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SEC Filings

10-Q
FEDERAL NATIONAL MORTGAGE ASSOCIATION FANNIE MAE filed this Form 10-Q on 05/07/2015
Entire Document
 


properties we repair prior to marketing has increased as a result of market demand and our continued focus on stabilizing neighborhoods and increasing opportunities for owner occupants to purchase.
Table 31 displays the current status of our single-family foreclosed property inventory, including the percentage of our inventory that we are unable to market, as of the dates indicated.
Table 31: Single-Family Foreclosed Property Status
 
Percent of Single-Family
 
 
Foreclosed Properties
 
 
As of
 
 
March 31, 2015
 
December 31, 2014
 
Available-for-sale
 
24
%
 
28
%
Offer accepted(1)
 
22
 
 
17
 
Appraisal stage(2)
 
14
 
 
13
 
Unable to market:
 
 
 
 
 
 
Occupied status(3)
 
13
 
 
12
 
Redemption status(4)
 
7
 
 
7
 
Properties being repaired
 
10
 
 
13
 
Rental property(5)
 
2
 
 
2
 
Other
 
8
 
 
8
 
Total unable to market
 
40
 
 
42
 
Total
 
100
%
 
100
%
__________
(1) 
Properties for which an offer has been accepted, but the property has not yet been sold.
(2) 
Properties that are pending appraisals and being prepared to be listed for sale.
(3) 
Properties that are still occupied, and for which the eviction process is not yet complete.
(4) 
Properties that are within the period during which state laws allow the former mortgagor and second lien holders to redeem the property.
(5) 
Properties with a tenant living in the home under our tenant in place or deed for lease programs.
Multifamily Mortgage Credit Risk Management
The credit risk profile of our multifamily mortgage credit book of business is influenced by the structure of the financing, the type and location of the property, the condition and value of the property, the financial strength of the borrower, market and sub-market trends and growth, the current and anticipated cash flows from the property, as well as the financial strength of the lender. These and other factors affect both the amount of expected credit loss on a given loan and the sensitivity of that loss to changes in the economic environment. We provide information on our credit-related income and credit losses in “Business Segment Results—Multifamily Business Results.”
Multifamily Acquisition Policy and Underwriting Standards
Our Multifamily business is responsible for pricing and managing the credit risk on multifamily mortgage loans we purchase and on Fannie Mae MBS backed by multifamily loans (whether held in our retained mortgage portfolio or held by third parties), with oversight from our Enterprise Risk Management division. Our primary multifamily delivery channel is the Delegated Underwriting and Servicing, or DUS®, program, which consists of large financial institutions and independent mortgage lenders. Multifamily loans that we purchase or that back Fannie Mae MBS are either underwritten by a Fannie Mae-approved lender or subject to our underwriting review prior to closing, depending on the product type, loan size, market and/or other factors. Loans delivered to us by DUS lenders and their affiliates represented 94% of our multifamily guaranty book of business as of March 31, 2015 and December 31, 2014.
We use various types of credit enhancement arrangements for our multifamily loans including lender risk-sharing, lender repurchase agreements, pool insurance, subordinated participations in mortgage loans or structured pools, cash and letter of credit collateral agreements, and cross-collateralization/cross-default provisions. The most prevalent form of credit enhancement on multifamily loans is lender risk-sharing. Lenders in the DUS program typically share in loan-level credit losses in one of two ways: (1) they bear losses up to the first 5% of the unpaid principal balance of the loan and share in

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