Freddie Mac 2012 Annual Report Download - page 19

relationships with our customers, see “MD&A — RISK MANAGEMENT — Credit Risk — Institutional Credit Risk —
Single-Family Mortgage Seller/Servicers.”
Our Competition
Historically, our principal competitors have been Fannie Mae, Ginnie Mae and FHA/VA, and other financial institutions
that retain or securitize mortgages, such as commercial and investment banks, dealers, and thrift institutions. Since 2008,
most of our competitors, other than Fannie Mae and Ginnie Mae, have ceased their activities in the residential mortgage
securitization business or severely curtailed these activities relative to their previous levels. We compete on the basis of
price, products, the structure of our securities, and service. Competition to acquire single-family mortgages can also be
significantly affected by changes in our credit standards.
Ginnie Mae, which became a more significant competitor beginning in 2009, guarantees the timely payment of principal
and interest on mortgage-related securities backed by federally insured or guaranteed loans, primarily those insured by FHA
or guaranteed by VA. Ginnie Mae maintained a significant market share in 2012 and 2011, in large part due to favorable
pricing of loans insured by FHA, the increase in the FHA loan limit and the availability, through FHA, of a mortgage product
for borrowers seeking greater than 80% financing who could not otherwise qualify for a conventional mortgage.
The conservatorship, including direction provided to us by our Conservator, and the restrictions on our activities under
the Purchase Agreement may affect our ability to compete. FHFA, through its strategic plan activities, has required that we
and Fannie Mae adopt uniform approaches in a number of areas. Through the servicing alignment initiative, we and Fannie
Mae have aligned many of our policies and procedures with respect to the servicing of single-family loans. We are also
aligning certain terms of the contracts we and Fannie Mae use with our respective single-family customers, and are working
with Fannie Mae on a new securitization platform. For more information, see “RISK FACTORS — Conservatorship and
Related Matters — FHFA directives that we and Fannie Mae adopt uniform approaches in some areas could have an
adverse impact on our business or on our competitive position with respect to Fannie Mae.”
14 Freddie Mac