Freddie Mac 2010 Annual Report Download - page 209

Other
Our involvement with other VIEs includes our investments in LIHTC partnerships, certain other mortgage-related
guarantees, and certain short-term default and other guarantee commitments that we account for as derivatives:
•Investments in LIHTC Partnerships: We hold an equity investment in various LIHTC fund partnerships that invest in
lower-tier or project partnerships that are single asset entities. In February 2010, the Acting Director of FHFA, after
consultation with Treasury, informed us that we may not sell or transfer our investments in LIHTC assets and that he
sees no other disposition options. As a result, we wrote down the carrying value of our LIHTC investments to zero as
of December 31, 2009, as we will not be able to realize any value either through reductions to our taxable income and
related tax liabilities or through a sale to a third party.
•Certain other mortgage-related guarantees: We have other guarantee commitments outstanding on multifamily
housing revenue bonds that were issued by third parties. As part of certain other mortgage-related guarantees, we also
provide commitments to advance funds, commonly referred to as “liquidity guarantees,” which require us to advance
funds to enable third parties to purchase variable-rate multifamily housing revenue bonds, or certificates backed by
such bonds, that cannot be remarketed within five business days after they are tendered to their holders.
•Certain short-term default and other guarantee commitments accounted for as derivatives: Our involvements in
these VIEs include our guarantee of the performance of interest-rate swap contracts in certain circumstances and
credit derivatives we issued to guarantee the payments on multifamily loans or securities.
At December 31, 2010, we were not the primary beneficiary of any such VIEs because our involvements in these VIEs
are passive in nature and do not provide us with the power to direct the activities of the VIEs that most significantly impact
their economic performance. See Table 4.2 for the carrying amounts and classification of the assets and liabilities recorded
on our consolidated balance sheets related to our variable interests in these non-consolidated VIEs, as well as our maximum
exposure to loss as a result of our involvement with these VIEs. Also see “NOTE 10: FINANCIAL GUARANTEES” for
additional information about our involvement with the VIEs related to mortgage-related guarantees and short-term default
and other guarantee commitments discussed above.
NOTE 5: MORTGAGE LOANS AND LOAN LOSS RESERVES
We own both single-family mortgage loans, which are secured by one to four family residential properties, and
multifamily mortgage loans, which are secured by properties with five or more residential rental units. For a discussion of
our significant accounting policies regarding our mortgage loans and loan loss reserves, see “NOTE 1: SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES.”
Table 5.1 summarizes the types of loans on our consolidated balance sheets as of December 31, 2010 and 2009. For
periods ending prior to January 1, 2010, the balances do not include mortgage loans underlying Freddie Mac mortgage-
related securities since these were not consolidated on our balance sheets at that time. See “NOTE 4: VARIABLE
INTEREST ENTITIES” for further information regarding the assets and liabilities, including mortgage loans, underlying our
consolidated VIEs.
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