Freddie Mac 2015 Annual Report Download - page 168

Management's Discussion and Analysis Regulation and Supervision
Freddie Mac 2015 Form 10-K 166
amount set aside. However, if we have made a draw under the Purchase Agreement during that fiscal
year or if such transfer will cause us to have to make a draw, then we will not make a transfer and the
amount set aside for that fiscal year will be reversed.
We are prohibited from passing through the costs of these allocations to the originators of the loans that
we purchase. During 2015, we completed $393.8 billion of new business purchases subject to these
allocations and accrued $165 million of related expense. In accordance with the GSE Act and as directed
by FHFA, we expect to pay this total amount in February 2016 through the following payments: $80.6
million to the Housing Trust Fund administered by HUD; $43.4 million to the Capital Magnet Fund
administered by Treasury; and $41.3 million to the HOPE Reserve Account administered by Treasury.
Portfolio Activities
The GSE Act provides FHFA with power to regulate the size and content of our mortgage-related
investments portfolio. The GSE Act requires FHFA to establish, by regulation, criteria governing portfolio
holdings to ensure the holdings are backed by sufficient capital and consistent with our mission and safe
and sound operations. FHFA adopted the portfolio holdings criteria established in the Purchase
Agreement, as it may be amended from time to time, for so long as we remain subject to the Purchase
Agreement. See "Conservatorship And Related Matters - Limitations On Our Mortgage-Related
Investments Portfolio And Indebtedness" for more information.
Subordinated Debt
FHFA directed us to continue to make interest and principal payments on our subordinated debt, even if
we fail to maintain required capital levels. As a result, the terms of any of our subordinated debt that
provide for us to defer payments of interest under certain circumstances, including our failure to maintain
specified capital levels, are no longer applicable.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
HUD has regulatory authority over Freddie Mac with respect to fair lending. Our loan purchase activities
are subject to federal anti-discrimination laws. In addition, the GSE Act prohibits discriminatory practices
in our loan purchase activities, requires us to submit data to HUD to assist in its fair lending investigations
of primary market lenders with which we do business, and requires us to undertake remedial actions
against such lenders found to have engaged in discriminatory lending practices. In addition, HUD
periodically reviews and comments on our underwriting and appraisal guidelines for consistency with the
Fair Housing Act and the anti-discrimination provisions of the GSE Act.
DEPARTMENT OF THE TREASURY
Treasury has significant rights and powers as a result of the Purchase Agreement. In addition, under our
Charter, the Secretary of the Treasury has approval authority over our issuances of notes, debentures
and substantially identical types of unsecured debt obligations (including the interest rates and maturities
of these securities), as well as new types of mortgage-related securities issued subsequent to the
enactment of the Financial Institutions Reform, Recovery and Enforcement Act of 1989. The Secretary of
the Treasury has performed this debt securities approval function by coordinating GSE debt offerings with
Treasury funding activities. In addition, our Charter authorizes Treasury to purchase Freddie Mac debt