Loans and Allowance for Losses

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

LOANS AND ALLOWANCE FOR LOSSES

LOANS AND ALLOWANCE FOR LOSSES

Loans

Farmer Mac classifies loans as either held for investment or held for sale. Loans held for investment are recorded at the unpaid principal balance, net of unamortized premium or discount and other cost adjustments. The following table displays the composition of the loan balances as of September 30, 2019 and December 31, 2018:

Table 5.1

	As of September 30, 2019									As of December 31, 2018
	Unsecuritized			In Consolidated Trusts			Total			Unsecuritized			In Consolidated Trusts			Total
	(in thousands)
Farm & Ranch	$	3,310,248		$	1,526,718		$	4,836,966		$	3,071,222		$	1,517,101		$	4,588,323
Rural Utilities	1,612,773			—			1,612,773			938,843			—			938,843
Total unpaid principal balance(1)	4,923,021			1,526,718			6,449,739			4,010,065			1,517,101			5,527,166
Unamortized premiums, discounts, and other cost basis adjustments	75,505			—			75,505			(5,097		)	—			(5,097		)
Total loans	4,998,526			1,526,718			6,525,244			4,004,968			1,517,101			5,522,069
Allowance for loan losses	(6,549		)	(1,475		)	(8,024		)	(5,565		)	(1,452		)	(7,017		)
Total loans, net of allowance	$	4,991,977		$	1,525,243		$	6,517,220		$	3,999,403		$	1,515,649		$	5,515,052

⁽¹⁾  Unpaid principal balance is the basis of presentation in disclosures of outstanding balances for Farmer Mac's lines of business.

Allowance for Losses

Farm & Ranch

The following is a summary of the changes in the total allowance for losses for the three and nine months ended September 30, 2019 and 2018:

Table 5.2

	September 30, 2019									September 30, 2018
	Allowance for Loan Losses			Reserve for Losses			Total Allowance for Losses			Allowance for Loan Losses			Reserve for Losses			Total Allowance for Losses
	(in thousands)
For the Three Months Ended:
Beginning Balance	$	7,264		$	1,880		$	9,144		$	6,789		$	2,249		$	9,038
Provision for/(release of) losses	760			(137		)	623			99			(102		)	(3		)
Charge-offs	—			—			—			(17		)	—			(17		)
Ending Balance	$	8,024		$	1,743		$	9,767		$	6,871		$	2,147		$	9,018
For the Nine Months Ended:
Beginning Balance	$	7,017		$	2,167		$	9,184		$	6,796		$	2,070		$	8,866
Provision for/(release of) losses	1,074			(424		)	650			92			77			169
Charge-offs	(67		)	—			(67		)	(17		)	—			(17		)
Ending Balance	$	8,024		$	1,743		$	9,767		$	6,871		$	2,147		$	9,018

The provision for the allowance for loan losses recorded during third quarter 2019 was attributable to a decrease in the portfolio credit quality, primarily related to idiosyncratic factors of a few large loans and less related to systemic, macroeconomic factors. The release from the reserve for losses recorded during third quarter 2019 was primarily attributable to a net volume decrease in off-balance sheet Farm & Ranch LTSPCs and a slight improvement in off-balance sheet portfolio credit quality. The $0.1 million charge-off that occurred during the nine months ended September 30, 2019 related to the foreclosure of one part-time farm loan.

During both the three and nine months ended September 30, 2018, Farmer Mac recorded a provision to its allowance for loan losses of $0.1 million. During those same periods, Farmer Mac also recorded a release of reserve for losses of $0.1 million and a provision to the reserve for losses of $0.1 million, respectively. The provisions for the allowance for loan losses recorded during the three and nine months ended September 30, 2018 were attributable to an increase in the balance of on-balance sheet Farm & Ranch loans, which was partially offset by a slight improvement in over portfolio credit quality. The release of the reserve for losses recorded during third quarter 2018 was attributable to a decrease in the balance of loans underlying LTSPCs since second quarter 2018. The provision for the reserve for losses recorded during the nine months ended September 30, 2018 was attributable to an increase in the balance of loans underlying LTSPCs since December 31, 2017. The charge-off that Farmer Mac recorded during the three and nine months ended September 30, 2018 related to one loan that was foreclosed and transitioned to REO during third quarter 2018.

