UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-34139
Federal Home Loan Mortgage Corporation
(Exact name of registrant as specified in its charter)
Federally chartered
52-0904874
8200 Jones Branch Drive
22102-3110
(703)
903-2000
corporation
McLean,
Virginia
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
(Address of principal executive offices)
(Zip Code)
(Registrant's telephone number,
including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
None
N/A
N/A
Securities registered pursuant to Section 12(g) of the Act:
Voting Common Stock, no par value per share (OTCQB: FMCC)
Variable Rate, Non-Cumulative Preferred Stock, par value $1.00 per share (OTCQB: FMCCI)
5% Non-Cumulative Preferred Stock, par value $1.00 per share (OTCQB: FMCKK)
Variable Rate, Non-Cumulative Preferred Stock, par value $1.00 per share (OTCQB: FMCCG)
5.1% Non-Cumulative Preferred Stock, par value $1.00 per share (OTCQB: FMCCH)
5.79% Non-Cumulative Preferred Stock, par value $1.00 per share (OTCQB: FMCCK)
Variable Rate, Non-Cumulative Preferred Stock, par value $1.00 per share (OTCQB: FMCCL)
Variable Rate, Non-Cumulative Preferred Stock, par value $1.00 per share (OTCQB: FMCCM)
Variable Rate, Non-Cumulative Preferred Stock, par value $1.00 per share (OTCQB: FMCCN)
5.81% Non-Cumulative Preferred Stock, par value $1.00 per share (OTCQB: FMCCO)
6% Non-Cumulative Preferred Stock, par value $1.00 per share (OTCQB: FMCCP)
Variable Rate, Non-Cumulative Preferred Stock, par value $1.00 per share (OTCQB: FMCCJ)
5.7% Non-Cumulative Preferred Stock, par value $1.00 per share (OTCQB: FMCKP)
Variable Rate, Non-Cumulative Perpetual Preferred Stock, par value $1.00 per share (OTCQB: FMCCS)
6.42% Non-Cumulative Perpetual Preferred Stock, par value $1.00 per share (OTCQB: FMCCT)
5.9% Non-Cumulative Perpetual Preferred Stock, par value $1.00 per share (OTCQB: FMCKO)
5.57% Non-Cumulative Perpetual Preferred Stock, par value $1.00 per share (OTCQB: FMCKM)
5.66% Non-Cumulative Perpetual Preferred Stock, par value $1.00 per share (OTCQB: FMCKN)
6.02% Non-Cumulative Perpetual Preferred Stock, par value $1.00 per share (OTCQB: FMCKL)
6.55% Non-Cumulative Perpetual Preferred Stock, par value $1.00 per share (OTCQB: FMCKI)
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, par value $1.00 per share (OTCQB: FMCKJ)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the
past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes
☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of
the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Emerging growth company
☐
Non-accelerated filer
☐
Smaller reporting company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect
the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any
of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the common stock held by non-affiliates computed by reference to the price at which the common stock was last sold on June 30,
2024 (the last business day of the registrant's most recently completed second fiscal quarter) was $0.9 billion.
As of January 31, 2025, there were 650,059,553 shares of the registrant's common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: None
Table of Contents
INTRODUCTION
1
n
About Freddie Mac
1
n
Our Business
6
n Forward-Looking Statements
10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
12
n Housing and Mortgage Market Conditions
12
n Consolidated Results of Operations
14
n Consolidated Balance Sheets Analysis
20
n Our Portfolios
21
n Our Business Segments
23
n Risk Management
47
l Credit Risk
48
l Market Risk
75
l Operational Risk
80
l Compliance Risk
83
n Liquidity and Capital Resources
84
n Conservatorship and Related Matters
95
n Regulation and Supervision
98
n Critical Accounting Estimates
106
RISK FACTORS
107
LEGAL PROCEEDINGS
127
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
128
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
129
n Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
130
n Consolidated Financial Statements
132
CONTROLS AND PROCEDURES
214
OTHER INFORMATION
216
DIRECTORS, CORPORATE GOVERNANCE, AND EXECUTIVE OFFICERS
217
n Directors
217
n Corporate Governance
224
n Executive Officers
234
EXECUTIVE COMPENSATION
237
n Compensation Discussion and Analysis
237
n Compensation and Risk
252
n CEO Pay Ratio
253
n 2024 Compensation Information for NEOs
254
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
262
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
265
PRINCIPAL ACCOUNTING FEES AND SERVICES
267
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
269
GLOSSARY
270
EXHIBIT INDEX
278
SIGNATURES
284
FORM 10-K INDEX
286
Table of Contents
FREDDIE MAC | 2024 Form 10-K
i
MD&A TABLE INDEX
1
Summary of Consolidated Statements of Income and Comprehensive Income
14
2
Components of Net Interest Income
14
3
Analysis of Net Interest Yield
16
4
Net Interest Income Rate / Volume Analysis
17
5
Components of Non-Interest Income
18
6
(Provision) Benefit for Credit Losses
18
7
Components of Non-Interest Expense
19
8
Summarized Consolidated Balance Sheets
20
9
Mortgage Portfolio
21
10
Mortgage-Related Investments Portfolio
22
11
Other Investments Portfolio
22
12
Single-Family Segment Financial Results
37
13
Multifamily Segment Financial Results
46
14
Allowance for Credit Losses Activity
50
15
Allowance for Credit Losses Ratios
50
16
Principal Amounts Due for Held-for-Investment Loans
51
17
Single-Family New Business Activity
54
18
Single-Family Mortgage Portfolio Newly Acquired Credit Enhancements
55
19
Single-Family Mortgage Portfolio Credit Enhancement Coverage Outstanding
56
20
Serious Delinquency Rates for Credit-Enhanced and Non-Credit-Enhanced Loans in Our Single-Family Mortgage
Portfolio
56
21
Credit Enhancement Coverage by Year of Origination
57
22
Single-Family Mortgage Portfolio Without Credit Enhancement
57
23
Credit Quality Characteristics and Serious Delinquency Rates of Our Single-Family Mortgage Portfolio
59
24
Characteristics of the Loans in Our Single-Family Mortgage Portfolio
60
25
Single-Family Mortgage Portfolio Attribute Combinations
61
26
Seriously Delinquent Single-Family Loans
62
27
Single-Family Relief Refinance Loans
63
28
Single-Family Completed Loan Workout Activity
63
29
Credit Characteristics of Single-Family Modified Loans
63
30
Payment Performance of Single-Family Modified Loans
63
31
Single-Family REO Activity
64
32
Single-Family Collateral Deficiency Ratios
64
33
Percentage of Multifamily New Business Activity With Higher Risk Characteristics
66
34
Multifamily Mortgage Portfolio CRT Issuance
67
35
Credit-Enhanced and Non-Credit-Enhanced Loans Underlying Our Multifamily Mortgage Portfolio
67
36
Credit Quality of Our Multifamily Mortgage Portfolio Without Credit Enhancement
68
37
Single-Family Mortgage Purchases from Non-Depository Sellers
71
38
Single-Family Mortgage Portfolio Non-Depository Servicers
71
39
Single-Family Primary Mortgage Insurers
72
40
Single-Family ACIS Counterparties
72
41
Derivative Counterparty Credit Exposure
74
42
PVS-YC and PVS-L Results Assuming Shifts of the Yield Curve
77
43
Duration Gap and PVS Results
78
44
PVS-L Results Before Derivatives and After Derivatives
78
Table Description
Page
Table of Contents
MD&A Table Index
FREDDIE MAC | 2024 Form 10-K
ii
45
GAAP Fair Value Sensitivity to Changes in Interest Rates
80
46
Liquidity Sources
85
47
Funding Sources
86
48
Debt of Freddie Mac Activity
87
49
Maturity and Redemption Dates
88
50
Debt of Consolidated Trusts Activity
88
51
Freddie Mac Credit Ratings
89
52
Net Worth Activity
91
53
Regulatory Capital Components
92
54
Statutory Capital Components
92
55
Capital Metrics Under ERCF
93
56
2023 and 2022 Affordable Housing Goals Results
101
57
Current and 2025-2027 Affordable Housing Goal Benchmark Levels
102
58
Forecasted House Price Growth Rates
106
59
Board Compensation Levels
232
60
Director Compensation
233
61
2024 Target TDC
240
62
2024 Deferred Salary
246
63
CEO Pay Ratio
253
64
Summary Compensation Table
254
65
Grants of Plan-Based Awards
256
66
SERP Benefit and SERP II Benefit
258
67
Compensation and Benefits if NEO Terminated Employment as of December 31, 2024
259
68
Stock Ownership by Directors and Executive Officers
263
69
Stock Ownership by Greater-Than 5% Holders
263
70
Auditor Fees
267
Table Description
Page
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MD&A Table Index
FREDDIE MAC | 2024 Form 10-K
iii
Introduction
This Annual Report on Form 10-K includes forward-looking statements that are based on current expectations and that are
subject to significant risks and uncertainties. These forward-looking statements are made as of the date of this Form 10-K. We
undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date of this Form
10-K. Actual results might differ significantly from those described in or implied by such statements due to various factors and
uncertainties, including those described in the Forward-Looking Statements and Risk Factors sections of this Form 10-K.
Throughout this Form 10-K, we use certain acronyms and terms that are defined in the Glossary.
ABOUT FREDDIE MAC
Freddie Mac is a GSE chartered by Congress in 1970, with a mission to provide liquidity, stability, and affordability to the U.S.
housing market. We do this primarily by purchasing single-family and multifamily residential mortgage loans originated by
lenders. In most instances, we package these loans into guaranteed mortgage-related securities, which are sold in the global
capital markets, and transfer interest-rate and liquidity risks to third-party investors. In addition, we transfer a portion of our
mortgage credit risk exposure to third-party investors through our credit risk transfer programs, which include securities- and
insurance-based offerings. We also invest in mortgage loans, mortgage-related securities, and other types of assets. We do not
originate mortgage loans or lend money directly to mortgage borrowers.
We support the U.S. housing market and the overall economy by enabling America's families to access mortgage loan funding
with better terms and by providing consistent liquidity to the single-family and multifamily mortgage markets. We have helped
many distressed borrowers keep their homes or avoid foreclosure and have helped many distressed renters avoid eviction.
Business Results
Consolidated Financial Results
Net Revenues and Net Income
(In billions)
$21.3
$21.2
$23.9
$9.3
$10.5
$11.9
Net Revenues
Net Income
2022
2023
2024
Net Worth as of December 31,
(In billions)
$37.0
$47.7
$59.6
2022
2023
2024
Key Drivers:
n 2024 vs. 2023
l
Net income was $11.9 billion, an increase of 13% year-over-year, primarily driven by higher net revenues, partially
offset by a credit reserve build in Single-Family in 2024 compared to a credit reserve release in Single-Family in 2023.
l Net revenues were $23.9 billion, up 13% year-over-year, driven by higher net interest income and higher non-interest
income.
l
Net worth was $59.6 billion as of December 31, 2024, up from $47.7 billion as of December 31, 2023.
Introduction
About Freddie Mac
FREDDIE MAC | 2024 Form 10-K
1
n 2023 vs. 2022
l
Net income was $10.5 billion, an increase of 13% year-over-year, primarily driven by a credit reserve release in Single-
Family in 2023 compared to a credit reserve build in Single-Family in 2022, partially offset by higher non-interest
expense.
l Net revenues were $21.2 billion, down slightly year-over-year, as higher net interest income was offset by lower non-
interest income.
l
Net worth was $47.7 billion as of December 31, 2023, up from $37.0 billion as of December 31, 2022.
Market Liquidity
Market Liquidity
(In thousands)
2,496
1,402
1,582
1,039
806
820
764
149
209
693
447
553
Single-Family purchase borrowers
Single-Family refinance borrowers
Multifamily rental units
2022
2023
2024
We support the U.S. housing market by executing our mission to provide liquidity and help maintain credit availability for new
and refinanced single-family mortgages as well as for rental housing. We provided $411 billion in liquidity to the mortgage
market in 2024, which enabled the financing of 1.6 million home purchases, refinancings, and rental units.
Introduction
About Freddie Mac
FREDDIE MAC | 2024 Form 10-K
2
Portfolio Balances
Mortgage Portfolio as of December 31,
(UPB in billions)
$3,415
$3,480
$3,571
$2,986
$3,039
$3,104
$429
$441
$467
Single-Family mortgage portfolio
Multifamily mortgage portfolio
2022
2023
2024
Key Drivers:
n 2024 vs. 2023
l Our mortgage portfolio increased 3% year-over-year to $3.6 trillion at December 31, 2024, continuing to grow at a
moderate pace.
–
Our Single-Family mortgage portfolio was $3.1 trillion at December 31, 2024, up 2% year-over-year.
–
Our Multifamily mortgage portfolio was $467 billion at December 31, 2024, up 6% year-over-year.
n 2023 vs. 2022
l Our mortgage portfolio increased 2% year-over-year to $3.5 trillion at December 31, 2023, as portfolio growth
moderated in 2023 due to the slowdown in new business activity driven by higher mortgage interest rates.
–
Our Single-Family mortgage portfolio was $3.0 trillion at December 31, 2023, up 2% year-over-year.
–
Our Multifamily mortgage portfolio was $441 billion at December 31, 2023, up 3% year-over-year.
Introduction
About Freddie Mac
FREDDIE MAC | 2024 Form 10-K
3
Credit Enhancement Coverage
Single-Family Mortgage Portfolio with Credit Enhancement as of
December 31,
(UPB in billions)
$1,832
$1,860
$1,914
61%
61%
62%
UPB
Percentage
2022
2023
2024
Multifamily Mortgage Portfolio with Credit Enhancement
as of December 31,
(UPB in billions)
$398
$415
$425
93%
94%
91%
UPB
Percentage
2022
2023
2024
In addition to transferring interest-rate and liquidity risk to third-party investors through our securitization activities, we engage
in various types of credit enhancements, such as primary mortgage insurance and CRT transactions, to reduce our credit risk
exposure and transfer a portion of the credit risk on certain loans in our mortgage portfolio to third parties. At December 31,
2024, we had credit enhancement coverage on 62% of our Single-Family mortgage portfolio and 91% of our Multifamily
mortgage portfolio. See MD&A - Our Business Segments and MD&A - Risk Management - Credit Risk for additional
information on our credit enhancements.
Conservatorship and Government Support for Our Business
Since September 2008, we have been operating in conservatorship, with FHFA as our Conservator. The conservatorship and
related matters significantly affect our management, business activities, financial condition, and results of operations. 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.
In connection with our entry into conservatorship, we entered into the Purchase Agreement with Treasury under which we
issued Treasury both senior preferred stock and a warrant to purchase common stock in consideration for Treasury's
commitment to provide funding to us. The Purchase Agreement with Treasury is critical to keeping us solvent and avoiding the
appointment of a receiver by FHFA under statutory mandatory receivership provisions. We believe that the support provided by
Treasury pursuant to the Purchase Agreement currently enables us to have adequate liquidity to conduct normal business
activities.
The Purchase Agreement with Treasury significantly affects our business activities, including by limiting: our secondary market
activities; our single-family loan acquisitions; the amount of indebtedness we can incur; the size of our mortgage-related
investments portfolio; and our ability to pay dividends, transfer certain assets, raise capital, pay down the liquidation preference
of the senior preferred stock, and our exit from conservatorship. See our Current Report on Form 8-K filed on January 8, 2025.
Treasury, as the holder of the senior preferred stock, is entitled to receive cumulative quarterly cash dividends, when, as, and if
declared by the Board of Directors. The dividends we have paid to Treasury on the senior preferred stock have been declared
by, and paid at the direction of, the Conservator, acting as successor to the rights, titles, powers, and privileges of the Board of
Directors.
Pursuant to the January 2021 Letter Agreement amending the Purchase Agreement, Freddie Mac will not be required to pay a
dividend to Treasury on the senior preferred stock until it has built sufficient net worth to meet the capital requirements and
Introduction
About Freddie Mac
FREDDIE MAC | 2024 Form 10-K
4
buffers set forth in the ERCF. As the company builds capital during this period, increases in our Net Worth Amount have been,
or will be, added to the aggregate liquidation preference of the senior preferred stock. To the extent our Net Worth Amount
exceeds capital requirements and buffers set forth in the ERCF, dividends on the senior preferred stock will be payable to
Treasury. After we have maintained the level of capital prescribed in the Purchase Agreement for the requisite time, we will be
subject to a new periodic cash dividend requirement, as well as a periodic commitment fee to be agreed upon with Treasury in
consultation with the Chairman of the Federal Reserve. Freddie Mac is required to comply with the ERCF as it is amended from
time to time pursuant to the January 2025 Letter Agreement. While Freddie Mac is required to comply with the ERCF as it is
amended from time to time pursuant to the January 2025 Letter Agreement, compliance with certain provisions of the ERCF is
suspended during conservatorship. See MD&A - Liquidity and Capital Resources - Capital Resources - ERCF for
additional information.
See MD&A - Regulation and Supervision and Note 2 for additional information on the Purchase Agreement, senior
preferred stock, and warrant and Risk Factors - Conservatorship and Related Matters for related risks.
The charts below show our net worth, the liquidation preference of the senior preferred stock, the remaining amount of
Treasury's funding commitment to us, the cumulative senior preferred stock dividends we have paid to Treasury, and the
cumulative funds we have drawn from Treasury pursuant to its funding commitment.
Net Worth, Liquidation Preference, and Treasury Funding
Commitment
(In billions)
$59.6
$129.0
$140.2
Net worth
Senior preferred stock liquidation
preference
Remaining Treasury funding commitment
As of December 31, 2024
Draws and Dividend Payments
(In billions)
$71.6
$119.7
Cumulative draws from Treasury
Cumulative dividend payments to Treasury
As of December 31, 2024
Introduction
About Freddie Mac
FREDDIE MAC | 2024 Form 10-K
5
OUR BUSINESS
Primary Business Strategies
Freddie Mac's overall strategic direction is recommended by management and affirmed by the Board of Directors and FHFA
through the approval of our Strategic Framework, which sets forth our strategic priorities and generally covers a three-year
timeframe. FHFA, the Administration, or Congress could take actions that cause us to alter our Strategic Framework. FHFA, as
Conservator, has influenced, and may in the future influence, our strategic direction, such as through our new initiatives, credit
and pricing policies, and capital, liquidity, and risk appetite constraints.
Our Charter and Mission
We are a GSE with a specific and limited corporate purpose to support the liquidity, stability, and affordability of the U.S.
housing market as a participant in the secondary mortgage market, while operating as a commercial enterprise earning an
appropriate return. All actions we take must be conducted within the constraints of our Charter.
As a result, our Charter forms the framework for our business activities. Pursuant to our Charter, our role in the secondary
mortgage market is to:
n Provide stability in the secondary mortgage market for residential loans;
n Respond appropriately to the private capital market;
n Provide ongoing assistance to the secondary mortgage market for residential loans (including activities relating to loans for
low- and moderate-income families involving a reasonable economic return that may be less than the return earned on
other activities) by increasing the liquidity of mortgage investments and improving the distribution of investment capital
available for residential mortgage financing; and
n Promote access to mortgage loan credit throughout the United States (including central cities, rural areas, and other
underserved areas) by increasing the liquidity of mortgage investments and improving the distribution of investment capital
available for residential mortgage financing.
Our Charter requires certain specified credit protections, which include mortgage insurance from a qualified insurer on the
portion of the UPB of the loan that exceeds an 80% LTV ratio, a seller's agreement to repurchase or replace a defaulted loan,
or the retention by the seller of at least a 10% participation interest in the loan for the purchase of first-lien single-family loans
with LTV ratios at the time of purchase of greater than 80%. This Charter requirement does not apply to multifamily loans or to
loans that have the benefit of any guarantee, insurance, or other obligation by the U.S. or any of its agencies or instrumentalities
(e.g., the FHA, VA, or USDA Rural Development).
Our Charter does not permit us to originate mortgage loans or lend money directly to mortgage borrowers in the primary
mortgage market. Our Charter limits our purchase of single-family loans to the conforming loan market, which consists of loans
originated with UPBs at or below limits determined annually based on changes in FHFA's housing price index. In most of the
U.S., the maximum conforming loan limit for a one-family residence has been set at $806,500 for 2025, an increase from
$766,550 for 2024, $726,200 for 2023, and $647,200 for 2022. Higher limits have been established in certain "high-cost" areas
(for 2025, up to $1,209,750 for a one-family residence). Higher limits also apply to two- to four-family residences and to one- to
four-family residences in Alaska, Guam, Hawaii, and the U.S. Virgin Islands.
Introduction
Our Business
FREDDIE MAC | 2024 Form 10-K
6
Our Strategic Priorities
We have four strategic priorities, each of which was created to ensure we fully serve our mission:
n Deliver on affordable housing;
n Identify, assess, and manage our risks;
n Grow, develop, and empower talent for today and tomorrow; and
n Build financial strength to serve our mission.
These strategic priorities help us create a more liquid, stable, affordable, and equitable housing finance system that serves
lenders, families, and the housing market as a whole. And, as with any mission-driven company, our people are at the center of
all we do.
Introduction
Our Business
FREDDIE MAC | 2024 Form 10-K
7
Human Capital Management
Attracting, Developing, and Retaining Talent
Our employees are integral to our company’s success. We strive to be an employer of choice that attracts and retains top talent
through our commitment to employee well-being and engagement, training, and other professional development opportunities.
Our talent retention program focuses on performance and talent, as we are committed to the growth and development of our
employees.
We encourage employees to volunteer and engage in community outreach in the neighborhoods where they work and live
through our Community Crew program, which focuses on mission-related activities and our SERVE program which provides
our employees with additional volunteer opportunities with local organizations.
We aim to support our employees’ overall well-being and enable them to perform at their best. Our wide variety of benefits
provide employees with flexibility to manage their lives at home and work. We also offer a variety of ways to support our
employees in planning for their financial well-being.
Our culture is anchored in our employee value proposition and embraces our values and competencies to deliver meaningfully
on our mission. Our evolving listening strategy includes various forums throughout the year including mini-surveys, town halls,
people leader meetings, on-boarding and exit surveys, and an annual employee engagement survey. Employee engagement,
one of our Corporate Scorecard goals, is measured through the annual employee engagement survey.
We encourage and support our employees' professional development to help them stay engaged, confident, and credible. Our
professional development opportunities include in-person and virtual courses on various topics, such as leadership, business,
communications, technology, and individual skill development; our educational assistance program; our student debt
repayment program; and our rewards programs for employees to recognize and celebrate their colleagues’ achievements.
We also strive to implement competitive compensation programs and practices within the constraints of the conservatorship.
We evaluate the success of our human capital management by measuring and monitoring the performance, development,
retention, and engagement of our employees.
Employees
At January 31, 2025, we had 8,076 full-time and 27 part-time employees. Our headquarters are in McLean, Virginia, and the
majority of our employees reside in the Washington, D.C. metropolitan area.
Board and FHFA Oversight
We engage with the CHC Committee by providing workforce insights that support their oversight of compensation and benefits,
talent development and strategies to strengthen our culture. Although the CHC Committee plays a significant role in these
matters, FHFA is actively involved in its role as both our conservator and regulator. For additional information, see Directors,
Corporate Governance, and Executive Officers - Corporate Governance - Board of Directors and Board Committee
Information - Authority of the Board of Directors and Board Committees.
Business Segments
We have two reportable segments: Single-Family and Multifamily. For additional information on our segments, see MD&A -
Our Business Segments and Note 14.
Properties
Our principal offices consist of four office buildings we own in McLean, Virginia, comprising approximately 1.3 million square
feet. We operate our business in the United States and its territories, and accordingly, we generate no revenue from and have
no long-lived assets, other than financial instruments, in geographic locations other than the United States and its territories.
Government Regulation and Supervision
Our business is subject to extensive laws, regulations, and supervision. The laws and regulations to which we are subject cover
all key aspects of our business, and directly and indirectly impact the key drivers of our results including, for example, our
product offerings, guarantee fees, pricing, competitive position and strategic priorities, relationship with sellers and servicers,
capital structure, cash needs and uses, liquidity, privacy for borrowers and others, risk management, cybersecurity, and costs
of compliance. Failure to comply with our legal and regulatory requirements could result in litigation, investigations,
enforcement actions, fines, monetary and other penalties, and harm to our reputation. Our business and results of operations
may also be directly and adversely affected by future legislative, regulatory, or judicial actions. Such actions could affect us in a
number of ways, including by imposing significant additional legal, compliance, and other costs on us and limiting our business
Introduction
Our Business
FREDDIE MAC | 2024 Form 10-K
8
activities. For example, changes to our capital requirements have affected our business and risk management strategies,
including our risk appetite, our risk-adjusted returns, and the impact of our CRT transactions on our capital needs, and have
increased the amount of capital we will be required to retain or raise to exit from conservatorship.
In addition, our conservatorship and related matters significantly affect our management, business activities, financial condition,
and results of operations. We are under the control of FHFA, as our Conservator, and are not managed to maximize
stockholder returns. FHFA determines our strategic direction. We face a variety of different, and sometimes competing,
business objectives and FHFA-mandated activities. FHFA has required us to make changes to our business that have adversely
affected our financial results and could require us to make additional changes at any time. FHFA may require us to undertake
activities that reduce our profitability, expose us to additional credit, market, funding, operational, legal, and other risks, or
provide additional support for the mortgage market that serves our mission but adversely affects our financial results. Further,
we can be put into receivership at the discretion of the Director of FHFA at any time, consistent with the GSE Act and the
Purchase Agreement, to the extent applicable by law. See our Current Report on Form 8-K filed on January 8, 2025.
