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Mortgage Loans

12 Months Ended

Dec. 31, 2018

SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Abstract]

Mortgage LoansWe own single-family mortgage loans, which are secured by four or fewer residential dwelling units, and multifamily mortgage loans, which are secured by five or more residential dwelling units. We classify these loans as either HFI or HFS. We report the carrying value of HFI loans at the unpaid principal balance, net of unamortized premiums and discounts, other cost basis adjustments, and an allowance for loan losses. We report the carrying value of HFS loans at the lower of cost or fair value and record valuation changes in “Investment gains, net” in our consolidated statements of operations and comprehensive income. We define the recorded investment of HFI loans as unpaid principal balance, net of unamortized premiums and discounts, other cost basis adjustments, and accrued interest receivable.

For purposes of the single-family mortgage loan disclosures below, we define “primary” class as mortgage loans that are not included in other loan classes; “government” class as mortgage loans that are guaranteed or insured, in whole or in part, by the U.S. government or one of its agencies, and that are not Alt-A; and “other” class as loans with higher-risk characteristics, such as interest-only loans and negative-amortizing loans, that are neither government nor Alt-A.

The following table displays the carrying value of our mortgage loans.



	As of December 31,
	2018			2017
	(Dollars in millions)
Single-family	$	2,929,925		$	2,890,634
Multifamily	293,858			265,069
Total unpaid principal balance of mortgage loans	3,223,783			3,155,703
Cost basis and fair value adjustments, net	39,815			41,906
Allowance for loan losses for loans held for investment	(14,203		)	(19,084		)
Total mortgage loans	$	3,249,395		$	3,178,525

The following table displays information about our redesignated mortgage loans.



	For the Year ended December 31,
	2018		2017		2016
	(Dollars in millions)
Carrying value of loans redesignated from HFI to HFS	$	21,960	$	12,886	$	3,878
Carrying value of loans redesignated from HFS to HFI	56		113		27
Loans sold - unpaid principal balance	21,918		12,184		6,736
Realized gains on sale of mortgage loans	444		723		54

The recorded investment of single-family mortgage loans for which formal foreclosure proceedings are in process was $10.1 billion and $13.0 billion as of December 31, 2018 and 2017, respectively. As a result of our various loss mitigation and foreclosure prevention efforts, we expect that a portion of the loans in the process of formal foreclosure proceedings will not ultimately foreclose.Aging Analysis

The following tables display an aging analysis of the total recorded investment in our HFI mortgage loans by portfolio segment and class, excluding loans for which we have elected the fair value option.



	As of December 31, 2018
	30 - 59 Days Delinquent			60 - 89 Days Delinquent			Seriously Delinquent⁽¹⁾			Total Delinquent			Current		Total		Recorded Investment in Loans 90 Days or More Delinquent and Accruing Interest			Recorded Investment in Nonaccrual Loans
	(Dollars in millions)
Single-family:
Primary		$	30,471		$	7,881		$	14,866		$	53,218	$	2,816,047	$	2,869,265		$	22	$	26,170
Government⁽²⁾		57			17			169			243		21,887		22,130			169		—
Alt-A		2,332			821			1,844			4,997		48,274		53,271			2		3,082
Other		804			283			713			1,800		13,038		14,838			2		1,128
Total single-family		33,664			9,002			17,592			60,258		2,899,246		2,959,504			195		30,380
Multifamily⁽³⁾		56			N/A			171			227		295,437		295,664			—		492
Total		$	33,720		$	9,002		$	17,763		$	60,485	$	3,194,683	$	3,255,168		$	195	$	30,872



	As of December 31, 2017
	30 - 59 Days Delinquent			60 - 89 Days Delinquent			Seriously Delinquent⁽¹⁾			Total Delinquent			Current		Total		Recorded Investment in Loans 90 Days or More Delinquent and Accruing Interest			Recorded Investment in Nonaccrual Loans
	(Dollars in millions)
Single-family:
Primary		$	35,582		$	10,396		$	23,999		$	69,977	$	2,732,818	$	2,802,795		$	87	$	37,971
Government⁽²⁾		55			21			206			282		30,807		31,089			206		—
Alt-A		3,186			1,147			3,418			7,751		59,475		67,226			5		5,094
Other		1,185			411			1,252			2,848		19,016		21,864			5		1,834
Total single-family		40,008			11,975			28,875			80,858		2,842,116		2,922,974			303		44,899
Multifamily⁽³⁾		26			N/A			276			302		266,699		267,001			—		424
Total		$	40,034		$	11,975		$	29,151		$	81,160	$	3,108,815	$	3,189,975		$	303	$	45,323


⁽¹⁾	Single-family seriously delinquent loans are loans that are 90 days or more past due or in the foreclosure process. Multifamily seriously delinquent loans are loans that are 60 days or more past due.


⁽²⁾	Primarily consists of reverse mortgages, which due to their nature, are not aged and are included in the current column.

