Company: FMCCN
Filing Date: 2025-02-13
Form Type: 10-K
Source: 0001026214-25-000040
Chunk: 158

Company: FEDERAL HOME LOAN MORTGAGE CORP
Filing Date: 2025-02-13
Form: 10-K
Item: Item 15
Chunk 158
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, or loan, or otherwise engaged in fraud. 

We review a sample of loans after we purchase them to determine if they comply with our contractual standards. However, our review may not detect any misrepresentations by the parties involved in the transaction, detect loan fraud, or reduce our exposure to these risks. 

We can exercise certain contractual remedies for loans that do not meet our standards. Our representation and warranty framework relieves sellers of certain repurchase obligations with respect to single-family loans. We may face greater exposure to credit and other losses because our ability to enforce repurchases from sellers may be limited. In addition, to the extent that we accept alternatives to repurchase, we may ultimately recover less than if we had enforced repurchase rights. We are accepting more alternatives to repurchase, such as fee-based and fee-only options, which may further increase our exposure to credit and other losses. 

Our suite of tools, collectively referred to as Loan Advisor, offers limited representation and warranty relief for certain loan components that satisfy automated data analytics related to appraisal quality, collateral valuation, certain condominium project requirements, borrower assets, borrower income, and borrower employment status. In general, limited representation and warranty relief is offered when information is validated against independent data sources and/or Freddie Mac analytics and risk assessments. However, there is a risk that the enhanced tools and processes provided by Loan Advisor will not enable us to identify all breaches in a timely manner. In addition, there is a risk that data provided by the independent data sources is not accurate, impacting the representation and warranty relief decision. In turn, this could increase our exposure to credit and other losses. For additional information, see MD&A - Risk Management - Single-Family Mortgage Credit Risk and MD&A - Risk Management - Operational Risk - Third-Party Risk. 

Mortgage fraud and other financial crimes could result in significant financial losses and harm to our reputation.

In the process of purchasing, securitizing, and servicing mortgage loans, we rely on information provided to us by third parties. We also rely on the representation of such third parties as to the accuracy and completeness of the information. This exposes 

FREDDIE MAC  |  2024 Form 10-K112

Risk Factors

us to the risk that one or more of the third parties involved in a transaction (for example, the borrower, seller, broker, appraiser, title agent, loan officer, or servicer) will intentionally or negligently engage in fraud by misrepresenting facts about a mortgage loan. While we