FHFA is also Conservator of Fannie Mae, our primary competitor. FHFA’s actions, as Conservator of both companies, could
affect competition between us. It is also possible that FHFA could require us and Fannie Mae to take a uniform approach to
certain activities, limiting innovation and competition, and possibly putting us at a competitive disadvantage because of
differences in our respective businesses. FHFA also could limit our ability to compete with new entrants and other institutions.
For additional information on conservatorship and related risks, see Introduction – About Freddie Mac – Conservatorship
and Government Support for Our Business and Risk Factors – Conservatorship and Related Matters.
For additional information on government regulation and supervision and related risks, see MD&A - Regulation and
Supervision and Risk Factors - Legal and Compliance Risks.
Available Information
We file reports and other information with the SEC. In view of the Conservator's succession to all of the voting power of our
stockholders, we have not prepared or provided proxy statements for the solicitation of proxies from stockholders since we
entered into conservatorship, and do not expect to do so while we remain in conservatorship. Pursuant to SEC rules, our
annual reports on Form 10-K contain certain information typically provided in an annual proxy statement.
We make available, free of charge through our website at www.freddiemac.com/investors, our annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and all other SEC reports and amendments to those reports as
soon as reasonably practicable after we electronically file the material with the SEC. The SEC also maintains a website
(www.sec.gov) that contains reports, proxy and information statements, and other information regarding companies that file
electronically with the SEC.
We are providing our website addresses and the website address of the SEC here and elsewhere in this Form 10-K solely for
your information. Information appearing on our website or on the SEC's website is not incorporated into this Form 10-K.
We provide information on the ERCF on our website at www.freddiemac.com/investors.
We provide disclosure about our debt securities on our website at www.freddiemac.com/debt. From this address, investors
can access the offering circular and issuance information for debt securities offerings under Freddie Mac's global debt facility,
including any required pricing supplements for individual issuances of debt securities. Similar information about our STACR®
transactions and MSCR transactions is available at crt.freddiemac.com and mf.freddiemac.com/investors, respectively.
We provide disclosure about our mortgage-related securities, some of which are off-balance sheet obligations (e.g., K
Certificates), on our website at www.freddiemac.com/mbs and mf.freddiemac.com/investors. From these addresses,
investors can access information and documents, including offering circulars and offering circular supplements, for mortgage-
related securities offerings.
We provide additional information, including product descriptions, investor presentations, securities issuance calendars,
transaction volumes and details, redemption notices, Freddie Mac research, and material developments or other events that
may be important to investors, in each case as applicable, on the websites for our business divisions, which can be found at
sf.freddiemac.com, mf.freddiemac.com, and capitalmarkets.freddiemac.com/capital-markets.
Introduction
Our Business
FREDDIE MAC | 2024 Form 10-K
9
FORWARD-LOOKING STATEMENTS
We regularly communicate information concerning our business activities to investors, the news media, securities analysts, and
others as part of our normal operations. Some of these communications, including this Form 10-K, contain "forward-looking
statements." Examples of forward-looking statements include, but are not limited to, statements pertaining to the
conservatorship, our current expectations and objectives for the Single-Family and Multifamily segments of our business, our
efforts to assist the housing market, our liquidity and capital management, economic and market conditions and trends
including, but not limited to, changes in house prices and house price forecasts, our market share, the effect of legislative and
regulatory developments, judicial rulings, and new accounting guidance, the credit quality of loans we own or guarantee, the
costs and benefits of our CRT transactions, the impact of banking crises or failures, the effects of natural disasters or
catastrophic events and actions taken in response thereto on our business, and our results of operations and financial
condition. Forward-looking statements involve known and unknown risks and uncertainties, some of which are beyond our
control. Forward-looking statements are often accompanied by, and identified with, terms such as "could," "may," "will,"
"believe," "expect," "anticipate," "forecast," and similar phrases. These statements are not historical facts, but rather represent
our expectations based on current information, plans, judgments, assumptions, estimates, and projections. Actual results may
differ significantly from those described in or implied by such forward-looking statements due to various factors and
uncertainties, including those described in the Risk Factors section of this Form 10-K and:
n The actions the federal government (including FHFA, Treasury, and Congress) and state governments may take, require us
to take, or restrict us from taking, including actions to promote equitable access to affordable and sustainable housing,
such as programs to implement the expectations in FHFA's Conservatorship Scorecards, recent requirements and
guidance related to equitable housing and fair lending, consumer protection, and other objectives for us;
n Changes in the fiscal and monetary policies of the Federal Reserve, including changes in target interest rates and in the
amount of agency MBS and agency CMBS held by the Federal Reserve;
n The effect of the restrictions on our business due to the conservatorship and the Purchase Agreement;
n The impact of any changes in our credit ratings or those of the U.S. government;
n Changes in our Charter, applicable legislative or regulatory requirements (including any legislation affecting the future
status of our company), or the Purchase Agreement;
n Changes to our capital requirements and potential effects of such changes on our business strategies;
n Changes in tax laws;
n Changes in privacy and cybersecurity laws and regulations;
n Changes in accounting policies, practices, standards, or guidance;
n Changes in economic and market conditions, including volatility in the financial services industry, changes in employment
rates, inflation, interest rates, spreads, and house prices;
n Changes in the U.S. mortgage market, including the supply of houses available for sale, the supply of multifamily rental
housing, and changes in the supply and type of loan products;
n The success of our efforts to mitigate our losses;
n The success of our strategy to transfer mortgage credit risk;
n Our ability to maintain adequate liquidity to fund our operations;
n Our ability to maintain the security and resiliency of our operational systems and infrastructure, including against
cybersecurity incidents or other security incidents, whether due to insider error or malfeasance or system errors or
vulnerabilities in our or our third parties' systems;
n Our ability to effectively execute our business strategies, implement significant changes, and improve efficiency;
n The adequacy of our risk management framework, including the adequacy of our regulatory capital framework prescribed
by FHFA and internal models for measuring risk;
n Our ability to manage mortgage credit risk, including the effect of changes in underwriting and servicing practices;
n Changes in credit reporting at the credit reporting bureaus due to regulatory and legal developments, as well as lender
practices;
n Our ability to limit or manage our economic exposure and GAAP earnings exposure to interest-rate volatility and spread
volatility, including the availability of derivative financial instruments needed for interest-rate and spread risk management
purposes and our ability to apply hedge accounting;
n Our operational ability to issue new securities, make timely and correct payments on securities, and provide initial and
ongoing disclosures;
n Our reliance on CSS and the CSP for the operation of the majority of our Single-Family securitization activities, limits on our
influence over CSS Board decisions, and any additional changes FHFA may require in our relationship with, or support of,
CSS;
n Performance of and changes in the methodologies, models, assumptions, and estimates we use to prepare our financial
statements, make business decisions, and manage risks;
Introduction
Forward-Looking Statements
FREDDIE MAC | 2024 Form 10-K
10
n Changes in investor demand for our debt or mortgage-related securities;
n Our ability to maintain market acceptance of the UMBS, including our ability to maintain alignment of the prepayment
speeds and pricing performance of our and Fannie Mae's respective UMBS;
n Changes in the practices or performance of loan originators, servicers, property managers, investors, insurers, and other
participants in the secondary mortgage market including as a result of evolving AI regulation;
n Competition from other market participants, which could affect the pricing we offer for and the performance of our
mortgage-related products, the credit characteristics of the loans we purchase, and our ability to meet our affordable
housing goals and other mandated activities;
n The availability of critical third parties, or their vendors and other business partners, to deliver products or services, or to
manage risks, including cybersecurity risk, effectively;
n The occurrence of a catastrophic event or natural disaster in areas in which our offices, significant portions of our total
mortgage portfolio, or the offices of critical third parties are located, and for which we may be uninsured or significantly
underinsured; and
n Other factors and assumptions described in this Form 10-K, including in the MD&A section.
Forward-looking statements are made only as of the date of this Form 10-K, and we undertake no obligation to update any
forward-looking statements we make to reflect events or circumstances occurring after the date of this Form 10-K.
Introduction
Forward-Looking Statements
FREDDIE MAC | 2024 Form 10-K
11
Management's Discussion and Analysis of
Financial Condition and Results of Operations
HOUSING AND MORTGAGE MARKET CONDITIONS
The following charts present certain housing and mortgage market indicators that can significantly affect our business and
financial results. Certain market and macroeconomic prior period data have been updated to reflect revised historical data. For
additional information on the effect of these indicators on our business and financial results, see MD&A – Consolidated
Results of Operations and MD&A – Our Business Segments.
Single-Family
U.S. Single-Family Home Sales and House Prices
___
6,462
6,891
5,671
4,756
4,743
5,640
6,120
5,030
4,090
4,060
822
771
641
666
683
11.5%
18.0%
4.9%
6.8%
4.0%
Sales of existing homes (units in thousands)
Sales of new homes (units in thousands)
Single-family house price growth rate
2020
2021
2022
2023
2024
Sources: National Association of Realtors, U.S. Census Bureau, and Freddie Mac
House Price Index (seasonally adjusted annual rate).
U.S. Single-Family Mortgage Originations
___(UPB in billions)
$4,374
$4,570
$2,374
$1,503
$1,689
2.67%
3.11%
6.42%
6.61%
6.85%
U.S. single-family originations (estimates)
30-year PMMS rate
2020
2021
2022
2023
2024
Source: Freddie Mac and Fannie Mae.
Single-Family Serious Delinquency Rates
as of December 31,
5.16%
2.83%
1.89%
1.52%
1.55%
2.64%
1.12%
0.66%
0.55%
0.59%
Total mortgage market
Freddie Mac
2020
2021
2022
2023
2024
Source: Freddie Mac and National Delinquency Survey from the Mortgage
Bankers Association. For 2024, the total mortgage market rate is as of
September 30, 2024 (latest available information).
Single-Family Mortgage Debt Outstanding
(UPB in trillions)
$2.3
$2.8
$3.0
$3.0
$3.1
$11.5
$12.7
$13.6
$14.0
$14.2
Freddie Mac Single-Family mortgage portfolio
U.S. single-family mortgage debt outstanding
2020
2021
2022
2023
2024
Source: Freddie Mac and Federal Reserve Financial Accounts of the United
States of America. For 2024, the U.S. single-family mortgage debt outstanding
balance is as of September 30, 2024 (latest available information).
Management's Discussion and Analysis
Housing and Mortgage Market Conditions
FREDDIE MAC | 2024 Form 10-K
12
Multifamily
Apartment Vacancy Rates and Change in Effective Rents
5.4%
5.0%
5.1%
5.7%
6.1%
(2.6)%
13.0%
10.1%
(1.1)%
0.7%
3.0%
Apartment vacancy rates (as of December 31)
Change in effective rents (for the year
ended December 31)
Annual long-term effective rent growth
(2000-2024)
2020
2021
2022
2023
2024
Source: Moody's.
Multifamily Property Price Growth Rate
6.8%
21.5%
0.7%
(9.7)%
(4.2)%
2020
2021
2022
2023
2024
Source: Real Capital Analytics Commercial Property Price Index (RCA CPPI).
Multifamily Delinquency Rates as of December 31,
0.16%
0.08%
0.12%
0.28%
0.40%
1.95%
1.41%
0.84%
0.57%
1.61%
0.27%
0.25%
0.17%
0.32%
0.74%
Freddie Mac (60+ day)
Multifamily CMBS market (60+ day)
FDIC insured institutions (90+ day)
2020
2021
2022
2023
2024
Source: Freddie Mac, FDIC Quarterly Banking Profile, Intex Solutions, Inc., and
Wells Fargo Securities (Multifamily CMBS conduit market, excluding REOs). For
2024, the delinquency rate for FDIC insured institutions is as of September 30,
2024 (latest available information).
Multifamily Mortgage Debt Outstanding
(UPB in billions)
$388
$415
$429
$441
$467
$1,764
$1,922
$2,092
$2,203
$2,279
Freddie Mac Multifamily mortgage portfolio
U.S. multifamily mortgage debt outstanding
2020
2021
2022
2023
2024
Source: Freddie Mac and Federal Reserve Financial Accounts of the United States
of America. For 2024, the U.S. multifamily mortgage debt outstanding balance is
as of September 30, 2024 (latest available information).
Management's Discussion and Analysis
Housing and Mortgage Market Conditions
FREDDIE MAC | 2024 Form 10-K
13
CONSOLIDATED RESULTS OF OPERATIONS
This discussion of our consolidated results of operations should be read in conjunction with our consolidated financial
statements and accompanying notes.
The table below compares our consolidated results of operations for the past three years. During 2024, we adopted ASU
2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which, among other amendments,
requires additional disclosure about significant segment expenses. In connection with the adoption of these amendments, we
have reclassified certain amounts within non-interest expense in our consolidated statements of income. Prior period amounts
have been reclassified to conform to the current period presentation. See Note 1 for additional information about our adoption
of ASU 2023-07.
Table 1 - Summary of Consolidated Statements of Income and Comprehensive Income
Year Over Year Change
Year Ended December 31,
2024 vs. 2023
2023 vs. 2022
(Dollars in millions)
2024
2023
2022
$
%
$
%
Net interest income
$19,737
$18,542
$18,005
$1,195
6%
$537
3%
Non-interest income
4,175
2,687
3,259
1,488
55
(572)
(18)
Net revenues
23,912
21,229
21,264
2,683
13
(35)
—
(Provision) benefit for credit losses
(476)
872
(1,841)
(1,348)
NM
2,713
NM
Non-interest expense
(8,658)
(8,902)
(7,819)
244
3
(1,083)
(14)
Income before income tax expense
14,778
13,199
11,604
1,579
12
1,595
14
Income tax expense
(2,920)
(2,661)
(2,277)
(259)
(10)
(384)
(17)
Net income
11,858
10,538
9,327
1,320
13
1,211
13
Other comprehensive income (loss),
net of taxes and reclassification adjustments
(5)
166
(342)
(171)
NM
508
NM
Comprehensive income
$11,853
$10,704
$8,985
$1,149
11%
$1,719
19%
See MD&A - Critical Accounting Estimates for information concerning certain significant accounting policies and
estimates applied in determining our reported results of operations and Note 1 for a summary of our accounting policies and
the related notes in which information about them can be found.
Net Revenues
Net Interest Income
Net interest income primarily consists of guarantee net interest income in Single-Family. We consolidate most of our Single-
Family securitization trusts and, therefore, we recognize the loans held by the trust and the debt securities issued by the trust
on our consolidated balance sheets. The difference between the interest income on these loans and the interest expense on the
related debt securities primarily represents the guarantee fees we receive as compensation for our guarantee of the principal
and interest payments of the issued debt securities. Guarantee net interest income includes two components:
n Contractual net interest income, which represents the ongoing monthly guarantee fee we receive for managing the credit
risk associated with mortgage loans held by consolidated trusts, including the legislated guarantee fees that we are
required to remit to Treasury and
n Deferred fee income, which primarily consists of recognition of premiums and discounts on mortgage loans and debt of
consolidated trusts and the fees that we receive or pay when we acquire single-family loans. These amounts are
recognized in net interest income based on the effective yield over the contractual life of the associated financial
instrument and may vary significantly from period to period, primarily based on changes in actual prepayments on the
underlying loans.
Net interest income also includes investments net interest income, which primarily consists of the difference between the
interest income earned on the assets in our investments portfolio and the interest expense incurred on the liabilities used to
fund those assets, and the impact on net interest income from hedge accounting, which primarily consists of amortization of
previously deferred hedge accounting basis adjustments and the earnings mismatch on qualifying fair value hedge
relationships. See Note 9 for additional information on hedge accounting.
Management's Discussion and Analysis
Consolidated Results of Operations
FREDDIE MAC | 2024 Form 10-K
14
The table below presents the components of net interest income.
Table 2 - Components of Net Interest Income
Year Over Year Change
Year Ended December 31,
2024 vs. 2023
2023 vs. 2022
(Dollars in millions)
2024
2023
2022
$
%
$
%
Guarantee net interest income:
Contractual net interest income
$15,338
$14,753
$14,020
$585
4%
$733
5%
Deferred fee income
773
1,012
2,984
(239)
(24)
(1,972)
(66)
Total guarantee net interest income
16,111
15,765
17,004
346
2
(1,239)
(7)
Investments net interest income
6,032
6,280
3,417
(248)
(4)
2,863
84
Impact on net interest income from hedge
accounting
(2,406)
(3,503)
(2,416)
1,097
31
(1,087)
(45)
Net interest income
$19,737
$18,542
$18,005
$1,195
6%
$537
3%
Key Drivers:
n
Guarantee net interest income
l 2024 vs. 2023 - Increased primarily due to continued mortgage portfolio growth.
l 2023 vs. 2022 - Decreased primarily due to a decline in deferred fee income due to slower prepayments as a result of
higher mortgage interest rates, partially offset by continued mortgage portfolio growth.
n
Investments net interest income
l 2024 vs. 2023 - Decreased primarily due to higher debt expense from issuance of higher yielding debt, partially offset
by the impact of the increase in non-interest bearing funding.
l 2023 vs. 2022 - Increased primarily due to higher returns on securities purchased under agreements to resell as a
result of higher short-term interest rates.
n
Impact on net interest income from hedge accounting
l 2024 vs. 2023 - Decreased due to lower expense related to debt in hedge accounting relationships.
l 2023 vs. 2022 - Expense increased primarily due to higher interest expense on derivatives in hedge relationships as a
result of higher interest rates, partially offset by a favorable change in the earnings mismatch on qualifying fair value
hedge relationships.
Management's Discussion and Analysis
Consolidated Results of Operations
FREDDIE MAC | 2024 Form 10-K
15
Net Interest Yield Analysis
The table below presents an analysis of interest-earning assets and interest-bearing liabilities. To calculate the average
balances, we generally use a daily weighted average of amortized cost. When daily average balance information is not
available, such as for mortgage loans, we use monthly averages. Mortgage loans on non-accrual status, where interest income
is generally recognized when collected, are included in the average balances.
Table 3 - Analysis of Net Interest Yield
Year Ended December 31,
2024
2023
2022
(Dollars in millions)
Average
Balance
Interest
Income
(Expense)
Average
Rate
Average
Balance
Interest
Income
(Expense)
Average
Rate
Average
Balance
Interest
Income
(Expense)
Average
Rate
Interest-earning assets:
Cash and cash equivalents
$10,979
$445
4.05 %
$13,466
$532
3.95 %
$14,705
$179
1.22 %
Securities purchased under
agreements to resell
114,028
6,083
5.34
118,579
6,135
5.17
97,260
1,718
1.77
Investment securities
45,498
2,069
4.55
40,481
1,571
3.88
47,612
1,640
3.44
Mortgage loans(1)
3,129,520 109,117
3.49
3,061,638
96,985
3.17
2,967,147
79,826
2.69
Other assets
2,414
163
6.75
2,479
140
5.65
4,104
95
2.31
Total interest-earning assets
3,302,439 117,877
3.57
3,236,643 105,363
3.25
3,130,828
83,458
2.67
Interest-bearing liabilities:
Debt of consolidated trusts
3,062,029
(88,227) (2.88)
2,997,841
(76,703) (2.56)
2,911,235
(61,404) (2.11)
Debt of Freddie Mac
182,706
(9,913) (5.43)
192,510
(10,118) (5.26)
178,757
(4,049) (2.27)
Total interest-bearing liabilities
3,244,735
(98,140) (3.02)
3,190,351
(86,821) (2.72)
3,089,992
(65,453) (2.12)
Impact of net non-interest-bearing
funding
57,704
—
0.05
46,292
—
0.04
40,836
—
0.03
Total funding of interest-
earning assets
3,302,439
(98,140) (2.97)
3,236,643
(86,821) (2.68)
3,130,828
(65,453) (2.09)
Net interest income/yield
$19,737
0.60 %
$18,542
0.57 %
$18,005
0.58 %
(1)
Loan fees included in interest income were $1.1 billion, $1.1 billion, and $1.5 billion during 2024, 2023, and 2022, respectively.
Management's Discussion and Analysis
Consolidated Results of Operations
FREDDIE MAC | 2024 Form 10-K
16
Net Interest Income Rate / Volume Analysis
The table below presents a rate and volume analysis of our net interest income. Our net interest income reflects the reversal of
interest income accrued, net of interest received on a cash basis, related to mortgage loans that are on non-accrual status.
Table 4 - Net Interest Income Rate / Volume Analysis
Variance Analysis
2024 vs. 2023
2023 vs. 2022
(In millions)
Rate(1)
Volume(1)
Total
Change
Rate(1)
Volume(1)
Total
Change
Interest-earning assets:
Cash and cash equivalents
$50
($137)
($87)
$361
($8)
$353
Securities purchased under agreements to resell
192
(244)
(52)
3,775
642
4,417
Investment securities
312
186
498
127
(196)
(69)
Mortgage loans
9,921
2,211
12,132
14,505
2,654
17,159
Other assets
8
15
23
98
(53)
45
Total interest-earning assets
10,483
2,031
12,514
18,866
3,039
21,905
Interest-bearing liabilities:
Debt of consolidated trusts
(9,852)
(1,672)
(11,524)
(13,058)
(2,241)
(15,299)
Debt of Freddie Mac
(331)
536
205
(5,726)
(343)
(6,069)
Total interest-bearing liabilities
(10,183)
(1,136)
(11,319)
(18,784)
(2,584)
(21,368)
Net interest income
$300
$895
$1,195
$82
$455
$537
(1)
The total change variances are allocated between rate and volume based on the relative size of each variance.
Non-Interest Income
Non-interest income primarily consists of guarantee income and investment gains, net.
Guarantee income relates primarily to our Multifamily senior subordinate securitizations. We do not consolidate the trusts used
in these transactions and therefore do not recognize the loans held by the trust or the debt securities issued by the trust on our
consolidated balance sheets. Rather, we separately account for our guarantee to the trust and recognize the revenue from our
guarantee as guarantee income. Guarantee income includes the amortization of our guarantee obligation as we are released
from risk under our guarantee and changes in fair value of our guarantee assets, net of contractual guarantee fees received.
Net investment gains primarily consist of the gains on sale of mortgage loans from our multifamily loan purchase and
securitization activities. Because we do not consolidate our Multifamily senior subordinate securitization trusts, we account for
these transactions as sales of the underlying loans. Net investment gains also include revenues from sales of single-family
delinquent and reperforming loans, gains and losses on investment securities, gains and losses from debt extinguishments and
debt recorded at fair value, and gains and losses from interest-rate risk management activities. Net investment gains can vary
significantly from period-to-period based on the pricing of our new multifamily loan purchases, the volume and nature of our
investment, funding, and hedging activities, and changes in market conditions, such as interest rates and market spreads.
Derivative instruments are a key component of our interest-rate risk management strategy. We use derivatives to economically
hedge the interest-rate risk of our financial assets and liabilities and manage our exposure to interest-rate risk on an economic
basis to a low level as measured by our models. We align our derivative portfolio to economically hedge the changing duration
of our assets and liabilities and apply fair value hedge accounting to certain single-family mortgage loans and debt to reduce
our GAAP earnings variability. As a result, interest-rate-related fair value gains and losses that we recognize on financial
instruments that we measure at fair value generally have offsetting impacts from the derivative instruments that we use to
economically hedge interest-rate risk. For additional information about our interest-rate risk management activities and the
sensitivity of reported GAAP earnings to those activities, see MD&A - Risk Management - Market Risk. For additional
information on derivative instruments, see Note 9.
Management's Discussion and Analysis
Consolidated Results of Operations
FREDDIE MAC | 2024 Form 10-K
17
The table below presents the components of non-interest income.
Table 5 - Components of Non-Interest Income
Year Over Year Change
Year Ended December 31,
2024 vs. 2023
2023 vs. 2022
(Dollars in millions)
2024
2023
2022
$
%
$
%
Guarantee income
$1,611
$1,615
$783
($4)
— %
$832
106 %
Investment gains, net
2,076
707
1,969
1,369
194
(1,262)
(64)
Other income
488
365
507
123
34
(142)
(28)
Non-interest income
$4,175
$2,687
$3,259
$1,488
55 %
($572)
(18) %
Key Drivers:
n Guarantee income
l 2023 vs. 2022 - Increased primarily due to higher fair value losses on guarantee assets in 2022 as a result of
significant interest rate increases.
n Investment gains, net
l 2024 vs. 2023 - Increased primarily due to higher revenues from held-for-sale loan purchase and securitization
activities, lower realized losses on sales of available-for-sale securities, and net impacts from index lock activities.
l
2023 vs. 2022 - Net investment gains declined, as the prior year period included spread-related gains on
commitments to hedge the Single-Family securitization pipeline that did not recur in 2023.
(Provision) Benefit for Credit Losses
Our provision for credit losses relates primarily to single-family loans held-for-investment and can vary substantially from period
to period based on a number of factors, such as changes in house prices and house price forecasts, changes in interest rates,
borrower prepayments and delinquency rates, events such as natural disasters and pandemics, the type and volume of our loss
mitigation and foreclosure activity, and government assistance provided to borrowers. See MD&A - Critical Accounting
Estimates for additional information.
The table below presents the components of provision for credit losses.
Table 6 - (Provision) Benefit for Credit Losses
Year Over Year Change
Year Ended December 31,
2024 vs. 2023
2023 vs. 2022
(Dollars in millions)
2024
2023
2022
$
%
$
%
Single-Family
($374)
$1,172
($1,772)
($1,546)
NM
$2,944
NM
Multifamily
(102)
(300)
(69)
198
66
(231)
(335)
(Provision) benefit for credit losses
($476)
$872
($1,841)
($1,348)
NM
$2,713
NM
Key Drivers:
n 2024 vs. 2023 - The provision for credit losses for 2024 was primarily driven by a credit reserve build in Single-Family
attributable to new acquisitions.
n 2023 vs. 2022 - The benefit for credit losses for 2023 was primarily driven by a credit reserve release in Single-Family due
to improvements in house prices.
