Freddie Mac 2012 Annual Report Download - page 45

Affordable Housing Goals
We are subject to annual affordable housing goals. In light of these housing goals, we may make adjustments to our
mortgage loan sourcing and purchase strategies, which could potentially increase our credit losses. These strategies could
include entering into some purchase and securitization transactions with lower expected economic returns than our typical
transactions. We have at times relaxed some of our underwriting criteria to obtain goal-qualifying mortgage loans and made
additional investments in higher risk mortgage loan products that we believe are more likely to serve the borrowers targeted
by the goals, but have not done so to a significant extent since we entered into conservatorship. The Acting Director of FHFA
stated that FHFA does not intend for us to undertake uneconomic or high risk activities in support of the housing goals nor
does it intend for the state of conservatorship to be a justification for withdrawing our support from these market segments.
If the Director of FHFA finds that we failed to meet a housing goal and that achievement of the housing goal was
feasible, the GSE Act states that the Director may require the submission of a housing plan with respect to the housing goal
for approval by the Director. The housing plan must describe the actions we would take to achieve the unmet goal in the
future. FHFA has the authority to take actions against us, including issuing a cease and desist order or assessing civil money
penalties, if we: (a) fail to submit a required housing plan or fail to make a good faith effort to comply with a plan approved
by FHFA; or (b) fail to submit certain data relating to our mortgage purchases, information or reports as required by law. See
“RISK FACTORS — Legal and Regulatory Risks — We may make certain changes to our business in an attempt to meet
our housing goals and subgoals.”
FHFA has established four goals and one subgoal for single-family owner-occupied housing, one multifamily special
affordable housing goal, and one multifamily special affordable housing subgoal. Three of the single-family housing goals
and the subgoal target purchase money mortgages for: (a) low-income families; (b) very low-income families; and/or
(c) families that reside in low-income areas. The single-family housing goals also include one that targets refinancing
mortgages for low-income families. The multifamily special affordable housing goal targets multifamily rental housing
affordable to low-income families. The multifamily special affordable housing subgoal targets multifamily rental housing
affordable to very low-income families.
The single-family goals are expressed as a percentage of the total number of eligible mortgages underlying our total
single-family mortgage purchases. The multifamily goals are expressed in terms of minimum numbers of units financed.
The single-family goals include: (a) an assessment of performance as compared to the actual share of the market that
meets the criteria for each goal; and (b) a benchmark level to measure performance. Where our performance on a single-
family goal falls short of the benchmark for a goal, we still could achieve the goal if our performance meets or exceeds the
actual share of the market that meets the criteria for the goal for that year. For example, if the actual market share of
mortgages to low-income families relative to all mortgages originated to finance owner-occupied single-family properties is
lower than the 23% benchmark rate, we would still satisfy this goal if we achieve that actual market percentage.
Affordable Housing Goals for 2012 to 2014
FHFA’s affordable housing goals for Freddie Mac for 2012 to 2014 are set forth below.
Table 5 — Affordable Housing Goals for 2012 to 2014
Goals for 2012 Goals for 2013 Goals for 2014
Single-family purchase money goals (benchmark levels):
Low-income .............................................................. 23% 23% 23%
Very low-income .......................................................... 7% 7% 7%
Low-income areas(1) ......................................................... 20% TBD TBD
Low-income areas subgoal ................................................... 11% 11% 11%
Single-family refinance low-income goal (benchmark level) ............................. 20% 20% 20%
Multifamily low-income goal (in units) ............................................ 225,000 215,000 200,000
Multifamily low-income subgoal (in units) .......................................... 59,000 50,000 40,000
(1) 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 low- and moderate-income families in designated disaster areas in the
three most recent years for which such data are available. For 2012, FHFA set the benchmark level at 20%.
We expect to report our performance with respect to the 2012 affordable housing goals in March 2013. We anticipate
that the difficult market conditions and our financial condition will affect our affordable housing activities in 2013. However,
we view the purchase of mortgage loans that are eligible to count toward our affordable housing goals to be a principal part
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