1026214--3/11/2009--FEDERAL_HOME_LOAN_MORTGAGE

related topics

{capital, credit, financial}

{loss, insurance, financial}

{investment, property, distribution}

{loan, real, estate}

{condition, economic, financial}

{stock, price, share}

{tax, income, asset}

{financial, litigation, operation}

{system, service, information}

{control, financial, internal}

{personnel, key, retain}

{debt, indebtedness, cash}

{product, market, service}

{acquisition, growth, future}

{competitive, industry, competition}

Our obligations under the senior preferred stock will adversely affect our future financial condition. Treasury s funding commitment may not be sufficient to keep us in a solvent condition. Factors including credit losses from our mortgage guarantee activities have had an increasingly negative impact on our cash flows from operations during 2007 and 2008. As we anticipate these trends to continue for the foreseeable future, it is likely that the company will increasingly rely upon access to the public debt markets as a source of funding for ongoing operations. Access to such public debt markets may not be available. We are in conservatorship and this is likely to affect our strategic objectives, as well as our future financial condition and results of operations. The conservatorship is indefinite in duration and the timing, conditions and likelihood of our emerging from conservatorship are uncertain. 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. We have a variety of different, and potentially competing, objectives that may adversely affect our financial results and our ability to maintain a positive net worth. We have experienced significant management changes and we may lose a significant number of valuable employees, 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 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. We are subject to mortgage credit risks; 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 subprime, Alt-A and MTA 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. A continued decline in U.S. home prices or other changes in the U.S. housing market could negatively impact our business and increase our losses. Our financial condition or results of operations may be adversely affected if mortgage seller/servicers fail to perform their obligations to service loans in our single-family mortgage portfolio as well as to repurchase loans sold to us in breach of representations and warranties. Our financial condition or results of operations may be adversely affected by the financial distress of our derivative and other counterparties. 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. 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. We face limited availability of financing, increased funding costs and uncertainty in our securitization financing; our ability to obtain funding would be adversely affected by the expiration of the Lending Agreement and other government programs. Our investment returns may be adversely affected by Treasury and Federal Reserve programs 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 in our mortgage-related investments portfolio 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 could materially impact our fair value of net assets and affect future results of operations, stockholders equity (deficit) and fair value of net assets. Negative publicity causing damage to our reputation could adversely affect our business prospects, financial results or capital. Programs 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. We may experience further write-downs and losses relating to our assets, including our investment securities, net deferred tax assets, REO properties, mortgage loans or investments in LIHTC partnerships, that could materially adversely affect our business, results of operations, financial condition, liquidity and net worth. If we are unable to recruit, retain and engage employees with the necessary skills, our ability to conduct our business activities effectively during the conservatorship may be adversely affected. 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. Material weaknesses and other deficiencies in internal control over financial reporting and disclosure controls could result in errors, affect operating results and cause investors to lose confidence in our reported results. Recent market conditions impair the reliability of the internal models 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. 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 functions that are critical to financial reporting, our mortgage-related investments portfolio 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 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 financial markets. We may make certain changes to our business in an attempt to meet the housing goals and subgoals that may increase our losses.

Full 10-K form ▸

1026214--3/11/2009--FEDERAL_HOME_LOAN_MORTGAGE_CORP