Management's Discussion and Analysis
Consolidated Results of Operations
FREDDIE MAC | 2024 Form 10-K
18
Non-Interest Expense
Non-interest expense consists of salaries and employee benefits, professional services, technology, and occupancy, credit
enhancement expense and benefit for credit enhancement recoveries, legislative and regulatory assessments, and other
expenses we incur to run our business.
Credit enhancement expense includes the premiums and other costs related to certain CRT transactions that are accounted for
as freestanding contracts, primarily STACR and ACIS transactions in Single-Family. Benefit for credit enhancement recoveries
primarily represents changes in expected recoveries from those transactions. We recognize expected recoveries from
freestanding credit enhancements at the same time that we recognize an allowance for credit losses on the covered loans,
measured on the same basis as the allowance for credit losses on the covered loans.
Legislative and regulatory assessments relate to three fees: (1) the legislated guarantee fees on single-family loans that we are
required to remit to Treasury, (2) the fee imposed on Freddie Mac's total new business purchases that is allocated to certain
affordable housing funds and remitted to Treasury and HUD, and (3) FHFA regulatory assessment. The legislated guarantee
fees relate to the 10 bps increase in guarantee fees implemented at the direction of FHFA pursuant to the Temporary Payroll
Tax Cut Continuation Act of 2011 as extended by the Infrastructure Investment and Jobs Act of 2021. The affordable housing
funds allocation relates to the GSE Act requirement to set aside in each fiscal year an amount equal to 4.2 bps of each dollar of
total new business purchases, and pay such amount to certain housing funds. We are prohibited from passing through the
costs of the affordable housing funds allocation to the originators of the loans that we purchase. The regulatory assessment
relates to FHFA's annual assessment on regulated entities, including Freddie Mac. The assessment, which is required under the
GSE Act, is for FHFA's costs and expenses, as well as to maintain FHFA's working capital.
The table below presents the components of non-interest expense.
Table 7 - Components of Non-Interest Expense
Year Over Year Change
Year Ended December 31,
2024 vs. 2023
2023 vs. 2022
(Dollars in millions)
2024
2023
2022
$
%
$
%
Salaries and employee benefits
($1,677)
($1,606)
($1,509)
($71)
(4)%
($97)
(6)%
Professional services, technology, and occupancy
(1,166)
(1,189)
(1,079)
23
2
(110)
(10)
Credit enhancement expense
(2,345)
(2,339)
(2,118)
(6)
—
(221)
(10)
Benefit for (decrease in) credit enhancement
recoveries
(36)
(189)
236
153
81
(425)
NM
Legislative and regulatory assessments:
Legislated guarantee fees expense
(2,923)
(2,856)
(2,751)
(67)
(2)
(105)
(4)
Affordable housing funds allocation
(173)
(146)
(258)
(27)
(18)
112
43
Regulatory assessment
(137)
(129)
(122)
(8)
(6)
(7)
(6)
Total legislative and regulatory assessments
(3,233)
(3,131)
(3,131)
(102)
(3)
—
—
Other expense
(201)
(448)
(218)
247
55
(230)
(106)
Non-interest expense
($8,658)
($8,902)
($7,819)
$244
3%
($1,083)
(14)%
Key Drivers:
n Credit enhancement expense
l
2023 vs. 2022 - Increased primarily due to a higher volume of outstanding cumulative CRT transactions and higher
losses on STACR Trust note repurchases.
n Benefit for (decrease in) credit enhancement recoveries
l 2024 vs. 2023 and 2023 vs. 2022 - Decreased primarily due to a decrease in expected credit losses on covered loans.
n Other expense
l 2023 vs. 2022 - Increased primarily due to a $313 million expense accrual for an adverse judgment at trial in 2023. See
Note 17 for additional information regarding our legal proceedings.
Management's Discussion and Analysis
Consolidated Results of Operations
FREDDIE MAC | 2024 Form 10-K
19
CONSOLIDATED BALANCE SHEETS ANALYSIS
The table below compares our summarized consolidated balance sheets.
Table 8 - Summarized Consolidated Balance Sheets
December 31,
Year Over Year Change
(Dollars in millions)
2024
2023
$
%
Assets:
Cash and cash equivalents
$5,534
$6,019
($485)
(8) %
Securities purchased under agreements to resell
100,118
95,148
4,970
5
Investment securities, at fair value
55,771
43,275
12,496
29
Mortgage loans held-for-sale
15,560
12,941
2,619
20
Mortgage loans held-for-investment
3,172,329
3,083,665
88,664
3
Accrued interest receivable
11,029
9,925
1,104
11
Deferred tax assets, net
5,018
4,076
942
23
Other assets
21,333
25,927
(4,594)
(18)
Total assets
$3,386,692
$3,280,976
$105,716
3 %
Liabilities and Equity:
Liabilities:
Accrued interest payable
$9,822
$8,812
$1,010
11 %
Debt
3,304,949
3,208,346
96,603
3
Other liabilities
12,346
16,096
(3,750)
(23)
Total liabilities
3,327,117
3,233,254
93,863
3
Total equity
59,575
47,722
11,853
25
Total liabilities and equity
$3,386,692
$3,280,976
$105,716
3 %
Key Drivers:
As of December 31, 2024 compared to December 31, 2023:
n Securities purchased under agreements to resell increased primarily due to a higher custodial account balance driven
by loan prepayments.
n Investment securities increased primarily due to an increase in purchases of U.S. Treasury securities.
n Mortgage loans held-for-investment increased primarily due to growth in our Single-Family mortgage portfolio.
n Debt increased primarily due to an increase in debt of consolidated trusts driven by growth in our Single-Family mortgage
portfolio.
Management's Discussion and Analysis
Consolidated Balance Sheets Analysis
FREDDIE MAC | 2024 Form 10-K
20
OUR PORTFOLIOS
Mortgage Portfolio
Our mortgage portfolio includes assets held by both business segments and consists of mortgage loans held-for-investment,
mortgage loans held-for-sale, and mortgage loans underlying our mortgage-related guarantees. See Note 4 for additional
information on our mortgage loans and Note 5 for additional information on our mortgage-related guarantees.
The table below presents the UPB of our mortgage portfolio by segment.
Table 9 - Mortgage Portfolio
December 31, 2024
December 31, 2023
(In millions)
Single-Family
Multifamily
Total
Single-Family
Multifamily
Total
Mortgage loans held-for-investment:
By consolidated trusts
$3,021,161
$70,701
$3,091,862
$2,963,296
$47,433
$3,010,729
By Freddie Mac
42,050
16,715
58,765
33,213
11,770
44,983
Total mortgage loans held-for-investment
3,063,211
87,416 3,150,627
2,996,509
59,203 3,055,712
Mortgage loans held-for-sale
2,984
13,265
16,249
3,527
9,905
13,432
Total mortgage loans
3,066,195
100,681 3,166,876
3,000,036
69,108 3,069,144
Mortgage-related guarantees:
Mortgage loans held by nonconsolidated trusts
30,038
355,108
385,146
30,182
360,928
391,110
Other mortgage-related guarantees
7,941
10,846
18,787
8,692
10,761
19,453
Total mortgage-related guarantees
37,979
365,954
403,933
38,874
371,689
410,563
Total mortgage portfolio
$3,104,174
$466,635 $3,570,809
$3,038,910
$440,797 $3,479,707
Guaranteed mortgage-related securities:
Issued by consolidated trusts
$3,033,506
$70,764
$3,104,270
$2,970,707
$47,436
$3,018,143
Issued by non-consolidated trusts
24,470
317,611
342,081
24,600
321,262
345,862
Total guaranteed mortgage-related securities
$3,057,976
$388,375 $3,446,351
$2,995,307
$368,698 $3,364,005
Investments Portfolio
Our investments portfolio consists of our mortgage-related investments portfolio and other investments portfolio.
Mortgage-Related Investments Portfolio
We primarily use our mortgage-related investments portfolio to provide liquidity to the mortgage market and support our loss
mitigation activities. Our mortgage-related investments portfolio includes assets held by both business segments and consists
of unsecuritized mortgage loans and mortgage-related securities. We primarily invest in mortgage-related securities that we
issue or guarantee, although we may also invest in other agency mortgage-related securities.
The Purchase Agreement limits the size of our mortgage-related investments portfolio to a maximum amount of $225 billion.
The calculation of mortgage assets subject to the Purchase Agreement cap includes the UPB of mortgage assets and 10% of
the notional value of interest-only securities. We are also subject to additional limitations on the size and composition of our
mortgage-related investments portfolio pursuant to FHFA guidance. For additional information on the restrictions on our
mortgage-related investments portfolio, see MD&A - Conservatorship and Related Matters.
Management's Discussion and Analysis
Our Portfolios
FREDDIE MAC | 2024 Form 10-K
21
The table below presents the details of our mortgage-related investments portfolio.
Table 10 - Mortgage-Related Investments Portfolio
December 31, 2024
December 31, 2023
(In millions)
Single-Family
Multifamily
Total
Single-Family
Multifamily
Total
Unsecuritized mortgage loans(1)
$45,034
$29,980
$75,014
$36,740
$21,675
$58,415
Mortgage-related securities:
Investment securities
3,136
4,020
7,156
2,667
4,613
7,280
Debt of consolidated trusts
18,188
634
18,822
18,639
660
19,299
Total mortgage-related securities
21,324
4,654
25,978
21,306
5,273
26,579
Mortgage-related investments portfolio
$66,358
$34,634
$100,992
$58,046
$26,948
$84,994
10% of notional amount of interest-only
securities
$22,495
$22,186
Mortgage-related investments portfolio for
purposes of Purchase Agreement cap
123,487
107,180
(1) Includes $30.0 billion and $27.3 billion of single-family loans that we have purchased from securitization trusts as of December 31, 2024 and December 31, 2023,
respectively.
Other Investments Portfolio
Our other investments portfolio, which includes the liquidity and contingency operating portfolio, is primarily used for short-term
liquidity management, collateral management, and asset and liability management. The assets in the other investments portfolio
are primarily allocated to the Single-Family segment.
The table below presents the details of the carrying value of our other investments portfolio.
Table 11 - Other Investments Portfolio
December 31, 2024
December 31, 2023
(In millions)
Liquidity and
Contingency
Operating
Portfolio
Custodial
Account
Other
Total Other
Investments
Portfolio
Liquidity and
Contingency
Operating
Portfolio
Custodial
Account
Other
Total Other
Investments
Portfolio
Cash and cash equivalents
$4,369
$1,055
$110
$5,534
$5,041
$890
$88
$6,019
Securities purchased under
agreements to resell
92,787
12,764
2,787
108,338
94,904
9,396
1,093
105,393
Non-mortgage related securities(1)
37,249
—
5,465
42,714
24,153
—
6,119
30,272
Other assets(2)
—
—
6,091
6,091
—
—
5,555
5,555
Other investments portfolio
$134,405 $13,819 $14,453
$162,677
$124,098 $10,286 $12,855
$147,239
(1) Primarily consists of U.S. Treasury securities.
(2) Primarily includes LIHTC investments and advances to lenders.
Management's Discussion and Analysis
Our Portfolios
FREDDIE MAC | 2024 Form 10-K
22
OUR BUSINESS SEGMENTS
As shown in the table below, we have two reportable segments, which are based on the way we manage our business. See
Note 14 for additional financial information for our reportable segments.
Segment
Description
Single-Family
Reflects results from our purchase, securitization, and guarantee of single-family loans, our investments in
single-family loans and mortgage-related securities, the management of Single-Family mortgage credit risk and
market risk, and any results of our treasury function that are not allocated to each segment.
Multifamily
Reflects results from our purchase, securitization, and guarantee of multifamily loans, our investments in
multifamily loans and mortgage-related securities, and the management of Multifamily mortgage credit risk and
market risk.
Segment Net Revenues and Net Income
The charts below show our net revenues and net income by segment.
Segment Net Revenues
(In billions)
$18.8
$18.3
$19.8
$2.5
$3.0
$4.1
Single-Family
Multifamily
2022
2023
2024
Segment Net Income
(In billions)
$7.9
$9.0
$9.4
$1.4
$1.5
$2.5
Single-Family
Multifamily
2022
2023
2024
Management's Discussion and Analysis
Our Business Segments
FREDDIE MAC | 2024 Form 10-K
23
Single-Family
Business Overview
Our Single-Family segment provides liquidity and support to the single-family mortgage market through a variety of activities
that include the purchase, securitization, and guarantee of single-family loans originated by lenders. Central to our mission is
our commitment to helping families attain affordable and sustainable housing and to increasing equitable access to housing
finance.
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. The size of the U.S. residential mortgage market is affected by
many factors, including changes in interest rates, unemployment rates, homeownership rates, house prices, the supply of
housing, lender preferences regarding credit risk, and borrower preferences regarding mortgage debt.
In accordance with our Charter, we participate in the secondary mortgage market. The mix of loan products we purchase is
affected by several factors, including the volume of loans meeting the requirements of our Charter, the volume meeting our risk
appetite and originated according to our purchase standards, the loan purchase and securitization activity of other financial
institutions, and instruction from FHFA related to pricing policies and the volume and type of new loans we acquire.
Our primary business model is to acquire loans that lenders originate and then pool those loans into guaranteed mortgage-
related securities that transfer interest-rate, prepayment, and liquidity risk to investors and can be sold in the capital markets.
We consolidate most of our Single-Family securitization trusts and, therefore, we recognize the loans held by such trusts and
the debt securities issued by such trusts on our balance sheet and recognize the guarantee fees we receive as net interest
income. To reduce our exposure under our guarantees, we transfer credit risk on a portion of our Single-Family mortgage
portfolio to the private market in certain instances. Most of our loans with LTV ratios above 80% at the time of purchase are
also credit enhanced by primary mortgage insurance. The returns we generate from our business activities are primarily derived
from the guarantee fees we receive in exchange for providing our guarantee of the principal and interest payments of the issued
mortgage-related securities.
The diagram below illustrates our primary business model.
Products and Activities
Our Single-Family business primarily consists of activities related to providing market liquidity by purchasing and securitizing
mortgage loans and issuing guaranteed mortgage-related securities, transferring credit risk, performing loss mitigation
activities, and investing in mortgage-related and other investments. Certain of our loan products and programs have been
designed to address affordability challenges, particularly in underserved markets, while others aim to support housing supply
and sustainability efforts.
Management's Discussion and Analysis
Our Business Segments | Single-Family
FREDDIE MAC | 2024 Form 10-K
24
Loan Purchase, Securitization, and Guarantee Activities
Guarantor Swap Transactions
One of the primary ways we acquire mortgage loans and provide liquidity to our Single-Family lender customers is by
securitizing loans into guaranteed mortgage-related securities in guarantor swap transactions. Our largest guarantor swap
customers are primarily large mortgage banking companies and commercial banks. In these transactions, we purchase
mortgage loans from our customers in exchange for a security backed by those same loans, as shown in the diagram below:
Cash Window Transactions
In addition to guarantor swap transactions, another primary way we acquire loans and provide liquidity to our Single-Family
lender customers is by purchasing loans through our cash window for future aggregation and securitization via our
securitization pipeline. In these transactions, we purchase mortgage loans from our customers in exchange for cash
consideration. We enter into forward commitments with lenders in advance of the loan purchase date to purchase loans
through our cash window at a fixed price for our securitization pipeline, allowing lenders to offer borrowers the opportunity to
lock in the interest rate on the mortgage prior to loan origination. We refer to the loan as being in our securitization pipeline for
the period of time between loan purchase and securitization.
We typically economically hedge the market risk exposure of our forward loan purchase commitments with lenders and our
securitization pipeline by entering into forward sale commitments and obtain permanent financing for the loans in our
securitization pipeline after a short aggregation period by securitizing the loans into guaranteed mortgage-related securities and
selling the resulting securities to third-party investors, typically through cash auctions. We may also retain certain of these
securities in our mortgage-related investments portfolio prior to selling them to third parties.
The Purchase Agreement requires us to purchase loans for cash consideration; operate the cash window with non-
discriminatory pricing; and comply with directives, regulations, restrictions, and other requirements prescribed by FHFA related
to equitable secondary market access by community lenders. We manage cash window activities in accordance with our risk
limits and limitations imposed by FHFA. For additional information about the Purchase Agreement, see MD&A -
Conservatorship and Related Matters.
Management's Discussion and Analysis
Our Business Segments | Single-Family
FREDDIE MAC | 2024 Form 10-K
25
The diagram below shows the process for acquiring and securitizing loans in our cash window transactions.
Advances to Lenders
We also provide liquidity to certain lenders through our early funding programs, where we advance funds to lenders for
mortgage loans prior to the loans being pooled and securitized generally through our guarantor swap transactions. In some
cases, the early funded mortgages are ultimately delivered through cash window purchase transactions. We account for these
transactions as advances that are fully collateralized by the mortgage loans and recognize the associated fees as interest
income on the advances from the early funding date to the final settlement date.
Securitization Products
We offer the following types of securitization products to our customers.
Level 1 Securitization Products
We refer to the securities we issue in guarantor swap transactions and cash window securitizations as Level 1 Securitization
Products, which are pass-through securities that represent undivided beneficial interests in trusts that hold pools of loans or
participation interests in loans.
We issue the following types of Level 1 Securitization Products:
n
UMBS - Single-class pass-through securities issued through the CSP with a 55-day payment delay for TBA-eligible fixed-
rate mortgage loans. The UMBS is a single (common) security that is issued by either Fannie Mae or us. The UMBS market
is designed to enhance the overall liquidity of TBA-eligible Freddie Mac and Fannie Mae securities by supporting their
fungibility without regard to which company is the issuer. SIFMA permits UMBS TBA contracts to be settled by delivery of
UMBS issued by either Freddie Mac or Fannie Mae under its good-delivery guidelines.
n
55-day MBS - Single-class pass-through securities issued through the CSP with a 55-day payment delay for non-TBA-
eligible fixed-rate mortgage loans.
n
ARM PCs - Single-class pass-through securities with a 75-day payment delay for ARM products. We do not use the CSP
to issue ARM PCs.
In prior years, we also issued Gold PCs, which were single-class pass-through securities with a 45-day payment delay for
fixed-rate mortgage loans. We discontinued the issuance of Gold PCs in 2019. Existing Gold PCs that are not entirely
resecuritized are eligible for exchange into UMBS (for TBA-eligible securities) or 55-day MBS (for non-TBA-eligible securities).
All Level 1 Securitization Products we issue are backed only by mortgage loans that we have acquired. We offer (or previously
offered) all of the above products through both guarantor swap and cash window programs.
Management's Discussion and Analysis
Our Business Segments | Single-Family
FREDDIE MAC | 2024 Form 10-K
26
We also periodically use Level 1 Securitization Products to securitize certain reperforming loans subsequent to purchasing
them from the original securities pool, depending on market conditions, business strategy, credit risk considerations, and
operational efficiency.
When we issue a Level 1 Securitization Product, we retain the credit risk of the underlying mortgage loans by guaranteeing the
principal and interest payments of the issued securities and transfer the interest-rate, prepayment, and liquidity risks of those
loans to the investors in the securities. For our fixed-rate Level 1 Securitization Products, we guarantee the timely payment of
principal and interest. For our ARM PCs, we guarantee the timely payment of the weighted average coupon interest rate for the
underlying loans, and we also guarantee the full and final payment of principal, but not the timely payment of principal. In
exchange for our guarantee of Level 1 Securitization Products, we receive guarantee fees that are designed to be
commensurate with the risks assumed and that we expect will, over the long-term, provide income that exceeds the credit-
related and administrative expenses on the underlying loans and also provide a return on the capital that would be needed to
support the related credit risk. The guarantee fees charged on new acquisitions generally consist of:
n
A contractual monthly fee paid as a percentage of the UPB of the underlying loan, including the legislated guarantee fees
and
n
Fees we receive or pay when we acquire a loan, which include credit fees and buy-up and buy-down fees. Credit fees are
calculated based on credit risk factors such as the loan product type, loan purpose, LTV ratio, and credit score, and are
charged to compensate us for higher levels of risk in some loan products. Buy-up and buy-down fees are payments made
or received to buy up or buy down, respectively, the monthly contractual guarantee fee rate and are paid in conjunction
with the formation of a security to provide for a uniform net coupon rate for the mortgage pool underlying the security.
In general, we must obtain FHFA's approval to implement significant across-the-board changes to our credit fees. In addition,
from time to time, FHFA issues directives or guidance to us affecting the levels of guarantee fees that we may charge.
In order to issue mortgage-related securities, we establish trusts pursuant to our Master Trust Agreements and place the
mortgage loans in the trust, which issues securities backed by those mortgage loans. The servicer administers the collection of
borrowers' payments on their loans and remits the collected funds to us, net of servicing fees. We administer the distribution of
payments to the investors in the mortgage-related securities, net of any applicable guarantee fees. When we securitize
mortgage loans using trusts, Freddie Mac typically functions in its capacity as depositor, guarantor, administrator, and trustee
of the trusts. We consolidate our Single-Family Level 1 Securitization Product trusts and recognize the mortgage loans held and
debt issued by those trusts on our consolidated balance sheets. The difference between the interest income on the loans and
the interest expense on the debt primarily represents the guarantee fees we receive as compensation for our guarantee. This
amount is referred to as guarantee net interest income.
When a borrower prepays a loan that we have securitized, the outstanding balance of the security owned by investors is
reduced by the amount of the prepayment. If the borrower becomes delinquent, we continue to make the applicable payments
to the investors in the mortgage-related securities pursuant to our guarantee until we purchase the loan out of the securitization
trust. We have the option to purchase loans from the trusts under certain circumstances (including certain levels of
delinquency) at a purchase price equal to the current UPB of the loan, less any outstanding advances of principal that have
been previously distributed. At the instruction of FHFA, we purchase loans from trusts when they reach 24 months of
delinquency, except for loans that meet certain criteria (e.g., permanently modified or foreclosure referral), which may be
purchased sooner. Many delinquent loans are purchased from trusts before they reach 24 months of delinquency under one of
the exceptions provided. We must obtain FHFA’s approval to implement changes to our policy to purchase loans from trusts.
Other Securitization Products
We securitize certain seasoned loans in transactions where we issue guaranteed senior securities and unguaranteed
subordinated securities. The collateral for these structures primarily consists of reperforming loans. The unguaranteed
subordinated securities absorb first losses on the related loans. After securitization, we do not control the servicing, and the
loans are not serviced in accordance with our Guide.
In prior years, we offered additional types of securitization products to our customers, including senior subordinate
securitizations backed by recently originated loans and other securitization products collateralized by non-Freddie Mac
mortgage-related securities. We no longer offer these products on a regular basis and have not entered into these types of
transactions recently.
Resecuritization Products
Resecuritization products represent beneficial interests in pools of Level 1 Securitization Products and certain other types of
mortgage assets. We generally create these securities by using Level 1 Securitization Products or our previously issued
resecuritization products as the underlying collateral. We leverage the issuance of these securities to expand the range of
investors in our mortgage-related securities to include those seeking specific security attributes. Similar to our Level 1
Securitization Products, we guarantee the payment of principal and interest to the investors in our resecuritization products. We
do not charge a guarantee fee for these securities if the underlying collateral is already guaranteed by us since no additional
credit risk is introduced, although we typically receive a transaction fee as compensation for creating the security and future
administrative responsibilities. We use the CSP for many of the securities issuance and administration activities for our
Management's Discussion and Analysis
Our Business Segments | Single-Family
FREDDIE MAC | 2024 Form 10-K
27
resecuritization products.
We have the ability to commingle TBA-eligible Fannie Mae collateral in certain of our resecuritization products. When we
resecuritize Fannie Mae securities, which are separately guaranteed by Fannie Mae, in our commingled resecuritization
products, our guarantee covers timely payment of principal and interest on such products from the underlying Fannie Mae
securities. If Fannie Mae were to fail to make a payment on a Fannie Mae security that we resecuritized, we would be
responsible for making the payment. We are required to hold incremental capital for our guarantees of Fannie Mae securities
under the ERCF. We also began to charge a fee for any commingled security issued on or after July 1, 2022.
All of the cash flows from the collateral underlying our resecuritization products are generally passed through to investors in
these securities. We do not issue resecuritization products that have concentrations of credit risk beyond those embedded in
the underlying assets. In many of our resecuritization transactions, securities dealers or investors deliver mortgage assets in
exchange for the resecuritization product. In certain cases, we may also transfer our own mortgage assets in exchange for the
resecuritization product. The diagram below provides a general example of how we create resecuritization products.
We offer the following types of resecuritization products:
n
Single-class resecuritization products - Involve the direct pass through of all cash flows of the underlying collateral to
the beneficial interest holders and include:
l
Supers - Resecuritizations of UMBS and certain other TBA-eligible mortgage securities. This structure allows
commingling of Freddie Mac and Fannie Mae collateral, where newly issued or exchanged UMBS and Supers issued
by us or Fannie Mae may be commingled to back Supers issued by us. Fannie Mae also issues Supers. Supers can be
backed by:
–
UMBS and/or other Supers issued by us or Fannie Mae;
–
Existing TBA-eligible Fannie Mae "MBS" and/or "Megas"; and/or
–
UMBS and Supers that we have issued in exchange for TBA-eligible PCs and Giant PCs that have been delivered
to us in response to our offer to exchange 45-day payment delay securities for corresponding 55-day payment
delay securities.
l
Giant MBS - Resecuritizations of:
–
Newly issued 55-day MBS and/or Giant MBS and/or
–
55-day MBS and/or Giant MBS that we have issued in exchange for non-TBA-eligible PCs and non-TBA-eligible
Giant PCs that have been delivered to us in response to our offer to exchange 45-day payment delay securities for
corresponding 55-day payment delay securities.
l
Giant PCs - Resecuritizations of previously issued PCs or Giant PCs. Although we no longer issue Gold PCs, existing
Gold PCs may continue to be resecuritized into Giant PCs. In addition, ARM PCs may continue to be resecuritized into
Management's Discussion and Analysis
Our Business Segments | Single-Family
FREDDIE MAC | 2024 Form 10-K
28
ARM Giant PCs. Fixed-rate Giant PCs are eligible for exchange into Supers (for TBA-eligible securities) or Giant MBS
(for non-TBA-eligible securities).
n
Multiclass resecuritization products
l
REMICs - Resecuritizations of previously issued mortgage securities that divide all cash flows of the underlying
collateral into two or more classes of varying maturities, payment priorities, and coupons. This structure allows
commingling of TBA-eligible Freddie Mac and Fannie Mae collateral.
l
Strips - Resecuritizations of previously issued Level 1 Securitization Products or single-class resecuritization products
and issuance of stripped securities, including principal-only and interest-only securities or floating rate and inverse
floating rate securities, backed by the cash flows from the underlying collateral. This structure allows commingling of
TBA-eligible Freddie Mac and Fannie Mae collateral.