The following tables present the changes in the total allowance for losses for the three and nine months ended September 30, 2019 and 2018 by commodity type:

Table 5.3

	September 30, 2019
	Crops		Permanent Plantings			Livestock		Part-time Farm			Ag. Storage and Processing			Other			Total
	(in thousands)
For the Three Months Ended:
Beginning Balance	$	4,773	$	1,926		$	1,423	$	400		$	603		$	19		$	9,144
Provision for/(release of) losses	88		179			404		(16		)	(18		)	(14		)	623
Ending Balance	$	4,861	$	2,105		$	1,827	$	384		$	585		$	5		$	9,767
For the Nine Months Ended:
Beginning Balance	$	4,394	$	2,126		$	1,460	$	474		$	720		$	10		$	9,184
Provision for/(release of) losses	467		(21		)	367		(23		)	(135		)	(5		)	650
Charge-offs	—		—			—		(67		)	—			—			(67		)
Ending Balance	$	4,861	$	2,105		$	1,827	$	384		$	585		$	5		$	9,767

	September 30, 2018
	Crops			Permanent Plantings			Livestock		Part-time Farm			Ag. Storage and Processing			Other			Total
	(in thousands)
For the Three Months Ended:
Beginning Balance	$	4,125		$	2,368		$	1,322	$	448		$	720		$	55		$	9,038
Provision for/(release of) losses	(99		)	40			148		50			(97		)	(45		)	(3		)
Charge-offs	—			—			—		(17		)	—			—			(17		)
Ending Balance	$	4,026		$	2,408		$	1,470	$	481		$	623		$	10		$	9,018
For the Nine Months Ended:
Beginning Balance	$	4,081		$	2,469		$	1,211	$	481		$	606		$	18		$	8,866
Provision for/(release of) losses	(55		)	(61		)	259		17			17			(8		)	169
Charge-offs	—			—			—		(17		)	—			—			(17		)
Ending Balance	$	4,026		$	2,408		$	1,470	$	481		$	623		$	10		$	9,018

The following tables present the unpaid principal balances of loans held and loans underlying LTSPCs and off-balance sheet Farmer Mac Guaranteed Securities (excluding AgVantage securities) and the related total allowance for losses by impairment method and commodity type as of September 30, 2019 and December 31, 2018:

Table 5.4

	As of September 30, 2019
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Ending Balance:
Collectively evaluated for impairment:
On-balance sheet	$	2,494,029	$	1,043,626	$	738,936	$	338,798	$	11,379	$	1,425	$	4,628,193
Off-balance sheet	1,187,972		519,924		605,422		161,045		67,562		2,855		2,544,780
Total	$	3,682,001	$	1,563,550	$	1,344,358	$	499,843	$	78,941	$	4,280	$	7,172,973
Individually evaluated for impairment:
On-balance sheet	$	108,497	$	49,225	$	43,346	$	7,705	$	—	$	—	$	208,773
Off-balance sheet	5,116		2,122		3,975		712		—		57		11,982
Total	$	113,613	$	51,347	$	47,321	$	8,417	$	—	$	57	$	220,755
Total Farm & Ranch loans:
On-balance sheet	$	2,602,526	$	1,092,851	$	782,282	$	346,503	$	11,379	$	1,425	$	4,836,966
Off-balance sheet	1,193,088		522,046		609,397		161,757		67,562		2,912		2,556,762
Total	$	3,795,614	$	1,614,897	$	1,391,679	$	508,260	$	78,941	$	4,337	$	7,393,728
Allowance for Losses:
Collectively evaluated for impairment:
On-balance sheet	$	1,729	$	885	$	550	$	242	$	28	$	1	$	3,435
Off-balance sheet	556		106		294		23		557		4		1,540
Total	$	2,285	$	991	$	844	$	265	$	585	$	5	$	4,975
Individually evaluated for impairment:
On-balance sheet	$	2,495	$	1,070	$	920	$	104	$	—	$	—	$	4,589
Off-balance sheet	81		44		63		15		—		—		203
Total	$	2,576	$	1,114	$	983	$	119	$	—	$	—	$	4,792
Total Farm & Ranch loans:
On-balance sheet	$	4,224	$	1,955	$	1,470	$	346	$	28	$	1	$	8,024
Off-balance sheet	637		150		357		38		557		4		1,743
Total	$	4,861	$	2,105	$	1,827	$	384	$	585	$	5	$	9,767

