Freddie Mac 2012 Annual Report Download - page 259

related to available-for-sale securities for which other-than-temporary impairment occurred prior to January 1, 2012, but will
not be realized until the securities are sold, written off, or mature. Net impairment of available-for-sale securities recognized
in earnings is presented as additions in two components based upon whether the current period is: (a) the first time the debt
security was credit-impaired; or (b) not the first time the debt security was credit-impaired. The credit loss component is
reduced if we sell, intend to sell or believe we will be required to sell previously credit-impaired available-for-sale securities.
Additionally, the credit loss component is reduced by the amortization resulting from significant increases in cash flows
expected to be collected that are recognized over the remaining life of the security.
Table 7.5 — Other-Than-Temporary Impairments Related to Credit Losses on Available-For-Sale Securities
Year Ended
December 31, 2012
(in millions)
Credit-related other-than-temporary impairments on available-for-sale securities recognized in earnings:
Beginning balance — remaining credit losses on available-for-sale securities held at the beginning of the period where other-
than-temporary impairments were recognized in earnings ................................................. $15,988
Additions:
Amounts related to credit losses for which an other-than-temporary impairment was not previously recognized .......... 141
Amounts related to credit losses for which an other-than-temporary impairment was previously recognized ............. 2,027
Reductions:
Amounts related to securities which were sold, written off or matured ........................................ (1,289)
Amounts previously recognized in other comprehensive income that were recognized in earnings because we intend to sell
the security or it is more likely than not that we will be required to sell the security before recovery of its amortized cost
basis ...................................................................................... (15)
Amounts related to amortization resulting from significant increases in cash flows expected to be collected that are
recognized over the remaining life of the security ..................................................... (266)
Ending balance — remaining credit losses on available-for-sale securities held at period end where other-than-temporary
impairments were recognized in earnings ............................................................. $16,586
Realized Gains and Losses on Sales of Available-For-Sale Securities
The table below illustrates the gross realized gains and gross realized losses received from the sale of available-for-sale
securities.
Table 7.6 — Gross Realized Gains and Gross Realized Losses on Sales of Available-For-Sale Securities
Year Ended December 31,
2012 2011 2010
(in millions)
Gross realized gains
Mortgage-related securities:
Freddie Mac ............................................................................ $ 34 $ 77 $27
Fannie Mae ............................................................................ 14 14 54
CMBS ................................................................................ 82 37 —
Option ARM ........................................................................... 3 — —
Obligations of states and political subdivisions ................................................... 19 11 3
Total mortgage-related securities gross realized gains ............................................ 152 139 84
Non-mortgage-related securities:
Asset-backed securities .................................................................... — — 10
Total non-mortgage-related securities gross realized gains ......................................... — — 10
Gross realized gains .......................................................................... 152 139 94
Gross realized losses
Mortgage related securities:(1)
Freddie Mac ............................................................................ — — (1)
CMBS ................................................................................ — (81) —
Option ARM ........................................................................... — — (6)
Total mortgage-related securities gross realized losses ............................................ — (81) (7)
Gross realized losses ......................................................................... — (81) (7)
Net realized gains (losses) ..................................................................... $152 $ 58 $87
(1) These individual sales do not change our conclusion that we do not intend to sell the majority of our remaining mortgage-related securities and it is not
more likely than not that we will be required to sell such securities before a recovery of the unrealized losses.
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