Freddie Mac 2015 Annual Report Download - page 43

Management's Discussion and Analysis Our Business Segments | Single-Family Guarantee
Freddie Mac 2015 Form 10-K 41
Competition
Our principal competitors in the Single-family Guarantee segment are Fannie Mae, Ginnie Mae (with
FHA/VA), and other financial institutions that retain or securitize loans, such as commercial and
investment banks, dealers, and thrift institutions. We compete on the basis of price, products, securities
structure, and service. Competition to acquire single-family loans can also be significantly affected by
changes in our credit standards. The conservatorship, including direction provided to us by our
Conservator, may affect our ability to compete. For more information, see “Risk Factors - Other Risks -
Competition from banking and non-banking institutions (including Fannie Mae, Ginnie Mae, and FHA/VA)
may harm our business. FHFA’s actions as Conservator of both companies could affect competition
between us and Fannie Mae."
Our Segment Earnings management and guarantee fee income is influenced by our PC price
performance because we adjust our fees based on the price performance of our PCs relative to
comparable Fannie Mae securities (we refer to this as market-adjusted pricing).
From time to time we undertake a variety of actions in an effort to support the liquidity and price
performance of our PCs relative to comparable Fannie Mae securities. These actions may include:
• Resecuritizing PCs;
• Encouraging sellers to pool loans that they deliver to us into PC pools with a larger and more diverse
population of loans; and
• Influencing the volume and characteristics of loans delivered to us by tailoring our loan eligibility
guidelines and by other means.
For additional information about our efforts to support the liquidity and relative price performance of our
PCs, see “Investments - Market Conditions” and “Risk Factors - Other Risks - A significant decline in the
price performance of or demand for our PCs could have an adverse effect on the volume and/or
profitability of our new single-family guarantee business. The profitability of our multifamily business could
be adversely affected by a significant decrease in demand for our K Certificates.”