Freddie Mac 2015 Annual Report Download - page 71

Management's Discussion and Analysis Our Business Segments | Investments
Freddie Mac 2015 Form 10-K 69
INVESTMENTS
BUSINESS OVERVIEW
The Investments segment reflects results from three primary activities:
• Managing the company’s mortgage-related investments portfolio, excluding Multifamily segment
investments and single-family seriously delinquent loans;
• Managing the treasury function for the company, including funding and liquidity; and
• Managing interest-rate risk for the company.
The objectives of our Investments segment are to make appropriate risk and capital management
decisions and to be a market leader. The Investments segment supports our primary business strategies
by creating:
A Better Freddie Mac:
• Engaging in economically sensible transactions to reduce our less liquid assets, including non-agency
mortgage-related securities, and to reduce the balance of our reperforming loans and our performing
modified loans;
• Managing the mortgage-related investments portfolio’s risk-versus-return profile based on our internal
economic capital framework;
• Enhancing the liquidity of our issued securities in the secondary mortgage market to support our
business needs;
• Responding to market opportunities by efficiently funding the company's business activities; and
• Managing the company's economic interest-rate risk through the use of derivatives and other debt.
A Better Housing Finance System:
• Expanding and improving the delivery of mortgage capital markets services through our cash loan
purchase program, in conjunction with the Single-family Guarantee segment.
Although we manage our business on an economic basis, we may forgo certain investment opportunities
for a variety of reasons, including the limit on the size of our mortgage-related investments portfolio or the
risk that a particular accounting treatment may create earnings volatility as well as result in a future draw
from Treasury. For additional information on the limits on the mortgage-related investments portfolio
established by the Purchase Agreement and by FHFA, see "Conservatorship and Related Matters - Limits
on Our Mortgage-Related Investments Portfolio and Indebtedness."
Products and Activities
Investing and Related Activities
In our Investments segment, we manage the following types of products:
• Agency mortgage-related securities - We primarily invest in Freddie Mac mortgage-related
securities, but may also invest in Fannie Mae and Ginnie Mae mortgage-related securities from time
to time. Our activities with respect to this product may include purchases and sales, dollar roll
transactions, and structuring activities (e.g., resecuritizing existing agency securities into REMICs and
selling some or all of the resulting REMIC tranches).