	As of December 31, 2018
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Ending Balance:
Collectively evaluated for impairment:
On-balance sheet	$	2,452,803	$	952,719	$	705,752	$	329,070	$	12,097	$	4,477	$	4,456,918
Off-balance sheet	1,239,094		515,520		624,522		166,907		73,084		3,286		2,622,413
Total	$	3,691,897	$	1,468,239	$	1,330,274	$	495,977	$	85,181	$	7,763	$	7,079,331
Individually evaluated for impairment:
On-balance sheet	$	66,432	$	36,333	$	21,361	$	7,278	$	—	$	—	$	131,404
Off-balance sheet	13,298		5,249		3,737		883		—		69		23,236
Total	$	79,730	$	41,582	$	25,098	$	8,161	$	—	$	69	$	154,640
Total Farm & Ranch loans:
On-balance sheet	$	2,519,235	$	989,052	$	727,113	$	336,348	$	12,097	$	4,477	$	4,588,322
Off-balance sheet	1,252,392		520,769		628,259		167,790		73,084		3,355		2,645,649
Total	$	3,771,627	$	1,509,821	$	1,355,372	$	504,138	$	85,181	$	7,832	$	7,233,971
Allowance for Losses:
Collectively evaluated for impairment:
On-balance sheet	$	2,120	$	822	$	731	$	303	$	84	$	4	$	4,064
Off-balance sheet	668		170		207		29		636		5		1,715
Total	$	2,788	$	992	$	938	$	332	$	720	$	9	$	5,779
Individually evaluated for impairment:
On-balance sheet	$	1,329	$	1,065	$	437	$	122	$	—	$	—	$	2,953
Off-balance sheet	277		69		85		20		—		1		452
Total	$	1,606	$	1,134	$	522	$	142	$	—	$	1	$	3,405
Total Farm & Ranch loans:
On-balance sheet	$	3,449	$	1,887	$	1,168	$	425	$	84	$	4	$	7,017
Off-balance sheet	945		239		292		49		636		6		2,167
Total	$	4,394	$	2,126	$	1,460	$	474	$	720	$	10	$	9,184

The following tables present by commodity type the unpaid principal balances, recorded investment, and specific allowance for losses related to impaired loans and the recorded investment in loans on nonaccrual status as of September 30, 2019 and December 31, 2018:

Table 5.5

	As of September 30, 2019
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Impaired Loans:
With no specific allowance:
Recorded investment	$	29,146	$	16,721	$	4,771	$	2,240	$	—	$	57	$	52,935
Unpaid principal balance	29,055		16,669		4,758		2,233		—		57		52,772
With a specific allowance:
Recorded investment(1)	84,808		34,781		42,686		6,202		—		—		168,477
Unpaid principal balance	84,558		34,678		42,563		6,184		—		—		167,983
Associated allowance	2,576		1,114		983		119		—		—		4,792
Total:
Recorded investment	113,954		51,502		47,457		8,442		—		57		221,412
Unpaid principal balance	113,613		51,347		47,321		8,417		—		57		220,755
Associated allowance	2,576		1,114		983		119		—		—		4,792
Recorded investment of loans on nonaccrual status(2)	$	34,543	$	24,425	$	30,213	$	3,106	$	—	$	—	$	92,287

⁽¹⁾  Impairment analysis was performed in the aggregate in consideration of similar risk characteristics of the assets and historical statistics on $166.1 million (75%) of impaired loans as of September 30, 2019, which resulted in a specific allowance of $3.4 million.