Other Mortgage-Related Guarantees
We previously offered a guarantee on mortgage assets held by third parties, in exchange for guarantee fees, without
securitizing those assets. These arrangements, referred to as long-term standby commitments, have obligated us to purchase
seriously delinquent loans that are covered by those commitments. From time to time, we have consented to the termination of
our long-term standby commitments and simultaneously entered into guarantor swap transactions with the same counterparty,
issuing securities backed by many of the same loans.
Credit Enhancement Activities
To reduce our credit risk exposure, we engage in various types of credit enhancements, including primary mortgage insurance
and CRT transactions. Our Charter requires coverage by specified credit enhancements or participation interests on single-
family loans with LTV ratios above 80% at the time of purchase. Most of our loans with LTV ratios above 80% are credit
enhanced by primary mortgage insurance, which provides loan-level credit enhancement against loss up to a specified amount,
the premium for which is typically paid by the borrower. Generally, an insured loan must be in default and the borrower's
interest in the underlying property must have been extinguished, such as through a short sale or foreclosure sale, before a claim
can be filed under a primary mortgage insurance policy. The mortgage insurer has a prescribed period of time within which to
process a claim and make a determination as to its validity and amount.
We define CRT transactions as those arrangements where we actively transfer the credit risk exposure on mortgages that we
own or guarantee. Our CRT transactions are designed to reduce the amount of required capital related to credit risk, to transfer
portions of credit losses on groups of previously acquired loans to third-party investors, and to reduce the risk of future losses
to us when borrowers default. The costs we incur in exchange for this credit protection effectively reduce our guarantee income
from the associated mortgages. We evaluate and update our CRT activities as needed depending on our business strategy,
market conditions, and regulatory requirements.
Each CRT transaction is designed to transfer a certain portion of the credit risk that we assume for loans with certain targeted
characteristics. Risk positions may be transferred to third-party investors through one or more CRT transactions. The risk
transfer could occur prior to, or simultaneously with, our purchase of the loan (i.e., front-end coverage) or after the purchase of
the loan (i.e., back-end coverage).
STACR and ACIS Offerings
Our two primary CRT programs are STACR and ACIS.
n
STACR - Our primary Single-Family securities-based credit risk sharing transaction. STACR Trust note transactions
transfer risk to the private capital markets through the issuance of unguaranteed notes using a third-party trust. In a
STACR transaction, we create a reference pool of loans from our Single-Family mortgage portfolio, and a third-party trust
issues credit notes linked to the reference pool. The trust makes periodic payments of principal and interest on the notes to
noteholders, but is not required to repay principal to the extent that the note balance is reduced as a result of specified
credit events on the mortgage loans in the related reference pool. We make payments to the trust to support payment of
the interest due on the notes. The amount of risk transferred in each transaction affects the amounts we are required to
pay. We receive payments from the trust that otherwise would have been made to the noteholders to the extent there are
certain defined credit events on the mortgage loans in the related reference pool. The note balance is reduced by the
amount of the payments to us, thereby transferring the related credit risk of the loans in the reference pool to the note
Management's Discussion and Analysis
Our Business Segments | Single-Family
FREDDIE MAC | 2024 Form 10-K
29
investors. Generally, the note balance is also reduced based on principal payments that occur on the loans in the reference
pool. The diagram below illustrates a typical STACR transaction.
n
ACIS - Our primary insurance-based credit risk sharing transaction. ACIS transactions are insurance policies we enter into
with global insurance and reinsurance companies to cover a portion of credit risk on the mortgage loans in the related
reference pools. We pay monthly premiums to the insurers or reinsurers in exchange for claim coverage on specified credit
events on the mortgage loans in the related reference pool. We require our ACIS counterparties to partially collateralize
their exposure to reduce the risk that we will not be reimbursed for our claims under the policies.
We primarily use STACR and ACIS transactions to transfer credit risk on certain recently acquired fixed rate mortgage loans
with maturity terms greater than 20 years and original LTV ratios between 60% and 97%. In a typical STACR or ACIS
transaction, we transfer to third-party investors a portion of the credit risk between a specified attachment point and a
detachment point which may vary based on numerous factors, such as the type of collateral and market conditions. We
generally retain the initial loss position and at least 5% of the credit risk of all the positions sold to align our interests with those
of the investors. The diagram below illustrates a typical STACR and ACIS structure.
We monitor the costs and benefits provided by the CRT coverage we have obtained on a regular basis, including the impact of
CRT on our capital requirements under the ERCF. We may periodically terminate certain CRT transactions, through the exercise
of contractual call options, repurchases of outstanding securities, or other means, if we determine prior to contractual maturity
that they are no longer economically sensible.
Additional Offerings
We also transfer credit risk through issuance of senior subordinate securitizations, additional types of insurance and
reinsurance transactions, and risk-sharing arrangements with certain single-family lenders. For additional information on Single-
Family mortgage loan credit enhancements, see MD&A - Risk Management - Credit Risk - Single-Family Mortgage
Credit Risk - Transferring Credit Risk to Third-Party Investors.
Management's Discussion and Analysis
Our Business Segments | Single-Family
FREDDIE MAC | 2024 Form 10-K
30
We also periodically sell certain delinquent loans that we have previously repurchased from securitization trusts. See Note 4
for additional information on sales of mortgage loans.
Loss Mitigation Activities
Servicers perform loss mitigation activities as well as foreclosures on loans that they service for us. Our loss mitigation strategy
emphasizes early intervention by servicers in delinquent loans and offers alternatives to foreclosure by providing servicers with
default management programs designed to manage delinquent loans and to assist borrowers in maintaining homeownership or
facilitate foreclosure alternatives. FHFA could require us to make changes to our loss mitigation activities which could make
these activities more costly to us.
We offer (or previously offered) a variety of borrower assistance programs, including refinance programs and loan workout
activities for eligible borrowers. Our loan workouts include both home retention options and foreclosure alternatives.
Relief Refinance Program
We previously offered relief refinance programs for eligible homeowners whose loans we already owned or guaranteed to
refinance with more favorable terms (such as reduction in payment, reduction in interest rate, or movement to a more stable
loan product) and without the need to obtain additional mortgage insurance. These programs also provided liquidity for
borrowers who were current on their mortgages but were unable to refinance because their LTV ratios exceeded our standard
refinance limits. Our most recent relief refinance offering, the Enhanced Relief RefinanceSM program, has been suspended until
further notice. However, our single-family mortgage portfolio continues to include loans that we acquired under these programs
in prior periods. For additional information on outstanding relief refinance loans, see MD&A - Risk Management - Credit
Risk - Single-Family Mortgage Credit Risk.
Loan Workout Activities
Home Retention Options
When refinancing is not practicable, we require our servicers to attempt to establish contact with the borrowers to discuss the
most appropriate options for delinquency resolution. When the contact is established, we require our servicers first to evaluate
the loan for a forbearance plan, repayment plan, payment deferral plan, or loan modification, because our level of recovery on a
loan that reperforms is often higher than for a loan that proceeds to a foreclosure alternative or foreclosure. Although workout
options are often less costly than a foreclosure, we incur costs as a result of our loss mitigation activities. Specifically, payment
deferral plans result in non-interest-bearing balances we have to finance for the life of the mortgage, resulting in economic
costs as a result of this program. Additionally, we incur economic losses on loan modifications that involve an interest rate
reduction or principal forbearance, and we incur expenses related to incentive fees we pay to servicers for certain successfully
completed loan workouts.
We offer the following types of home retention options:
n Forbearance plans - Arrangements that require reduced or no payments during a defined period that provides borrowers
additional time to return to compliance with the original mortgage terms or to implement another type of loan workout
option. Borrowers may exit forbearance by repaying all past due amounts thus fully reinstating the loan, paying off the loan
in full, or entering into a repayment plan, a payment deferral plan, or a trial period plan pursuant to a loan modification. We
offer forbearance of up to 12 months to single-family borrowers experiencing financial difficulty. Borrowers may receive an
initial forbearance term of one to six months and, if necessary, one or more forbearance term extensions of one to six
months, as long as the delinquency of the mortgage does not exceed 12 months.
n Repayment plans - Contractual plans that allow borrowers a specific period of time to return to current status by paying the
normal monthly payment plus additional agreed upon delinquent amounts. Repayment plans must have a term greater
than one month and less than or equal to 12 months and the monthly repayment plan payment amount must not exceed
150% of the contractual mortgage payment.
n Payment deferral plans - Arrangements that allow borrowers to return to current status by deferring delinquent principal
and interest into a non-interest-bearing principal balance that is due at the earlier of the payoff date, maturity date, or sale
of the property. The remaining mortgage term, interest rate, payment schedule, and maturity date remain unchanged and
no trial period plan is required. The number of months of payments deferred varies based upon the type of hardship the
borrower is experiencing.
n Loan modifications - Contractual plans that may involve changing the terms of the loan such as payment delays, interest
rate reductions, term extensions, or a combination of these items. Payment delays in our loan modification programs most
commonly consist of adding outstanding indebtedness, such as delinquent interest, to the UPB of the loan, and may also
include principal forbearance, in which a portion of the principal balance becomes non-interest-bearing and is due at the
earlier of the payoff date, maturity date, or sale of the property. Our modification programs generally require completion of
a trial period of at least three months prior to receiving the modification. If a borrower fails to complete the trial period, the
loan is considered for our other workout activities. These modification programs offer eligible borrowers extension of the
loan's term up to 480 months and a fixed interest rate. Servicers are paid incentive fees for each completed modification,
Management's Discussion and Analysis
Our Business Segments | Single-Family
FREDDIE MAC | 2024 Form 10-K
31
and there are limits on the number of times a loan may be modified. Our primary loan modification program is the Freddie
Mac Flex Modification® program, which intends to create a suitable payment reduction through payment delays, interest
rate reduction, and term extension. Freddie Mac announced updates to the Flex Modification® program on May 29, 2024
and those updates went into effect with all new evaluations beginning December 1, 2024. These updates revised how
payment delays, rate reductions, and term extensions are determined in order to create greater borrower eligibility and
create greater consistency in suitable payment reduction percentages.
Foreclosure Alternatives
When a seriously delinquent single-family loan cannot be resolved through an economically sensible home retention option, we
typically seek to pursue a foreclosure alternative before we pursue a foreclosure sale. We pay servicers incentive fees for each
completed foreclosure alternative. In some cases, we provide cash relocation assistance to the borrower, while allowing the
borrower to exit the home in an orderly manner. We offer the following types of foreclosure alternatives:
n Short sale - The borrower sells the property for less than the total amount owed under the terms of the loan. A short sale is
preferable for a borrower because we provide limited relief to the borrower from repaying the entire amount owed on the
loan. A short sale allows us to avoid the costs we would otherwise incur to complete the foreclosure and subsequently sell
the property.
n Deed in lieu of foreclosure - The borrower voluntarily agrees to transfer title of the property to us without going through
formal foreclosure proceedings.
When we are unable to successfully execute a loan workout and the loan remains delinquent, we may ultimately pursue
foreclosure. In a foreclosure, we may acquire the underlying property and later sell it, using the proceeds of the sale to reduce
our losses. For additional information on our loss mitigation and foreclosure activities, see MD&A - Risk Management -
Credit Risk - Single-Family Mortgage Credit Risk and Note 4.
Investing Activities
We primarily use our Single-Family mortgage-related investments portfolio to provide liquidity to the mortgage market by
purchasing loans for our securitization pipeline and by purchasing delinquent and modified loans from securitization trusts. We
also invest in agency mortgage-related securities. We manage the portfolio's risk-versus-return profile using our internal
economic framework and make risk and capital management decisions intended to execute our business strategy and be
responsive to market conditions. For additional information on our mortgage-related investments portfolio, see MD&A - Our
Portfolios - Investments Portfolio - Mortgage-Related Investments Portfolio.
We may use our Single-Family mortgage-related investments portfolio to undertake various activities to support our presence in
the agency securities market or to support the liquidity of our securities, including their price performance relative to
comparable Fannie Mae securities. Depending upon market conditions, there may be substantial variability in any period in the
total amount of securities we purchase or sell. The purchase or sale of agency securities could, at times, adversely affect the
price performance of our securities relative to comparable Fannie Mae securities. We may incur costs to support our presence
in the agency securities market and to support the liquidity and price performance of our securities. For additional information,
see Risk Factors - Market Risks - A significant decline in the price performance of, or demand for, our UMBS could
have an adverse effect on the volume and/or profitability of our Single-Family business activity. For additional
information on the limits on the mortgage-related investments portfolio established by the Purchase Agreement and by FHFA,
see MD&A - Conservatorship and Related Matters - Limits on Our Mortgage-Related Investments Portfolio and
Indebtedness. In addition, we may forgo investment opportunities for a variety of reasons, including the limits on our
mortgage-related investments portfolio or the risk that an accounting treatment may create earnings variability.
Our company-wide Treasury function primarily includes issuing, calling, and repurchasing debt of Freddie Mac, managing our
other investments portfolio, and managing interest-rate risk, which includes monitoring and economically hedging interest-rate
risk for the entire company, primarily through the use of derivative instruments. We allocate debt funding costs and interest-rate
risk management gains and losses to specific assets and liabilities included in each segment. The residual financial impact of
our company-wide Treasury function and interest-rate risk management function is primarily allocated to the Single-Family
segment. For additional information on the company-wide Treasury function, see MD&A - Liquidity and Capital
Resources. For additional information on interest-rate risk management, see MD&A - Risk Management - Market Risk.
Management's Discussion and Analysis
Our Business Segments | Single-Family
FREDDIE MAC | 2024 Form 10-K
32
Customers
Our Single-Family customers are investors in our mortgage-related securities, CRT offerings, and Freddie Mac debt securities,
including banks and other depository institutions, insurance companies, money managers, central banks, pension funds, state
and local governments, REITs, non-depository institutions, and brokers and dealers. We also maintain relationships with
dealers in our guaranteed mortgage-related securities and Freddie Mac debt securities. Our unsecured Freddie Mac debt
securities and structured mortgage-related securities are initially purchased by dealers and redistributed to their customers. Our
Single-Family customers also include institutions that originate, sell, and perform the ongoing servicing of loans for new or
existing homeowners. These companies include mortgage banking companies, commercial banks, regional banks, community
banks, credit unions, HFAs, savings institutions, and non-depository institutions. Many of these companies are both sellers and
servicers for us.
We enter into loan purchase agreements with many of our Single-Family customers that outline the terms under which we
agree to purchase loans from them over a period of time. For most of the loans we purchase, the guarantee fees are not
specified contractually. Instead, we bid for some or all of the lender's loan volume on a monthly basis at a guarantee fee that
we specify. As a result, our loan purchase volumes from individual customers can fluctuate significantly.
We acquire a significant portion of our loans from several lenders that are among the largest originators in the U.S. In addition,
a significant portion of our single-family loans is serviced by several large servicers. The following charts show the
concentration of our 2024 Single-Family purchase volume by our largest sellers and our Single-Family loan servicing by our
largest servicers as of December 31, 2024. Any seller or servicer with a 10% or greater share is listed separately.
Percentage of Single-Family Purchase Volume
(Based on UPB of $346 billion)
12%
43%
45%
United Wholesale Mortgage, LLC
Other top 10 sellers
All other sellers
Percentage of Single-Family Servicing Volume(1)
(Based on UPB of $3,104 billion)
11%
44%
45%
JPMorgan Chase Bank, N.A.
Other top 10 servicers
All other servicers
(1) Percentage of servicing volume is based on the total Single-Family mortgage
portfolio, which includes loans for which we do not exercise servicing control.
However, loans for which we do not exercise servicing control are not included
for purposes of determining the concentration of servicers who serviced more
than 10% of our Single-Family mortgage portfolio.
For additional information about seller and servicer concentration risk and our relationships with our seller and servicer
customers, see MD&A - Risk Management - Counterparty Credit Risk - Single-Family Sellers and Servicers and Note
15.
Management's Discussion and Analysis
Our Business Segments | Single-Family
FREDDIE MAC | 2024 Form 10-K
33
Competition
Our principal competitors in the single-family mortgage market are Fannie Mae and FHA/VA (with Ginnie Mae securitization).
Other institutions, such as commercial and investment banks, dealers, savings institutions, REITs, insurance companies, the
Federal Farm Credit Banks, the FHLBs, and independent mortgage companies, also compete with us by retaining or
securitizing loans that would otherwise be eligible for purchase by us.
We operate in a competitive market by varying our pricing for different customers, loan products, and underwriting
characteristics. We seek to maintain a broad mix of loan quality for the loans we purchase. However, sellers may elect to retain
loans with better credit characteristics. A seller's decision to retain these loans, or its decision concerning the loans it sells to
Freddie Mac based on the credit standards and pricing policies of other secondary market participants, could result in Freddie
Mac purchasing loans with a more adverse credit profile.
The conservatorship, including direction provided to us by our Conservator, may affect our ability to compete. The areas in
which we and Fannie Mae compete have been limited as we have been required by FHFA to align certain of our Single-Family
mortgage purchase offerings, servicing, and securitization practices with Fannie Mae to achieve and maintain market
acceptance of the UMBS. FHFA has also placed limits on our and Fannie Mae's ability to compete with each other on pricing.
Management's Discussion and Analysis
Our Business Segments | Single-Family
FREDDIE MAC | 2024 Form 10-K
34
Business Results
The charts, tables, and related discussion below present the business results of our Single-Family segment.
New Business Activity
UPB of Single-Family Loan Purchases and Guarantees by Loan
Purpose and Average Estimated Guarantee Fee Rate(1) on New
Acquisitions
(UPB in billions)
$541
$300
$346
$340
$265
$286
$201
$35
$60
51
56
55
Home purchase
Refinance
Average estimated guarantee fee rate
on new acquisitions (bps)
2022
2023
2024
(1) Estimated guarantee fee rate calculations exclude the legislated guarantee
fees and include deferred fees recognized over the estimated life of the
related loans based on month-end market rates for the month of
acquisition.
Number of Families Helped to Own a Home and Average Loan UPB
of New Acquisitions
(Loan count in thousands)
1,803
955
1,029
1,039
806
820
764
149
209
$300,000
$314,000
$337,000
Home purchase borrowers
Refinance borrowers
Average loan UPB of new acquisitions
2022
2023
2024
n Our loan purchase and guarantee activity increased in 2024 compared to 2023 as both home purchase and refinance
volume increased due to lower mortgage interest rates during the second half of 2024.
n The average loan size of new acquisitions increased in 2024 compared to 2023 due to a higher conforming loan limit and
house price appreciation in recent periods.
n The average estimated guarantee fee rate on new acquisitions consists of the contractual guarantee fee rate and deferred
fee income, including the expected gains (losses) from buy-up and buy-down fees, recognized over the estimated life of
the related loans based on our expectations of prepayments and other liquidations. The average estimated guarantee fee
rate on new acquisitions decreased slightly in 2024 compared to 2023.
Management's Discussion and Analysis
Our Business Segments | Single-Family
FREDDIE MAC | 2024 Form 10-K
35
n We continued working to improve equitable access to affordable and sustainable housing. For example, our Home
Possible® and Home One® initiatives offer down payment options as low as 3% and are designed to help qualified
borrowers with limited savings buy a home. We purchased approximately 158,000 loans under these initiatives in 2024.
Our Refi Possible® initiative provides more flexibility to help low- and moderate-income borrowers refinance their existing
mortgages and lower their monthly payments. We also continue to implement programs that support responsibly
broadening access to affordable housing by:
l Providing homebuyer and financial education through our CreditSmart® learning suite and our Borrower Help Centers;
l Implementing the Duty to Serve Underserved Markets plan;
l Implementing the Equitable Housing Finance plan;
l Developing and implementing a plan to increase and preserve sustainable mortgage purchase and refinance credit for
all qualified borrowers; and
l Increasing support for first-time home buyers.
While we are responsibly expanding our programs and outreach capabilities to better serve low- and moderate-income
borrowers and underserved markets, these loans may result in increased credit risk. See MD&A - Regulation and
Supervision - Federal Housing Finance Agency - Duty to Serve Underserved Markets Plan for additional information.
Single-Family Mortgage Portfolio
Single-Family Mortgage Portfolio and Average Estimated
Guarantee Fee Rate(1) on Mortgage Portfolio as of December 31,
(UPB in billions)
$2,986
$3,039
$3,104
48
48
49
Single-Family mortgage portfolio
Average estimated guarantee fee rate
on mortgage portfolio (bps)
2022
2023
2024
(1) Estimated guarantee fee rate is calculated based on month-end market
rates for the month of acquisition and includes deferred fees recognized
over the estimated life of the related loans. These calculations exclude the
legislated guarantee fees and certain loans, the majority of which are held
by VIEs that we do not consolidate. The UPB of these excluded loans was
$40 billion as of December 31,2024.
Single-Family Mortgage Loans as of December 31,
(Loan count in millions)
13.6
13.7
13.9
$219,000
$221,000
$224,000
Single-Family mortgage portfolio
Average loan UPB
2022
2023
2024
n Our Single-Family mortgage portfolio was $3.1 trillion at December 31, 2024, up 2% year-over-year. The mortgage
portfolio continued to grow at a moderate pace.
n The average estimated guarantee fee rate on our Single-Family mortgage portfolio increased slightly year-over-year.
Management's Discussion and Analysis
Our Business Segments | Single-Family
FREDDIE MAC | 2024 Form 10-K
36
Financial Results
The table below presents the results of operations for our Single-Family segment. See Note 14 for additional information about
segment financial results.
Table 12 - Single-Family Segment Financial Results
Year Over Year Change
Year Ended December 31,
2024 vs. 2023
2023 vs. 2022
(Dollars in millions)
2024
2023
2022
$
%
$
%
Net interest income
$18,513 $17,657 $17,067
$856
5%
$590
3%
Non-interest income
1,306
610
1,684
696
114
(1,074)
(64)
Net revenues
19,819
18,267
18,751
1,552
8
(484)
(3)
(Provision) benefit for credit losses
(374)
1,172
(1,772)
(1,546)
NM
2,944
NM
Non-interest expense
(7,783)
(8,118)
(7,148)
335
4
(970)
(14)
Income before income tax expense
11,662
11,321
9,831
341
3
1,490
15
Income tax expense
(2,305)
(2,282)
(1,929)
(23)
(1)
(353)
(18)
Net income
9,357
9,039
7,902
318
4
1,137
14
Other comprehensive income (loss), net of taxes and
reclassification adjustments
(1)
10
(24)
(11)
NM
34
NM
Comprehensive income
$9,356
$9,049
$7,878
$307
3%
$1,171
15%
Key Drivers:
n 2024 vs. 2023
l
Net income of $9.4 billion, up 4% year-over-year.
–
Net revenues were $19.8 billion, up 8% year-over-year.
◦
Net interest income was $18.5 billion, up 5% year-over-year, primarily driven by continued mortgage
portfolio growth and lower funding costs due to increasing net worth.
◦
Non-interest income was $1.3 billion, up from $0.6 billion for 2023, due to impacts from interest-rate risk
management activities.
–
Provision for credit losses was $0.4 billion for 2024, primarily driven by a credit reserve build attributable to new
acquisitions. The benefit for credit losses was $1.2 billion for 2023, primarily driven by a credit reserve release due
to improvements in house prices.
n 2023 vs. 2022
l
Net income of $9.0 billion, up 14% year-over-year.
–
Net revenues were $18.3 billion, down 3% year-over-year.
◦
Net interest income was $17.7 billion, up 3% year-over-year, primarily driven by higher investments net
interest income as a result of higher short-term interest rates, partially offset by lower deferred fee
income due to slower mortgage prepayment activity.
◦
Non-interest income was $0.6 billion, down 64% year-over-year, as the prior year period included
spread-related gains on commitments to hedge the securitization pipeline that did not recur in 2023.
–
Benefit for credit losses was $1.2 billion for 2023, primarily driven by a credit reserve release due to improvements
in house prices. The provision for credit losses was $1.8 billion for 2022, primarily driven by a credit reserve build
due to deterioration in house prices.
–
Non-interest expense was $8.1 billion for 2023, up 14% year-over-year, primarily driven by higher credit
enhancement expense due to a higher volume of outstanding cumulative CRT transactions and higher losses on
STACR Trust note repurchases, a decrease in credit enhancement recoveries due to a decline in expected credit
losses on covered loans, and an allocation of $250 million for the $313 million accrual for the adverse judgment at
trial.
Management's Discussion and Analysis
Our Business Segments | Single-Family
FREDDIE MAC | 2024 Form 10-K
37
Multifamily
Business Overview
Our Multifamily segment provides liquidity and support to the multifamily mortgage market through a variety of activities that
include the purchase, securitization, and guarantee of multifamily loans originated by our Optigo® network of approved lenders.
