Freddie Mac 2008 Annual Report Download - page 39

• the availability of options, interest-rate and currency swaps and other derivative financial instruments of the types and
quantities and with acceptable counterparties needed for investment funding and risk management purposes;
• changes in pricing, valuation or other methodologies, models, assumptions, judgments, estimates and/or other
measurement techniques or their respective reliability;
• changes in mortgage-to-debt OAS;
• volatility of reported results due to changes in the fair value of certain instruments or assets;
• preferences of originators in selling into the secondary mortgage market;
• changes to our underwriting requirements or investment standards for mortgage-related products;
• investor preferences for mortgage loans and mortgage-related and debt securities compared to other investments;
• the ability of our financial, accounting, data processing and other operating systems or infrastructure and those of our
vendors to process the complexity and volume of our transactions;
• borrower preferences for fixed-rate mortgages or adjustable-rate mortgages;
• the occurrence of a major natural or other disaster in geographic areas in which portions of our total mortgage
portfolio are concentrated;
• other factors and assumptions described in this Form 10-K, including in the “MD&A” section;
• our assumptions and estimates regarding the foregoing and our ability to anticipate the foregoing factors and their
impacts; and
• market reactions to the foregoing.
We undertake no obligation to update forward-looking statements we make to reflect events or circumstances after the
date of this Form 10-K or to reflect the occurrence of unanticipated events.
ITEM 1A. RISK FACTORS
Before you invest in our securities, you should know that making such an investment involves risks, including the risks
described below and in “BUSINESS,” “MD&A,” and elsewhere in this Form 10-K. These risks and uncertainties could,
directly or indirectly, adversely affect our business, financial condition, results of operations, cash flows, strategies and/or
prospects.
Conservatorship and Related Developments
Due primarily to our continued significant losses, we expect to face additional deficits in net worth, and will need to
request additional draws under the Purchase Agreement.
It is likely that we will continue to record significant losses in future periods, which will lead us to require additional
draws, as deteriorating economic conditions could cause, among other things, increased provision for credit losses and REO
operations expense and additional unrealized losses on our non-agency mortgage-related securities. In addition, a variety of
other factors could lead us to need additional draws in the future, including:
• pursuit of public policy-oriented objectives that produce suboptimal financial returns, such as the continued use or
expansion of foreclosure suspensions, loan modifications and refinancings and other foreclosure prevention efforts;
• adverse changes in interest rates, the yield curve, implied volatility or mortgage-to-LIBOR OAS, which could increase
realized and unrealized mark-to-fair value losses recorded in earnings or accumulated other comprehensive income, or
AOCI;
• dividend obligations on the senior preferred stock;
• changes in accounting practices or standards, including the implementation of proposed amendments to SFAS
No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities, a
replacement of FASB Statement No. 125,” or SFAS 140, and Financial Accounting Standards Board, or FASB,
Interpretation No., or FIN, 46 (revised December 2003), “Consolidation of Variable Interest Entities, an interpretation
of ARB No. 51,” or FIN 46(R), that would require consolidation of our PC trusts in our financial statements;
• potential accounting consequences of our implementation of HASP;
• our inability to access the public debt markets on terms sufficient for our needs, absent support from Treasury and the
Federal Reserve;
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