Freddie Mac 2015 Annual Report Download - page 231

Financial Statements Notes to the Consolidated Financial Statements | Note 3
Freddie Mac 2015 Form 10-K 229
Other Indemnifications
In connection with certain business transactions, we may provide indemnification to counterparties for
claims arising out of breaches of certain obligations (e.g., those arising from representations and
warranties) in contracts entered into in the normal course of business. Our assessment is that the risk of
any material loss from such a claim for indemnification is remote and there are no significant probable
and estimable losses associated with these contracts. In addition, we provided indemnification for
litigation defense costs to certain former officers who are subject to ongoing litigation. See Note 15 for
information on ongoing litigation. The recognized liabilities on our consolidated balance sheets related to
indemnifications were not significant at December 31, 2015 and 2014.
VIEs FOR WHICH WE ARE NOT THE PRIMARY BENEFICIARY
Our involvement with VIEs for which we are not the primary beneficiary takes one or both of two forms -
purchasing an investment in these entities or providing a guarantee to these entities. Our maximum
exposure to loss for those VIEs in which we have purchased an investment is calculated as the maximum
potential charge that we would recognize in earnings if that investment were to become worthless. Our
maximum exposure to loss for those VIEs for which we have provided a guarantee represents the
contractual amounts that could be lost under the guarantees if counterparties or borrowers defaulted,
without consideration of possible recoveries under credit enhancement arrangements. We do not believe
the maximum exposure to loss disclosed in the table below is representative of the actual loss we are
likely to incur, based on our historical loss experience and after consideration of proceeds from related
collateral liquidation, including possible recoveries under credit enhancement arrangements.
The following table presents the carrying amounts and classification of the assets and liabilities recorded
on our consolidated balance sheets related to our variable interests in unconsolidated VIEs with which we
were involved in the design and creation and have a significant continuing involvement, as well as our
maximum exposure to loss.
December 31, 2015 December 31, 2014
(in millions) Freddie Mac Securities(1)
Assets and Liabilities Recorded on our Consolidated
Balance Sheets
Assets:
Investments in securities $ 49,040 $ 56,568
Accrued interest receivable 200 236
Other assets 1,232 914
Liabilities:
Other liabilities (1,230)(1,005)
Maximum Exposure to Loss $114,193 $87,529
Total Assets of Non-Consolidated VIEs $134,900 $103,253
(1) Freddie Mac securities include our variable interests in REMICs and Stripped Giant PCs, K Certificates, and other
securitization products that we do not consolidate. Our maximum exposure to loss includes the guaranteed UPB of assets
held by the non-consolidated VIEs related to K Certificates and other securitization products. Our maximum exposure to loss
excludes investments in REMICs and Stripped Giant PCs, because we already consolidate the collateral of these trusts on
our consolidated balance sheets.
We also obtain interests in various other VIEs created by third parties through the normal course of
business, such as through our investments in non-Freddie Mac mortgage-related securities, purchases of
multifamily loans, guarantees of multifamily housing revenue bonds, as a derivative counterparty, or