Freddie Mac 2015 Annual Report Download - page 34

Management's Discussion and Analysis Our Business Segments | Single-Family Guarantee
Freddie Mac 2015 Form 10-K 32
SINGLE-FAMILY GUARANTEE
BUSINESS OVERVIEW
In our Single-family Guarantee segment, we purchase, securitize, and guarantee single-family loans
originated by lenders and we manage our single-family mortgage credit risk. Our Single-family Guarantee
segment supports our primary business strategies by creating:
A Better Freddie Mac:
• Providing market leadership by delivering quality offerings, programs, and services to an increasingly
diversified customer base and an evolving mortgage market;
• Improving the customer experience through continued enhancement of our products, programs,
processes, and technology; and
• Establishing efficient risk management activities that are appropriate for the expected level of risk.
A Better Housing Finance System:
• Developing innovative technology platforms to provide sellers and Freddie Mac with better methods
of assessing and managing single-family mortgage credit risk;
• Developing and implementing initiatives to reduce taxpayer exposure and offer private investors new
and innovative ways to share in the credit risk of the Core single-family book;
• Expanding access to mortgage credit in a responsible manner to support our Charter Mission as well
as to meet specific mandated goals;
• Working with FHFA, Fannie Mae, and Common Securitization Solutions, LLC ("CSS") on the
development of a new common securitization platform; and
• Implementing the single (common) security initiative for Freddie Mac and Fannie Mae, which is
intended to reduce the disparities in trading value between our PCs and Fannie Mae's single-class
mortgage-related securities.
The U.S. residential mortgage market consists of a primary mortgage market that links homebuyers and
lenders and a secondary mortgage market that links lenders and investors. We participate only in the
secondary mortgage market. The size of the U.S. residential mortgage market is affected by many
factors, including changes in interest rates, unemployment rates, homeownership rates, housing prices,
the supply of housing, lender preferences regarding credit risk, and borrower preferences regarding
mortgage debt. The amount of residential mortgage debt available for us to purchase and the mix of
available loan products are also affected by several factors, including the volume of loans meeting the
requirements of our Charter, our own preference for credit risk reflected in our purchase standards, and
the loan purchase and securitization activity of other financial institutions.
Products and Activities
Securitization and Guarantee Products
In a typical loan securitization, we purchase loans that lenders originate and then pool these loans into
mortgage-related securities that can be sold in the capital markets. We typically guarantee the payment of
principal and interest on the mortgage-related securities in exchange for management and guarantee fee
income. We administer the collection of borrowers' payments on their loans and the distribution of
payments to the investors in the mortgage-related securities, net of our management and guarantee fee