Freddie Mac 2010 Annual Report Download - page 36

economic conditions and our financial condition. For more information, see “EXECUTIVE COMPENSATION —
Compensation Discussion and Analysis — Executive Management Compensation Program — Determination of the
Performance-Based Portion of 2010 Deferred Base Salary.”
We anticipate that the difficult market conditions and our financial condition will continue to affect our affordable
housing activities in 2011. See also “RISK FACTORS — Legal and Regulatory Risks.” However, we view the purchase of
mortgage loans that are eligible to count toward our affordable housing goals to be a principal part of our mission and
business and we are committed to facilitating the financing of affordable housing for low- and moderate-income families.
Duty to Serve Underserved Markets
The GSE Act establishes a duty for Freddie Mac and Fannie Mae to serve three underserved markets (manufactured
housing, affordable housing preservation and rural areas) by developing loan products and flexible underwriting guidelines to
facilitate a secondary market for mortgages for very low-, low- and moderate-income families in those markets. Effective for
2010, FHFA is required to establish a manner for annually: (a) evaluating whether and to what extent Freddie Mac and
Fannie Mae have complied with the duty to serve underserved markets; and (b) rating the extent of compliance.
On June 7, 2010, FHFA published in the Federal Register a proposed rule regarding the duty of Freddie Mac and Fannie
Mae to serve the underserved markets. Comments were due on July 22, 2010. We provided comments on the proposed rule
to FHFA, but we cannot predict the contents of any final rule that FHFA may release, or the impact that the final rule will
have on our business or operations.
Affordable Housing Goals and Reported Results for 2009 and 2008
Prior to 2010, we were subject to affordable housing goals related to mortgages for low- and moderate-income families,
low-income families living in low-income areas, very low-income families and families living in defined underserved areas.
These goals were set as a percentage of the total number of dwelling units underlying our total mortgage purchases. The goal
relating to low-income families living in low-income areas and very low-income families was referred to as the “special
affordable” housing goal. This special affordable housing goal also included a multifamily annual minimum dollar volume
target of qualifying multifamily mortgage purchases. In addition, from 2005 to 2009, we were subject to three subgoals that
were expressed as percentages of the total number of mortgages we purchased that financed the purchase of single-family,
owner-occupied properties located in metropolitan areas.
Our housing goals and results for 2009 and 2008 are set forth in Table 6 below.
Table 6 — Affordable Housing Goals and Reported Results for 2009 and 2008
(1)
Goal Results Goal Results
2009 2008
Year Ended December 31,
Housing goals and actual results:
Low- and moderate-income goal
(2)
.................................................. 43% 44.7% 56% 51.5%
Underserved areas goal
(3)(4)
....................................................... 32 26.8 39 37.7
Special affordable goal
(2)(5)
....................................................... 18 17.8 27 23.1
Multifamily special affordable volume target (in billions)
(4)
............................... $4.60 $3.69 $3.92 $7.49
Home purchase subgoals and actual results:
Low- and moderate-income subgoal
(2)
............................................... 40% 48.4% 47% 39.3%
Underserved areas subgoal
(2)(5)
.................................................... 30 27.9 34 30.3
Special affordable subgoal
(2)
...................................................... 14 20.6 18 15.1
(1) An individual mortgage may qualify for more than one of the goals or subgoals. Each of the goal and subgoal percentages and each of our percentage
results is determined independently and cannot be aggregated to determine a percentage of total purchases that qualifies for these goals or subgoals.
(2) These 2008 goals and subgoals were determined to be infeasible.
(3) FHFA concluded that achievement by us of this 2008 goal was feasible, but challenging. Accordingly, FHFA decided not to require us to submit a
housing plan.
(4) These 2009 goals were determined to be infeasible.
(5) FHFA concluded that achievement by us of these 2009 goals and subgoals was feasible, but decided not to require us to submit a housing plan.
Affordable Housing Allocations
The GSE Act requires us to set aside in each fiscal year an amount equal to 4.2 basis points for each dollar of the UPB
of total new business purchases, and allocate or transfer such amount to: (a) HUD to fund a Housing Trust Fund established
and managed by HUD; and (b) a Capital Magnet Fund established and managed by Treasury. FHFA has the authority to
suspend our allocation upon finding that the payment would contribute to our financial instability, cause us to be classified as
undercapitalized or prevent us from successfully completing a capital restoration plan. In November 2008, FHFA advised us
that it has suspended the requirement to set aside or allocate funds for the Housing Trust Fund and the Capital Magnet Fund
until further notice.
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