Freddie Mac 2015 Annual Report Download - page 386

Certain Relationships and Related Transactions
Freddie Mac 2015 Form 10-K 384
• Whether the transaction is proposed to be, or was, entered into on terms no less favorable to us than
terms that could have been reached with an unrelated third party; and
• The purpose, and potential benefits to us, of the transaction.
TRANSACTIONS WITH 5% SHAREHOLDERS
In connection with our entry into conservatorship, we issued a warrant to Treasury to purchase shares of
our common stock equal to 79.9% of the total number of shares of our common stock outstanding, on a
fully diluted basis. There were a number of transactions between us and Treasury since the beginning of
2015, as discussed in “MD&A — Consolidated Results of Operations,” “MD&A — Risk Management —
Credit Risk — Single-Family Mortgage Credit Risk,” “MD&A — Conservatorship and Related Matters,”
“MD&A — Regulation and Supervision,” Note 2, Note 4, Note 7, Note 10, Note 11, and Note 12.
FHFA, as conservator, approved the Purchase Agreement and our role as compliance agent in the MHA
Program and the Memorandum of Understanding with Treasury, FHFA, and Fannie Mae under the HFA
Initiative. FHFA also instructed us to implement a new $5,000 principal reduction incentive under HAMP in
which Treasury will pay the incentive for borrowers with certain of our HAMP modified loans. The
remaining transactions described in the sections referenced above did not require review and approval
under any of our policies and procedures relating to transactions with related persons.
TRANSACTIONS WITH INSTITUTIONS RELATED
TO DIRECTORS
In the ordinary course of business, we were a party during 2015, and expect to continue to be a party
during 2016, to certain business transactions with institutions affiliated with members of our Board.
Management believes that the terms and conditions of the transactions were no more and no less
favorable to us than the terms of similar transactions with unaffiliated institutions to which we are, or
expect to be, a party. None of these transactions were required to be disclosed under SEC rules.
TRANSACTIONS WITH INSTITUTIONS RELATED
TO EXECUTIVE OFFICERS
Mr. Layton joined us in May 2012 as CEO and as a member of the Board. Mr. Layton previously served
as a senior executive officer of JPMorgan Chase, ending his service in 2004.
Freddie Mac has an extensive business relationship with JPMorgan Chase (through its subsidiaries). As
of December 31, 2015, JPMorgan Chase was one of Freddie Mac’s largest servicers, and serviced
approximately 1.05 million loans for Freddie Mac. JPMorgan Chase had an aggregate UPB of loans of
approximately $165.36 billion as of December 31, 2015 and approximately $164.16 billion as of
January 31, 2016. JPMorgan Chase sold approximately $11.2 billion in single-family loans to Freddie Mac
in 2015.
JPMorgan Chase also is a significant capital markets, derivatives, and multifamily counterparty and is an
underwriter of our debt and mortgage securities. As of January 31, 2016, JPMorgan Chase and its