Freddie Mac 2009 Annual Report Download - page 106

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Mortgage-Related Securities
We are primarily a buy-and-hold investor in mortgage-related securities, which consist of securities issued by us, Fannie
Mae, Ginnie Mae and other financial institutions. Our mortgage-related securities are classified as either available-for-sale or
trading on our consolidated balance sheets.
Our investments in mortgage-related securities are included in the calculation of our mortgage-related investments
portfolio. Also included in our mortgage-related investments portfolio are our investments in mortgage loans, discussed under
“Mortgage Loans.” The unpaid principal balance of our mortgage-related investments portfolio, for purposes of the limit
imposed by the Purchase Agreement and FHFA regulation, was $755.3 billion at December 31, 2009.
Under the Purchase Agreement, as amended, the unpaid principal balance of our mortgage-related investments portfolio
could not exceed $900 billion as of December 31, 2009, and must decline by 10% per year thereafter until it reaches
$250 billion. Therefore, the unpaid principal balance of our mortgage-related investments portfolio may not exceed
$810 billion as of December 31, 2010. Treasury has stated it does not expect us to be an active buyer to increase the size of
our mortgage-related investments portfolio, and also does not expect that active selling will be necessary to meet the required
portfolio reduction targets. FHFA has also stated its expectation in the Acting Director’s February 2, 2010 letter that we will
not be a substantial buyer or seller of mortgages for our mortgage-related investments portfolio, except for purchases of
delinquent mortgages out of PC pools. FHFA has stated that, given the size of our current mortgage-related investments
portfolio and the potential volume of delinquent mortgages to be purchased out of PC pools, it expects that any net additions
to our mortgage-related investments portfolio would be related to that activity. For a further discussion of the limit on our
mortgage-related investments portfolio, see “NOTE 6: INVESTMENTS IN SECURITIES — Impact of the Purchase
Agreement and FHFA Regulation on the Mortgage-Related Investments Portfolio” to our consolidated financial statements.
103 Freddie Mac