Freddie Mac 2011 Annual Report Download - page 43

Securities and Exchange Commission
We are subject to the financial reporting requirements applicable to registrants under the Exchange Act, including the
requirement to file with the SEC annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on
Form 8-K. Although our common stock is required to be registered under the Exchange Act, we continue to be exempt
from certain federal securities law requirements, including the following:
• Securities we issue or guarantee are “exempted securities” under the Securities Act and may be sold without
registration under the Securities Act;
• We are excluded from the definitions of “government securities broker” and “government securities dealer” under
the Exchange Act;
• The Trust Indenture Act of 1939 does not apply to securities issued by us; and
• We are exempt from the Investment Company Act of 1940 and the Investment Advisers Act of 1940, as we are an
“agency, authority or instrumentality” of the U.S. for purposes of such Acts.
Legislative and Regulatory Developments
We discuss certain significant legislative and regulatory developments below. For more information regarding these
and other legislative and regulatory developments that could impact our business, see “RISK FACTORS —
Conservatorship and Related Matters” and “— Legal and Regulatory Risks.”
Administration Report on Reforming the U.S. Housing Finance Market
On February 11, 2011, the Administration delivered a report to Congress that lays out the Administration’s plan to
reform the U.S. housing finance market, including options for structuring the government’s long-term role in a housing
finance system in which the private sector is the dominant provider of mortgage credit. The report recommends winding
down Freddie Mac and Fannie Mae, stating that the Administration will work with FHFA to determine the best way to
responsibly reduce the role of Freddie Mac and Fannie Mae in the market and ultimately wind down both institutions. The
report states that these efforts must be undertaken at a deliberate pace, which takes into account the impact that these
changes will have on borrowers and the housing market.
The report states that the government is committed to ensuring that Freddie Mac and Fannie Mae have sufficient
capital to perform under any guarantees issued now or in the future and the ability to meet any of their debt obligations,
and further states that the Administration will not pursue policies or reforms in a way that would impair the ability of
Freddie Mac and Fannie Mae to honor their obligations. The report states the Administration’s belief that under the
companies’ senior preferred stock purchase agreements with Treasury, there is sufficient funding to ensure the orderly and
deliberate wind down of Freddie Mac and Fannie Mae, as described in the Administration’s plan.
The report identifies a number of policy levers that could be used to wind down Freddie Mac and Fannie Mae, shrink
the government’s footprint in housing finance, and help bring private capital back to the mortgage market, including
increasing guarantee fees, phasing in a 10% down payment requirement, reducing conforming loan limits, and winding
down Freddie Mac and Fannie Mae’s investment portfolios, consistent with the senior preferred stock purchase
agreements. These recommendations, if implemented, would have a material impact on our business volumes, market
share, results of operations and financial condition.
As discussed below in “Legislated Increase to Guarantee Fees,” we have recently been directed by FHFA to raise our
guarantee fees. We cannot currently predict the extent to which our business will be impacted by this increase in
guarantee fees. In addition, as discussed below in “Conforming Loan Limits,” the temporary high-cost area loan limits
expired on September 30, 2011.
We cannot predict the extent to which the other recommendations in the report will be implemented or when any
actions to implement them may be taken. However, we are not aware of any current plans of our Conservator to
significantly change our business model or capital structure in the near-term.
FHFA’s Strategic Plan for Freddie Mac and Fannie Mae Conservatorships
On February 21, 2012, FHFA sent to Congress a strategic plan for the next phase of the conservatorships of Freddie
Mac and Fannie Mae. The plan sets forth objectives and steps FHFA is taking or will take to meet FHFA’s obligations as
Conservator. FHFA states that the steps envisioned in the plan are consistent with each of the housing finance reform
frameworks set forth in the report delivered by the Administration to Congress in February 2011, as well as with the
leading congressional proposals introduced to date. FHFA indicates that the plan leaves open all options for Congress and
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