Freddie Mac 2015 Annual Report Download - page 150

Management's Discussion and Analysis Liquidity and Capital Resources | Overview
Freddie Mac 2015 Form 10-K 148
LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW
Our business activities require that we maintain adequate liquidity to fund our operations, which primarily
include the following:
• Principal payments due to the maturity, redemption or repurchase of our short- and long-term debt;
• Interest payments on our other debt securities;
• Dividend obligations on our senior preferred stock;
• Cash purchases of single-family and multifamily loans;
• Purchases of mortgage-related securities and non-mortgage investments;
• Removal of modified or seriously delinquent mortgage loans from PC trusts;
• Any shortfall related to the payments of principal and interest on our debt securities issued by
consolidated trusts and any other payments related to our guarantees of mortgage assets;
• Any costs related to the disposition of our REO properties;
• Payments related to derivative contracts;
• Posting or pledging collateral to third parties in connection with secured financing and daily trade
activities; and
• Administrative expenses.
We fund our cash needs primarily by issuing short- and long-term debt. Other sources of cash primarily
include:
• Interest and principal payments on and sales of securities or loans that we hold in our mortgage-
related investments portfolio or our liquidity and contingency operating portfolio;
• Repurchase transactions with counterparties;
• Management and guarantee fees we receive in connection with our guarantee activities, excluding
those fees associated with the legislated 10 basis point increase we remit to Treasury; and
• Quarterly draws from Treasury under the Purchase Agreement, which are made if we have a
quarterly deficit in our net worth.
In addition to the uses and sources of cash described above, we are involved in various legal
proceedings, including those discussed in “Legal Proceedings,” which may result in a need to use cash to
settle claims or pay certain costs or receipt of cash from settlements.
Our securities and other obligations are not guaranteed by the U.S. government and do not constitute a
debt or obligation of the U.S. government or any agency or instrumentality thereof, other than Freddie
Mac. We continue to manage our debt issuances to remain in compliance with the aggregate
indebtedness limits set forth in the Purchase Agreement. For a description of our debt products, see “Our
Business Segments - Investments.”