Freddie Mac 2012 Annual Report Download - page 49

congressional proposals previously introduced. FHFA indicated that the plan leaves open all options for Congress and the
Administration regarding the resolution of the conservatorships and the degree of government involvement in supporting the
secondary mortgage market in the future.
FHFA’s plan provides lawmakers and the public with an outline of how FHFA as Conservator intends to guide Freddie
Mac and Fannie Mae over the next few years, and identifies three strategic goals:
•Build. Build a new infrastructure for the secondary mortgage market;
•Contract. Gradually contract Freddie Mac and Fannie Mae’s dominant presence in the marketplace while simplifying
and shrinking their operations; and
•Maintain. Maintain foreclosure prevention activities and credit availability for new and refinanced mortgages.
The first of these goals establishes the steps FHFA, Freddie Mac, and Fannie Mae will take to create the necessary
infrastructure, including a new securitization platform and national standards for mortgage securitization, that Congress and
market participants may use to develop the secondary mortgage market of the future. This securitization platform would
replace our and Fannie Mae’s current separate proprietary systems. In addition, we completed a key milestone of the UMDP
with the launch of the Uniform Collateral Data Portal for the electronic submission of appraisal reports for conventional
mortgages. We also implemented ULDD, which provides for the efficient collection and use of consistent information about
loan terms, collateral, and borrowers. In October 2012, we announced, pursuant to a directive by FHFA, changes to
requirements in certain areas related to loan servicing, including a process and criteria for evaluating servicer performance.
These changes align our and Fannie Mae’s requirements in these areas.
The second goal describes steps that FHFA plans to take to gradually shift mortgage credit risk from Freddie Mac and
Fannie Mae to private investors and eliminate the direct funding of mortgages by the enterprises. The plan states that the goal
of gradually shifting mortgage credit risk from Freddie Mac and Fannie Mae to private investors could be accomplished, in
the case of single-family credit guarantees, in several ways, including increasing guarantee fees, establishing loss-sharing
arrangements and expanding reliance on mortgage insurance. To evaluate how to accomplish the goal of contracting
enterprise operations in the multifamily business, the plan states that Freddie Mac and Fannie Mae will each undertake a
market analysis of the viability of its respective multifamily operations without government guarantees.
For the third goal, the plan states that programs and strategies to ensure ongoing mortgage credit availability, assist
troubled homeowners, and minimize taxpayer losses while restoring stability to housing markets continue to require energy,
focus, and resources. The plan states that activities that must be continued and enhanced include: (a) successful
implementation of HARP, including the significant program changes announced in October 2011; (b) continued
implementation of the Servicing Alignment Initiative; (c) renewed focus on short sales, deeds-in-lieu, and deeds-for-lease
options that enable households and Freddie Mac and Fannie Mae to avoid foreclosure; and (d) further development and
implementation of the REO disposition initiative announced by FHFA in 2011.
The Conservatorship Scorecard provides the implementation roadmap for the strategic plan. For information about our
performance with respect to the scorecard, see “EXECUTIVE COMPENSATION — Compensation Discussion and
Analysis.”
Legislation Related to the Future Status of Freddie Mac and Fannie Mae
Our future structure and role will be determined by the Administration and Congress, and there are likely to be
significant changes beyond the near-term. Congress did not adopt any significant legislation on the future status of Freddie
Mac and Fannie Mae in 2012. However, a number of bills were introduced in Congress in 2011 relating to the future status of
Freddie Mac, Fannie Mae, and the secondary mortgage market. Several of the bills would have revoked our charter and
wound us down or placed us into receivership. Other bills would have limited the companies’ operations or altered FHFA’s
or Treasury’s authority over the companies. These bills were not enacted prior to the adjournment of the 112th Congress on
January 3, 2013 and would need to be reintroduced in the 113th Congress. It is likely that similar or new bills will be
introduced and considered in the 113th Congress.
For more information, see “RISK FACTORS — Conservatorship and Related Matters — The future status and role of
Freddie Mac is uncertain and could be materially adversely affected by legislative and regulatory action that alters the
ownership, structure, and mission of the company.”
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