Our support of the multifamily mortgage market occurs through all economic cycles and is especially important during periods
of economic stress. During these periods, we serve a critical countercyclical role by providing liquidity when many other capital
providers exit the market. Central to our mission is our commitment to support greater access to quality, affordable, and
sustainable rental housing, particularly in underserved markets.
Multifamily loans are typically originated by our Optigo lenders without recourse to the borrower, making repayment dependent
on the cash flows generated by the underlying property. Cash flows generated by a property are significantly influenced by
vacancy and rental rates, as well as conditions in the local rental market, the physical condition of the property, the quality of
property management, and the level of operating expenses. The overall market demand for multifamily loans is generally
affected by local and regional economic factors, such as unemployment rates, construction cycles, property prices,
preferences for homeownership versus renting, and the relative affordability of single-family homes, as well as certain
macroeconomic factors, such as interest rates.
Our primary business model is to acquire loans that lenders originate and then securitize those loans into mortgage-related
securities that transfer interest-rate and liquidity risk to investors and can be sold in the capital markets. We guarantee some or
all of the issued mortgage-related securities in exchange for guarantee fees. In transactions where we guarantee all issued
mortgage-related securities, we typically consolidate the securitization trusts. Therefore, we recognize the loans held by the
trusts and the debt securities that the trusts issue on our balance sheet. We also recognize the guarantee fees we receive as
net interest income. In senior subordinate securitization transactions, we typically do not consolidate the securitization trusts.
Therefore, we account for these securitizations as sales of the underlying loans and recognize the guarantee fees we receive as
guarantee income. To reduce our exposure under our guarantees, we transfer mortgage credit risk to third-party investors,
either through the issuance of subordinate securities as part of the securitization transaction or by entering into a freestanding
CRT transaction. The returns we generate from our business activities are primarily derived from (1) the net interest income we
earn on the loans held on our balance sheet, (2) the ongoing guarantee fees we receive in exchange for providing our guarantee
on the issued mortgage-related securities, and (3) the gains on sale of mortgage loans, net of interest-rate risk management
activities, from our senior subordinate securitization transactions. We evaluate these factors collectively to assess the
profitability of any given transaction.
Products and Activities
Our Multifamily business primarily consists of activities related to providing market liquidity by purchasing and securitizing
mortgage loans and issuing guaranteed mortgage-related securities, transferring credit risk, and investing in mortgage-related
and other investments. Certain of our loan and securitization products have been designed to support increased access to and
preservation of affordable housing, particularly in underserved markets.
Loan Purchase, Securitization, and Guarantee Activities
Loan Purchase
Our Optigo network allows lenders to offer borrowers a variety of loan products for the acquisition, refinance, and/or
rehabilitation of multifamily properties. While our Optigo lenders originate the loans that we purchase, we use a prior-approval
underwriting approach. Under this approach, we maintain credit discipline by completing our own underwriting, credit review,
and legal review for each loan prior to issuing a loan purchase commitment, including reviewing third-party appraisals,
performing cash flow analysis, and evaluating a borrower's ability to exit at maturity. This helps us maintain credit discipline
throughout the process. Additionally, to protect against prepayments, most multifamily mortgage loans impose prepayment
charges, such as a yield maintenance fee.
Our primary multifamily loan products include the following:
n Conventional loans - Financing that includes fixed-rate and floating-rate loans, loans in lease-up and with moderate
property upgrades, manufactured housing community loans, senior housing loans, student housing loans, supplemental
loans, and certain Green Advantage loans.
n Targeted affordable housing loans - Financing for properties located in underserved areas that have restricted units
affordable to households with low income (earning 80% or less of AMI) and very-low income (earning 50% or less of AMI)
and that typically receive government subsidies.
Management's Discussion and Analysis
Our Business Segments | Multifamily
FREDDIE MAC | 2024 Form 10-K
38
n Small balance loans - Financing provided to small rental property borrowers for the acquisition or refinance of multifamily
properties. Financing ranges from $1 million to $7.5 million and is focused on affordable or workforce housing properties
from 5 to 50 units.
The volume and type of multifamily loans that we purchase are influenced by the Multifamily loan purchase cap and the
Multifamily Affordable Housing goals established by FHFA. In November 2024, FHFA announced that the 2025 Multifamily loan
purchase cap will be $73 billion, up from $70 billion in 2024. The purchase cap is subject to reassessment throughout the year
by FHFA to determine whether an increase in the cap is appropriate based on a stronger than expected overall market. For
additional information on Multifamily's loan purchase cap, see MD&A - Conservatorship and Related Matters and for
information on the Multifamily Affordable Housing goals, see MD&A - Regulation and Supervision.
Our process for purchasing multifamily loans generally begins with a loan purchase commitment. Prior to issuing a commitment
to purchase a multifamily loan, we negotiate with the lender and quote the specific economic terms and conditions of our
commitment, including the loan's purchase price, index, and mortgage spread. Decisions related to the commitment price and/
or mortgage spread are generally influenced by our current business strategy, competition in the market, the type of loan that
we acquire (i.e., the loan product and whether it qualifies as mission-driven), the amount available under the loan purchase cap,
current securitization spreads, and changing market conditions. We may offer pricing for a loan that furthers certain elements of
our mission and/or supports our affordable housing goals that results in lower profitability as compared to the pricing we offer
generally. We also offer borrowers an option to lock the Treasury index component of their fixed rate loans anytime during the
quote or underwriting process. This option enables borrowers, through our lenders, to lock the most volatile part of their
coupon, thereby providing an enhanced level of risk mitigation against their interest-rate volatility. The index lock period offered
for most loans is 60 days and is generally followed by a loan purchase commitment.
At the time we commit to purchase a multifamily loan, we preliminarily determine our intent with respect to that loan. For
commitments to purchase fixed-rate loans that we intend to sell (i.e., held-for-sale commitments), we generally elect the fair
value option and therefore recognize and measure these commitments at fair value in our consolidated financial statements. We
do not elect the fair value option for held-for-sale commitments to purchase floating-rate loans or loans that we intend to hold
for the foreseeable future, including loans that we intend to securitize using trusts that we consolidate. As a result, we
recognize a fair value gain based on the price we would receive to sell the mortgage loans in a typical securitization transaction
at the commitment date for commitments we measure at fair value and generally at the time of securitization for held-for-sale
loans where we do not elect the fair value option. Similarly, we recognize changes in fair value subsequent to the commitment
date in earnings as they occur for commitments and loans we measure at fair value and at the time of securitization for held-for-
sale loans where we do not elect the fair value option. We do not recognize gains or losses at the time of securitization for loans
or commitments that we classify as held-for-investment, including loans that we intend to securitize using trusts that we
consolidate.
Our multifamily commitments and loans are subject to changes in fair value due to changes in interest-rates and changes in
spreads. We enter into interest-rate risk management derivatives and forward sale contracts to manage our interest-rate
exposures from multifamily commitments and loans prior to securitization, including index lock agreements. As a result of our
interest-rate risk management activities, we have minimal exposure to earnings variability from changes in interest rates.
However, index lock agreements for loans that we intend to sell create temporary interest-rate-related earnings variability as we
economically hedge the interest-rate risk created by the index lock agreement prior to entering into an offsetting loan purchase
commitment. This exposure is typically fully offset when we enter into the associated loan purchase commitment and elect to
measure the commitment at fair value, as the fair value of the commitment reflects changes in the index rate that have occurred
since we entered into the index lock agreement. As our ability to manage spread risk is more limited than our ability to manage
interest rate risk, we have exposure to earnings variability due to changes in spreads. We enter into certain transactions to
manage this exposure, including the following:
n WI K-Deal Certificates - We forward sell a K Certificate to be issued in the future to WI K Certificate investors thereby
reducing our exposure to future changes in interest rates and K Certificate spreads.
n Spread-related derivatives - We purchase or enter into certain spread-related derivatives including the purchase of
swaptions on credit indices providing some protection against significant adverse movements in spreads.
Securitization Products
We securitize substantially all of the loans we purchase after a short holding period. Loans awaiting securitization are generally
referred to as being in our securitization pipeline. We offer two main types of securitization products: K Certificates, which could
either be fully guaranteed or senior subordinate securitizations, and Multifamily PCs, which are fully guaranteed securities
where we retain the credit risk of the underlying mortgage loans. The securitization structure and product selected is generally
designed to achieve an appropriate economic return, which may vary based on the characteristics of the underlying loans and
the level of subordination, if any. We continue to issue securitization products focused on addressing affordable housing
challenges and supporting broader environmental, social, and sustainability goals. We may accept lower economic returns for
securitizations that further certain elements of our mission and/or support our affordable housing goals while operating in a safe
and sound manner.
Management's Discussion and Analysis
Our Business Segments | Multifamily
FREDDIE MAC | 2024 Form 10-K
39
K Certificates
In a senior subordinate K Certificate securitization, we transfer the interest-rate risk, liquidity risk, and a portion of the credit risk
of the underlying collateral to third-party investors. The structures of these transactions involve the issuance of senior and
subordinate securities that represent undivided beneficial interests in trusts that hold pools of multifamily loans that we
previously purchased. In a senior subordinate K Certificate, we sell multifamily loans to a non-Freddie Mac securitization trust
that issues senior and subordinate securities and simultaneously purchase and place the senior securities into a Freddie Mac
securitization trust that issues guaranteed K Certificates. We do not issue or guarantee the subordinate securities.
At inception of a senior subordinate K Certificate transaction, we recognize a guarantee asset. This asset, which represents the
right to collect contractual fees in exchange for our guarantee of the issued senior mortgage-related securities, is recorded at
fair value with subsequent changes in fair value recognized in earnings. The fair value of our guarantee assets may vary
significantly from period-to-period based on changes in market conditions, including interest rates and credit spreads. Because
our multifamily loans contain prepayment protection, decreasing interest rates generally result in higher guarantee asset fair
values, with the opposite effect occurring when interest rates increase. Pursuant to our funds transfer pricing methodologies,
gains and losses on interest-rate risk management derivative instruments are allocated to Multifamily to offset interest rate-
related changes in fair value on guarantee assets. See Note 5 for additional information on our accounting for guarantees.
Our K Certificate product offers investors a variety of structural and collateral options that provide for stable cash flows and a
structured credit enhancement. The volume and type of our K Certificate securitizations are generally influenced by our
business strategy, the product mix and size of our held-for-sale securitization pipeline, and market demand for multifamily
securities. While the amount of guarantee fees we receive may vary by collateral type and deal structure, it is generally fixed for
those K Certificate series that we issue with regular frequency (e.g., 5-, 7- and 10-year fixed-rate K Certificates and floating rate
K Certificates).
The diagram below shows a senior subordinate K Certificate transaction.
Our K Certificate product offerings include a fully guaranteed K Certificate transaction. This product retains most of the same
collateral and bond features that are present in K Certificates with subordination. While we initially retain the credit risk of the
mortgage pool, we expect to subsequently transfer a portion of the credit risk using other CRT products such as MCIP and
MSCR notes.
We consolidate the securitization trusts used in our fully guaranteed K Certificate transactions and therefore do not account for
these securitizations as sales of the underlying loans.
Management's Discussion and Analysis
Our Business Segments | Multifamily
FREDDIE MAC | 2024 Form 10-K
40
Multifamily PCs
Multifamily PCs are fully guaranteed securitizations. In a Multifamily PC securitization, we retain the credit risk of the underlying
mortgage loan by guaranteeing the principal and interest payments of the issued security while transferring the interest-rate and
liquidity risks to the PC investors. Multifamily PCs are fully guaranteed pass-through securities with a 55-day payment delay
that are collateralized by a single underlying mortgage loan. In exchange for providing our guarantee, we receive an ongoing
guarantee fee that is designed to be commensurate with the risks assumed and that will, over the long-term, provide us with
guarantee net interest income that is expected to exceed the credit, administrative, and implied capital costs of the underlying
loans. We consolidate the securitization trusts used in these transactions and therefore do not account for Multifamily PC
securitizations as sales of the underlying loans. As a result, we classify loans that we intend to securitize in Multifamily PC
transactions as held-for-investment. After securitization, we often enter into CRT transactions to reduce our credit risk exposure
to Multifamily PCs.
The diagram below shows the process for acquiring and securitizing a mortgage loan into a PC transaction.
Other Securitization Products
Our other securitization products involve the issuance of mortgage-related securities that represent beneficial interests in trusts
that hold pools of multifamily loans. The collateral for these securitizations may include loans underwritten and purchased by us
at loan origination and loans we do not own prior to securitization and that we underwrite after (rather than at) origination. These
transactions involve a variety of structures and the mortgage-related securities issued in these transactions may include
guaranteed senior and unguaranteed subordinate securities or fully guaranteed pass-through securities. We generally do not
consolidate the securitization trusts used in these transactions as we do not direct loss mitigation activities.
Resecuritization Products
During 2024, we expanded our security offerings to include Multifamily Giant PCs. Similar to the Single-Family Giant program,
Multifamily Giant PCs enable investors to pool eligible PCs into a larger, single security with desired features to manage their
portfolios more efficiently.
Other Mortgage-Related Guarantees
We also guarantee mortgage-related assets held by third parties in exchange for guarantee fees, without securitizing those
assets. For example, we provide guarantees on certain tax-exempt multifamily housing revenue bonds issued by state and local
housing finance authorities that are secured by low- and moderate-income multifamily loans.
Management's Discussion and Analysis
Our Business Segments | Multifamily
FREDDIE MAC | 2024 Form 10-K
41
Credit Enhancement Activities
We transfer credit risk to third parties through subordination, which is created through our securitization products described
above. In addition to subordination, we enter into other types of CRT transactions to transfer to third parties a portion of the
credit risk of certain loans that are not covered by subordination. In determining the nature and extent of our credit
enhancement activities, we consider a number of factors, including the degree of regulatory capital relief provided by a
transaction, our risk appetite, the cost of CRT transactions, and our internal view of future multifamily market conditions.
Other CRT Products
For multifamily assets for which we have not transferred credit risk through securitization, we may pursue other strategies to
reduce our credit risk exposure. Our primary other CRT products include the following:
n MCIP - Insurance coverage underwritten by a group of insurers and/or reinsurers that generally provides mezzanine loss
credit protection. These transactions are similar in structure to ACIS contracts purchased in Single-Family, except the
reference pool may include bonds for which we provided credit enhancement, in addition to loans, underlying our other
mortgage-related guarantees. When specific credit events occur, we receive compensation from the insurance policy up to
an aggregate limit based on actual losses. We require our counterparties to partially collateralize their exposure to reduce
the risk that we will not be reimbursed for our claims under the policies.
n MSCR notes - A securities-based credit risk sharing vehicle similar to STACR Trust notes in Single-Family. In a MSCR
notes transaction, we create a reference pool of loans from our Multifamily mortgage portfolio and a trust issues notes
linked to the reference pool. The trust makes periodic payments of principal and interest on the notes to noteholders, but is
not required to repay principal to the extent the note balance is reduced as a result of specified credit events on the
mortgage loans in the reference pool. We make payments to the trust to support the interest due on the notes. The amount
of risk transferred in each transaction affects the amounts we are required to pay. We receive payments from the trust that
otherwise would have been made to the noteholders to the extent that a defined credit event occurs on the mortgage loans
in the reference pool. The note balance is reduced by any payments made to us, thereby transferring the related credit risk
of the loans in the reference pool to the noteholders. Generally, the note balance is also reduced based on principal
payments that occur on the loans in the reference pool.
In addition to our other CRT products, we may engage in whole loan sales, including sales of loans to funds to which we may
also provide secured financing, to eliminate our interest-rate risk, liquidity risk, and credit risk exposure to certain loans.
For additional information on multifamily credit enhancements, see MD&A - Risk Management - Multifamily Mortgage
Credit Risk - Transferring Credit Risk to Third-Party Investors.
Investing Activities
We primarily use our Multifamily mortgage-related investments portfolio to provide liquidity to the multifamily mortgage market
by purchasing loans for our securitization pipeline. We may also hold certain multifamily mortgage loans or agency mortgage-
related securities as investments. Depending on market conditions and our business strategy, we may purchase or sell
guaranteed K Certificates or other securitization products at issuance or in the secondary market, including interest-only
securities. Through our ownership of the securities, we are exposed to the market risk on the loans underlying our
securitizations. We also invest in certain non-mortgage investments, including LIHTC partnerships and other secured lending
activities. Our current investment in the LIHTC market is limited to $1 billion annually. Our ongoing investment in LIHTC
partnerships helps to support and preserve the supply of affordable housing.
For additional information, see Risk Factors - Market Risks - The profitability of our Multifamily business could be
adversely affected by market competition and/or decreased investor demand for our securities.
Customers
Our Multifamily customers include both investors in our securitization products and other CRT products, as well as financial
institutions that originate, sell, and service multifamily mortgage loans to us. Investors include banks and other financial
institutions, insurance companies, money managers, hedge funds, pension funds, state and local governments, and broker
dealers. Our multifamily loan purchases are generally sourced through our Optigo network of approved lenders, which are
primarily non-bank real estate finance companies and banks. Many of these lenders are both sellers and servicers to us.
The following charts show the concentration of our 2024 Multifamily new business activity by our largest sellers and loan
servicing by our largest servicers as of December 31, 2024. Any seller or servicer with a 10% or greater share is listed
separately.
Management's Discussion and Analysis
Our Business Segments | Multifamily
FREDDIE MAC | 2024 Form 10-K
42
Percentage of New Business Activity
(Based on UPB of $65 billion)
11%
11%
10%
38%
30%
Berkadia Commercial Mortgage LLC
JLL Real Estate Capital, LLC
CBRE Capital Markets, Inc.
Other top 10 sellers
All other sellers
Percentage of Servicing Volume(1)
(Based on UPB of $467 billion)
14%
13%
11%
39%
23%
Berkadia Commercial Mortgage LLC
CBRE Capital Markets, Inc.
JLL Real Estate Capital, LLC
Other top 10 servicers
All other servicers
(1) Percentage of servicing volume is based on the total multifamily mortgage
portfolio.
Competition
We compete on the basis of price, service, and products, including our use of certain securitization structures. When evaluating
new business and/or CRT opportunities, we consider a number of factors, including expected profitability, our risk limits, the
Multifamily loan purchase cap, and the affordable housing goals established by FHFA. Our principal competitors in the
multifamily mortgage market are Fannie Mae, FHA, commercial and investment banks, CMBS conduits, savings institutions,
debt funds, and life insurance companies.
Management's Discussion and Analysis
Our Business Segments | Multifamily
FREDDIE MAC | 2024 Form 10-K
43
Business Results
The charts, tables, and related discussion below present the business results of our Multifamily segment.
New Business Activity and Securitization Activity
New Business Activity and Units Financed (1)
(In billions)
New Securitization Activity(2)
(In billions)
$73
$48
$65
693
447
553
New business activity
Total number of units financed (in thousands)
2022
2023
2024
$65
$53
$55
$52
$36
$30
$13
$17
$25
Senior subordinate securitizations
Fully guaranteed securitizations
2022
2023
2024
(1) Includes rental units financed by supplemental loans.
(2) Excludes resecuritizations.
n Our new business activity was $65.1 billion in 2024, up 35% compared to 2023, primarily driven by increased demand for
multifamily financing as a result of lower mortgage interest rates during the third quarter of 2024, coupled with executing
on our competitive strategies. Approximately 65% of this activity in 2024, based on UPB, was mission-driven, affordable
housing, exceeding FHFA's minimum requirement of 50%.
n Our index lock agreements and outstanding commitments to purchase or guarantee multifamily assets were $15.7 billion
and $16.3 billion as of December 31, 2024 and December 31, 2023, respectively.
n Fully guaranteed securitization issuance UPB increased, representing a larger percentage of total securitization issuance
UPB in 2024 compared to 2023.
Management's Discussion and Analysis
Our Business Segments | Multifamily
FREDDIE MAC | 2024 Form 10-K
44
Multifamily Mortgage Portfolio and Guarantee Exposure
Mortgage Portfolio as of December 31,
(In billions)
$429
$441
$467
2022
2023
2024
Guarantee Exposure as of December 31,
(In billions)
$360
$379
$399
$350
$369
$388
$10
$10
$11
43
46
51
G uaranteed mortgage-related securities
O ther mortgage-related guarantees
Average guarantee fee rate charged (bps)
2022
2023
2024
n Our Multifamily mortgage portfolio was $467 billion as of December 31, 2024, up 6% compared to December 31, 2023,
primarily driven by our new business activity.
n As of December 31, 2024, 83% of the loan UPB in our Multifamily mortgage portfolio was fixed-rate, while the remaining
17% was floating rate.
n Our guarantee exposure was $399 billion as of December 31, 2024, up 5% compared to December 31, 2023, as new
mortgage-related security guarantees outpaced paydowns. Our guarantee exposure includes guaranteed mortgage related
securities that are consolidated on our balance sheet where income from guarantee fees is recognized in net interest
income.
n The average guarantee fee rate on our guarantee exposures increased as of December 31, 2024 compared to December
31, 2023, primarily due to continued growth of fully guaranteed securitization issuances for which we charge higher
guarantee fee rates. The average remaining guarantee term was seven years as of both December 31, 2024 and December
31, 2023. The profitability of our guarantee activities may vary and will depend on the actual performance of the underlying
collateral that we have guaranteed.
n In addition to our Multifamily mortgage portfolio, we have investments in LIHTC fund partnerships with carrying values
totaling $4.3 billion and $3.5 billion as of December 31, 2024 and December 31, 2023, respectively.
Management's Discussion and Analysis
Our Business Segments | Multifamily
FREDDIE MAC | 2024 Form 10-K
45
Financial Results
The table below presents the results of operations for our Multifamily segment. See Note 14 for additional information about
segment financial results.
Table 13 - Multifamily Segment Financial Results
Year-Over-Year Change
Year Ended December 31,
2024 vs. 2023
2023 vs. 2022
(Dollars in millions)
2024
2023
2022
$
%
$
%
Net interest income
$1,224
$885
$938
$339
38%
($53)
(6)%
Non-interest income
2,869
2,077
1,575
792
38
502
32
Net revenues
4,093
2,962
2,513
1,131
38
449
18
(Provision) benefit for credit losses
(102)
(300)
(69)
198
66
(231)
(335)
Non-interest expense
(875)
(784)
(671)
(91)
(12)
(113)
(17)
Income before income tax expense
3,116
1,878
1,773
1,238
66
105
6
Income tax expense
(615)
(379)
(348)
(236)
(62)
(31)
(9)
Net income
2,501
1,499
1,425
1,002
67
74
5
Other comprehensive income (loss), net of taxes and
reclassification adjustments
(4)
156
(318)
(160)
NM
474
NM
Comprehensive income
$2,497
$1,655
$1,107
$842
51%
$548
50%
Key Drivers:
n 2024 vs. 2023
l
Net income of $2.5 billion, up 67% year-over-year.
–
Net revenues were $4.1 billion, up 38% year-over-year.
◦
Net interest income was $1.2 billion, up 38% year-over-year, primarily driven by continued mortgage
portfolio growth.
◦
Non-interest income was $2.9 billion, up 38% year-over-year, primarily driven by higher revenues from
held-for-sale loan purchase and securitization activities, lower realized losses on sales of available-for-
sale securities, and net impacts from index lock activities.
–
Provision for credit losses was $0.1 billion, primarily driven by a credit reserve build attributable to deterioration in
overall loan performance and new loan purchases, partially offset by a credit reserve release due to
enhancements in our credit loss estimation process.
n 2023 vs. 2022
l
Net income of $1.5 billion, up 5% year-over-year.
–
Net revenues were $3.0 billion, up 18% year-over-year.
◦
Net interest income was $0.9 billion, down 6% year-over-year, primarily due to lower prepayment income
driven by higher mortgage interest rates, partially offset by higher net interest income from mortgage
loans.
◦
Non-interest income was $2.1 billion, up 32% year-over-year, primarily driven by higher fair value losses
on our guarantee assets in 2022, net of the related interest-rate risk management activities. During 2Q
2022, we updated our funds transfer pricing methodologies to allocate gains and losses on derivative
instruments to Multifamily to offset interest rate-related changes in fair value on our guarantee assets.
–
Provision for credit losses was $0.3 billion, driven by a credit reserve build due to increased uncertainty in
forecasted economic and multifamily market conditions as well as deterioration in overall loan performance.
–
Non-interest expense was $0.8 billion, up 17% year-over-year, primarily driven by an allocation of $63 million for
the $313 million accrual for the adverse judgment at trial.
Management's Discussion and Analysis
Our Business Segments | Multifamily
FREDDIE MAC | 2024 Form 10-K
46
RISK MANAGEMENT
Overview
To achieve our mission of providing liquidity, stability, and affordability to the U.S. housing market, we take risks as an integral
part of our business activities. Risk is the possibility that events will occur that adversely impact our financial strength, safe and
sound operations, and ability to achieve our mission, strategic, and business objectives. Risk can manifest itself in many ways
and the responsibility for risk management resides at all levels of the company. We seek to take risks in a safe and sound, well-
controlled manner to earn acceptable risk-adjusted returns on a corporate-wide, divisional, and, where applicable, transaction
basis. Our goal is to maintain an effective risk culture where employees are risk aware, collaborative, transparent, and
individually accountable for their decisions, and to conduct business in an effective, legal, and ethical manner.
We utilize a risk taxonomy to define, classify, and report risks that we face in operating our business. These risks have the
potential to adversely affect our current or projected financial and operational resilience. Risks are classified into the following
categories:
n Credit Risk;
n Market Risk;
n Liquidity Risk;
n Operational Risk;
n Compliance Risk;
n Legal Risk;
n Strategic Risk; and
n Reputation Risk.
These risks are factored into our business decisions, as appropriate. For additional discussion of these and other risks facing
our business, see Risk Factors. See MD&A - Liquidity and Capital Resources for a discussion of liquidity risk.
