Freddie Mac 2015 Annual Report Download - page 166

Management's Discussion and Analysis Regulation and Supervision
Freddie Mac 2015 Form 10-K 164
economic conditions. Under the rule, Freddie Mac is required to conduct annual stress tests using
scenarios specified by FHFA that reflect a minimum of three sets of economic and financial conditions
and publicly disclose the results of the stress test under the “severely adverse” scenario. In April 2015, we
disclosed the results of our most recent "severely adverse" scenario stress test which projected an
improvement in the amount of available funding remaining under the Purchase Agreement compared to
the test results disclosed in April 2014.
For additional information, see “Liquidity And Capital Resources - Capital Resources.”
New Products
The GSE Act requires Freddie Mac and Fannie Mae to obtain the approval of FHFA before initially offering
any product, subject to certain exceptions. The GSE Act also requires us to provide FHFA with written
notice of any new activity that we consider not to be a product. While FHFA published an interim final rule
on prior approval of new products, it stated that permitting us to engage in new products is inconsistent
with the goals of conservatorship and instructed us not to submit such requests under the interim final
rule.
Affordable Housing Goals
We are subject to annual affordable housing goals. We view the purchase of 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 very low-, low-, and moderate-income
families. In light of these goals, we may make adjustments to our strategies for purchasing loans, which
could potentially increase our credit losses. These strategies could include entering into purchase and
securitization transactions with lower expected economic returns than our typical transactions. In
February 2010, FHFA stated that it does not intend for us to undertake uneconomic or high risk activities
in support of the housing goals nor does it intend for the state of conservatorship to be a justification for
withdrawing our support from these market segments.
If the Director of FHFA finds that we failed (or there is a substantial probability that we will fail) to meet a
housing goal and that achievement of the housing goal was or is feasible, the Director may require the
submission of a housing plan that describes the actions we will take to achieve the unmet goal. FHFA has
the authority to take actions against us if we fail to submit a required housing plan, submit an
unacceptable plan, fail to comply with a plan approved by FHFA, or fail to submit certain mortgage
purchase data, information or reports as required by law. See “Risk Factors - Legal And Regulatory Risks
- We may make certain changes to our business in an attempt to meet our housing goals and subgoals,
which may cause us to forgo other more profitable opportunities.”
Current FHFA housing goals applicable to our purchases consist of four goals and one subgoal for single-
family owner-occupied housing, one multifamily affordable housing goal, and two multifamily affordable
housing subgoals. Single-family goals are expressed as a percentage of the total number of eligible loans
underlying our total single-family loan purchases, while the multifamily goals are expressed in terms of
minimum numbers of units financed.
Three of the single-family housing goals and the subgoal target purchase money loans for low-income
families, very low-income families, and/or families that reside in low-income areas. The single-family
housing goals also include one goal that targets refinancing loans for low-income families. The multifamily