Freddie Mac 2009 Annual Report Download - page 71

• significant volatility in interest rates;
• continued low levels of liquidity in institutional credit markets;
• rating agency downgrades of mortgage-related securities and financial institutions; and
• declines in market rents and increased vacancy rates that cause declines in multifamily property values.
A number of factors make it difficult to predict when a sustained recovery in the mortgage and credit markets will
occur, including, among others, uncertainty concerning the effect of current or any future government actions in these
markets. Our assumption for home prices, based on our own index, continues to be for a further decline in national home
prices over the near term before any sustained turnaround in housing begins, due to, among other factors:
• our expectation for a significant increase in distressed sales, which include pre-foreclosure sales, foreclosure transfers
and sales by financial institutions of their REO properties. This reflects, in part, the substantial backlog of delinquent
loans lenders developed over recent periods, due to various foreclosure suspensions and the implementation of HAMP.
We expect many of these loans will transition to REO and be sold in 2010. This may cause prices to decline further
as the market absorbs the additional supply of homes for sale;
• the scheduled expiration of the homebuyer tax credit in 2010;
• our expectation that mortgage rates may increase in 2010 due to the completion of the Federal Reserve mortgage-
backed securities purchase program, which will make it less affordable to buy a home; and
• the likelihood of continued high unemployment rates.
Single-Family Mortgage Portfolio
The following statistics illustrate the credit deterioration of loans in our single-family mortgage portfolio, which consists
of single-family mortgage loans that we hold and those underlying our PCs, Structured Securities and other mortgage-related
guarantees.
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