Freddie Mac 2015 Annual Report Download - page 223

Financial Statements Notes to the Consolidated Financial Statements | Note 2
Freddie Mac 2015 Form 10-K 221
In addition, Treasury may terminate its funding commitment and declare the Purchase Agreement null
and void if a court vacates, modifies, amends, conditions, enjoins, stays or otherwise affects the
appointment of the Conservator or otherwise curtails the Conservator’s powers. Treasury may not
terminate its funding commitment under the Purchase Agreement solely by reason of our being in
conservatorship, receivership or other insolvency proceeding, or due to our financial condition or any
adverse change in our financial condition.
Waivers and Amendments
The Purchase Agreement provides that most provisions of the agreement may be waived or amended by
mutual written agreement of the parties; however, no waiver or amendment of the agreement is permitted
that would decrease Treasury’s aggregate funding commitment or add conditions to Treasury’s funding
commitment if the waiver or amendment would adversely affect in any material respect the holders of our
debt securities or mortgage guarantee obligations.
Third-party Enforcement Rights
In the event of our default on payments with respect to our debt securities or mortgage guarantee
obligations, if Treasury fails to perform its obligations under its funding commitment and if we and/or the
Conservator are not diligently pursuing remedies in respect of that failure, the holders of these debt
securities or mortgage guarantee obligations may file a claim in the United States Court of Federal Claims
for relief requiring Treasury to fund to us the lesser of:
• The amount necessary to cure the payment defaults on our debt and mortgage guarantee obligations;
and
• The lesser of:
The deficiency amount; and
The maximum amount of the commitment less the aggregate amount of funding previously
provided under the commitment.
Any payment that Treasury makes under those circumstances will be treated for all purposes as a draw
under the Purchase Agreement that will increase the liquidation preference of the senior preferred stock.
IMPACT OF CONSERVATORSHIP AND RELATED DEVELOPMENTS ON THE
MORTGAGE-RELATED INVESTMENTS PORTFOLIO
For purposes of the limit imposed by the Purchase Agreement and FHFA regulation, the UPB of our
mortgage-related investments portfolio could not exceed $399.2 billion at December 31, 2015 and was
$346.9 billion at that date. Our Retained Portfolio Plan, which we adopted in 2014, provides for us to
manage the UPB of the mortgage-related investments portfolio so that it does not exceed 90% of the
annual cap established by the Purchase Agreement (subject to certain exceptions). The annual 15%
reduction in our mortgage-related investments portfolio cap until it reaches $250 billion is calculated
based on the maximum allowable size of the mortgage-related investments portfolio, rather than the
actual UPB of the mortgage-related investments portfolio, as of December 31 of the preceding year. Our
ability to acquire and sell mortgage assets is significantly constrained by limitations of the Purchase
Agreement and those imposed by FHFA.