Enterprise Risk Framework
The Risk Framework defines how we manage risk to achieve our mission, strategic, and business objectives. By serving as the
basis for managing risk in a consistent, effective, and efficient manner, the Risk Framework supports our financial strength and
safe and sound operations through a range of stressful conditions. The Risk Framework is implemented through the ERM
Program, which consists of our enterprise-wide risk management practices and processes.
The Risk Framework includes the following components:
n Risk Culture - Risk culture is the set of corporate values, competencies, and behaviors related to risk taking and risk
management at Freddie Mac. Management supports an effective risk culture by establishing clear risk objectives, assigning
accountability, and setting a tone at the top so that employees feel empowered to challenge business decisions without
fear of negative consequences. An effective risk culture promotes an environment where employees who take, accept, and
manage risks for the company are risk aware, collaborative, and transparent.
n Risk Governance - Risk governance is the set of corporate requirements and processes that must be followed to make
and implement risk decisions across the company. Effective risk governance establishes a reporting and escalation path
for risks and issues across the company. Freddie Mac’s risk governance structure provides forums for transparent
communication of risks and issues, as well as risk management and control activities. Risk governance is established
through:
l
Risk Authority - Authority to take or accept risk is vested in an individual employee. Individual business or functional
risk officers may be assigned risk authority for specific risk areas and functions, as appropriate.
l
Corporate Risk Policies and Standards - Corporate risk policies and standards define roles and responsibilities with
respect to risk management, establish limits to risk taking authority, and set forth escalation and reporting
requirements.
l
Risk Governance Structure - The risk governance structure consists of management- and Board-level committees
with roles and responsibilities formalized in their charters.
n Risk Appetite - Risk appetite is the level of risk, both in aggregate and by risk type, within the company's risk capacity (the
maximum amount of risk the enterprise can absorb before breaching capital, liquidity, and other constraints) that the Board
of Directors and management are willing to assume to achieve the company's strategic goals. The risk appetite is
integrated and aligned with the Company Strategic Plan, the consolidated business plan, and divisional business plans
(collectively, the Annual Business Plan). The risk appetite consists of qualitative risk appetite statements and quantitative
metrics with limits, and it is approved by the Board of Directors. FHFA as Conservator then approves the quantitative
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
47
metrics with limits.
n Risk Identification, Assessment, Control, and Monitoring Processes - Our ERM Program supports risk management
through enterprise-wide practices and processes designed to identify, assess, control, monitor, and report on all risks,
including material and emerging risks.
n Risk Profile - Risk profile is a point-in-time assessment of risks aggregated within and across each risk category using
methodologies consistent with the company's risk appetite. The Risk Framework requires accurate and timely reporting
needed to manage risks. Regular reporting is provided to senior management and to the Board of Directors, or appropriate
Board committees, at an aggregate level to provide a comprehensive view of the company's risk position. Risk profile
reporting includes adherence to management thresholds and established Board limits and potential or actual breaches;
material and emerging risks; significant issues and their remediation status; and stress testing and scenario analysis.
FHFA continues to increase supervisory expectations related to how risk is managed and overseen by management and the
Board of Directors, and specifically the role of ERM in providing independent risk oversight and effective challenge. As a result,
we must continue to invest in our risk management practices to meet these expectations.
Enterprise Risk Governance Structure
We manage risk using a three lines model and our risk governance structure includes enterprise-wide oversight by the Board of
Directors and its committees, the CRO, and senior management. Only legal risk is managed outside of the three lines model.
The first line consists of Business Divisions which are responsible, with support from our Enterprise divisions, for identifying,
assessing, controlling, monitoring, and reporting on risks, including adherence to the established risk appetite and risk policies
and standards that are approved by senior management and/or our Board of Directors or Board Committees.
The second line consists of ERM, which designs and implements the enterprise risk management program and Risk Framework,
including corporate risk policies and standards, risk taxonomy, risk appetite, risk limits, and other risk metrics and indicators. In
addition, ERM provides oversight of first line divisions and monitors and assesses risk. ERM is responsible for reporting on the
enterprise risk profile to senior management, the Board of Directors, and the Board Risk Committee, and escalating significant
risk issues as appropriate.
The second line also includes Compliance, which is responsible for the independent assessment and oversight of ethics and
compliance risk across the company. In addition, Compliance advises employees and business divisions on compliance with
policies and procedures involving ethical and regulatory matters and consults with the Legal Division on any such regulatory
matters or ethical issues that include legal requirements or potential legal liability. Compliance issues and maintains compliance
policies and standards for the company. Compliance also establishes and maintains the company's Code of Conduct.
The third line consists of Internal Audit, which is responsible for independently evaluating the adequacy and effectiveness of
governance, risk management, and control processes, including, but not limited to, the way the first and second lines achieve
risk management and control objectives.
The Enterprise Risk Committee, established by the CEO and chaired by the CRO, is comprised of members of senior
management. This Committee monitors the risk profile of each business division and the management of the company’s risk
exposures consistent with the Enterprise Risk Policy and reviews aggregate enterprise-wide risks, including material and
emerging risks.
The Board of Directors provides enterprise-wide risk oversight, including through its committees. The Board of Directors also
approves the Enterprise Risk Policy, which establishes the enterprise risk management program and framework; the Company
Strategic Plan and the Annual Business Plan; and the enterprise risk appetite, which must be aligned with the Company Strategic
Plan and the Annual Business Plan, subject to FHFA approval as Conservator. For additional information on the role of the Board
of Directors' committees risk oversight responsibilities, see Directors, Corporate Governance, and Executive Officers -
Corporate Governance - Board of Directors and Board Committee Information.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
48
Credit Risk
Overview
Credit risk is the risk associated with the inability or failure of a borrower, issuer, or counterparty to meet its financial and/or
contractual obligations. We are exposed to both mortgage credit risk and counterparty credit risk.
Mortgage credit risk is the risk associated with the inability or failure of a borrower to meet its financial and/or contractual
obligations. We are exposed to two types of mortgage credit risk:
n Single-Family mortgage credit risk, through our ownership or guarantee of loans in our Single-Family mortgage portfolio
and
n Multifamily mortgage credit risk, through our ownership or guarantee of loans in our Multifamily mortgage portfolio.
Counterparty credit risk is the risk associated with the inability or failure of a counterparty to meet its contractual obligations.
In the sections below, we provide a general discussion of our enterprise Risk Framework and current risk environment for
mortgage credit risk, including natural disaster and climate-related risk, and for counterparty credit risk.
Allowance for Credit Losses
For financial assets measured at amortized cost, we recognize an allowance for credit losses that is deducted from or added to
the amortized cost basis of the financial asset to present the net amount expected to be collected on the financial asset on the
balance sheet.
For Single-Family credit exposures, we estimate the allowance for credit losses for loans on a pooled basis using a discounted
cash flow model that evaluates a variety of factors to estimate the cash flows we expect to collect. The discounted cash flow
model forecasts cash flows over the loan’s remaining contractual life, adjusted for expectations of prepayments, and using our
historical experience (which includes the effects of natural disasters), adjusted for current and forecasted economic conditions.
These projections require significant management judgment, and we face uncertainties and risks related to the models we use
for financial accounting and reporting purposes. For further information on our accounting policies and methods for estimating
our allowance for credit losses and related management judgments, see MD&A - Critical Accounting Estimates.
For Multifamily credit exposures, we estimate the allowance for credit losses using a loss-rate method to estimate the net
amount of cash flows we expect to collect. The loss rate method is based on a probability of default and loss given default
framework that estimates credit losses by considering a loan’s underlying characteristics, our historical experience (which
includes the effects of natural disasters), and current and forecasted economic conditions. Loan characteristics considered by
our model include vintage, loan term, current DSCR, current NOI, current LTV ratio, interest rate type, underlying property type,
and property location. We simulate multiple forecast paths of economic variables, property values, and NOI over the loan's
remaining contractual life. We also consider as model inputs expected prepayments and expected recoveries from credit
enhancements that are not freestanding contracts. Management adjustments to our model output may be necessary to take
into consideration current economic events and other factors not considered within the model.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
49
The tables below present a summary of the changes in our allowance for credit losses and key allowance for credit losses
ratios.
Table 14 - Allowance for Credit Losses Activity
December 31, 2024
December 31, 2023
December 31, 2022
(Dollars in millions)
Single-
Family
Multifamily
Total
Single-
Family
Multifamily
Total
Single-
Family
Multifamily
Total
Allowance for credit losses:
Beginning balance
$6,402
$447
$6,849
$7,746
$147
$7,893
$5,440
$78
$5,518
Provision (benefit) for credit
losses
374
102
476
(1,172)
300
(872)
1,772
69
1,841
Charge-offs
(511)
(2)
(513)
(643)
—
(643)
(505)
—
(505)
Recoveries collected
115
—
115
144
—
144
148
—
148
Net charge-offs
(396)
(2)
(398)
(499)
—
(499)
(357)
—
(357)
Other(1)
311
1
312
327
—
327
891
—
891
Ending balance
$6,691
$548
$7,239
$6,402
$447
$6,849
$7,746
$147
$7,893
Average loans outstanding
during the year(2)
$3,055,472
$66,741
$3,122,213 $3,002,523 $50,602
$3,053,125 $2,929,728 $33,054
$2,962,782
Net charge-offs to average
loans outstanding
0.01 %
— %
0.01 %
0.02 %
— %
0.02 %
0.01 %
— %
0.01 %
Components of ending balance of allowance for credit losses:
Mortgage loans held-for-
investment
$6,381
$393
$6,774
$6,057
$326
$6,383
$7,314
$77
$7,391
Other(3)
310
155
465
345
121
466
432
70
502
Total ending balance
$6,691
$548
$7,239
$6,402
$447
$6,849
$7,746
$147
$7,893
(1)
Primarily includes capitalization of past due interest related to non-accrual loans that received payment deferral plans and loan modifications.
(2)
Based on amortized cost basis of mortgage loans held-for-investment for which we have not elected the fair value option.
(3)
Primarily includes allowance for credit losses related to advances of pre-foreclosure costs and off-balance sheet credit exposures.
Table 15 - Allowance for Credit Losses Ratios
December 31, 2024
December 31, 2023
(Dollars in millions)
Single-Family
Multifamily
Total
Single-Family
Multifamily
Total
Allowance for credit losses ratios:
Allowance for credit losses(1) to total loans outstanding
0.21 %
0.46 %
0.21 %
0.20 %
0.57 %
0.21 %
Non-accrual loans to total loans outstanding
0.51
0.15
0.50
0.44
0.11
0.44
Allowance for credit losses to non-accrual loans
40.11
314.40
42.25
45.01
509.38
47.20
Balances:
Allowance for credit losses on mortgage loans held-
for-investment
$6,381
$393
$6,774
$6,057
$326
$6,383
Total loans outstanding(2)
3,092,137
84,554
3,176,691
3,031,136
57,107
3,088,243
Non-accrual loans(2)
15,908
125
16,033
13,458
64
13,522
(1)
Represents allowance for credit losses on mortgage loans held-for-investment.
(2)
Based on amortized cost basis of mortgage loans held-for-investment for which we have not elected the fair value option.
See Note 6 for additional information on our allowance for credit losses and Note 4 for additional information on our non-
accrual policy.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
50
The table below shows the contractual principal payments due by specified timeframe for held-for-investment loans
outstanding as of the period end.
Table 16 - Principal Amounts Due for Held-for-Investment Loans
December 31, 2024
(In millions)
Due in One Year
or Less
Due after One Year
through Five Years
Due after Five Years
through 15 Years
Due after 15
Years
Total
Single-Family:
Fixed-rate
$93,737
$400,147
$1,091,339
$1,454,836
$3,040,059
Adjustable-rate
640
2,912
8,579
11,021
23,152
Total Single-Family
94,377
403,059
1,099,918
1,465,857
3,063,211
Multifamily:
Fixed-rate
1,104
33,771
41,520
3,607
80,002
Adjustable-rate
1,184
2,550
3,680
—
7,414
Total Multifamily
2,288
36,321
45,200
3,607
87,416
Cost basis and fair value adjustments, net
28,476
Total(1)
$3,179,103
(1)
Includes $2.4 billion multifamily held-for-investment loans for which we have elected the fair value option as of December 31, 2024.
Single-Family Mortgage Credit Risk
We manage our exposure to Single-Family mortgage credit risk, which is a type of consumer credit risk, using the following
principal strategies:
n Maintaining prudent eligibility standards and quality control practices and managing seller/servicer performance;
n Transferring credit risk to third-party investors;
n Monitoring loan performance and characteristics;
n Engaging in loss mitigation activities; and
n Managing foreclosure and REO activities.
Maintaining Prudent Eligibility Standards and Quality Control Practices and Managing
Seller/Servicer Performance
We employ multiple strategies to maintain loan quality:
n Our eligibility requirements are set forth in our underwriting standards, which are published in our Guide and incorporated
in Freddie Mac Loan Advisor®. These underwriting standards establish the requirements our sellers apply when originating
loans in compliance with representations and warranties to us;
n Loan quality control practices, including post-closing review and our remedy management repurchase process, help to
validate that the loan origination process is acceptable to us; and
n Seller/servicer management, including review of their in-house quality control as well as our loan performance monitoring,
helps to maintain quality control for loans sold and/or serviced by third parties.
Underwriting Standards
We use a delegated underwriting process in connection with our acquisition of single-family loans whereby we set eligibility and
underwriting standards, and sellers represent and warrant to us that loans they sell to us meet these standards. Our eligibility
and underwriting standards are used to assess loans based on a number of characteristics.
We establish more strict eligibility standards for loans with certain higher risk characteristics. These standards are designed to
balance our credit risk exposure while supporting affordable housing in a responsible manner. Our purchase guidelines
generally provide for:
n A maximum original LTV ratio of 97% for creditworthy first-time homebuyers and for a targeted segment of creditworthy
borrowers meeting certain AMI requirements under our affordable housing initiatives;
n A maximum original LTV ratio of 95% for all other home purchase and no cash-out refinance loans; and
n A maximum original LTV ratio of 80% for cash-out refinance loans.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
51
Our ability to assess the credit quality of our Single-Family mortgage portfolio and loan acquisitions could be adversely affected
by changes resulting from the COVID-19 pandemic. The CARES Act required creditors to report to credit bureaus that loans in
relief programs, such as forbearance plans, repayment plans, and loan modification programs, are current as long as the loans
were current prior to entering into the relief programs and the borrowers remain in compliance with the programs. In addition,
the Department of Education provided borrowers of federal student loans with additional assistance, such as forbearance plans
and other debt relief programs, and suspended the delinquency reporting to the credit bureaus until 4Q 2024. As a result, credit
scores may not fully reflect the impact of relief programs, offered by us or other creditors, into which borrowers may have
entered during the affected periods.
Loan Advisor is our main tool for assessing loan eligibility and documentation. Loan Advisor is a set of software applications
and services designed to give lenders access to our view of risk, loan quality, and eligibility during the origination process. As a
component of Loan Advisor, Loan Product Advisor® (LPA) helps lenders validate that submitted loans meet our underwriting
standards.
Substantially all of the loans we purchase are assessed by Freddie Mac's proprietary underwriting software tools, LPA or Loan
Quality Advisor®, prior to purchase, helping validate their compatibility with our risk appetite. Any loans that are not assessed
by Freddie Mac’s proprietary underwriting software are manually underwritten by the seller in accordance with Guide
requirements.
We offer limited representation and warranty relief for certain loan components that satisfy automated data analytics related to
appraisal quality, valuation, borrower assets, borrower income, borrower employment status, and certain condominium project
requirements. In general, limited representation and warranty relief is offered when information is validated through the use of
independent data sources and/or Freddie Mac analytics and risk assessments.
If we discover that the representations or warranties related to a loan were breached (i.e., that contractual standards were not
followed), we can exercise certain contractual remedies to mitigate our actual or potential credit losses. These contractual
remedies may include, but are not limited to, the ability to require the seller or servicer to repurchase the loan at its current
UPB, reimburse us for losses realized with respect to the loan after consideration of any other recoveries, and/or indemnify us.
Our current remedies framework provides for the categorization of loan origination defects for loans with settlement dates on or
after January 1, 2016. Among other items, the framework provides that "significant defects" may result in a repurchase request
or a repurchase alternative, such as recourse or indemnification. We implemented a pilot program in 2024 that provides
participating sellers with a fee-based alternative to performing loan repurchases. The pilot program continues to maintain the
protections related to delinquent loans outlined in the selling and servicing representation and warranty framework for mortgage
loans.
Under our current selling and servicing representation and warranty framework for our mortgage loans, we relieve sellers of
repurchase obligations for breaches of certain selling representations and warranties for certain types of loans, including:
n Loans that have established an acceptable payment history for 36 months (12 months for relief refinance loans) of
consecutive, on-time payments after purchase, subject to certain exclusions and
n Loans that have satisfactorily completed a quality control review.
Solely for the purpose of determining whether the acceptable payment history requirements are met, payments due during the
COVID-19-related forbearance period are considered to have been made on time, provided that the mortgage was reported by
the servicer as having entered into a COVID-19-related forbearance plan between March 13, 2020 and October 31, 2023 and
met certain other criteria as described in our Guide.
An independent dispute resolution process for alleged breaches of selling or servicing representations and warranties on our
loans allows for a neutral third party to render a decision on demands that remain unresolved after the existing appeal and
escalation processes have been exhausted.
Quality Control Practices
We employ a quality control process to review underwriting documentation and decision-making for compliance with our
standards using both statistical random and targeted sampling. Pursuant to Guide requirements, we initiate these sampling
reviews to timely identify breaches of representations and warranties. Sellers may appeal our ineligible loan determination.
We also perform quality control reviews on loans that have defaulted and have not obtained representation and warranty relief
under the representation and warranty relief framework. These loans are subject to repurchase if a significant breach of our
Guide is identified.
Managing Seller/Servicer Performance
We actively monitor seller and servicer performance, including compliance with our standards. We maintain approval standards
for our seller/servicers, which include requiring our sellers to maintain an in-house quality control program with written
procedures that operates independently of the seller’s underwriting and origination functions. We monitor servicer performance
using our Servicer Success Scorecard. In addition, we perform servicing and loan modification quality control reviews on
selected servicers through random sampling of delinquent loans and loan modifications.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
52
Underwriting Restrictions Related to Purchase Agreement
Pursuant to the Purchase Agreement and subject to such exceptions as FHFA may prescribe to permit us to acquire single-
family mortgage loans that are currently eligible for acquisition, we were required to implement a program reasonably designed
to ensure that each single-family mortgage loan acquired is: (1) a qualified mortgage; (2) exempt from the CFPB’s ability-to-
repay requirements; (3) secured by an investment property; (4) a refinancing with streamlined underwriting for high LTV ratios;
(5) a loan with temporary underwriting flexibilities due to exigent circumstances, as determined in consultation with FHFA; or (6)
secured by manufactured housing.
For additional information, see MD&A - Conservatorship and Related Matters - Limits on our Secondary Market
Activities and Single-Family Loan Acquisitions.
Loan Purchase Credit Characteristics
We monitor and evaluate market conditions that could affect the credit quality of our single-family loan purchases. Additionally,
when managing our new acquisitions, we consider our risk limits and guidance from FHFA and capital requirements under the
ERCF. This may affect the volume and characteristics of our loan acquisitions.
The charts below show the credit profile of the single-family loans we purchased or guaranteed.
Weighted Average Original LTV Ratio
75%
78%
77%
2022
2023
2024
Weighted Average Original Credit Score(1)
746
752
755
2022
2023
2024
(1) Weighted average original credit score is
generally based on three credit bureaus
(Equifax, Experian, and TransUnion).
Weighted Average Original DTI Ratio
37%
39%
39%
2022
2023
2024
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
53
The table below contains additional information about the single-family loans we purchased or guaranteed.
Table 17 - Single-Family New Business Activity
Year Ended December 31,
2024
2023
2022
(Dollars in millions)
Amount
% of Total
Amount
% of Total
Amount
% of Total
20- and 30-year, amortizing fixed-rate
$329,516
95 %
$285,854
95 %
$489,698
91 %
15-year or less, amortizing fixed-rate
14,120
4
10,769
4
44,424
8
Adjustable-rate
2,772
1
3,263
1
6,503
1
Total
$346,408
100 %
$299,886
100 %
$540,625
100 %
Percentage of purchases
DTI ratio > 45%
29 %
27 %
17 %
Original LTV ratio > 90%
24
26
19
Transaction type:
Guarantor swap
66
72
74
Cash window
34
28
26
Property type:
Detached single-family houses and townhouses
91
91
92
Condominium or co-op
9
9
8
Occupancy type:
Primary residence
93
92
90
Second home
2
2
3
Investment property
5
6
7
Loan purpose:
Purchase
83
88
63
Cash-out refinance
8
8
25
Other refinance
9
4
12
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
54
Transferring Credit Risk to Third-Party Investors
Types of Credit Enhancements
The table below contains a summary of the types of credit enhancements we use to transfer credit risk on our single-family
loans. See MD&A - Our Business Segments - Single-Family - Products and Activities for additional information on our
credit enhancement activities.
Category
Products
CRT
Coverage Type
Accounting Treatment
for Credit
Enhancement
Primary mortgage insurance
Primary mortgage insurance
No
Front-end
Not Freestanding
STACR
STACR Trust notes
Yes
Back-end
Freestanding
STACR debt notes
Yes
Back-end
Debt
ACIS
ACIS
Yes
Front-end/Back-end
Freestanding
Other
Senior subordinate securitizations
Yes
Back-end
Debt/Guarantee
Lender risk-sharing
Yes
Front-end
Freestanding
Other insurance/reinsurance products
Yes
Front-end
Freestanding
Single-Family Mortgage Portfolio Newly Acquired Credit Enhancements
The table below provides the UPB of the mortgage loans acquired during the periods presented that were covered by primary
mortgage insurance, the UPB of the mortgage loans covered by CRT transactions we entered into during the periods
presented, and maximum coverage related to these newly acquired credit enhancements. The amount of risk transferred
through new CRT transactions can be affected by a number of factors, including current market conditions, the volume and
characteristics of newly acquired loans, our risk appetite, the cost of CRT transactions, and FHFA guidance.
Table 18 - Single-Family Mortgage Portfolio Newly Acquired Credit Enhancements
Year Ended December 31,
2024
2023
2022
(In millions)
UPB(1)(2)
Maximum
Coverage(3)(4)
UPB(1)(2)
Maximum
Coverage(3)(4)
UPB(1)(2)
Maximum
Coverage(3)(4)
Primary mortgage insurance
$135,459
$35,595
$125,352
$33,032
$163,648
$42,571
CRT transactions:
STACR
131,388
3,785
85,693
2,838
325,721
12,720
ACIS
47,301
1,625
28,080
999
225,070
7,611
Other
2,278
547
1,046
317
2,617
622
Total CRT issuance
$180,967
$5,957
$114,819
$4,154
$553,408
$20,953
(1)
Represents the UPB of the mortgage assets, reference pool, or securitization trust, as applicable.
(2)
The primary mortgage insurance and CRT transactions presented in this table are not mutually exclusive as a single loan may be covered by both primary mortgage
insurance and CRT transactions.
(3)
For primary mortgage insurance, represents the coverage as of the related loan acquisition. For STACR transactions, represents the balance held by third parties at
issuance. For ACIS transactions, represents the aggregate limit of insurance purchased from third parties at issuance.
(4)
The credit risk positions to which the maximum coverage applies may vary on a transaction-by-transaction basis.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
55
Single-Family Mortgage Portfolio Credit Enhancement Coverage Outstanding
The table below provides information on the UPB and maximum coverage associated with credit-enhanced loans in our Single-
Family mortgage portfolio.
Table 19 - Single-Family Mortgage Portfolio Credit Enhancement Coverage Outstanding
December 31, 2024
(Dollars in millions)
UPB(1)
% of Portfolio
Maximum Coverage(2)(3)
Primary mortgage insurance(4)
$658,104
21%
$174,445
STACR
1,196,740
39
28,471
ACIS
754,489
24
16,474
Other
38,951
1
10,643
Less: UPB with multiple credit enhancements and other reconciling items(5)
(733,818)
(23)
—
Single-Family mortgage portfolio - credit-enhanced
1,914,466
62
230,033
Single-Family mortgage portfolio - non-credit-enhanced
1,189,708
38
N/A
Total
$3,104,174
100%
$230,033
December 31, 2023
(Dollars in millions)
UPB(1)
% of Portfolio
Maximum Coverage(2)(3)
Primary mortgage insurance(4)
$637,037
21%
$165,738
STACR
1,175,837
39
31,222
ACIS
821,048
27
17,647
Other
39,901
1
11,027
Less: UPB with multiple credit enhancements and other reconciling items(5)
(813,966)
(27)
—
Single-Family mortgage portfolio - credit-enhanced
1,859,857
61
225,634
Single-Family mortgage portfolio - non-credit-enhanced
1,179,053
39
N/A
Total
$3,038,910
100%
$225,634
(1)
Represents the current UPB of the mortgage assets, reference pool, or securitization trust, as applicable.
(2)
For STACR transactions, represents the outstanding balance held by third parties. For ACIS transactions, represents the remaining aggregate limit of insurance
purchased from third parties.
(3)
The credit risk positions to which the maximum coverage applies may vary on a transaction-by-transaction basis.
(4)
Amounts exclude certain loans for which we do not control servicing, as the coverage information for these loans is not readily available to us.
(5)
Other reconciling items primarily include timing differences in reporting cycles between the UPB of certain CRT transactions and the UPB of the underlying loans.
Credit Enhancement Coverage Characteristics
The table below provides the serious delinquency rates for the credit-enhanced and non-credit-enhanced loans in our Single-
Family mortgage portfolio. The credit-enhanced categories are not mutually exclusive as a single loan may be covered by both
primary mortgage insurance and other credit enhancements.