⁽²⁾  Includes $36.3 million of loans that are less than 90 days delinquent but which have not met Farmer Mac's performance criteria for returning to accrual status.

	As of December 31, 2018
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Impaired Loans:
With no specific allowance:
Recorded investment	$	20,734	$	3,592	$	5,764	$	1,922	$	—	$	—	$	32,012
Unpaid principal balance	20,632		3,573		5,737		1,912		—		—		31,854
With a specific allowance:
Recorded investment(1)	59,335		38,176		19,443		6,276		—		70		123,300
Unpaid principal balance	59,098		38,009		19,361		6,249		—		69		122,786
Associated allowance	1,606		1,134		522		142		—		1		3,405
Total:
Recorded investment	80,069		41,768		25,207		8,198		—		70		155,312
Unpaid principal balance	79,730		41,582		25,098		8,161		—		69		154,640
Associated allowance	1,606		1,134		522		142		—		1		3,405
Recorded investment of loans on nonaccrual status(2)	$	26,611	$	21,349	$	8,803	$	4,645	$	—	$	—	$	61,408

⁽¹⁾  Impairment analysis was performed in the aggregate in consideration of similar risk characteristics of the assets and historical statistics on $120.9 million (78%) of impaired loans as of December 31, 2018, which resulted in a specific allowance of $2.7 million.

⁽²⁾  Includes $41.8 million of loans that are less than 90 days delinquent but which have not met Farmer Mac's performance criteria for returning to accrual status.

The following table presents by commodity type the average recorded investment and interest income recognized on impaired loans for the three and nine months ended September 30, 2019 and 2018:

Table 5.6

	September 30, 2019
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
For the Three Months Ended:
Average recorded investment in impaired loans	$	106,535	$	45,197	$	36,859	$	8,265	$	—	$	58	$	196,914
Income recognized on impaired loans	178		166		87		105		—		—		536
For the Nine Months Ended:
Average recorded investment in impaired loans	$	93,088	$	41,524	$	31,189	$	8,079	$	—	$	63	$	173,943
Income recognized on impaired loans	879		586		504		227		—		—		2,196

	September 30, 2018
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
For the Three Months Ended:
Average recorded investment in impaired loans	$	75,920	$	44,818	$	24,443	$	8,898	$	—	$	72	$	154,151
Income recognized on impaired loans	223		933		122		56		—		—		1,334
For the Nine Months Ended:
Average recorded investment in impaired loans	$	73,968	$	44,122	$	23,358	$	8,874	$	—	$	394	$	150,716
Income recognized on impaired loans	942		1,597		261		173		—		—		2,973

For the nine months ended September 30, 2019, the recorded investment of loans determined to be troubled debt restructurings ("TDRs") was $35.6 million both before and after restructuring. For the nine months ended September 30, 2018, the recorded investment of loans determined to be TDRs was immaterial. As of September 30, 2019 and 2018, there were no TDRs identified during the previous 12 months that were in default under the modified terms. The impact of TDRs on Farmer Mac's allowance for loans losses was immaterial for the nine months ended September 30, 2019 and 2018.

Net credit losses and 90-day delinquencies as of and for the periods indicated for loans held and loans underlying off-balance sheet securities representing interests in pools of eligible Farm & Ranch loans ("Farm & Ranch Guaranteed Securities") and LTSPCs are presented in the table below.  As of September 30, 2019, there were no delinquencies and no probable losses inherent in Farmer Mac's Rural Utilities loan portfolio and Farmer Mac had not experienced credit losses on any Rural Utilities loans.

