Freddie Mac 2012 Annual Report Download - page 135

Other Liabilities
Other liabilities consist of the guarantee obligation, the reserve for guarantee losses on non-consolidated trusts and other
mortgage-related financial guarantees, servicer liabilities, accounts payable and accrued expenses, and other miscellaneous
liabilities. Other liabilities increased to $6.1 billion as of December 31, 2012 from $6.0 billion as of December 31, 2011
primarily due to an increase in: (a) accrued estimated losses on unsettled foreclosure alternative transactions at year end
primarily related to an increase in short sale activity; and (b) real estate services payable relating to estimated taxes and
insurance on REO properties held in inventory at year end, partially offset by a decline in servicer liabilities primarily due to
a decrease in the population of seriously delinquent loans. See “NOTE 18: SELECTED FINANCIAL STATEMENT LINE
ITEMS” for additional information.
Total Equity (Deficit)
The table below presents the changes in total equity (deficit) and certain capital-related disclosures.
Table 38 — Changes in Total Equity (Deficit)
Three Months Ended
Twelve Months
Ended
12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011 12/31/2012
(in millions)
Beginning balance ....................................... $ 4,907 $ 1,086 $ (18) $ (146) $ (5,991) $ (146)
Net income ............................................ 4,457 2,928 3,020 577 619 10,982
Other comprehensive income (loss), net of taxes:
Changes in unrealized gains (losses) related to available-for-sale
securities .......................................... 1,261 2,599 (238) 1,147 701 4,769
Changes in unrealized gains (losses) related to cash flow hedge
relationships ........................................ 94 102 107 111 118 414
Changes in defined benefit plans ........................... (84) 1 3 (46) 68 (126)
Comprehensive income ................................... 5,728 5,630 2,892 1,789 1,506 16,039
Capital draw funded by Treasury ............................ — — 19 146 5,992 165
Senior preferred stock dividends declared ...................... (1,808) (1,809) (1,809) (1,807) (1,655) (7,233)
Other ................................................ — — 2 — 2 2
Total equity (deficit)/Net worth ............................. $ 8,827 $ 4,907 $ 1,086 $ (18) $ (146) $ 8,827
Aggregate draws under the Purchase Agreement (as of period
end) (1) .............................................. $71,336 $71,336 $71,336 $71,317 $71,171 $71,336
Aggregate senior preferred stock dividends paid to Treasury in cash (as
of period end) ........................................ $23,754 $21,946 $20,137 $18,328 $16,521 $23,754
Percentage of dividends paid to Treasury in cash to aggregate draws (as
of period end) ........................................ 33% 31% 28% 26% 23% 33%
(1) Does not include the initial $1.0 billion liquidation preference of senior preferred stock that we issued to Treasury in September 2008 as an initial
commitment fee and for which no cash was received.
We requested a total of $19 million and $7.6 billion in draws from Treasury under the Purchase Agreement to eliminate
quarterly deficits in net worth for 2012 and 2011, respectively. At December 31, 2012, our assets exceeded our liabilities
under GAAP; therefore no draw is being requested from Treasury under the Purchase Agreement for the fourth quarter of
2012. We paid cash dividends to Treasury of $7.2 billion and $6.5 billion during 2012 and 2011, respectively. Based on our
Net Worth Amount at December 31, 2012, our dividend obligation to Treasury in March 2013 will be $5.8 billion.
Net unrealized losses on our available-for-sale securities in AOCI decreased by $4.8 billion during 2012. The decrease
was primarily due to fair value gains related to: (a) the movement of our single-family non-agency mortgage-related
securities with unrealized losses towards maturity; (b) the impact of spread tightening on our CMBS; and (c) the impact of
declining interest rates. Net unrealized losses on our closed cash flow hedge relationships in AOCI decreased by $414
million during 2012, primarily attributable to the reclassification of losses into earnings related to our closed cash flow
hedges as the originally forecasted transactions affected earnings.
RISK MANAGEMENT
Our investment and credit guarantee activities expose us to three broad categories of risk: (a) credit risk; (b) interest-rate
risk and other market risk; and (c) operational risk. See “RISK FACTORS” for additional information regarding these and
other risks.
130 Freddie Mac