Freddie Mac 2011 Annual Report Download - page 40

owner-occupied single-family properties is lower than the 27% benchmark rate, we would still satisfy this goal if we
achieve that actual market percentage.
The rule makes a number of changes to the previous counting methods for goals credit, including prohibiting housing
goals credit for purchases of private-label securities. However, the rule allows credit under the low-income refinance goal
for permanent MHA Program loan modifications. The rule also states that FHFA does not intend for the enterprises to
undertake economically adverse or high-risk activities in support of the goals, nor does it intend for the enterprises’ state
of conservatorship to be a justification for withdrawing support from these important market segments.
Our housing goals for 2010 and 2011 and results for 2010 are set forth in the table below.
Table 5 — Affordable Housing Goals for 2010 and 2011 and Results for 2010
Goals for 2010 and 2011 Market Level for 2010
(1)
Results for 2010
(2)
Single-family purchase money goals (benchmark levels):
Low-income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27% 27.2% 26.8%
Very low-income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8% 8.1% 7.9%
Low-income areas
(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24% 24.0% 23.0%
Low-income areas subgoal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13% 12.1% 10.4%
Single-family refinance low-income goal (benchmark level) . . . . . . . . . . . 21% 20.2% 22.0%
Multifamily low-income goal (in units) . . . . . . . . . . . . . . . . . . . . . . . . . 161,250 N/A 161,500
Multifamily low-income subgoal (in units) . . . . . . . . . . . . . . . . . . . . . . . 21,000 N/A 29,656
(1) Determined by FHFA based on its analysis of market data for 2010.
(2) In February 2012, at the direction of FHFA, we revised our single-family results for 2010 to exclude mortgages underlying certain HFA bonds.
(3) FHFA will annually set the benchmark level for the low-income areas goal based on the benchmark level for the low-income areas subgoal, plus an
adjustment factor reflecting the additional incremental share of mortgages for moderate-income families in designated disaster areas in the most
recent year for which such data is available. For 2010 and 2011, FHFA set the benchmark level for the low-income areas goal at 24% for both
periods.
We previously reported that we did not achieve the benchmark levels for the single-family low-income areas goal and
the related low-income areas subgoal for 2010 and that we did achieve the benchmark levels for the single-family low-
income purchase and very low-income purchase goals. In February 2012, at the direction of FHFA, we revised our single-
family results for 2010 to exclude mortgages underlying certain HFA bonds. FHFA determined that the resulting small
shortfalls were not sufficient to require reopening its previous determination that the single-family low-income purchase
and very low-income purchase goals had been met. FHFA has informed us that, given that 2010 is the first year under
which FHFA utilized the benchmark or market level for the housing goals and that we continue to operate under
conservatorship, FHFA will not be requiring housing plans for goals that we did not achieve.
We expect to report our performance with respect to the 2011 affordable housing goals in March 2012. At this time,
based on preliminary information, we believe we met the single-family refinance low-income goal and both multifamily
goals, and believe we failed to meet the FHFA benchmark level for the single-family purchase-money goals and the
subgoal for 2011. In such cases, FHFA regulations allow us to achieve a goal if our qualifying share matches that of the
market, as measured by the Home Mortgage Disclosure Act. Because the Home Mortgage Disclosure Act data for 2011
will not be released until September 2012, FHFA will not be able to make a final determination on our performance until
that time. If we fail to meet both the FHFA benchmark level and the market level, we may enter into discussions with
FHFA concerning whether these goals were infeasible under the terms of the GSE Act, due to market and economic
conditions and our financial condition. For more information, see “EXECUTIVE COMPENSATION — Compensation
Discussion and Analysis — Executive Management Compensation Program — Determination of the Performance-Based
Portion of 2011 Deferred Base Salary.”
We anticipate that the difficult market conditions and our financial condition will continue to affect our affordable
housing activities in 2012. However, we view the purchase of mortgage 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 low- and moderate-income families. See also “RISK FACTORS — Legal and
Regulatory Risks — We may make certain changes to our business in an attempt to meet the housing goals and subgoals
set for us by FHFA that may increase our losses.”
Duty to Serve Underserved Markets
The GSE Act establishes a duty for Freddie Mac and Fannie Mae to serve three underserved markets (manufactured
housing, affordable housing preservation and rural areas) by developing loan products and flexible underwriting guidelines
to facilitate a secondary market for mortgages for very low-, low- and moderate-income families in those markets.
Effective for 2010 and subsequent years, FHFA is required to establish a manner for annually: (a) evaluating whether and
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