⁽³⁾

Multifamily loans 60-89 days delinquent are included in the seriously delinquent column.Credit Quality Indicators

The following table displays the total recorded investment in our single-family HFI loans by class and credit quality indicator, excluding loans for which we have elected the fair value option.



	As of December 31,
	2018⁽¹⁾						2017⁽¹⁾
	Primary		Alt-A		Other		Primary		Alt-A		Other
	(Dollars in millions)
Estimated mark-to-market LTV ratio:⁽²⁾
Less than or equal to 80%	$	2,521,766	$	45,476	$	12,291	$	2,439,858	$	51,903	$	16,428
Greater than 80%and less than or equal to 90%	228,614		3,804		1,195		238,038		6,680		2,277
Greater than 90%and less than or equal to 100%	109,548		1,997		645		106,076		4,044		1,443
Greater than 100%	9,337		1,994		707		18,823		4,599		1,716
Total	$	2,869,265	$	53,271	$	14,838	$	2,802,795	$	67,226	$	21,864


⁽¹⁾	Excludes $22.1 billion and $31.1 billion as of December 31, 2018 and 2017, respectively, of mortgage loans guaranteed or insured, in whole or in part, by the U.S. government or one of its agencies, that are not Alt-A loans. The class is primarily reverse mortgages for which we do not calculate an estimated mark-to-market LTV ratio.

⁽²⁾

The aggregate estimated mark-to-market LTV ratio is based on the unpaid principal balance of the loan as of the end of each reported period divided by the estimated current value of the property, which we calculate using an internal valuation model that estimates periodic changes in home value.The following table displays the total recorded investment in our multifamily HFI loans by credit quality indicator, excluding loans for which we have elected the fair value option.



	As of December 31,
	2018		2017
	(Dollars in millions)
Credit risk profile by internally assigned grade:
Non-classified	$	289,231	$	263,416
Classified⁽¹⁾	6,433		3,585
Total	$	295,664	$	267,001

⁽¹⁾

Represents loans classified as “Substandard,” which have a well-defined weakness that jeopardizes the timely full repayment. Loans with a weakness that makes collection or liquidation in full highly questionable and improbable based on existing conditions and values are referred to as “Doubtful.” We had a recorded investment of $1 million in loans classified as Doubtful as of December 31, 2018. There were no loans classified as Doubtful as of December 31, 2017.Individually Impaired Loans

Individually impaired loans include TDRs, acquired credit-impaired loans and multifamily loans that we have assessed as probable that we will not collect all contractual amounts due, regardless of whether we are currently accruing interest, excluding loans classified as HFS and loans for which we have elected the fair value option. The following tables display the total unpaid principal balance, recorded investment, related allowance, average recorded investment and interest income recognized for individually impaired loans.



	As of December 31,
	2018									2017
	Unpaid Principal Balance			Total Recorded Investment			Related Allowance for Loan Losses			Unpaid Principal Balance			Total Recorded Investment			Related Allowance for Loan Losses
	(Dollars in millions)
Individually impaired loans:
With related allowance recorded:
Single-family:
Primary		$	81,791		$	78,688	$	(9,406	)		$	91,194		$	86,864	$	(11,652	)
Government		264			270		(55		)		276			279		(56		)
Alt-A		16,576			15,158		(2,793		)		23,077			21,045		(4,046		)
Other		5,482			5,169		(1,001		)		8,488			8,006		(1,493		)
Total single-family		104,113			99,285		(13,255		)		123,035			116,194		(17,247		)
Multifamily		197			196		(40		)		279			280		(42		)
Total individually impaired loans with related allowance recorded		104,310			99,481		(13,295		)		123,314			116,474		(17,289		)
With no related allowance recorded:⁽¹⁾
Single-family:
Primary		15,939			15,191		—				16,027			15,158		—
Government		61			56		—				66			60		—
Alt-A		2,628			2,363		—				3,253			2,870		—
Other		718			666		—				988			909		—
Total single-family		19,346			18,276		—				20,334			18,997		—
Multifamily		343			346		—				308			310		—
Total individually impaired loans with no related allowance recorded		19,689			18,622		—				20,642			19,307		—
Total individually impaired loans⁽²⁾		$	123,999		$	118,103	$	(13,295	)		$	143,956		$	135,781	$	(17,289	)


⁽¹⁾	The discounted cash flows or collateral value equals or exceeds the carrying value of the loan and, as such, no valuation allowance is required.


⁽²⁾	Includes single-family loans restructured in a TDR with a recorded investment of $117.2 billion and $134.7 billion as of December 31, 2018 and 2017, respectively. Includes multifamily loans restructured in a TDR with a recorded investment of $187 million and $185 million as of December 31, 2018 and 2017, respectively.



