Company: FMCCN
Filing Date: 2025-02-13
Form Type: 10-K
Source: 0001026214-25-000040
Chunk: 165

Company: FEDERAL HOME LOAN MORTGAGE CORP
Filing Date: 2025-02-13
Form: 10-K
Item: Item 15
Chunk 165
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 effect on our financial results, future instances may adversely affect our financial results.

We are exposed to increased credit losses and credit-related expenses in the event of a natural disaster or catastrophic event.

The occurrence, severity, and duration of a catastrophic event, such as a pandemic or other health crisis; terrorism, war, political instability, or other political conflict or crisis; or natural disaster such as a flood in an area where we own or guarantee mortgage loans could increase our credit losses and credit-related expenses. A catastrophic event that damages or destroys single-family or multifamily real estate underlying mortgage loans that we own or guarantee, or negatively affects the ability of borrowers to continue to make payments on mortgage loans that we own or guarantee, could increase our serious delinquency rates and average loan loss severity in the affected areas. Such catastrophic events could generate credit losses and credit-related expenses and have a material adverse effect on our business and financial results. While homeowner's and flood 

FREDDIE MAC  |  2024 Form 10-K115

Risk Factors

insurance may offset some of the risk of natural disasters, insurance coverage may not be adequate or always available and borrowers may not be required or choose to purchase certain types of insurance, such as earthquake insurance or flood insurance for properties located outside SFHAs. Rising costs or limited availability of insurance could also lead borrowers to underinsure, which could result in higher uninsured costs and unrepaired properties. Additionally, rising insurance costs could impact consumers' ability to make mortgage payments, and higher insurance costs could decrease the availability of affordable housing for buyers.

Increases in the severity and frequency of natural disasters and the continued existence of conditions that could lead to a natural disaster, particularly with respect to flooding in areas not designated as SFHAs (i.e., in areas where we do not require flood insurance), as well as any decrease in the willingness of insurers to provide coverage in certain areas for certain perils, would increase the foregoing risks. In addition, the unpredictability of natural disasters and the complexity of forecasting negatively affect our ability to forecast losses from such events.

We also face climate transition risk, which includes policy, legal, technology, financial and economic changes from any potential transition to a lower-carbon economy. Changing policies, coupled with changing market preferences, could affect housing and could result in a significant financial burden to our borrowers. Actions taken by Congress, the Administration, state and municipal governments, and FHFA in response to climate change concerns may create transition risks that specifically impact the housing market and our business. Such a