Freddie Mac 2015 Annual Report Download - page 8

Introduction About Freddie Mac | Our Business
Freddie Mac 2015 Form 10-K 6
OUR CHARTER
Our Charter forms the framework for our business activities. Our statutory mission as defined in our
Charter is to:
• Provide stability in the secondary market for residential loans;
• Respond appropriately to the private capital market;
• Provide ongoing assistance to the secondary market for residential loans (including activities relating
to loans for low- and moderate-income families, involving a reasonable economic return that may be
less than the return earned on other activities) by increasing the liquidity of mortgage investments and
improving the distribution of investment capital available for residential mortgage financing; and
• Promote access to mortgage loan credit throughout the U.S. (including central cities, rural areas, and
other underserved areas) by increasing the liquidity of mortgage investments and improving the
distribution of investment capital available for residential mortgage financing.
Our Charter permits us to purchase first-lien single-family loans with LTV ratios at the time of our
purchase of less than or equal to 80%. Our Charter also permits us to purchase first-lien single-family
loans that do not meet this criterion if we have certain specified credit protections, which include
mortgage insurance on the portion of the UPB of the loan that exceeds an 80% LTV ratio, a seller's
agreement to repurchase or replace a defaulted loan, or the retention by the seller of at least a 10%
participation interest in the loan.
This Charter requirement does not apply to multifamily loans or to loans that have the benefit of any
guarantee, insurance or other obligation by the U.S. or any of its agencies or instrumentalities (e.g., the
FHA, the VA, or the USDA Rural Development). Additionally, as part of HARP, we purchase single-family
loans that refinance loans we currently own or guarantee without obtaining additional credit enhancement
in excess of that already in place for any such loan, even when the LTV ratio of the new loan is above
80%.
Our Charter does not permit us to originate loans or lend money directly to consumers in the primary
mortgage market. Our Charter limits our purchase of single-family loans to the conforming loan market,
which consists of loans originated with UPBs at or below limits determined annually based on changes in
FHFA’s housing price index. Since 2006, the base conforming loan limit for a one-family residence has
been set at $417,000, and higher limits have been established in certain “high-cost” areas (currently, up to
$625,500 for a one-family residence). Higher limits also apply to two- to four-family residences and to
loans secured by properties in Alaska, Guam, Hawaii, and the U.S. Virgin Islands.