Freddie Mac 2015 Annual Report Download - page 257

Financial Statements Notes to the Consolidated Financial Statements | Note 6
Freddie Mac 2015 Form 10-K 255
Obligations of States and Political Subdivisions
These investments consist of housing revenue bonds. We believe the unrealized losses on obligations of
states and political subdivisions are primarily a result of movements in interest rates and liquidity and risk
premiums. We believe that any credit risk related to these securities is minimal because of the issuer
guarantees provided on these securities.
Other-Than-Temporary Impairments on Available-for-Sale Securities
The following table presents our net impairment of available-for-sale securities recognized in earnings by
security type.
Net Impairment of Available-For-Sale Securities Recognized in Earnings For the Year Ended December 31,
(in millions) 2015 2014 2013
Available-for-sale securities:(1)
CMBS $ (29) $ —$(14)
Subprime (146)(794)(1,258)
Option ARM (101)(101)(58)
Alt-A and other (16)(42)(179)
Manufactured housing —(1) (1)
Total net impairment of available-for-sale securities
recognized in earnings $(292) $ (938) $ (1,510)
(1) Includes $240 million, $817 million, and $568 million of other-than-temporary impairments recognized in earnings for the
years ended December 31, 2015, 2014, and 2013, respectively, as we had the intent to sell the related securities before
recovery of their amortized cost basis.
The following table presents the changes in the unrealized credit losses related to available-for-sale
securities that we have written down for other-than-temporary impairment and for which only a portion of
the other-than-temporary impairment was recognized in other comprehensive income.
Year Ended December 31,
(in millions) 2015 2014
Credit-related other-than-temporary impairments on available-for-sale securities recognized in
earnings:
Beginning balance — remaining credit losses on available-for-sale securities where other-than-
temporary impairments were recognized in earnings $6,798 $14,463
Additions:
Amounts related to credit losses on securities for which an other-than-temporary impairment
was not previously recognized — —
Amounts related to credit losses on securities for which an other-than-temporary impairment
was previously recognized 52 121
Reductions:
Amounts related to securities which were sold, written off, or matured (107)(1,188)
Amounts related to securities which we intend to sell or it is more likely than not that we will be
required to sell before recovery of amortized cost basis (1,116) (6,113)
Amounts related to amortization resulting from significant increases in cash flows expected to
be collected and/or due to the passage of time that are recognized over the remaining life of
the security (321)(485)
Ending balance — remaining credit losses on available-for-sale securities where other-than-
temporary impairments were recognized in earnings(1) $5,306 $6,798
(1) Excludes other-than-temporary impairments on securities that we intend to sell or it is more likely than not that we will be
required to sell before recovery of the amortized cost basis.