Freddie Mac 2015 Annual Report Download - page 91

Management's Discussion and Analysis Risk Management | Credit Risk
Freddie Mac 2015 Form 10-K 89
CREDIT RISK
OVERVIEW
We are exposed to both mortgage credit risk and institutional credit risk. Mortgage credit risk is the risk
that a borrower will fail to make timely payments on a loan that we own or guarantee. Institutional credit
risk is the risk that a counterparty that has entered into a business contract or arrangement with us will fail
to meet its obligations.
We are exposed to three types of mortgage credit risk:
• Single-family mortgage (SF) credit risk, through our ownership or guarantee of loans in the single-
family credit guarantee portfolio;
• Multifamily mortgage (MF) credit risk, through our ownership or guarantee of loans in the
multifamily mortgage portfolio; and
• Mortgage-related securities (MRS) credit risk, through our ownership of non-Freddie Mac
mortgage-related securities in the mortgage-related investments portfolio.
We also hold investments in certain non-mortgage-related securities. As of December 31, 2015, 2014,
and 2013, the fair value of our investments in these securities was $17.2 billion, $6.7 billion and $6.6
billion, respectively, and consisted of investments in Treasury securities. As Treasury securities are
backed by the full faith and credit of the U.S. government, we consider these securities to be free of credit
risk. We may also invest in other types of non-mortgage-related securities that may expose us to
institutional credit risk.
In the sections below, we generally discuss our risk management framework and current risk environment
for each of the three types of mortgage credit risk and for institutional credit risk.