Freddie Mac 2015 Annual Report Download - page 240

Financial Statements Notes to the Consolidated Financial Statements | Note 4
Freddie Mac 2015 Form 10-K 238
The table below presents our loan loss reserves activity.
Year Ended December 31,
2015 2014
Allowance for Loan Losses Reserve
for
Guarantee
Losses
Allowance for Loan Losses Reserve
for
Guarantee
Losses (in millions) Held by Freddie Mac
Held By
Consolidated
Trusts Total Held by Freddie Mac
Held By
Consolidated
Trusts Total
Single-family:
Beginning balance $ 18,800 $ 2,884 $ 109 $ 21,793 $ 21,487 $ 3,006 $ 85 $ 24,578
Provision (benefit) for credit
losses (2,763) 169 (45) (2,639) (864) 947 30 113
Charge-offs (4,696) (367) (8) (5,071) (4,510) (376) (6) (4,892)
Recoveries 703 14 — 717 998 260 — 1,258
Transfers, net(1) 473 75 — 548 1,689 (953) — 736
Ending balance $ 12,517 $ 2,775 $ 56 $ 15,348 $ 18,800 $ 2,884 $ 109 $ 21,793
Multifamily:
Beginning balance $ 77 $ — $ 17 $ 94 $ 125 $ — $ 26 $ 151
Provision (benefit) for credit
losses (29) — 3 (26) (46) — (9) (55)
Charge-offs (9) — — (9) (3) — — (3)
Recoveries — — — — 1 — — 1
Transfers, net(1) (1) 1 — — — — — —
Ending balance $ 38 $ 1 $ 20 $ 59 $ 77 $ — $ 17 $ 94
Total:
Beginning balance $ 18,877 $ 2,884 $ 126 $ 21,887 $ 21,612 $ 3,006 $ 111 $ 24,729
Provision (benefit) for credit
losses (2,792) 169 (42) (2,665) (910) 947 21 58
Charge-offs (4,705) (367) (8) (5,080) (4,513) (376) (6) (4,895)
Recoveries 703 14 — 717 999 260 — 1,259
Transfers, net(1) 472 76 — 548 1,689 (953) — 736
Ending balance $ 12,555 $ 2,776 $ 76 $ 15,407 $ 18,877 $ 2,884 $ 126 $ 21,887
Ratio of total loan loss reserves (excluding reserves for TDR concessions) to net
charge-offs for single-family loans 3.0 2.5
Ratio of total loan loss reserves to net charge-offs for single-family loans 9.2 5.2
(1) For the years ended December 31, 2015 and 2014, consists of approximately $0.5 billion and $0.7 billion, respectively,
attributable to capitalization of past due interest on modified loans. Also includes amounts associated with reclassified single-
family reserves related to our removal of loans previously held by consolidated trusts, net of reclassifications for single-family
loans subsequently resecuritized after such removal.
Loan Loss Reserves Determined on a Collective Basis
Single-Family Loans
We estimate loan loss reserves on homogeneous pools of single-family loans using a model that
evaluates a variety of factors affecting collectability. The homogeneous pools of single-family loans are
determined based on common underlying characteristics, including current LTV ratios, trends in home
prices, loan product type, and geographic region.
We rely upon third-parties to service our loans. At loan delivery, the seller provides us with loan data,
which includes characteristics and underwriting information. Each subsequent month, the servicers
provide us with monthly loan level servicing data, including delinquency and loss information.
Our single-family loan loss reserve default models produce estimates based on 12 months of loan level