Table 5.7

	90-Day Delinquencies(1)				Net Credit Losses/(Recoveries)
	As of				For the Nine Months Ended
	September 30, 2019		December 31, 2018		September 30, 2019		September 30, 2018
	(in thousands)
On-balance sheet assets:
Farm & Ranch:
Loans	$	55,987	$	19,577	$	131	$	40
Total on-balance sheet	$	55,987	$	19,577	$	131	$	40
Off-balance sheet assets:
Farm & Ranch:
LTSPCs	$	3,704	$	7,304	$	—	$	—
Total off-balance sheet	$	3,704	$	7,304	$	—	$	—
Total	$	59,691	$	26,881	$	131	$	40

⁽¹⁾  Includes loans and loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs that are 90 days or more past due, in foreclosure, or in bankruptcy with at least one missed payment, excluding loans performing under either their original loan terms or a court-approved bankruptcy plan.

Of the $56.0 million of on-balance sheet loans reported as 90-day delinquencies as of September 30, 2019, none were subject to "removal-of-account" provisions. Of the $19.6 million of on-balance sheet loans reported as 90-day delinquencies as of December 31, 2018, $0.1 million were loans subject to "removal-of-account" provisions.

Credit Quality Indicators

The following tables present credit quality indicators related to Farm & Ranch loans held and loans underlying LTSPCs and off-balance sheet Farm & Ranch Guaranteed Securities as of September 30, 2019 and December 31, 2018:  

Table 5.8

	As of September 30, 2019
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Credit risk profile by internally assigned grade(1)
On-balance sheet:
Acceptable	$	2,401,258	$	1,006,255	$	715,900	$	327,882	$	11,379	$	1,362	$	4,464,036
Special mention(2)	92,771		37,371		23,036		10,916		—		63		164,157
Substandard(3)	108,497		49,225		43,346		7,705		—		—		208,773
Total on-balance sheet	$	2,602,526	$	1,092,851	$	782,282	$	346,503	$	11,379	$	1,425	$	4,836,966
Off-Balance Sheet:
Acceptable	$	1,067,311	$	485,044	$	537,370	$	157,630	$	67,562	$	2,280	$	2,317,197
Special mention(2)	80,746		30,935		45,302		845		—		—		157,828
Substandard(3)	45,031		6,067		26,725		3,282		—		632		81,737
Total off-balance sheet	$	1,193,088	$	522,046	$	609,397	$	161,757	$	67,562	$	2,912	$	2,556,762
Total Ending Balance:
Acceptable	$	3,468,569	$	1,491,299	$	1,253,270	$	485,512	$	78,941	$	3,642	$	6,781,233
Special mention(2)	173,517		68,306		68,338		11,761		—		63		321,985
Substandard(3)	153,528		55,292		70,071		10,987		—		632		290,510
Total	$	3,795,614	$	1,614,897	$	1,391,679	$	508,260	$	78,941	$	4,337	$	7,393,728
Commodity analysis of past due loans(1)
On-balance sheet	$	24,112	$	15,598	$	15,139	$	1,138	$	—	$	—	$	55,987
Off-balance sheet	1,493		903		824		484		—		—		3,704
90 days or more past due	$	25,605	$	16,501	$	15,963	$	1,622	$	—	$	—	$	59,691

⁽¹⁾  Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of past due loans. 

⁽²⁾  Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.  

⁽³⁾  Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not corrected.