Table 20 - Serious Delinquency Rates for Credit-Enhanced and Non-Credit-Enhanced Loans in Our Single-Family
Mortgage Portfolio
December 31, 2024
December 31, 2023
(% of portfolio based on UPB)(1)
% of Portfolio(2)
SDQ Rate
% of Portfolio(2)
SDQ Rate
Credit-enhanced:
Primary mortgage insurance
21 %
1.12 %
21 %
0.95 %
CRT and other
54
0.66
55
0.60
Non-credit-enhanced
38
0.43
39
0.42
Total
N/A
0.59
N/A
0.55
(1)
Excludes loans underlying certain securitization products for which loan-level data is not available.
(2)
Percentages do not total to 100% as a single loan may be included in multiple line items.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
56
The table below provides information on the amount of credit enhancement coverage by year of origination associated with
loans in our Single-Family mortgage portfolio.
Table 21 - Credit Enhancement Coverage by Year of Origination
December 31, 2024
December 31, 2023
(Dollars in millions)
UPB
% of UPB with
Credit
Enhancement
UPB
% of UPB with
Credit
Enhancement
Year of Loan Origination
2024
$309,757
39 %
N/A
N/A
2023
250,712
73
$265,072
42 %
2022
399,741
69
433,252
67
2021
912,364
64
984,004
64
2020
665,137
68
719,822
68
2019 and prior
566,463
53
636,760
53
Total
$3,104,174
62
$3,038,910
61
The following table provides information on the characteristics of the loans in our Single-Family mortgage portfolio without
credit enhancement.
Table 22 - Single-Family Mortgage Portfolio Without Credit Enhancement(1)
December 31, 2024
December 31, 2023
(Dollars in millions)
UPB
% of Portfolio
UPB
% of Portfolio
Low original LTV ratio(1)(2)
$675,499
22 %
$687,185
23 %
Short-term(1)(3)
178,179
6
196,608
6
Recently acquired(1)(4)
206,274
7
163,789
5
Other(1)(5)
129,756
3
131,471
5
Single-Family mortgage portfolio - non-credit-enhanced
$1,189,708
38 %
$1,179,053
39 %
(1)
Loans with multiple characteristics are assigned to categories in this table based on the following prioritization: low original LTV ratio, short-term, and recently
acquired.
(2)
Represents loans with an original LTV ratio less than or equal to 60%.
(3)
Represents loans with an original maturity of 20 years or less.
(4)
Represents loans that were recently acquired and have not been included in a reference pool.
(5)
Primarily includes ARM loans, loans with an original LTV ratio greater than 97%, loans that fail the delinquency requirements for CRT transactions, and relief
refinance loans and loans that were acquired before the inception of our CRT programs in 2013.
Credit Enhancement Recoveries
Our expected recovery receivable from freestanding credit enhancements, net of allowance, was $0.1 billion as of both
December 31, 2024 and December 31, 2023. These amounts are included in other assets on our consolidated balance sheets.
See Note 3 and Note 6 for additional information on accounting for credit enhancements.
Monitoring Loan Performance and Characteristics
We review loan performance, including delinquency statistics and related loan characteristics, in conjunction with housing
market and economic conditions, to assess credit risk when estimating our allowance for credit losses. We review the payment
performance of our loans to facilitate early identification of potential problem loans, which could inform our loss mitigation
strategies. We also review performance metrics for additional loan characteristics that may expose us to concentrations of
credit risk.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
57
Loan Characteristics
The table below contains a description of some of the credit characteristics that we monitor for loans in our Single-Family
mortgage portfolio.
Credit Characteristic
Description
Impact on Credit Quality
LTV ratio(1)
Loan-to-value ratio. The ratio of the unpaid principal
amount of the loan to the value of the property that serves
as collateral for the loan, expressed as a percentage
• Measures ability of the underlying property to cover our
exposure on the loan
• Higher LTV ratios indicate higher risk, as proceeds from sale of
the property may not cover our exposure on the loan
• Lower LTV ratios indicate borrowers are more likely to repay
Credit score(1)
Statistically-derived number that may indicate a
borrower's likelihood to repay debt
• Borrowers with higher credit scores are generally more likely to
repay or have the ability to refinance their loans than those with
lower scores
Loan purpose
Indicates how the borrower intends to use the proceeds
from a loan (i.e., purchase, cash-out refinance, or other
refinance)
• Cash-out refinancings, which increase the LTV ratios, generally
have a higher risk of default than loans originated in purchase
or other refinance transactions
Property type
Indicates whether the property is a detached single-family
house, townhouse, condominium, or co-op
• Condominiums historically have experienced greater volatility in
house prices than detached single-family houses, which may
expose us to more risk
• Condominiums are subject to additional risks, typically
managed by the condominium association, including but not
limited to the associations' financial stability and the physical
condition of buildings and common areas
Occupancy type
Indicates whether the borrower intends to use the
property as a primary residence, second home, or
investment property
• Loans on primary residence properties tend to have lower credit
risk than loans on second homes or investment properties
Product type
Indicates the type of loan based on key loan terms, such
as the contractual maturity, type of interest rate, and
payment characteristics of the loan
• Loan products that contain terms which result in scheduled
changes in monthly payments may result in higher risk
• Shorter loan terms result in faster repayment of principal and
may indicate lower risk
DTI ratio(1)
Debt-to-income ratio. The ratio of borrowers' total monthly
debt payments to gross monthly income
• Borrowers with lower DTI ratios are generally more likely to
repay their loans than those with higher DTI ratios, holding all
other factors equal
• DTI ratios are at the time of origination and may not be
indicative of borrowers' current creditworthiness
Geographic
concentration
Indicates whether our mortgage portfolio is diversified
geographically
• Geographic concentrations may increase the exposure of our
mortgage portfolio to credit risk, as regional economic
conditions may affect a borrower's ability to repay and the
underlying property value
• Geographic diversification reduces the credit risk impact of an
economic downturn in or a catastrophic event that
disproportionately affects a particular geographic area
Loan age
Number of years since loan origination
• Credit losses on mortgage loans typically are low during the
first few years after origination and may increase subsequently
depending on macroeconomic conditions and other factors as
the benefit of underwriting wanes
(1)
See Glossary for additional details.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
58
Loan Characteristics and Serious Delinquency Rate
The table below contains details of the characteristics and serious delinquency rates of the loans in our Single-Family mortgage
portfolio.
Table 23 - Credit Quality Characteristics and Serious Delinquency Rates of Our Single-Family Mortgage Portfolio(1)
December 31, 2024
(Dollars in millions)
UPB
Original
Credit
Score(2)
Current
Credit
Score(2)(3)
Original
LTV Ratio
Current LTV
Ratio
SDQ Rate
Single-Family mortgage portfolio year of origination:
2024
$309,757
754
749
78 %
76 %
0.12 %
2023
250,712
751
749
79
72
0.68
2022
399,741
746
743
76
65
0.95
2021
912,364
752
756
71
50
0.42
2020
665,137
761
768
71
43
0.25
2019 and prior
566,463
738
752
75
33
0.91
Total
$3,104,174
751
755
74
52
0.59
December 31, 2023
(Dollars in millions)
UPB
Original
Credit
Score(2)
Current
Credit
Score(2)(3)
Original
LTV Ratio
Current LTV
Ratio
SDQ Rate
Single-Family mortgage portfolio year of origination:
2023
$265,072
751
745
79 %
75 %
0.13 %
2022
433,252
745
746
76
68
0.63
2021
984,004
752
756
71
54
0.35
2020
719,822
761
768
71
46
0.22
2019
119,557
746
753
76
46
0.69
2018 and prior
517,203
736
751
75
32
0.96
Total
$3,038,910
750
755
73
52
0.55
(1)
Excludes certain credit quality characteristics and serious delinquency rate information on loans underlying certain securitization products for which data was not
available.
(2)
Original credit score is generally based on three credit bureaus (Equifax, Experian, and TransUnion). Current credit score is based on Experian only.
(3)
Credit scores for certain recently acquired loans may not have been updated by the credit bureau since the loan acquisition and therefore the original credit scores
also represent the current credit scores.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
59
Table 24 - Characteristics of the Loans in Our Single-Family Mortgage Portfolio
December 31, 2024
December 31, 2023
(Dollars in millions)
Amount
% of Total
Amount
% of Total
20- and 30-year or more, amortizing fixed-rate
$2,775,489
90 %
$2,671,735
88 %
15-year or less, amortizing fixed-rate
292,763
9
329,489
11
Adjustable-rate and other
35,922
1
37,686
1
Total
$3,104,174
100 %
$3,038,910
100 %
Percentage of portfolio based on UPB
Original LTV ratio range:
60% and below
22 %
23 %
Above 60% to 80%
49
49
Above 80% to 90%
12
12
Above 90% to 100%
16
15
Above 100%
1
1
Portfolio weighted average original LTV ratio
74
73
Current LTV ratio range:
60% and below
68
68
Above 60% to 80%
23
24
Above 80% to 90%
6
6
Above 90% to 100%
3
2
Above 100%
—
—
Portfolio weighted average current LTV ratio
52
52
Original credit score(1)
:
740 and above
64
64
700 to 739
21
21
680 to 699
7
7
660 to 679
4
4
620 to 659
3
3
Less than 620
1
1
Portfolio weighted average original credit score
751
750
Current credit score(1)(2)
:
740 and above
72
71
700 to 739
13
14
680 to 699
4
4
660 to 679
3
3
620 to 659
4
4
Less than 620
4
4
Portfolio weighted average current credit score
755
755
DTI ratio:
Above 45%
18
16
Portfolio weighted average DTI ratio
36
35
Property type:
Detached single-family houses and townhouse
92
92
Condominium or co-op
8
8
Occupancy type at origination:
Primary residence
92
92
Second home
3
3
Investment property
5
5
Loan purpose:
Purchase
50
46
Cash-out refinance
19
21
Other refinance
31
33
(1)
Original credit score is generally based on three credit bureaus (Equifax, Experian, and TransUnion). Current credit score is based on Experian only.
(2)
Credit scores for certain recently acquired loans may not have been updated by the credit bureau since the loan acquisition and therefore the original credit scores
also represent the current credit scores.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
60
The following table presents the combination of credit score and CLTV ratio attributes of loans in our Single-Family mortgage
portfolio.
Table 25 - Single-Family Mortgage Portfolio Attribute Combinations(1)(2)
December 31, 2024
CLTV ≤ 60
CLTV > 60 to 80
CLTV > 80 to 90
CLTV > 90 to 100
CLTV > 100
All Loans
Current credit
score
% of
Portfolio
SDQ Rate
% of
Portfolio
SDQ Rate
% of
Portfolio
SDQ Rate
% of
Portfolio
SDQ Rate
% of
Portfolio
SDQ Rate
% of
Portfolio
SDQ Rate
740 and above
50 %
0.04 %
16 %
0.05 %
4 %
0.09 %
2 %
0.10 %
— %
NM
72 %
0.05 %
700 to 739
9
0.22
2
0.22
2
0.25
1
0.18
—
NM
14
0.22
680 to 699
2
0.45
2
0.40
—
NM
—
NM
—
NM
4
0.44
660 to 679
2
0.73
1
0.66
—
NM
—
NM
—
NM
3
0.71
620 to 659
2
1.60
1
1.62
—
NM
—
NM
—
NM
3
1.60
Less than 620
3
7.95
1
10.62
—
NM
—
NM
—
NM
4
8.80
Total
68 %
0.51
23 %
0.82
6 %
1.00
3 %
0.75
— %
NM
100 %
0.59
December 31, 2023
CLTV ≤ 60
CLTV > 60 to 80
CLTV > 80 to 90
CLTV > 90 to 100
CLTV > 100
All Loans
Current credit
score
% of
Portfolio
SDQ Rate
% of
Portfolio
SDQ Rate(2)
% of
Portfolio
SDQ Rate(2)
% of
Portfolio
SDQ Rate(2)
% of
Portfolio
SDQ Rate(2)
% of
Portfolio
SDQ Rate
740 and above
50 %
0.05 %
16 %
0.07 %
4 %
0.09 %
1 %
0.09 %
— %
NM
71 %
0.06 %
700 to 739
7
0.25
4
0.23
2
0.23
1
0.16
—
NM
14
0.25
680 to 699
3
0.49
1
0.44
—
NM
—
NM
—
NM
4
0.48
660 to 679
2
0.80
1
0.75
—
NM
—
NM
—
NM
3
0.79
620 to 659
3
1.69
1
1.63
—
NM
—
NM
—
NM
4
1.66
Less than 620
3
8.06
1
9.88
—
NM
—
NM
—
NM
4
8.56
Total
68 %
0.49
24 %
0.70
6 %
0.72
2 %
0.52
— %
NM
100 %
0.55
(1)
Excludes loans underlying certain securitization products for which current credit score is not available.
(2)
Current credit score is based on the credit bureau Experian only.
Certain of the loan attributes shown above may indicate a higher risk of default. For example, loans with LTV ratios over 90% or
credit scores below 620 may be higher risk. A single loan may fall within more than one risk category. Certain combinations of
loan attributes can indicate an even higher degree of credit risk, such as loans with both higher LTV ratios and lower credit
scores.
Geographic Concentrations
We purchase mortgage loans from across the U.S. but do not purchase an equal number of loans from each state, leading to
concentrations of credit risk in certain geographic areas. Local economic and other conditions can affect the borrower's ability
to repay and the value of the underlying collateral. Property insurance markets in certain geographic areas, including areas with
high risk of natural disaster events, have observed rapid increases in property insurance premiums and reduction in the
availability of coverage in recent years. In addition, certain states and municipalities have passed or may pass laws that limit our
ability to foreclose or evict and make it more difficult and costly to manage our risk.
See MD&A - Risk Management - Credit Risk - Natural Disaster and Climate-Related Risk Management for additional
information about the impact of natural disaster events on our Single-Family mortgage portfolio and Note 15 for additional
information about the geographic distribution of our Single-Family mortgage portfolio.
Delinquency Rates
We report Single-Family delinquency rates based on the number of loans in our Single-Family mortgage portfolio that are past
due as reported to us by our servicers as a percentage of the total number of loans in our Single-Family mortgage portfolio.
The chart below shows the delinquency rates of mortgage loans in our Single-Family mortgage portfolio.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
61
Single-Family Delinquency Rates
0.94%
1.10%
1.10%
0.24%
0.27%
0.31%
0.66%
0.55%
0.59%
One month past due
Two months past due
Seriously delinquent
4Q22
4Q23
4Q24
The percentage of loans that were one month past due stayed flat as of December 31, 2024 compared to December 31, 2023
while the percentage of loans that were two months past due increased as of December 31, 2024 compared to December 31,
2023. The percentage of loans one month past due can be volatile due to seasonality, whether the last day of the period falls on
a weekend, and other factors that may not be indicative of default. As a result, the percentage of loans two months past due
tends to be a better early performance indicator than the percentage of loans one month past due.
Our Single-Family serious delinquency rate has increased to 0.59% as of December 31, 2024, compared to 0.55% as of
December 31, 2023, primarily due to the recent hurricanes. We have historically observed temporary increases in delinquency
rates following such events. See Note 4 for additional information on the payment status of our single-family mortgage loans.
The longer a loan remains delinquent, the greater the associated costs we incur. Loans that remain delinquent for more than
one year, and are not in active forbearance plans, are more challenging to resolve as many of these borrowers may not be in
contact with the servicer, may not be eligible for loan modifications, or may determine that it is not economically beneficial for
them to enter into a loan modification due to the amount of costs incurred on their behalf while the loan was delinquent. The
table below presents the length of time loans in our Single-Family mortgage portfolio have been seriously delinquent.
Table 26 - Seriously Delinquent Single-Family Loans
December 31, 2024
December 31, 2023
(Dollars in millions)
UPB
Loan Count
% of Total(1)
UPB
Loan Count
% of Total(1)
<= 1 year
$14,885
67,264
82 %
$12,318
57,939
77 %
> 1 year and <= 2 years
2,136
10,250
12
1,805
9,548
13
> 2 years and <= 4 years
558
2,970
4
952
5,178
7
> 4 years
417
1,861
2
441
2,088
3
Total
$17,996
82,345
100 %
$15,516
74,753
100 %
(1)
Based on loan count.
See Note 4 for additional information on the payment status of our single-family mortgage loans.
Engaging in Loss Mitigation Activities
We offer a variety of borrower assistance programs, including refinance programs and loan workout activities for eligible
borrowers. For purposes of the disclosure below related to loss mitigation activities, we generally exclude loans for which we
do not control servicing. See MD&A - Our Business Segments - Single-Family and Note 4 for additional information on
our loss mitigation activities.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
62
Relief Refinance Program
The following table includes information about the performance of our relief refinance mortgage portfolio.
Table 27 - Single-Family Relief Refinance Loans
December 31, 2024
December 31, 2023
(Dollars in millions)
UPB
Loan Count
SDQ Rate
UPB
Loan Count
SDQ Rate
Above 125% original LTV
$5,111
44,151
0.78 %
$5,779
47,799
0.97 %
Above 100% to 125% original LTV
9,837
84,958
0.76
11,160
92,162
0.94
Above 80% to 100% original LTV
16,983
162,335
0.66
19,416
177,148
0.70
80% and below original LTV
24,155
316,960
0.52
28,352
355,829
0.51
Total
$56,086
608,404
0.61
$64,707
672,938
0.65
Loan Workout Activities
We continue to help families retain their homes or otherwise avoid foreclosure through loan workouts. The table below provides
details about the single-family loan workout activities that were completed during the periods presented.
Table 28 - Single-Family Completed Loan Workout Activity
Year Ended December 31,
2024
2023
2022
(UPB in billions, loan count in thousands)
UPB
Loan Count
UPB
Loan Count
UPB
Loan Count
Payment deferral plans
$9
32
$9
35
$14
61
Loan modifications
6
25
5
22
11
45
Forbearance plans and other(1)
5
20
5
24
6
30
Total
$20
77
$19
81
$31
136
(1)
The forbearance data is limited to loans in forbearance that are past due based on the loans' original contractual terms and excludes loans included in certain legacy
transactions, as the forbearance data for such loans is either not reported to us by the servicers or is otherwise not readily available to us. Other includes repayment
plans and foreclosure alternatives.
Completed loan workout activity includes forbearance plans where borrowers fully reinstated the loan to current status during
or at the end of the forbearance period, payment deferral plans, loan modifications, successfully completed repayment plans,
short sales, and deeds in lieu of foreclosure. Completed loan workout activity excludes active loss mitigation activity that was
ongoing and had not been completed as of the end of the year, such as forbearance plans that had been initiated but not
completed and trial period modifications. There were approximately 24,000 loans in active forbearance plans and
approximately 15,000 loans in other active loss mitigation activity as of December 31, 2024.
The table below contains credit characteristic data on our single-family modified loans.
Table 29 - Credit Characteristics of Single-Family Modified Loans(1)
(Dollars in millions)
December 31, 2024
December 31, 2023
UPB
$29,730
$27,465
Percent of portfolio
1 %
1 %
CLTV ratio
47
47
SDQ rate
7.26
6.30
(1)
Primarily includes loans modified through the Freddie Mac Flex Modification program.
The table below contains information about the payment performance of modified loans in our Single-Family mortgage
portfolio, based on the number of loans that were current or paid off one year and, if applicable, two years after modification.
Table 30 - Payment Performance of Single-Family Modified Loans(1)
Quarter of Loan Modification Completion
4Q 2023
3Q 2023
2Q 2023
1Q 2023
4Q 2022
3Q 2022
2Q 2022
1Q 2022
Current or paid off
one year after modification:
66 %
68 %
73 %
73 %
78 %
82 %
86 %
89 %
Current or paid off
two years after modification:
N/A
N/A
N/A
N/A
78
82
86
90
(1)
Primarily includes loans modified through the Freddie Mac Flex Modification program.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
63
Managing Foreclosure and REO Activities
In a foreclosure, we may acquire the underlying property and later sell it, using the proceeds of the sale to reduce our losses.
We typically acquire properties as a result of borrower defaults and subsequent foreclosures or deeds in lieu of foreclosure on
loans that we own or guarantee. We evaluate the condition of, and market for, newly acquired REO properties, determine if
repairs will be performed and manage such repairs, determine occupancy status and whether there are legal or other issues to
be addressed, and determine our sale or disposition strategy. When we sell REO properties, we typically provide an initial
period where we consider offers by owner occupants and entities engaged in community stabilization activities before offers by
investors. We also consider disposition strategies, such as auctions, as appropriate to improve collateral recoveries and/or
when traditional sales strategies (i.e., marketing via Multiple Listing Service and a real estate agent) may not be as effective. Our
management of REO properties is also governed by federal fair housing/fair lending requirements.
We are subject to various state and local laws that affect the foreclosure process. The pace and volume of REO acquisitions are
affected not only by the delinquent loan population but also by when we can initiate the foreclosure process and the length of
the process. These factors extend the time it takes for loans to be foreclosed upon and for the underlying properties to
transition to REO.
The volume of our foreclosure sales, which include foreclosure sales that result in our acquisition of the underlying properties
and third-party foreclosure sales, was approximately 4,000, 5,000, and 4,000 in 2024, 2023, and 2022, respectively.
The table below shows our Single-Family REO activity.
Table 31 - Single-Family REO Activity
Year Ended December 31,
2024
2023
2022
(Dollars in millions)
Number of
Properties
Amount
Number of
Properties
Amount
Number of
Properties
Amount
Beginning balance - REO
2,499
$354
2,218
$280
1,615
$179
Additions
2,223
379
2,600
363
2,137
266
Dispositions
(2,398)
(345)
(2,319)
(289)
(1,534)
(165)
Ending balance - REO
2,324
388
2,499
354
2,218
280
Beginning balance, valuation allowance
(3)
(2)
(3)
Change in valuation allowance
(6)
(1)
1
Ending balance, valuation allowance
(9)
(3)
(2)
Ending balance - REO, net
$379
$351
$278
Collateral Deficiency Ratios
Collateral deficiency ratios are the percentages of our realized losses when loans are resolved by the completion of REO
dispositions and third-party foreclosure sales or short sales. Collateral deficiency ratios are calculated as the amount of our
recognized losses divided by the aggregate UPB of the related loans. The amount of recognized losses is equal to the amount
by which the UPB of the loans exceeds the amount of sales proceeds from disposition of the properties, net of capitalized
repair and selling expenses, if applicable. Collateral deficiency excludes recoveries from credit enhancements and certain
expenses and costs related to the foreclosure process that are recognized on our consolidated financial statements, such as
property taxes, homeowner's insurance premiums, property maintenance costs, and the cost of funding the loans after they are
repurchased from the associated security pool. Our overall loss severity is typically higher than the collateral deficiency when
these items are included.
The table below presents Single-Family collateral deficiency ratios for REO dispositions and third-party foreclosure sales. We
did not have a significant number of short sales in 2024.
Table 32 - Single-Family Collateral Deficiency Ratios
Year Ended December 31,
2024
2023
2022
REO dispositions and third-party foreclosure sales(1)
(1.8) %
(5.2) %
(5.5) %
(1)
Negative ratios indicate that the amount of sales proceeds from disposition of the properties, net of capitalized repair and selling expenses, exceeded the UPB of the
related loan.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
64
REO Property Status
A significant portion of our REO portfolio is unable to be marketed at any given time because the properties are occupied,
involved in legal matters (e.g., bankruptcy or other litigation), or subject to a redemption period, which is a post-foreclosure
period during which borrowers may reclaim a foreclosed property. Redemption periods increase the average holding period of
our inventory by 10% or more. As of December 31, 2024, approximately 28% of our REO properties were unable to be
marketed because the properties were occupied, located in states with a redemption period, or subject to other legal matters.
Another 35% of the properties were being prepared for sale (i.e., valued, marketing strategies determined, and repaired). As of
December 31, 2024, approximately 28% of our REO properties were listed and available for sale, and 9% of our inventory was
pending the settlement of sales. Though it varied significantly by state, the average holding period of our single-family REO
properties, excluding any redemption period, was 345 days and 328 days for our REO dispositions during 2024 and 2023,
respectively.
Multifamily Mortgage Credit Risk
We manage our exposure to multifamily mortgage credit risk, which is a type of commercial real estate credit risk, using the
following principal strategies:
n Completing our own underwriting, credit and legal review for new business activity;
n Transferring credit risk to third-party investors; and
n Managing our portfolio, including loss mitigation activities.
Completing Our Own Underwriting, Credit, and Legal Review for New Business
Activity
We use a prior approval underwriting approach for multifamily loans, completing our own underwriting, credit review, and legal
review for each new loan prior to issuing a loan purchase commitment. This helps us to maintain credit discipline throughout
the process. Occasionally, we securitize loans or bonds contributed by third parties that are underwritten by us after origination.
As multifamily loans are generally nonrecourse to the borrower, our underwriting standards focus on the LTV ratio and DSCR,
which estimates a borrower's ability to repay the loan using the secured property's cash flows, after expenses. A higher DSCR
and/or a lower LTV indicates lower credit risk. Our standards define maximum LTV ratios and minimum DSCRs that vary based
on the characteristics and features of the loan. Loans are generally underwritten with a maximum original LTV ratio of 80% and
a DSCR of greater than 1.25, assuming monthly payments that reflect amortization of principal. However, certain loans may
have a higher LTV ratio and/or a lower DSCR, typically where this will serve our mission and contribute to achieving our
affordable housing goals.
