Freddie Mac 2015 Annual Report Download - page 242

Financial Statements Notes to the Consolidated Financial Statements | Note 4
Freddie Mac 2015 Form 10-K 240
recoveries.
Multifamily Loans
Multifamily loans evaluated collectively for impairment are aggregated into book year vintages and
measured by benchmarking published historical commercial loan data to those vintages based upon
available economic data related to multifamily real estate, including apartment vacancy and rental rates.
Loan Loss Reserves Determined on an Individual Basis
We consider a loan to be impaired when, based on current information, it is probable that we will not
receive all amounts due (including both principal and interest) in accordance with the contractual terms of
the original loan agreement.
Single-family loans individually evaluated for impairment include TDRs, as well as loans acquired under
our financial guarantees with deteriorated credit quality prior to 2010. Multifamily loans individually
evaluated for impairment include TDRs, loans three monthly payments or more past due, and loans that
are impaired based on management judgment.
Troubled Debt Restructurings
A modification to the contractual terms of a loan that results in granting a concession to a borrower
experiencing financial difficulties is considered a TDR. A concession is deemed granted when, as a result
of the restructuring, we do not expect to collect all amounts due, including interest accrued, at the original
contractual interest rate. As appropriate, we also consider other qualitative factors in determining whether
a concession is deemed granted, including whether the borrower’s modified interest rate is consistent
with that of a non-troubled borrower. We do not consider restructurings that result in an insignificant delay
in payment to be a concession. We generally consider a delay in monthly amortizing payments of three
months or less to be insignificant. A concession typically includes one or more of the following being
granted to the borrower:
• A trial period where the expected permanent modification will change our expectation of collecting all
amounts due at the original contract rate;
• A delay in payment that is more than insignificant;
• A reduction in the contractual interest rate;
• Interest forbearance for a period of time that is more than insignificant or forgiveness of accrued but
uncollected interest amounts;
• Principal forbearance that is more than insignificant; and
• Discharge of the borrower’s obligation in Chapter 7 bankruptcy.