Freddie Mac 2015 Annual Report Download - page 219

Financial Statements Notes to the Consolidated Financial Statements | Note 2
Freddie Mac 2015 Form 10-K 217
As part of the first goal, the 2014 Strategic Plan describes various steps related to increasing access to
mortgage credit for credit-worthy borrowers. The 2014 Strategic Plan provides for the Enterprises to
continue to play an ongoing role in supporting multifamily housing needs, particularly for low-income
households. The plan states that FHFA will continue to impose a production cap on Freddie Mac’s and
Fannie Mae’s multifamily businesses. However, in 2015 FHFA allowed loans in certain affordable and
underserved market segments to be excluded from the production cap. This allowance was maintained in
the 2016 Conservatorship Scorecard with slight modification.
The second goal focuses on ways to transfer risk to private market participants and away from the
Enterprises in a responsible way that does not reduce liquidity or adversely impact the availability of
mortgage credit. The second goal provides for us to increase the use of single-family credit risk transfer
transactions, continue using credit risk transfer transactions in the multifamily business and continue
shrinking our mortgage-related investments portfolio consistent with the requirements in the Purchase
Agreement, with a focus on selling less liquid assets.
The third goal includes the continued development of the Common Securitization Platform. FHFA refined
the scope of this project to focus on making the new shared system operational for Freddie Mac’s and
Fannie Mae’s existing single-family securitization activities. The third goal also provides for the
Enterprises to work towards the development of a single (common) security.
We continue to align our resources and internal business plans to meet the goals and objectives provided
to us by FHFA.
As a result of the net worth sweep dividend provisions of the senior preferred stock, we cannot retain
capital from the earnings generated by our business operations (other than a limited amount that will
decrease to zero in 2018) or return capital to stockholders other than Treasury, the holder of our senior
preferred stock. Our future is uncertain, and the conservatorship has no specified termination date. We do
not know what changes may occur to our business model during or following conservatorship, including
whether we will continue to exist. We are not aware of any current plans of our Conservator to
significantly change our business model or capital structure in the near term. Our future structure and role
will be determined by the Administration and Congress, and it is possible and perhaps likely that there will
be significant changes beyond the near term. We have no ability to predict the outcome of these
deliberations.
PURCHASE AGREEMENT AND WARRANT
Overview
On September 7, 2008, we, through FHFA, in its capacity as Conservator, entered into the Purchase
Agreement with Treasury. The Purchase Agreement was subsequently amended and restated on
September 26, 2008, and further amended on May 6, 2009, December 24, 2009, and August 17, 2012.
The amount of available funding remaining under the Purchase Agreement was $140.5 billion as of
December 31, 2015. This amount will be reduced by any future draws.
The Purchase Agreement requires Treasury, upon the request of the Conservator, to provide funds to us
after any quarter in which we have a negative net worth (that is, our total liabilities exceed our total
assets, as reflected on our GAAP balance sheet). In addition, the Purchase Agreement requires Treasury,
upon the request of the Conservator, to provide funds to us if the Conservator determines, at any time,