Freddie Mac 2009 Annual Report Download - page 6

2010 Significant Changes in Accounting Standards
Effective January 1, 2010, we adopted amendments to the accounting standards for transfers of financial assets and
consolidation of VIEs. The adoption of these amendments will have a significant impact on our consolidated financial
statements and other financial disclosures beginning in the first quarter of 2010.
Due to the implementation of these changes, we recognized a significant decline in our total equity (deficit) on
January 1, 2010, which will increase the likelihood that we will require a draw from Treasury under the Purchase Agreement
for the first quarter of 2010. The cumulative effect of these changes in accounting principles as of January 1, 2010 is a net
decrease of approximately $11.7 billion to total equity (deficit), which includes the changes to the opening balances of AOCI
and retained earnings (accumulated deficit).
See “MD&A — EXECUTIVE SUMMARY — 2010 Significant Changes in Accounting Standards — Accounting for
Transfers of Financial Assets and Consolidation of VIEs” and “NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES — Recently Issued Accounting Standards, Not Yet Adopted Within These Consolidated Financial Statements” to
our consolidated financial statements for additional information regarding these changes.
Our Charter and Statutory Mission
The Federal Home Loan Mortgage Corporation Act, which we refer to as our charter, forms the framework for our
business activities, the products we bring to market and the services we provide to the nation’s residential housing and
mortgage industries. Our charter also determines the types of mortgage loans that we are permitted to purchase, as described
in “Our Business Segments — Single-Family Guarantee Segment” and “— Multifamily Segment.”
Our statutory mission as defined in our charter is:
• to provide stability in the secondary market for residential mortgages;
• to respond appropriately to the private capital market;
• to provide ongoing assistance to the secondary market for residential mortgages (including activities relating to
mortgages for low- and moderate-income families, involving a reasonable economic return that may be less than the
return earned on other activities); and
• to promote access to mortgage credit throughout the U.S. (including central cities, rural areas and other underserved
areas).
Our business objectives continue to evolve under conservatorship. For more information, see “Conservatorship and
Related Developments — Impact of Conservatorship and Related Actions on Our Business.”
Our Market and Mortgage Securitizations
We conduct business in the U.S. residential mortgage market and the global securities market under the direction of our
Conservator. These markets continued to remain weak during 2009 and early 2010, as discussed in “MD&A — EXECUTIVE
SUMMARY.” The size of the U.S. residential mortgage market is affected by many factors, including changes in interest
rates, home ownership rates, home prices, the supply of housing and lender preferences regarding credit risk and borrower
preferences regarding mortgage debt. The amount of residential mortgage debt available for us to purchase and the mix of
available loan products are also affected by several factors, including the volume of mortgages meeting the requirements of
our charter, (including changes in conforming loan limit sizes by our regulator), our own preference for credit risk reflected
in our purchase standards and the mortgage purchase and securitization activity of other financial institutions.
At December 31, 2009, our total investments in and guarantees of mortgage-related assets was $2.3 trillion, while the
total U.S. residential mortgage debt outstanding, which includes single-family and multifamily loans, was approximately
$11.8 trillion. See “MD&A — OUR PORTFOLIOS” for further information on the composition of our mortgage portfolios.
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