Freddie Mac 2012 Annual Report Download - page 46

of our mission and business and we are committed to facilitating the financing of affordable housing for low- and moderate-
income families.
Duty to Serve Underserved Markets
The GSE Act establishes a duty for Freddie Mac and Fannie Mae to serve three underserved markets (manufactured
housing, affordable housing preservation and rural areas) by developing loan products and flexible underwriting guidelines to
facilitate a secondary market for mortgages for very low-, low- and moderate-income families in those markets. Effective for
2010 and subsequent years, FHFA is required to establish a manner for annually: (a) evaluating whether and to what extent
Freddie Mac and Fannie Mae have complied with the duty to serve underserved markets; and (b) rating the extent of
compliance.
In June 2010, FHFA published in the Federal Register a proposed rule regarding the duty of Freddie Mac and Fannie
Mae to serve the underserved markets. FHFA has not yet issued a final rule. We cannot predict the content of any such final
rule, or the impact that the final rule will have on our business or operations.
Affordable Housing Goals and Results for 2010 and 2011
In October 2012, FHFA informed us that it had reviewed our performance with respect to the affordable housing goals
for 2011, and determined that we achieved the single-family refinance low-income goal and both multifamily goals.
Our housing goals and results for 2010 and 2011 are set forth in the table below.
Table 6 — Affordable Housing Goals and Results for 2010 and 2011
Goals for 2010
and 2011
Market Level for
2010(1) Results for 2010
Market Level for
2011(1) Results for 2011
Single -family purchase money goals (benchmark levels):
Low-income ................................. 27% 27.2% 27.8% 26.5% 23.3%
Very low-income .............................. 8% 8.1% 8.4% 8.0% 6.6%
Low-income areas(2) ............................ 24% 24.0% 23.8% 22.0% 19.2%
Low-income areas subgoal ....................... 13% 12.1% 10.8% 11.4% 9.2%
Single -family refinance low-income goal (benchmark
level) ....................................... 21% 20.2% 22.0% 21.5% 23.4%
Multifamily low-income goal (in units) ................ 161,250 N/A 161,500 N/A 229,001
Multifamily low-income subgoal (in units) ............. 21,000 N/A 29,656 N/A 35,471
(1) Determined by FHFA based on its analysis of market data.
(2) FHFA annually sets 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 both 2010 and 2011, FHFA set the benchmark level for the low-income areas goal at 24%.
We failed to achieve two of the single-family purchase money goals in 2010, and failed to achieve all four of the single-
family purchase money goals for 2011. FHFA has not required us to submit housing plans for goals that we did not achieve
in 2010 or 2011.
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
FHFA has established prudential standards relating to the management and operations of Freddie Mac, Fannie Mae, and
the FHLBs. The 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
41 Freddie Mac