1026214--2/24/2010--FEDERAL_HOME_LOAN_MORTGAGE

related topics

{loss, insurance, financial}

{financial, litigation, operation}

{stock, price, share}

{investment, property, distribution}

{loan, real, estate}

{condition, economic, financial}

{tax, income, asset}

{capital, credit, financial}

{regulation, change, law}

{control, financial, internal}

{system, service, information}

{regulation, government, change}

{debt, indebtedness, cash}

{gas, price, oil}

{personnel, key, retain}

{product, market, service}

{competitive, industry, competition}

We are subject to significant limitations on our business activities under the Purchase Agreement which could have a material adverse effect on our results of operations and financial condition. The conservatorship is indefinite in duration and the timing, conditions and likelihood of our emerging from conservatorship are uncertain. Even if the conservatorship is terminated, we would remain subject to the Purchase Agreement, senior preferred stock and warrant. Our regulator may, and in some cases must, place us into receivership, which would result in the liquidation of our assets and terminate all rights and claims that our stockholders and creditors may have against our assets or under our charter; if we are liquidated, there may not be sufficient funds to pay the secured and unsecured claims of the company, repay the liquidation preference of any series of our preferred stock or make any distribution to the holders of our common stock. We have a variety of different, and potentially competing, objectives that may adversely affect our financial results and our ability to maintain positive net worth. We have experienced significant management changes which could increase our control risks and have a material adverse effect on our ability to do business and our results of operations. The conservatorship and uncertainty concerning our future may have an adverse effect on the retention and recruitment of management and other valuable employees. The conservatorship and investment by Treasury has had, and will continue to have, a material adverse effect on our common and preferred stockholders. The future growth of our mortgage-related investments portfolio is significantly limited under the Purchase Agreement and by FHFA regulation, which will result in greater reliance on our guarantee activities to generate revenue. It may be difficult to increase our returns on new single-family guarantee business. We are subject to mortgage credit risks, including mortgage credit risk relating to off-balance sheet arrangements; increased credit costs related to these risks could adversely affect our financial condition and/or results of operations. We are exposed to increased credit risk related to the subprime, Alt-A and option ARM loans that back our non-agency mortgage-related securities investments. The credit losses we experience in future periods as a result of the housing and economic crisis are likely to be larger, perhaps substantially larger, than our current loan loss reserves. Further declines in U.S. home prices or other adverse changes in the U.S. housing market could negatively impact our business and increase our losses. We depend on our institutional counterparties to provide services that are critical to our business, and our results of operations or financial condition may be adversely affected if one or more of our institutional counterparties is unable to meet their obligations to us. Our financial condition or results of operations may be adversely affected if mortgage seller/servicers fail to repurchase loans sold to us in breach of representations and warranties or to perform their obligations to service loans in our single-family and multifamily mortgage portfolios. Our financial condition or results of operations may be adversely affected by the financial distress of our derivative and other counterparties. Our credit and other losses could increase if our mortgage or bond insurers become insolvent or fail to perform their obligations to us. If mortgage insurers continue to tighten their standards, the volume of high LTV mortgages available for us to purchase could be reduced, which could negatively affect our business and make it more difficult for us to meet our affordable housing goals. The loss of business volume from key lenders could result in a decline in our market share and revenues. Changes in general business and economic conditions in the U.S. and abroad may adversely affect our business and results of operations. Competition from banking and non-banking companies may harm our business. Our business may be adversely affected by limited availability of financing, increased funding costs and uncertainty in our securitization financing. Our business may be adversely affected by the completion of the Federal Reserve program to purchase GSE mortgage-related securities. A reduction in the credit ratings for our debt could adversely affect our liquidity. Mortgage fraud could result in significant financial losses and harm to our reputation. The value of mortgage-related securities guaranteed by us and held as investments in securities may decline if we did not or were unable to perform under our guarantee or if investor confidence in our ability to perform under our guarantee were to diminish. Changes in interest rates could negatively impact our results of operations, stockholders equity (deficit) and fair value of net assets. Changes in OAS as a result of the completion of the Federal Reserve s mortgage-related securities purchase program or other events could materially impact our fair value of net assets and affect future results of operations, stockholders equity (deficit) and fair value of net assets. We could experience significant reputational harm, which could affect the future of our company, if our efforts under the MHA Program, the Housing Finance Agency Initiative and other initiatives to support the U.S. residential mortgage market do not succeed. Negative publicity causing damage to our reputation could adversely affect our business prospects, financial results or net worth. The MHA Program and other efforts to reduce foreclosures, modify loan terms and refinance mortgages may fail to mitigate our credit losses and may adversely affect our results of operations or financial condition. Our relationships with our customers could be harmed by our actions as the compliance agent under HAMP, which could negatively affect our ability to purchase loans from them in the future. We may experience further write-downs and losses relating to our assets, including our investment securities, net deferred tax assets, REO properties or mortgage loans, that could materially adversely affect our business, results of operations, financial condition, liquidity and net worth. The price and trading liquidity of our common stock and our NYSE-listed issues of preferred stock may be adversely affected if those securities are delisted from the NYSE. Ineffective internal control over financial reporting and disclosure controls could result in errors and inadequate disclosures, affect operating results and cause investors to lose confidence in our reported results. Recent market conditions have added to the uncertainty about the results of the internal models that we use for financial accounting and reporting purposes, to make business decisions and to manage risks, and our business could be adversely affected if those models fail to produce reliable results. Changes in our accounting policies, as well as estimates we make, could materially affect how we report our financial condition or results of operations. We face additional risks related to our adoption of changes in accounting standards related to securitization entities. A failure in our operational systems or infrastructure, or those of third parties, could impair our liquidity, disrupt our business, damage our reputation and cause losses. We rely on third parties for certain important functions, including some that are critical to financial reporting, our mortgage-related investment activity and mortgage loan underwriting. Any failures by those vendors could disrupt our business operations. Our risk management and loss mitigation efforts may not effectively mitigate the risks we seek to manage. The future status and role of Freddie Mac could be materially adversely affected by legislative and regulatory action that alters the ownership, structure and mission of the company. Legislation or regulation affecting the financial services, mortgage and investment banking industries may adversely affect our business activities and financial results. Our financial condition and results of operations and our ability to return to long-term profitability may be affected by the nature, extent and success of the actions taken by the U.S. government to stabilize the economy and the housing and financial markets. We may make certain changes to our business in an attempt to meet the housing goals and subgoals set for us by FHFA that may increase our losses. We are involved in legal proceedings, governmental investigations and IRS examinations that could result in the payment of substantial damages or otherwise harm our business.

Full 10-K form ▸

1026214--2/24/2010--FEDERAL_HOME_LOAN_MORTGAGE_CORP