Freddie Mac 2009 Annual Report Download - page 64

multifamily housing. Our share of the support provided under two components of this initiative (the Temporary Credit
and Liquidity Facilities Initiative and the New Issue Bond Initiative) is an aggregate of $11.7 billion; and
• we completed multifamily Structured Transactions during 2009 which totaled approximately $2.4 billion.
Government Support for our Business
We are dependent upon the continued support of Treasury and FHFA in order to continue operating our business. We
also receive substantial support from the Federal Reserve. Our ability to access funds from Treasury under the Purchase
Agreement is critical to keeping us solvent and avoiding the appointment of a receiver by FHFA under statutory mandatory
receivership provisions. Recent developments concerning this support include the following:
• on December 24, 2009, FHFA, acting on our behalf in its capacity as Conservator, and Treasury further amended the
Purchase Agreement to provide that: (i) the $200 billion cap on Treasury’s funding commitment will increase as
necessary to accommodate any cumulative reduction in our net worth during 2010, 2011 and 2012; and (ii) the annual
10% reduction in the size of our mortgage-related investments portfolio, the first of which is effective on
December 31, 2010, will be calculated based on the maximum allowable size of the mortgage-related investments
portfolio, rather than the actual balance of the mortgage-related investments portfolio, as of December 31 of the
preceding year. This is intended to provide us with additional flexibility to meet the portfolio reduction requirement.
Therefore, the size of our mortgage-related investments portfolio may not exceed $810 billion as of December 31,
2010. Under the amended Purchase Agreement, the size of the mortgage-related investments portfolio for purposes of
the annual limit will be based on unpaid principal balance, rather than the amount that would appear on our
consolidated balance sheet in accordance with GAAP, and the related limitation on the amount of our indebtedness
will be based on the par value of our indebtedness. In each case, the limitations will be determined without giving
effect to any change in the accounting standards related to transfers of financial assets and consolidation of VIEs or
any similar accounting standard. The Purchase Agreement was also amended to provide that the determination and
payment of the periodic commitment fee that we must pay to Treasury will be delayed by one year, and must now be
set no later than December 31, 2010 and will be payable quarterly beginning March 31, 2011. To date, we received an
aggregate of $50.7 billion in funding under the Purchase Agreement;
• in November 2008, the Federal Reserve established a program to purchase: (i) our direct obligations and those of
Fannie Mae and the FHLBs; and (ii) mortgage-related securities issued by us, Fannie Mae and Ginnie Mae.
According to information provided by the Federal Reserve, it held $64.1 billion of our direct obligations and had net
purchases of $400.9 billion of our mortgage-related securities under this program as of February 10, 2010. In
September 2009, the Federal Reserve announced that it would gradually slow the pace of purchases under the
program in order to promote a smooth transition in markets and anticipates that its purchases under this program will
be completed by the end of the first quarter of 2010;
• in September 2008, Treasury established a program to purchase mortgage-related securities issued by us and Fannie
Mae. This program expired on December 31, 2009. According to information provided by Treasury, it held
$197.6 billion of mortgage-related securities issued by us and Fannie Mae as of December 31, 2009 previously
purchased under this program; and
• in September 2008, we entered into the Lending Agreement with Treasury, pursuant to which Treasury established a
secured lending credit facility that was available to us as a liquidity back-stop. The Lending Agreement expired on
December 31, 2009. We did not make any borrowings under the Lending Agreement.
For information on the potential impact of the completion of the Federal Reserve’s mortgage-related securities and debt
purchase programs on our business, see “LIQUIDITY AND CAPITAL RESOURCES — Liquidity.” We do not believe we
have experienced any adverse effects on our business from the expiration of the Lending Agreement (which occurred after
the December 2009 amendment to the Purchase Agreement) or the expiration of Treasury’s mortgage-related securities
purchase program.
For more information on the programs and agreements described above, see “BUSINESS — Conservatorship and
Related Developments.”
2010 Significant Changes in Accounting Standards — Accounting for Transfers of Financial Assets and Consolidation
of VIEs
We use separate securitization trusts in our securities issuance process for the purpose of managing the receipts and
payments of cash flow of our PCs and Structured Securities. Prior to January 1, 2010, these trusts met the definition of
QSPEs and were therefore not subject to consolidation analysis. Effective January 1, 2010, the concept of a QSPE was
removed from GAAP and entities previously considered QSPEs are now required to be evaluated for consolidation. Based on
our evaluation, we determined that, under the new consolidation guidance, we are the primary beneficiary of our single-
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