	For the Year Ended December 31,
	2018									2017									2016
	Average Recorded Investment			Total Interest Income Recognized			Interest Income Recognized on a Cash Basis			Average Recorded Investment			Total Interest Income Recognized			Interest Income Recognized on a Cash Basis			Average Recorded Investment			Total Interest Income Recognized			Interest Income Recognized on a Cash Basis
	(Dollars in millions)
Individually impaired loans:
With related allowance recorded:
Single-family:
Primary		$	85,063		$	3,522		$	381		$	92,893		$	3,721		$	319		$	105,076		$	4,004		$	325
Government		276			17			—			292			10			—			314			12			—
Alt-A		18,202			772			57			23,536			929			56			27,512			1,010			54
Other		6,691			250			19			9,158			318			19			11,382			365			20
Total single-family		110,232			4,561			457			125,879			4,978			394			144,284			5,391			399
Multifamily		235			3			—			273			9			—			508			29			—
Total individually impaired loans with related allowance recorded		110,467			4,564			457			126,152			4,987			394			144,792			5,420			399
With no related allowance recorded:⁽¹⁾
Single-family:
Primary		15,005			967			119			15,166			1,107			96			15,293			1,236			91
Government		57			4			—			61			3			—			59			4			—
Alt-A		2,625			218			17			3,000			270			13			3,293			309			9
Other		807			56			5			997			84			4			1,116			108			3
Total single-family		18,494			1,245			141			19,224			1,464			113			19,761			1,657			103
Multifamily		336			14			—			297			19			—			317			13			—
Total individually impaired loans with no related allowance recorded		18,830			1,259			141			19,521			1,483			113			20,078			1,670			103
Total individually impaired loans		$	129,297		$	5,823		$	598		$	145,673		$	6,470		$	507		$	164,870		$	7,090		$	502

⁽¹⁾

The discounted cash flows or collateral value equals or exceeds the carrying value of the loan and, as such, no valuation allowance is required.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. In addition to formal loan modifications, we also engage in other loss mitigation activities with troubled borrowers, which include repayment plans and forbearance arrangements, both of which represent informal agreements with the borrower that do not result in the legal modification of the loan’s contractual terms. We account for these informal restructurings as a TDR if we defer more than three missed payments. We also classify loans to certain borrowers who have received bankruptcy relief as TDRs.

The substantial majority of the loan modifications we complete result in term extensions, interest rate reductions or a combination of both. The average term extension of a single-family modified loan was 109 months, 153 months and 157 months for the years ended December 31, 2018, 2017 and 2016, respectively. The average interest rate reduction was 0.21, 0.56 and 0.79 percentage points for the years ended December 31, 2018, 2017 and 2016, respectively.

The following table displays the number of loans and recorded investment in loans classified as a TDR.



	For the Year Ended December 31,
	2018					2017					2016
	Number of Loans		RecordedInvestment⁽¹⁾			Number of Loans		RecordedInvestment⁽¹⁾			Number of Loans		RecordedInvestment⁽¹⁾
	(Dollars in millions)
Single-family:
Primary		89,192		$	13,437		59,708		$	8,247		61,586		$	8,405
Government		115		11			171		18			186		20
Alt-A		5,378		697			5,369		771			6,647		946
Other		1,127		208			1,158		207			1,381		244
Total single-family		95,812		14,353			66,406		9,243			69,800		9,615
Multifamily		14		74			8		99			11		66
Total TDRs		95,826		$	14,427		66,414		$	9,342		69,811		$	9,681


⁽¹⁾	Based on the nature of our modification programs, which do not include principal or past-due interest forgiveness, there is not a material difference between the recorded investment in our loans pre- and post- modification, therefore amounts represent recorded investment post-modification.

The increase in loans classified as TDRs for the year ended December 31, 2018 compared with the years ended December 31, 2017 and 2016 was primarily attributable to single-family loan modifications and other forms of loss mitigation in the areas affected by Hurricanes Harvey, Irma and Maria that resulted in a restructuring of the terms of these loans.For loans that had a payment default in the period presented and that were classified as a TDR in the twelve months prior to the payment default, the following tables display the number of loans and our recorded investment in these loans at the time of payment default. For the purposes of this disclosure, we define loans that had a payment default as: single-family and multifamily loans with completed TDRs that liquidated during the period, either through foreclosure, deed-in-lieu of foreclosure, or a short sale; single-family loans with completed modifications that are two or more months delinquent during the period; or multifamily loans with completed modifications that are one or more months delinquent during the period.



	For the Year Ended December 31,
	2018					2017					2016
	Number of Loans		Recorded Investment			Number of Loans		Recorded Investment			Number of Loans		Recorded Investment
	(Dollars in millions)
Single-family:
Primary		18,613		$	2,697		19,539		$	2,722		20,810		$	2,938
Government		55		7			91		10			95		11
Alt-A		2,412		386			2,588		400			3,131		500
Other		662		131			760		145			1,002		172
Total single-family		21,742		3,221			22,978		3,277			25,038		3,621
Multifamily		2		3			2		12			5		46
Total TDRs that subsequently defaulted		21,744		$	3,224		22,980		$	3,289		25,043		$	3,667