Freddie Mac 2011 Annual Report Download - page 41

to what extent Freddie Mac and Fannie Mae have complied with the duty to serve underserved markets; and (b) rating the
extent of compliance.
On June 7, 2010, FHFA published in the Federal Register a proposed rule regarding the duty of Freddie Mac and
Fannie Mae to serve the underserved markets. Comments were due on July 22, 2010. We provided comments on the
proposed rule to FHFA, but we cannot predict the contents of any final rule that FHFA may release, or the impact that the
final rule will have on our business or operations.
Affordable Housing Goals and Results for 2009
Prior to 2010, we were subject to affordable housing goals related to mortgages for low- and moderate-income
families, low-income families living in low-income areas, very low-income families and families living in defined
underserved areas. These goals were set as a percentage of the total number of dwelling units underlying our total
mortgage purchases. The goal relating to low-income families living in low-income areas and very low-income families
was referred to as the “special affordable” housing goal. This special affordable housing goal also included a multifamily
annual minimum dollar volume target of qualifying multifamily mortgage purchases. In addition, from 2005 to 2009, we
were subject to three subgoals that were expressed as percentages of the total number of mortgages we purchased that
financed the purchase of single-family, owner-occupied properties located in metropolitan areas.
Our housing goals and results for 2009 are set forth in the table below.
Table 6 — Affordable Housing Goals and Results for 2009
(1)
Goal Results
Housing goals and actual results
Low- and moderate-income goal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43% 44.7%
Underserved areas goal
(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 26.8
Special affordable goal
(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 17.8
Multifamily special affordable volume target (in billions)
(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4.60 $3.69
Home purchase subgoals and actual results:
Low- and moderate-income subgoal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40% 48.4%
Underserved areas subgoal
(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 27.9
Special affordable subgoal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 20.6
(1) An individual mortgage may qualify for more than one of the goals or subgoals. Each of the goal and subgoal percentages and each of our
percentage results is determined independently and cannot be aggregated to determine a percentage of total purchases that qualifies for these goals
or subgoals.
(2) These goals were determined to be infeasible.
(3) FHFA concluded that achievement by us of these goals and subgoals was feasible, but decided not to require us to submit a housing plan.
Affordable Housing Allocations
The GSE Act requires us to set aside in each fiscal year an amount equal to 4.2 basis points for each dollar of the
UPB of total new business purchases, and allocate or transfer such amount to: (a) HUD to fund a Housing Trust Fund
established and managed by HUD; and (b) a Capital Magnet Fund established and managed by Treasury. FHFA has the
authority to suspend our allocation upon finding that the payment would contribute to our financial instability, cause us to
be classified as undercapitalized or prevent us from successfully completing a capital restoration plan. In November 2008,
FHFA advised us that it has suspended the requirement to set aside or allocate funds for the Housing Trust Fund and the
Capital Magnet Fund until further notice.
Prudential Management and Operations Standards
The GSE Act requires FHFA to establish prudential standards, by regulation or by guideline, for a broad range of
operations of the enterprises. These standards must address internal controls, information systems, independence and
adequacy of internal audit systems, management of interest rate risk exposure, management of market risk, liquidity and
reserves, management of asset and investment portfolio growth, overall risk management processes, investments and asset
acquisitions, management of credit and counterparty risk, and recordkeeping. FHFA may also establish any additional
operational and management standards the Director of FHFA determines appropriate.
On June 20, 2011, FHFA published a proposed rule that would establish prudential standards, in the form of
guidelines, relating to the management and operations of Freddie Mac, Fannie Mae, and the FHLBs. This proposed rule
implements certain Reform Act amendments to the GSE Act. The proposed standards address a number of business,
controls, and risk management areas. The standards specify the possible consequences for any entity that fails to meet any
of the standards or otherwise fails to comply (including submission of a corrective plan, limits on asset growth, increases
in capital, limits on dividends and stock redemptions or repurchases, a minimum level of retained earnings or any other
action that the FHFA Director determines will contribute to bringing the entity into compliance with the standards). In
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