Freddie Mac 2014 Annual Report Download - page 26

21 Freddie Mac
31, 2015. Our 2014 Retained Portfolio Plan provides for us to manage the UPB of the mortgage-related investments portfolio
so that it does not exceed 90% of the annual cap established by the Purchase Agreement, subject to certain exceptions. For
more information on the plan, see “Executive Summary — Our Primary Business Objectives — Reducing Taxpayer Exposure
to Losses — Reducing Our Mortgage-Related Investments Portfolio Over Time.” The reduction in the mortgage-related
investments portfolio will result in a decline in income from this portfolio over time.
The table below presents the UPB of our mortgage-related investments portfolio, for purposes of the limit imposed by the
Purchase Agreement and FHFA regulation. See "Table 21 — Composition of Segment Mortgage Portfolios and Credit Risk
Portfolios" for more information on the composition of the table below.
Table 2 — Mortgage-Related Investments Portfolio
December 31, 2014 December 31, 2013
More Liquid Less Liquid Total More Liquid Less Liquid Total
(in millions)
Investments segment — Mortgage investments portfolio:
Single-family unsecuritized mortgage loans $ — $ 82,778 $ 82,778 $ — $ 84,411 $ 84,411
Freddie Mac mortgage-related securities 150,852 7,363 158,215 156,438 8,809 165,247
Non-agency mortgage-related securities — 44,230 44,230 — 64,524 64,524
Non-Freddie Mac agency mortgage-related securities 16,341 — 16,341 16,889 — 16,889
Total Investments segment — Mortgage investments
portfolio 167,193 134,371 301,564 173,327 157,744 331,071
Single-family Guarantee segment — Single-family
unsecuritized seriously delinquent mortgage loans — 28,738 28,738 — 37,726 37,726
Multifamily segment — Mortgage investments portfolio 1,911 76,201 78,112 1,411 90,816 92,227
Total mortgage-related investments portfolio $ 169,104 $ 239,310 $ 408,414 $ 174,738 $ 286,286 $ 461,024
Percentage of total mortgage-related investments portfolio 41% 59% 100% 38% 62% 100%
Mortgage-related investments portfolio cap $ 469,625 $ 552,500
We evaluate the liquidity of the assets in our mortgage-related investments portfolio based on two categories: (a) single-
class and multiclass agency securities (excluding certain structured agency securities collateralized by non-agency mortgage-
related securities); and (b) assets that are less liquid than the agency securities noted above. Assets that we consider to be less
liquid than agency securities include unsecuritized single-family and multifamily mortgage loans, certain structured agency
securities collateralized with non-agency mortgage-related securities, and our investments in non-agency mortgage-related
securities.
The UPB of our mortgage-related investments portfolio was $408.4 billion at December 31, 2014, a decline of $52.6
billion (or 11%) compared to $461.0 billion at December 31, 2013. Our less liquid assets accounted for $47.0 billion of this
decline, primarily due to liquidations and our efforts to reduce these assets. We sold $16.5 billion of less liquid assets in 2014
(including sales related to settlements of non-agency mortgage-related securities litigation). In addition, we securitized $7.0
billion of single-family reperforming and modified loans in 2014. These amounts do not include sales of mortgage loans we
purchased for cash and subsequently securitized. The sales of less liquid assets noted above included a pilot transaction in
which we sold approximately $0.6 billion in UPB of seriously delinquent unsecuritized single-family loans. In January 2015,
we received FHFA approval to execute additional such sales. We plan to continue reducing the balance of our less liquid assets,
although we also continue to add certain of these assets to our mortgage-related investments portfolio as part of our business
strategies (e.g., removal of seriously delinquent loans from PC pools and acquisitions of mortgage loans purchased for cash).
Powers of the Conservator
Upon its appointment, the Conservator immediately succeeded to all rights, titles, powers and privileges of Freddie Mac,
and of any stockholder, officer or director of Freddie Mac with respect to Freddie Mac and its assets. The Conservator also
succeeded to the title to all books, records and assets of Freddie Mac held by any other legal custodian or third party.
Under the GSE Act, the Conservator may take any actions it determines are necessary to put us in a safe and solvent
condition and appropriate to carry on our business and preserve and conserve our assets and property. The Conservator’s
powers include the ability to transfer or sell any of our assets or liabilities (subject to certain limitations and post-transfer notice
provisions) without any approval, assignment of rights or consent of any party. The GSE Act, however, provides that mortgage
loans and mortgage-related assets that have been transferred to a Freddie Mac securitization trust must be held by the
Conservator for the beneficial owners of the trust and cannot be used to satisfy our general creditors. For more information on
the GSE Act, see "Regulation and Supervision."
Treasury Agreements and Senior Preferred Stock
Treasury entered into several agreements with us in connection with our entry into conservatorship, as described below.
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