Freddie Mac 2012 Annual Report Download - page 336

ITEM 11. EXECUTIVE COMPENSATION
Executive Summary
2012 Business Highlights
During 2012, Freddie Mac made substantial progress in pursuing its primary business objectives, as summarized below.
See “BUSINESS — Executive Summary” for further information.
Summary of Financial Results
Our comprehensive income for the year ended December 31, 2012 was $16.0 billion, consisting of $11.0 billion of net
income and $5.1 billion of other comprehensive income. We paid cash dividends of $7.2 billion to Treasury at the direction
of FHFA during 2012.
Providing Credit Availability for Mortgages, Maintaining Foreclosure Prevention Activities and Minimizing Credit Losses
During 2012, we purchased or issued other guarantee commitments for $426.8 billion in UPB of single-family
conforming mortgage loans, representing approximately 2.0 million loans. This includes purchases of HARP loans totaling
$86.9 billion, and representing approximately 434,000 borrowers.
Under our loan workout programs, our servicers contact borrowers and attempt to help them stay in their homes or
avoid foreclosure. Based on information provided by the MHA Program administrator, our servicers had completed
approximately 217,209 loan modifications under HAMP from the introduction of the initiative in 2009 through
December 31, 2012. As of December 31, 2012, approximately 24,000 borrowers were in modification trial periods, including
approximately 15,000 borrowers in trial periods for our non-HAMP standard modification.
Since 2009, we have helped more than 785,000 borrowers experiencing hardship to complete a loan workout.
Developing Mortgage Market Enhancements in Support of a New Infrastructure for the Secondary Mortgage Market
During 2012, we continued efforts that we believe will create value for the industry by building the infrastructure for a
future housing finance system. These efforts include the implementation of the Uniform Mortgage Data Program, which
provides us with the ability to collect additional data that we believe will improve our risk management practices, and the
Uniform Loan Delivery Dataset, which provides for the efficient collection and use of consistent information about loan
terms, collateral, and borrowers.
We are also continuing to work with FHFA and others to develop a plan for the design and development of a
securitization platform that can be used in a future secondary mortgage market. In addition, we are continuing to work with
FHFA and Fannie Mae to develop recommendations to align certain of the terms of the contracts we and Fannie Mae use
with our respective single-family seller/servicers, as well as certain other practices we follow in managing our remedies and
our respective business relationships with these companies.
Maintaining Sound Credit Quality on the Loans We Purchase or Guarantee
During 2012, we continued to focus on maintaining credit policies, including our underwriting standards, that allow us
to purchase and guarantee loans made to qualified borrowers that we believe will provide management and guarantee fee
income (excluding the amounts associated with the Temporary Payroll Tax Cut Continuation Act of 2011), over the long-
term that exceeds our expected credit-related and administrative expenses on such loans.
The credit quality of the single-family loans we acquired beginning in 2009 (excluding HARP and other relief refinance
mortgages) is significantly better than that of loans we acquired from 2005 to 2008 as measured by original LTV ratios,
FICO scores, and the proportion of loans underwritten with fully documented income. Based on UPB, approximately 96% of
the single-family mortgages we purchased in 2012 were fixed rate, first lien amortizing mortgages, approximately 82% were
refinance mortgages, and approximately 24% of these refinance mortgages were HARP loans.
Contracting the Dominant Presence of the GSEs in the Marketplace
During 2012, we continued to take steps toward the goal of gradually shifting mortgage credit risk from Freddie Mac to
private investors, while simplifying and shrinking certain of our operations. In the case of single-family credit guarantees, we
are exploring several ways to accomplish this goal, including increasing guarantee fees and evaluating new risk-sharing
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