Freddie Mac 2012 Annual Report Download - page 252

interest rate. Approximately $45.0 billion in UPB of our completed HAMP loan modifications at December 31, 2012 had
provisions for reduced interest rates that remain fixed for the first five years of the modification and then increase at a rate of
one percent per year (or such lesser amount as may be needed) until the interest rate has been adjusted to the market rate that
was in effect at the time of the modification.
Table 5.5 — Payment Defaults of Completed TDR Modifications, by Segment(1)
Year Ended December 31, 2012 Year Ended December 31, 2011
# of Loans
Post-TDR
Recorded
Investment(2) # of Loans
Post-TDR
Recorded
Investment(2)
(dollars in millions)
Single-family
20 and 30-year or more, amortizing fixed-rate ........................... 15,718 $2,905 23,592 $4,417
15-year amortizing fixed-rate ....................................... 716 73 890 91
Adjustable-rate .................................................. 331 71 519 111
Alt-A, interest-only, and option ARM ................................. 3,042 805 5,794 1,529
Total single-family ................................................. 19,807 $3,854 30,795 $6,148
Multifamily ...................................................... 6 $ 82 8 $ 31
(1) Represents TDR loans that experienced a payment default during the period and had completed a modification during the year preceding the payment
default. A payment default occurs when a borrower either: (a) became two or more months delinquent; or (b) completed a loss event, such as a short sale
or foreclosure transfer. We only include payment defaults for a single loan once during each quarterly period within a year; however, a single loan will
be reflected more than once if the borrower experienced another payment default in a subsequent quarterly period.
(2) Represents the recorded investment at the end of the period in which the loan was modified and does not represent the recorded investment as of
December 31.
There were 3,845 loans where we engaged in other loss mitigation activities (i.e., repayment plan, forbearance
agreement, or trial period modifications) initially classified as TDRs, with a post-TDR recorded investment of $576 million,
that returned to a current payment status, and then subsequently became two months delinquent during 2012. In addition,
there were 5,220 loans with other loss mitigation activities initially classified as TDRs, with a post-TDR recorded investment
of $876 million, that subsequently completed a loss event, such as a short sale or a foreclosure transfer during 2012. There
were also 9,390 loans with a recorded investment of $ 1.5 billion that were initially classified as TDRs because the
borrowers’ debts were discharged in Chapter 7 bankruptcy (and the loan was not already classified as TDR for other reasons)
and the loan subsequently experienced a loss event in 2012.
NOTE 6: REAL ESTATE OWNED
We obtain REO properties: (a) when we are the highest bidder at foreclosure sales of properties that collateralize non-
performing single-family and multifamily mortgage loans owned by us; or (b) when a delinquent borrower chooses to
transfer the mortgaged property to us in lieu of going through the foreclosure process. Upon acquiring single-family
properties, we establish a marketing plan to sell the property as soon as practicable by determining an estimated market value
and listing it for sale with a real estate broker. Upon acquiring multifamily properties, we may operate them using third-party
property-management firms for a period to stabilize value and then sell the properties through commercial real estate brokers.
However, certain jurisdictions require a period of time after foreclosure during which the borrower may reclaim the property.
During the period when the borrower may reclaim the property, or we are completing the eviction process, we are not able to
market the property and this extends our holding period for these properties. See “NOTE 1: SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES” for a discussion of our significant accounting policies for REO.
The table below provides a summary of the change in the carrying value of our combined single-family and multifamily
REO balances. For the periods presented in the table below, the weighted average holding period for our disposed properties
was less than one year.
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