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Federal Home Loan Mortgage Corporation UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2008 Commission File Number: 000-53330 Federal Home Loan Mortgage Corporation (Exact name of registrant as specified in its charter) Freddie Mac Federally chartered corporation 8200 Jones Branch Drive 52-0904874 (703) 903-2000 (State or other jurisdiction of McLean, Virginia 22102-3110 (I.R.S. Employer (Registrant’s telephone number, incorporation or organization) (Address of principal executive Identification No.) including area code) offices, including zip code) Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class: on which registered: Voting Common Stock, no par value per share New York Stock Exchange Variable Rate, Non-Cumulative Preferred Stock, par value $1.00 per share New York Stock Exchange 5% Non-Cumulative Preferred Stock, par value $1.00 per share New York Stock Exchange Variable Rate, Non-Cumulative Preferred Stock, par value $1.00 per share New York Stock Exchange 5.1% Non-Cumulative Preferred Stock, par value $1.00 per share New York Stock Exchange 5.79% Non-Cumulative Preferred Stock, par value $1.00 per share New York Stock Exchange Variable Rate, Non-Cumulative Preferred Stock, par value $1.00 per share New York Stock Exchange Variable Rate, Non-Cumulative Preferred Stock, par value $1.00 per share New York Stock Exchange Variable Rate, Non-Cumulative Preferred Stock, par value $1.00 per share New York Stock Exchange 5.81% Non-Cumulative Preferred Stock, par value $1.00 per share New York Stock Exchange 6% Non-Cumulative Preferred Stock, par value $1.00 per share New York Stock Exchange Variable Rate, Non-Cumulative Preferred Stock, par value $1.00 per share New York Stock Exchange 5.7% Non-Cumulative Preferred Stock, par value $1.00 per share New York Stock Exchange Variable Rate, Non-Cumulative Perpetual Preferred Stock, par value $1.00 per share New York Stock Exchange 6.42% Non-Cumulative Perpetual Preferred Stock, par value $1.00 per share New York Stock Exchange 5.9% Non-Cumulative Perpetual Preferred Stock, par value $1.00 per share New York Stock Exchange 5.57% Non-Cumulative Perpetual Preferred Stock, par value $1.00 per share New York Stock Exchange 5.66% Non-Cumulative Perpetual Preferred Stock, par value $1.00 per share New York Stock Exchange 6.02% Non-Cumulative Perpetual Preferred Stock, par value $1.00 per share New York Stock Exchange 6.55% Non-Cumulative Preferred Stock, par value $1.00 per share New York Stock Exchange Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, par value $1.00 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes n No ≤ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes n No ≤ Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ≤ No n Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ≤ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer n Accelerated filer n Non-accelerated filer (Do not check if a smaller reporting company) ≤ Smaller reporting company n Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes n No ≤ The aggregate market value of the common stock held by non-affiliates computed by reference to the price at which the common equity was last sold on June 30, 2008 (the last business day of the registrant’s most recently completed second fiscal quarter) was $10.6 billion. As of February 25, 2009, there were 647,364,714 shares of the registrant’s common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE: The information required by Part III (Items 10, 11, 12, 13 and 14) will be filed in an amendment to this annual report on Form 10-K on or before April 30, 2009. TABLE OF CONTENTS PART I Item 1. Business ....................................................................... 1 Item 1A. Risk Factors .................................................................... 36 Item 1B. Unresolved Staff Comments. ...................................................... 53 Item 2. Properties ...................................................................... 53 Item 3. Legal Proceedings ................................................................ 53 Item 4. Submission of Matters to a Vote of Security Holders ...................................... 53 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities..................................................................... 54 Item 6. Selected Financial Data ............................................................ 58 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ........... 59 Executive Summary . ...................................................... 59 Consolidated Results of Operations .............................................. 70 Consolidated Balance Sheets Analysis ............................................ 92 Consolidated Fair Value Balance Sheets Analysis ................................... 115 Liquidity and Capital Resources ................................................ 118 Portfolio Balances and Activities................................................ 125 Off-Balance Sheet Arrangements................................................ 130 Contractual Obligations ...................................................... 131 Critical Accounting Policies and Estimates ........................................ 133 Credit Risks ............................................................... 140 Operational Risks ........................................................... 171 Risk Management and Disclosure Commitments .................................... 172 Item 7A. Quantitative and Qualitative Disclosures About Market Risk ................................. 174 Item 8. Financial Statements and Supplementary Data ........................................... 180 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ........... 272 Item 9A(T). Controls and Procedures ........................................................... 272 Item 9B. Other Information ................................................................ 275 PART III Item 10. Directors, Executive Officers and Corporate Governance.................................... 276 Item 11. Executive Compensation ........................................................... 276 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . 276 Item 13. Certain Relationships and Related Transactions, and Director Independence ..................... 276 Item 14. Principal Accountant Fees and Services ................................................ 276 PART IV Item 15. Exhibits and Financial Statement Schedules ............................................. 277 SIGNATURES ............................................................................. 278 EXHIBIT INDEX .......................................................................... E-1 i Freddie Mac FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Page Report of Independent Registered Public Accounting Firm ............................................. 181 Consolidated Statements of Operations ............................................................ 182 Consolidated Balance Sheets.................................................................... 183 Consolidated Statements of Stockholders’ Equity (Deficit) .............................................. 184 Consolidated Statements of Cash Flows ........................................................... 185 Note 1: Summary of Significant Accounting Policies.................................................. 186 Note 2: Financial Guarantees and Mortgage Securitizations ............................................. 203 Note 3: Retained Interests in Mortgage-Related Securitizations . ......................................... 207 Note 4: Variable Interest Entities ................................................................ 209 Note 5: Investments in Securities ................................................................ 211 Note 6: Mortgage Loans and Loan Loss Reserves .................................................... 219 Note 7: Real Estate Owned..................................................................... 222 Note 8: Debt Securities and Subordinated
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