... 0.10% 0.11%
UPB of delinquent loans (in millions) ................................................ $ 76 $ 93
Credit-enhanced portfolio:
Delinquency rate ............................................................... 0.36% 0.52%
UPB of delinquent loans (in millions) ................................................ $ 172 $ 166
Total Multifamily:
Delinquency rate ............................................................... 0.19% 0.22%
UPB of delinquent loans (in millions) ................................................ $ 248 $ 259
(1) Single-family mortgage loans that have been modified are not counted as seriously delinquent if the borrower is less than three monthly payments past
due under the modified terms. Serious delinquencies on single-family mortgage loans underlying certain REMICs and Other Structured Securities, Other
Guarantee Transactions, and other guarantee commitments may be reported on a different schedule due to variances in industry practice.
(2) Other Guarantee Transactions generally have underlying mortgage loans with higher risk characteristics, but some Other Guarantee Transactions may
provide inherent credit protections from losses due to underlying subordination, excess interest, overcollateralization and other features.
(3) Multifamily delinquency performance is based on UPB of mortgage loans that are two monthly payments or more past due or those in the process of
foreclosure and includes multifamily Other Guarantee Transactions. Excludes mortgage loans that have been modified as long as the borrower is less
than two monthly payments past due under the modified contractual terms.
We continue to implement a number of initiatives to modify and restructure loans, including the MHA Program. Our
implementation of the MHA Program, for our loans, includes the following: (a) an initiative to allow mortgages currently
owned or guaranteed by us to be refinanced without obtaining additional credit enhancement beyond that already in place for
the loan (i.e., our relief refinance mortgage, which is our implementation of HARP); (b) an initiative to modify mortgages for
both homeowners who are in default and those who are at risk of imminent default (i.e., HAMP); and (c) an initiative
designed to permit borrowers who meet basic HAMP eligibility requirements to sell their homes in short sales or to complete
a deed in lieu transaction (i.e., HAFA). As part of accomplishing certain of these initiatives, we pay various incentives to
servicers and borrowers. We bear the full costs associated with these loan workout and foreclosure alternatives on mortgages
that we own or guarantee, including the cost of any monthly payment reductions, and do not receive any reimbursement from
Treasury.
Troubled Debt Restructurings
On July 1, 2011, we adopted an amendment to the accounting guidance for receivables, which clarifies the guidance
regarding a creditor’s evaluation of when a restructuring is considered a TDR. While our adoption of this amendment did not
have an effect on how we account for TDRs, it did significantly expand the population of loans that we account for as TDRs.
See “NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Recently Adopted Accounting Guidance” for
further information on our implementation of this guidance.
In the third quarter of 2012, we changed the treatment of single-family loans discharged in Chapter 7 bankruptcy to
classify these loans as TDRs (unless they were already classified as such for other reasons), regardless of the borrowers’
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