	As of December 31, 2018
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Credit risk profile by internally assigned grade(1)
On-balance sheet:
Acceptable	$	2,381,853	$	937,793	$	679,253	$	321,345	$	10,604	$	4,477	$	4,335,325
Special mention(2)	71,096		14,926		26,499		7,725		1,493		—		121,739
Substandard(3)	66,286		36,333		21,361		7,278		—		—		131,258
Total on-balance sheet	$	2,519,235	$	989,052	$	727,113	$	336,348	$	12,097	$	4,477	$	4,588,322
Off-Balance Sheet
Acceptable	$	1,128,787	$	469,479	$	577,708	$	162,730	$	71,959	$	2,656	$	2,413,319
Special mention(2)	62,430		36,778		30,703		1,023		—		—		130,934
Substandard(3)	61,175		14,512		19,848		4,037		1,125		699		101,396
Total off-balance sheet	$	1,252,392	$	520,769	$	628,259	$	167,790	$	73,084	$	3,355	$	2,645,649
Total Ending Balance:
Acceptable	$	3,510,640	$	1,407,272	$	1,256,961	$	484,075	$	82,563	$	7,133	$	6,748,644
Special mention(2)	133,526		51,704		57,202		8,748		1,493		—		252,673
Substandard(3)	127,461		50,845		41,209		11,315		1,125		699		232,654
Total	$	3,771,627	$	1,509,821	$	1,355,372	$	504,138	$	85,181	$	7,832	$	7,233,971
Commodity analysis of past due loans(1)
On-balance sheet	$	8,345	$	2,997	$	4,059	$	4,176	$	—	$	—	$	19,577
Off-balance sheet	6,476		197		—		631		—		—		7,304
90 days or more past due	$	14,821	$	3,194	$	4,059	$	4,807	$	—	$	—	$	26,881

⁽¹⁾  Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of past due loans.  

⁽²⁾  Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.  

⁽³⁾  Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not corrected.

Concentrations of Credit Risk

The following table sets forth the geographic and commodity/collateral diversification, the range of original loan-to-value ratios, and the range in the size of borrower exposure for all Farm & Ranch loans held and loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs as of September 30, 2019 and December 31, 2018:

Table 5.9

	As of
	September 30, 2019		December 31, 2018
	(in thousands)
By commodity/collateral type:
Crops	$	3,795,614	$	3,771,627
Permanent plantings	1,614,897		1,509,821
Livestock	1,391,679		1,355,372
Part-time farm	508,260		504,138
Ag. Storage and Processing	78,941		85,181
Other	4,337		7,832
Total	$	7,393,728	$	7,233,971
By geographic region(1):
Northwest	$	850,862	$	855,596
Southwest	2,417,144		2,273,184
Mid-North	2,297,159		2,296,073
Mid-South	917,889		883,279
Northeast	325,674		332,370
Southeast	585,000		593,469
Total	$	7,393,728	$	7,233,971
By original loan-to-value ratio:
0.00% to 40.00%	$	1,332,719	$	1,333,790
40.01% to 50.00%	1,864,787		1,811,166
50.01% to 60.00%	2,557,798		2,530,484
60.01% to 70.00%	1,300,301		1,244,823
70.01% to 80.00%(2)	318,671		289,427
80.01% to 90.00%(2)	19,452		24,281
Total	$	7,393,728	$	7,233,971
By size of borrower exposure(3):
Less than $1,000,000	$	2,436,975	$	2,431,296
$1,000,000 to $4,999,999	2,731,458		2,755,996
$5,000,000 to $9,999,999	957,901		916,422
$10,000,000 to $24,999,999	644,231		601,349
$25,000,000 and greater	623,163		528,908
Total	$	7,393,728	$	7,233,971

⁽¹⁾  Geographic regions:  Northwest (AK, ID, MT, OR, WA, WY); Southwest (AZ, CA, CO, HI, NM, NV, UT); Mid-North (IA, IL, IN, MI, MN, NE, ND, SD, WI); Mid-South (AR, KS, LA, MO, OK, TX); Northeast (CT, DE, KY, MA, MD, ME, NH, NJ, NY, OH, PA, RI, VA, VT, WV); Southeast (AL, FL, GA, MS, NC, SC, TN).

⁽²⁾  Primarily part-time farm loans. Loans with original loan-to-value ratios of greater than 80% are required to have private mortgage insurance.

⁽³⁾  Includes multiple loans to the same borrower or borrower-related entities.

The original loan-to-value ratio is calculated by dividing the loan principal balance at the time of guarantee, purchase, or commitment by the appraised value at the date of loan origination or, when

available, the updated appraised value at the time of guarantee, purchase, or commitment.  Current loan-to-value ratios may be higher or lower than the original loan-to-value ratios.