Company: FMCCN
Filing Date: 2025-02-13
Form Type: 10-K
Source: 0001026214-25-000040
Chunk: 80

Company: FEDERAL HOME LOAN MORTGAGE CORP
Filing Date: 2025-02-13
Form: 10-K
Item: Item 15
Chunk 80
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 the frequency of communications with the borrower may be increased. We rate servicing performance on a regular basis, and we may conduct on-site reviews to confirm compliance with our standards.

The majority of our guarantees have first loss credit protection provided by subordination. As a result, our primary credit risk exposure stems from unsecuritized loans and consolidated loans underlying our fully guaranteed securitizations (e.g., Multifamily PCs). Our credit exposure to held-for-sale mortgage loans is short-term and transitory in nature, as this portfolio will generally be used as collateral in future senior subordinate securitizations.

Our unsecuritized held-for-investment mortgage loans will generally be used as collateral in a future fully guaranteed securitization. Although we initially retain the credit risk exposure to the mortgage loans underlying these transactions, we expect to transfer a portion of the credit risk using our back-end MCIP and MSCR products where economically sensible.

For loans that remain unsecuritized or underlie our consolidated fully guaranteed securitizations, if they were to become delinquent, we may offer a workout option to give the borrower an opportunity to bring the loan current and retain ownership of the property, such as providing a forbearance plan or a short-term extension of up to 12 months. These arrangements are entered into with the expectation that we will recover our initial investment or reduce our losses. We do not enter into these arrangements in situations where we believe we would experience a loss in the future that is greater than or equal to the loss we would experience if we foreclosed on the property at the time of the agreement. While our multifamily loan modification and other loan workout activities have been minimal during the last three years, we have identified an increased number of loans that may require loss mitigation and the amount of modification and other loan workout activities may increase in the future. 

Various federal, state, and local laws may affect our business processes and financial results. Future changes in these laws may adversely impact our borrowers or make it more difficult and costly for us to manage our credit risk. Rent restrictions and eviction moratoriums may adversely impact the cash flows generated by the underlying properties, while foreclosure moratoriums may limit our ability to pursue certain loss mitigation actions (e.g., foreclosure) upon a borrower default. 

See Note 15 for additional information about the geographic distribution of our Multifamily mortgage portfolio.

REO Activity

We had four REO properties as of December 31, 2024. We did not have any REO properties