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SEC Filings

10-Q
FEDERAL NATIONAL MORTGAGE ASSOCIATION FANNIE MAE filed this Form 10-Q on 08/05/2011
Entire Document
 
Table of Contents

FANNIE MAE
(In conservatorship)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(UNAUDITED)
 
 
Interest income recognized on impaired loans was $455 million for the three months ended June 30, 2010 and $2.6 billion for the six months ended June 30, 2010. Interest income recognized on a cash basis on impaired loans was $558 million for the three months ended June 30, 2010 and $891 million for the six months ended June 30, 2010.
 
Loans Acquired in a Transfer
 
We acquired delinquent loans from unconsolidated trusts and long-term standby commitments with an unpaid principal balance plus accrued interest of $48 million and $75 million for the three months ended June 30, 2011 and 2010, respectively, and $96 million and $160 million for the six months ended June 30, 2011 and 2010, respectively. The following table displays the outstanding balance, carrying amount and accretable yield of acquired credit-impaired loans as of June 30, 2011 and December 31, 2010, excluding loans that were modified as TDRs subsequent to their acquisition from MBS trusts.
 
                 
    As of  
    June 30,
    December 31,
 
    2011     2010  
    (Dollars in millions)  
 
Outstanding contractual balance
  $ 6,351     $ 8,519  
                 
Carrying amount:
               
Loans on accrual status
  $ 1,836     $ 2,029  
Loans on nonaccrual status
    1,696       2,449  
                 
Total carrying amount of loans
  $ 3,532     $ 4,478  
                 
Accretable yield
  $ 1,965     $ 2,412  
                 
 
The following table displays interest income recognized and the impact to the “Provision for credit losses” related to loans that are still being accounted for as acquired credit-impaired loans, as well as loans that have been subsequently modified as a TDR, for the three and six months ended June 30, 2011 and 2010.
 
                                 
    For the Three
    For the Six
 
    Months Ended
    Months Ended
 
    June 30,     June 30,  
    2011     2010     2011     2010  
    (Dollars in millions)  
 
Accretion of fair value discount(1)
  $ 250     $ 288     $ 481     $ 554  
Interest income on loans returned to accrual status or subsequently modified as TDRs
    265       298       520       619  
                                 
Total interest income recognized on acquired credit-impaired loans
  $ 515     $ 586     $ 1,001     $ 1,173  
                                 
Increase (Decrease) in “Provision for loan losses” subsequent to the acquisition of credit-impaired loans
  $ 721     $ (120 )   $ 959     $ 444  
 
 
(1) Represents accretion of the fair value discount that was recorded on acquired credit-impaired loans.
 
4.   Allowance for Loan Losses
 
We maintain an allowance for loan losses for HFI loans in our mortgage portfolio and loans backing Fannie Mae MBS issued from consolidated trusts. When calculating our allowance for loan losses, we consider only our net recorded investment in the loan at the balance sheet date, which includes interest income only while


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