Freddie Mac 2010 Annual Report Download - page 218

while they evaluated and addressed these issues. We temporarily suspended certain foreclosure proceedings, and certain REO
sales and eviction proceedings for REO properties for certain servicers during the fourth quarter of 2010 while we evaluated
the impact of these issues. On October 13, 2010, FHFA made public a four-point policy framework detailing FHFA’s plan to
address these issues, including guidance for consistent remediation of identified foreclosure process deficiencies, and directed
us to implement this plan. We resumed our REO sales in November 2010.
The method of accounting for cash flows associated with REO acquisitions changed significantly with our adoption of
amendments to the accounting standards for transfers of financial assets and consolidation of VIEs. In 2009, the majority of
our REO acquisitions resulted from cash payment for extinguishments of mortgage loans within PC pools at the time of their
conversion to REO. These cash outlays are included in net payments of mortgage insurance and acquisitions and dispositions
of REO in our consolidated statements of cash flows. Effective January 1, 2010, REO property acquisitions resulted from
extinguishment of our mortgage loans held on our consolidated balance sheets and are treated as non-cash transfers. As a
result, the amount of non-cash acquisitions of REO properties during the year ended December 31, 2010 and 2009 was
$22.0 billion and $1.2 billion, respectively.
NOTE 8: INVESTMENTS IN SECURITIES
Commencing with our adoption of two new accounting standards on January 1, 2010, we changed the way we account
for the purchase and sale of the majority of our PCs and certain Other Guarantee Transactions. See “NOTE 1: SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES” for a discussion of our significant accounting policies related to our
investments in securities.
Table 8.1 summarizes amortized cost, estimated fair values, and corresponding gross unrealized gains and gross
unrealized losses for available-for-sale securities by major security type.
Table 8.1 — Available-For-Sale Securities
December 31, 2010
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
(1)
Fair Value
(in millions)
Mortgage-related securities:
Freddie Mac . ...................................................... $ 80,742 $ 5,142 $ (195) $ 85,689
Subprime .......................................................... 47,916 1 (14,056) 33,861
CMBS ........................................................... 58,455 1,551 (1,919) 58,087
Option ARM . ...................................................... 10,726 16 (3,853) 6,889
Alt-A and other ..................................................... 15,561 58 (2,451) 13,168
Fannie Mae . . ...................................................... 23,025 1,348 (3) 24,370
Obligations of states and political subdivisions ................................ 9,885 31 (539) 9,377
Manufactured housing . . ............................................... 945 13 (61) 897
Ginnie Mae . . ...................................................... 268 28 — 296
Total mortgage-related securities ........................................ 247,523 8,188 (23,077) 232,634
Total available-for-sale securities . . ......................................... $247,523 $ 8,188 $(23,077) $232,634
December 31, 2009
Mortgage-related securities:
Freddie Mac . ...................................................... $215,198 $ 9,410 $ (1,141) $223,467
Subprime .......................................................... 56,821 2 (21,102) 35,721
CMBS ........................................................... 61,792 15 (7,788) 54,019
Option ARM . ...................................................... 13,686 25 (6,475) 7,236
Alt-A and other ..................................................... 18,945 9 (5,547) 13,407
Fannie Mae . . ...................................................... 34,242 1,312 (8) 35,546
Obligations of states and political subdivisions ................................ 11,868 49 (440) 11,477
Manufactured housing . . ............................................... 1,084 1 (174) 911
Ginnie Mae . . ...................................................... 320 27 — 347
Total mortgage-related securities ........................................ 413,956 10,850 (42,675) 382,131
Non-mortgage-related securities:
Asset-backed securities . ............................................... 2,444 109 — 2,553
Total non-mortgage-related securities . . . .................................. 2,444 109 — 2,553
Total available-for-sale securities . . ......................................... $416,400 $10,959 $(42,675) $384,684
(1) Includes non-credit-related other-than-temporary impairments on available-for-sale securities recognized in AOCI and temporary unrealized losses.
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