Freddie Mac 2005 Annual Report Download - page 17

This Information Statement and Annual Report includes forward-looking statements, which may include expectations
and objectives for our operating results, Ñnancial condition, business, and trends and other matters that could aÅect our
business. You should not unduly rely on our forward-looking statements. Actual results might diÅer signiÑcantly from our
forecasts and expectations due to several factors that involve risks and uncertainties, including those described in
""BUSINESS,'' ""RISK FACTORS'' and ""FORWARD-LOOKING STATEMENTS.'' These forward-looking statements are
made as of the date of this Information Statement and we undertake no obligation to publicly update any forward-looking
statement to reÖect events or circumstances after the date of this Information Statement, or to reÖect the occurrence of
unanticipated events.
BUSINESS
Overview
Freddie Mac is a stockholder-owned company chartered by Congress in 1970 to stabilize the nation's residential
mortgage markets and expand opportunities for homeownership and aÅordable rental housing. We are one of the largest
purchasers of mortgage loans in the U.S. We bring innovation and eÇciency to the mortgage lending process.
Our mission is to provide liquidity, stability and aÅordability to the U.S. housing market. We fulÑll our mission by
purchasing residential mortgages and mortgage-related securities in the secondary mortgage market. We purchase mortgages
that meet our underwriting and product standards, then bundle them into mortgage-related securities that can be sold to
investors. We can use the proceeds to purchase additional mortgages from primary market mortgage lenders, thus
providing them with a continuous Öow of funds. We also purchase mortgage loans and mortgage-related securities for our
investment portfolio, which we Ñnance primarily by issuing a variety of debt instruments in the capital markets.
Though we are chartered by Congress, our business is funded completely with private capital. We are responsible for
making payments on our securities. Neither the U.S. government nor any other agency or instrumentality of the U.S.
government is obligated to fund our mortgage purchase or Ñnancing activities or to guarantee our securities and other
obligations.
Our Charter and Mission
The Federal Home Loan Mortgage Corporation Act, which we refer to as our charter, forms the framework for our
business activities, shapes the products we bring to market, and drives the services we provide to the nation's residential
housing and mortgage industries. Our charter also prescribes the terms and principal amounts of mortgage loans that we
are permitted to purchase, as described in ""Business Activities Ì Types of Mortgages We Purchase.''
Our statutory purposes, as stated in our charter, are:
‚ to provide stability in the secondary market for residential mortgages;
‚ to respond appropriately to the private capital market;
‚ to provide ongoing assistance to the secondary market for residential mortgages (including activities relating to
mortgages on housing 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 Ñnancing; and
‚ to promote access to mortgage 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 Ñnancing.
To facilitate our statutory purposes, our charter provides us with special attributes including:
‚ exemption from the registration and reporting requirements of the Securities Act and the Exchange Act (we are
subject to the general antifraud provisions of the federal securities laws and have committed to the voluntary
registration of our common stock with the Securities and Exchange Commission under the Exchange Act);
‚ favorable treatment of our securities under various investment laws and other regulations;
‚ discretionary authority of the Secretary of the Treasury to purchase up to $2.25 billion of our securities; and
‚ exemption from state and local taxes, except for taxes on real property that we own.
Our activities in the secondary mortgage market beneÑt consumers by providing lenders a steady Öow of low-cost
mortgage funding. This Öow of funds helps moderate cyclical swings in the housing market, equalizes the Öow of mortgage
funds regionally throughout the U.S. and provides for the availability of mortgage funds in a variety of economic conditions.
In addition, the supply of cash made available to lenders through this process drives down mortgage rates on loans within
the dollar limits set under our charter. These lower rates help make homeownership aÅordable for more families and
individuals than would be possible without our participation in the secondary mortgage market.
1Freddie Mac