Underwriting consideration is also given to other qualitative factors, such as borrower experience and financial strength, the
type and location of the property, and the strength of the local market. These and other factors, including the LTV ratio and
DSCR, ultimately affect the amount of expected credit loss on a given loan. Sellers provide certain representations and
warranties regarding the loans they sell to us and are required to repurchase loans for which there has been a breach of
representation or warranty. These representations and warranties are made as of the date the loan is sold to Freddie Mac, and
unless Freddie Mac agrees to an exception to the representation and warranty at purchase, the repurchase remedy may be
claimed upon proof of the breach. However, repurchases of multifamily loans have been limited due to our underwriting
approach, which is completed prior to issuance of a loan purchase commitment.
Multifamily loans may be amortizing or interest-only (for the full term or a portion thereof) and have a fixed or variable rate of
interest. Multifamily loans generally amortize over a thirty-year period, but have shorter contractual maturity terms than single-
family loans, typically ranging from five to ten years. As a result, most multifamily loans require a balloon payment at maturity,
making a borrower's ability to refinance or pay off the loan at maturity a key attribute. Some borrowers may be unable to
refinance during periods of high interest rates or adverse market conditions, increasing the likelihood of borrower default.
To reduce credit risk exposure to floating rate loans, we generally require borrowers to purchase interest rate caps to protect
against large movements in interest rates. This underwriting requirement protects both the borrower and Freddie Mac as rising
interest rates generally result in higher debt service payments and financing costs, thereby reducing net property cash flows.
We generally require a minimum term three-year interest rate cap to be in place at origination with an escrow established for
the cost to purchase replacement caps through the maturity of the loan. Replacing a required interest rate cap, especially one
with a longer term and/or lower strike rate, becomes more expensive in volatile and rising interest rate environments. As a
result, the cost of interest rate caps has risen significantly in recent years and there is no guarantee that this escrow will be
sufficient to purchase the required replacement cap.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
65
The charts below provide the weighted average original LTV ratio and original DSCR for our new business activity.
Weighted Average Original LTV Ratio
61%
59%
62%
2022
2023
2024
Weighted Average Original DSCR(1)
1.30
1.27
1.29
2022
2023
2024
(1) Assumes monthly payments that reflect amortization of
principal.
The table below presents the percentage of our Multifamily new business activity that had certain characteristics that may be
considered higher risk.
Table 33 - Percentage of Multifamily New Business Activity With Higher Risk Characteristics
Year Ended December 31,
2024
2023
2022
Original LTV ratio greater than 80%
1 %
1 %
1 %
Original DSCR less than or equal to 1.10
2
5
2
Transferring Credit Risk to Third-Party Investors
Types of Credit Enhancements
In connection with the acquisition, guarantee, and/or securitization of a loan or group of loans, we may obtain various forms of
credit protection that reduce our credit risk exposure to the underlying mortgage borrower and reduce our required capital. For
example, at the time of loan acquisition or guarantee, we may obtain recourse and/or indemnification protection from our
lenders or sellers. After acquisition, we reduce our credit risk exposure to the underlying borrower primarily through our senior
subordinate securitizations and our other CRT products including MCIP and MSCR notes. The timing of our other CRT
products can vary as we aggregate adequately sized reference pools to execute transactions.
The following table summarizes our principal types of credit enhancements. See MD&A - Our Business Segments -
Multifamily - Products and Activities for additional information on our securitization and CRT products.
Category
Products
CRT
Coverage Type
Accounting
Treatment for
Credit
Enhancement
Subordination
K Certificates
Yes
Back-end
Guarantee
Other securitization products:
• Securitizations of purchased collateral
Yes
Back-end
Guarantee
• Securitizations of collateral contributed by third parties
No
Front-end
Guarantee
MSCR
MSCR notes
Yes
Back-end
Freestanding
SCR debt notes
Yes
Back-end
Debt
MCIP
MCIP
Yes
Back-end
Freestanding
Lender risk-sharing
Loss sharing
Yes
Front-end
Freestanding
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
66
Multifamily Mortgage Portfolio CRT Issuance
The table below provides the UPB of the multifamily mortgage loans covered by CRT transactions issued during the periods
presented as well as the maximum coverage provided by those transactions. We evaluate and update our risk transfer strategy
as needed depending on our business strategy, market conditions, and regulatory requirements.
Table 34 - Multifamily Mortgage Portfolio CRT Issuance
Year Ended December 31,
2024
2023
2022
(In millions)
UPB(1)
Maximum
Coverage(2)(3)
UPB(1)
Maximum
Coverage(2)(3)
UPB(1)
Maximum
Coverage(2)(3)
Subordination
$27,873
$1,670
$34,034
$2,250
$49,799
$3,334
MSCR
17,504
412
17,026
407
11,487
193
MCIP
33,243
703
15,860
340
11,487
399
Lender risk-sharing
1,081
119
808
104
1,072
159
Less: UPB with more than
one type of CRT
(33,243)
—
(15,860)
—
(11,487)
—
Total CRT Issuance
$46,458
$2,904
$51,868
$3,101
$62,358
$4,085
(1)
Represents the UPB of the assets included in the associated reference pool or securitization trust, as applicable.
(2) For subordination, represents the UPB of the securities that are held by third parties at issuance and are subordinate to the securities we guarantee. For MSCR
transactions, represents the UPB of securities held by third parties at issuance. For MCIP transactions, represents the aggregate limit of insurance purchased from
third parties at issuance. For lender risk-sharing, represents the maximum amount of loss recovery that is available subject to the terms of counterparty agreements
at issuance.
(3)
The credit risk positions to which the maximum coverage applies may vary on a transaction-by-transaction basis.
Multifamily Mortgage Portfolio Credit Enhancement Coverage Outstanding
While we obtain various forms of credit protection in connection with the acquisition, guarantee, and/or securitization of a loan
or group of loans, our principal credit enhancement type is subordination, which is created through our senior subordinate
securitization transactions. Through senior subordinate securitizations, we have transferred a substantial amount of the
expected and stressed credit risk on the Multifamily mortgage portfolio, thereby reducing our overall credit risk exposure and
required capital. As of December 31, 2024 and December 31, 2023, our maximum coverage outstanding provided by
subordination in nonconsolidated VIEs was $37.4 billion and $39.5 billion, respectively.
The table below presents the UPB and delinquency rates for both credit-enhanced and non-credit-enhanced loans underlying
our Multifamily mortgage portfolio.
Table 35 - Credit-Enhanced and Non-Credit-Enhanced Loans Underlying Our Multifamily Mortgage Portfolio
December 31,
2024
2023
(Dollars in millions)
UPB
Delinquency Rate
UPB
Delinquency Rate
Credit-enhanced:
Subordination
$352,566
0.45 %
$358,944
0.26 %
MSCR/MCIP
62,870
0.25
47,011
0.23
Other
9,737
0.82
8,844
0.89
Total credit-enhanced
425,173
0.43
414,799
0.27
Non-credit-enhanced
41,462
0.15
25,998
0.51
Total
$466,635
0.40
$440,797
0.28
The Multifamily delinquency rate increased to 0.40% at December 31, 2024, primarily driven by an increase in delinquent
floating rate loans including small balance loans that are in their floating rate period. As of December 31, 2024, 97% of the
delinquent loans in the Multifamily mortgage portfolio have credit enhancement coverage.
In addition to the credit enhancements listed above, we have various other credit enhancements related to our multifamily
unsecuritized loans, securitizations, and other mortgage-related guarantees, in the form of collateral posting requirements, pool
insurance, bond insurance, loss sharing agreements, and other similar arrangements. These credit enhancements, along with
the proceeds received from the sale of the underlying mortgage collateral, are designed to enable us to recover all or a portion
of our losses on our mortgage loans or the amounts paid under our financial guarantee contracts. Our historical losses paid
under our guarantee contracts and related recoveries pursuant to these agreements have not been significant.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
67
The table below contains details on the loans underlying our Multifamily mortgage portfolio that are not credit-enhanced.
Table 36 - Credit Quality of Our Multifamily Mortgage Portfolio Without Credit Enhancement
December 31,
2024
2023
(Dollars in millions)
UPB
Delinquency Rate
UPB
Delinquency Rate
Mortgage loans held-for-sale
$11,856
— %
$8,823
— %
Mortgage loans held-for-investment:
Held by Freddie Mac
14,589
0.33
9,941
1.21
Held by consolidated trusts
12,125
0.11
4,851
0.27
Other mortgage-related guarantees
2,892
—
2,383
—
Total
$41,462
0.15
$25,998
0.51
Credit Enhancement Recoveries
Our expected recovery receivable from freestanding credit enhancements was $0.1 billion as of both December 31, 2024 and
December 31, 2023. These amounts are included in other assets on our consolidated balance sheets. See Note 3 and Note 6
for additional information on accounting for credit enhancements.
Managing Our Portfolio, Including Loss Mitigation Activities
To help mitigate our potential losses, we generally require sellers to act as the primary servicer for loans they have sold to us,
including property monitoring tasks beyond those typically performed by single-family servicers. We typically transfer the role of
master servicer in our K Certificate transactions to third parties. Servicers for unsecuritized loans over $250,000 must generally
provide us with an assessment of the mortgaged property's financial condition at least annually. We use this assessment and
other information to evaluate the credit quality of our mortgage portfolio and to identify potential problem loans. In situations
where a borrower or property is in distress, the frequency of communications with the borrower may be increased. We rate
servicing performance on a regular basis, and we may conduct on-site reviews to confirm compliance with our standards.
The majority of our guarantees have first loss credit protection provided by subordination. As a result, our primary credit risk
exposure stems from unsecuritized loans and consolidated loans underlying our fully guaranteed securitizations (e.g.,
Multifamily PCs). Our credit exposure to held-for-sale mortgage loans is short-term and transitory in nature, as this portfolio will
generally be used as collateral in future senior subordinate securitizations.
Our unsecuritized held-for-investment mortgage loans will generally be used as collateral in a future fully guaranteed
securitization. Although we initially retain the credit risk exposure to the mortgage loans underlying these transactions, we
expect to transfer a portion of the credit risk using our back-end MCIP and MSCR products where economically sensible.
For loans that remain unsecuritized or underlie our consolidated fully guaranteed securitizations, if they were to become
delinquent, we may offer a workout option to give the borrower an opportunity to bring the loan current and retain ownership of
the property, such as providing a forbearance plan or a short-term extension of up to 12 months. These arrangements are
entered into with the expectation that we will recover our initial investment or reduce our losses. We do not enter into these
arrangements in situations where we believe we would experience a loss in the future that is greater than or equal to the loss
we would experience if we foreclosed on the property at the time of the agreement. While our multifamily loan modification and
other loan workout activities have been minimal during the last three years, we have identified an increased number of loans
that may require loss mitigation and the amount of modification and other loan workout activities may increase in the future.
Various federal, state, and local laws may affect our business processes and financial results. Future changes in these laws
may adversely impact our borrowers or make it more difficult and costly for us to manage our credit risk. Rent restrictions and
eviction moratoriums may adversely impact the cash flows generated by the underlying properties, while foreclosure
moratoriums may limit our ability to pursue certain loss mitigation actions (e.g., foreclosure) upon a borrower default.
See Note 15 for additional information about the geographic distribution of our Multifamily mortgage portfolio.
REO Activity
We had four REO properties as of December 31, 2024. We did not have any REO properties as of December 31, 2023.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
68
Natural Disaster and Climate-Related Risk Management
Natural disasters in areas where we own or guarantee mortgage loans expose us to credit risk by damaging properties that
secure loans in our mortgage portfolio and by negatively impacting the ability of borrowers to make payments on mortgage
loans. We also face climate transition risk, which is the negative financial and economic impact from any potential transition to
a lower-carbon economy. Changing policies, coupled with changing market preferences, could affect housing and could result
in a significant financial burden to our borrowers. The extent of our transition risk exposure depends on the nature of the
policies.
We require all homes underlying single-family mortgages in our portfolio to have homeowners insurance coverage throughout
the life of the loan; however, we do not require earthquake insurance. Sellers are required to confirm that adequate
homeowners insurance coverage exists at the time the loan is sold to Freddie Mac, and servicers are required to confirm and
provide evidence that homeowners insurance is maintained, directly placing coverage when necessary. For homes located in
SFHAs, we also require flood insurance coverage. Sellers are required to determine whether homes underlying single-family
mortgages are located in an SFHA and, if so, to confirm that flood insurance coverage exists at the time the loan is sold to
Freddie Mac. Servicers are also required to confirm and provide evidence that flood insurance on these homes is maintained
throughout the life of the loan and is in amounts needed to comply with federal government and Freddie Mac requirements. If a
borrower fails to obtain and maintain required flood insurance coverage, servicers must directly place such coverage.
For multifamily mortgages, we also have insurance requirements to address catastrophic risks for properties. Seller/servicers
are required to determine whether any buildings at multifamily properties are located in SFHAs and to confirm flood insurance is
in place and complies with federal government and Freddie Mac requirements throughout the life of the mortgage. In addition,
we require property insurance to cover earthquake damage indicated by results of a seismic risk assessment. Insurance for all
relevant perils is required to cover building replacement cost as well as to cover business income rental value. If a multifamily
borrower fails to maintain required insurance, servicers must directly place required coverage. We confirm insurance
compliance prior to loan purchase during the underwriting process. We also review insurance compliance post-purchase and
prior to securitization and require our seller/servicers to report details of insurance compliance annually. Our Multifamily
segment uses property surveys, virtual maps, and environmental and property condition reports to identify properties that are
potentially at higher risk for natural disasters.
Freddie Mac’s loss exposure is further limited by the geographic diversity of our mortgage portfolio, borrower equity in the
properties underlying mortgage loans, disaster relief options for borrowers, our credit risk transfer products, and support from
federal and local government for individuals and communities impacted by natural disasters. For additional information on the
geographic diversity of our mortgage portfolio and our management of Single-Family and Multifamily mortgage credit risk, see
Note 15 and MD&A - Risk Management - Credit Risk, respectively.
The severity and frequency of hazard events, as well as conditions that make these hazard events more likely, could impact the
effectiveness of current risk mitigation, as property insurers may have to raise premiums or limit the level of coverage offered,
which could affect the availability and affordability of coverage for borrowers. Changes in the insurance market are already
observable in certain locations that experience the highest risk of hazard events.
For additional information, see Risk Factors - Credit Risks - We are exposed to increased credit losses and credit-
related expenses in the event of a natural disaster or catastrophic event and Operational Risks - Natural disasters
could adversely affect our business.
Counterparty Credit Risk
We are exposed to counterparty credit risk as a result of our contracts with sellers and servicers, credit enhancement providers,
financial intermediaries, clearinghouses, and other counterparties, as well as through our guarantees of Fannie Mae securities
underlying commingled resecuritization transactions. We primarily manage our exposure to counterparty credit risk by
maintaining eligibility standards, evaluating creditworthiness and monitoring performance, and working with underperforming
counterparties and limiting our losses from their nonperformance of obligations, when possible.
In the sections below, we discuss our management of counterparty credit risk for each type of counterparty to which we have
significant exposure.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
69
Single-Family Sellers and Servicers
In our Single-Family business, we do not originate mortgage loans or have our own loan servicing operation. Instead, we
purchase loans from sellers and engage servicers, which perform loan servicing functions on our behalf. We establish
underwriting and servicing standards for our sellers and servicers to follow and have contractual arrangements with them under
which they represent and warrant that the loans they sell to us meet our standards and that they will service loans in
accordance with our standards. We acquire a significant portion of our single-family loan purchase volume from several large
lenders, and a large percentage of our loans are also serviced by several large servicers. If our sellers or servicers lack
appropriate controls, experience a failure in their controls, or experience an operational disruption, including as a result of
cybersecurity incidents, legal or regulatory actions, or financial difficulties, we could experience a decline in mortgage servicing
quality and/or be less likely to recover losses through lender repurchases, recourse agreements, or other credit enhancements,
where applicable. We are also exposed to the settlement risk from the non-performance of single-family sellers as a result of
our forward settlement loan purchase programs, as discussed in the Financial Intermediaries, Clearinghouses, and Other
Counterparties - Forward Settlement Counterparties section below.
For our mortgage-related securities, we guarantee the payment of principal and interest, and when the underlying borrowers do
not make their mortgage payments, our Guide generally requires Single-Family servicers to advance the missed mortgage
interest payments for up to 120 days. After this time, Freddie Mac will make the missed mortgage principal and interest
payments until the mortgages are no longer held by the securitization trust.
In addition, when borrowers do not pay certain other expenses, such as property taxes and homeowner's insurance premiums,
our Guide generally requires single-family servicers to advance the funds for these expenses in order to protect or preserve our
interest in or legal right to the properties. These advances are ultimately collectible from the borrowers. If the borrowers
reperform through loan workout activities, the missed payments and incurred expenses will be collected from the borrowers.
Should the borrower not reinstate the loan, we will reimburse the servicer for the advanced amounts at completion of
foreclosure or loan workout activities.
Our eligibility standards for sellers and servicers require the following: a demonstrated operating history in residential mortgage
origination and servicing, or an eligible agent acceptable to us; a quality control program that meets our standards; and
sufficient net worth, capital, liquidity, and funding sources, as well as adequate insurance coverage. We perform ongoing
monitoring and review of our exposure to individual sellers or servicers in accordance with our counterparty credit risk
management practices, including requiring our counterparties to provide regular financial reporting to us. We also monitor and
rate our sellers and servicers' compliance with our standards and periodically review their operational processes.
We actively manage the current quality of loan originations of our largest single-family sellers by performing loan quality control
sampling reviews and communicating loan defect rates and the causes of those defects to such sellers on a monthly basis. If
we discover that the representations or warranties related to a loan were breached (i.e., that contractual standards were not
followed), we can exercise certain contractual remedies to mitigate our actual or potential credit losses. If necessary, we work
with these sellers to develop an appropriate plan of corrective action.
We use a variety of tools and techniques to engage our single-family sellers and servicers and limit our losses, including the
following:
n Repurchases and other remedies - For certain violations of our single-family selling or servicing policies, we may require
the counterparty to repurchase loans or provide alternative remedies, such as reimbursement of realized losses or
indemnification, and/or suspend or terminate the selling and servicing relationship, in addition to pursuing other remedies
as may be appropriate. As of December 31, 2024 and December 31, 2023, the UPB of loans subject to repurchase
requests issued to our single-family sellers and servicers was approximately $0.6 billion and $0.5 billion, respectively. See
Note 15 for additional information about loans subject to repurchase requests.
n Incentives and compensatory fees - We pay various incentives to single-family servicers for completing workouts of
problem loans. We also assess compensatory fees if single-family servicers do not achieve certain benchmarks with
respect to servicing delinquent loans.
n Servicing transfers - From time to time, we may facilitate the transfer of servicing as a result of poor servicer performance,
or for certain groups of single-family loans that are delinquent or are deemed at risk of default, to servicers that we believe
have the capabilities and resources necessary to improve the loss mitigation associated with the loans. We may also
facilitate the transfer of servicing on loans at the request of the servicer.
We may disqualify or suspend a seller or servicer with or without cause at any time. Once a seller or servicer is disqualified or
suspended, we no longer purchase loans from that counterparty and generally no longer allow that counterparty to service
loans for us, while seeking to transfer servicing of existing portfolios.
Non-depository Sellers and Servicers
We have significant exposure to non-depository institutions in our Single-Family business. We acquire a large portion of our
business from non-depository institutions, and some of these non-depository institutions service a large share of our loans.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
70
These institutions may not have the same financial strength or operational capacity, or be subject to the same level of
regulatory oversight, as large depository institutions. We monitor and review the financial stability of our non-depository
counterparties. However, if these counterparties experience financial difficulty, we could see a decline in mortgage servicing
quality and/or be less likely to recover losses. In 2025, we expect the risk from non-depository counterparties to remain
elevated, and possibly increase, due to continuing difficult operating conditions.
The table below summarizes the concentration of our Single-Family mortgage purchases acquired from non-depository sellers.
Table 37 - Single-Family Mortgage Purchases from Non-Depository Sellers
2024
2023
% of Purchases
% of Purchases
Top five non-depository sellers
42 %
41 %
Other non-depository sellers
36
32
Total
78 %
73 %
The table below summarizes the concentration of non-depository servicers of our Single-Family mortgage portfolio.
Table 38 - Single-Family Mortgage Portfolio Non-Depository Servicers
December 31, 2024
December 31, 2023
% of Portfolio(1)
% of Seriously Delinquent
Single-Family Loans
% of Portfolio(1)
% of Seriously Delinquent
Single-Family Loans
Top five non-depository servicers
29 %
21 %
25 %
22 %
Other non-depository servicers
31
52
32
45
Total
60 %
73 %
57 %
67 %
(1)
Excludes loans for which we do not exercise control over the associated servicing.
Multifamily Sellers and Servicers
We acquire a significant portion of our multifamily loan purchase volume from several large lenders, and a large percentage of
our loans are also serviced by several large servicers. We are exposed to the risk that multifamily sellers and servicers could
come under financial stress, which could potentially cause degradation in the quality of the servicing they provide us, including
their monitoring of each property's financial performance and physical condition. This could also, in certain cases, reduce the
likelihood that we could recover losses through lender repurchases, recourse agreements, or other credit enhancements, where
applicable. This risk primarily relates to multifamily loans that we hold on our consolidated balance sheets where we retain all of
the related credit risk.
The majority of our multifamily loans are securitized using trusts that are administered by master servicers who bear
responsibility to advance funds in the event of payment shortfalls, including principal and interest payments related to loans in
forbearance. For the majority of our K Certificate transactions, we utilize one of three large depository institutions as master
servicer. However, one of these large depository institutions is in the process of selling their commercial mortgage servicing
business (inclusive of the rights to master service certain K Certificate transactions) to a non-depository institution with
settlement expected in 2025, subject to customary closing conditions. For our other securitization products and a smaller
number of K Certificate securitizations, we serve as master servicer. In instances where payment shortfalls occur, the master
servicer is required to make advances as long as such advances have not been deemed non-recoverable. For multifamily loans
purchased and held in our mortgage-related investments portfolio, the primary servicers are not required to advance funds in
the event of payment shortfalls and therefore do not present significant counterparty credit risk from this source.
Credit Enhancement Providers
We have exposure to credit enhancement providers through certain credit enhancements we obtain. If any of our credit
enhancement providers fail to fulfill their obligations, we may not receive reimbursement for credit losses to which we are
contractually entitled pursuant to our credit enhancements.
We maintain eligibility standards for mortgage insurers and other insurers and reinsurers. For mortgage insurers, our eligibility
requirements include financial requirements determined using a risk-based framework and are designed to promote their ability
to provide consistent liquidity throughout the mortgage cycle. Our mortgage insurers are required to submit audited financial
information and certify compliance with the PMIERs on an annual basis. Our eligibility requirements also include operational
requirements.
During 3Q 2024, Freddie Mac, in coordination with FHFA and in alignment with Fannie Mae, issued updates to the PMIERs. The
updates to PMIERs relate to the standards for available assets held by mortgage insurers to pay claims to ensure that these
assets are high quality, highly liquid, and readily available when needed. The updated standards differentiate between bonds
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
71
based on credit quality and liquidity, and also establish limits for assets backed by residential mortgages or commercial real
estate, to mitigate the impact if such assets lose value during periods of housing stress. The updates will be implemented
through a 24-month phased-in approach, and be fully effective on September 30, 2026.
We monitor our exposure to individual insurers by performing periodic analysis of the ability of each insurer to remain solvent
under various adverse economic conditions. Monitoring performance and potentially identifying underperformance allows us to
plan for loss mitigation. If our credit enhancement providers fail to meet their obligations to reimburse us for claims, we could
experience an increase in credit losses.
Primary Mortgage Insurers
We currently cannot differentiate pricing for primary mortgage insurers based on counterparty strength or revoke a primary
mortgage insurer's status as an eligible insurer without FHFA approval. Further, we generally do not select the insurance
provider on a specific loan, because the selection is made by the lender at the time the loan is originated. Accordingly, we are
limited in our ability to manage our concentration risk with respect to primary mortgage insurers. Although the financial
condition of our mortgage insurers improved in recent years, there is still a risk that some of these counterparties may fail to
fully meet their obligations under a stress economic scenario because they are monoline entities primarily exposed to mortgage
credit risk. We continue to acquire new loans with mortgage insurance from the mortgage insurers shown in the table below.
For additional information about counterparty credit risk associated with mortgage insurers, see Note 15.
The table below summarizes our exposure to single-family mortgage insurers as of December 31, 2024. In the event a
mortgage insurer fails to perform, the coverage amounts represent our maximum exposure to credit losses resulting from such
a failure.
Table 39 - Single-Family Primary Mortgage Insurers
December 31, 2024
December 31, 2023
(In millions)
UPB
Coverage(1)
UPB
Coverage(1)
Radian Guaranty Inc. (Radian)
$116,412
$30,308
$112,487
$28,728
Mortgage Guaranty Insurance Corporation (MGIC)
115,146
30,792
112,184
29,495
Essent Guaranty, Inc.
110,180
29,982
104,847
27,880
Arch Mortgage Insurance Company
109,869
29,086
111,412
29,061
Enact
107,583
28,013
103,495
26,400
National Mortgage Insurance (NMI)
96,762
25,770
90,176
23,603
Others
2,152
494
2,436
571
Total
$658,104
$174,445
$637,037
$165,738
(1)
Coverage amounts exclude coverage primarily related to certain loans for which we do not control servicing, and may include coverage provided by consolidated
affiliates and subsidiaries of the counterparty.
ACIS Counterparties
As part of our ACIS transactions, we regularly obtain insurance coverage from global insurers and reinsurers. These
transactions incorporate features designed to increase the likelihood that we will recover on the claims we file with the insurers
and reinsurers. In each transaction, we require the individual insurers and reinsurers to post collateral to cover portions of their
exposure, which helps to promote certainty and timeliness of claim payment. In addition, while private mortgage insurance
companies are required to be monoline (i.e., to participate solely in the mortgage insurance business, although the holding
company may be a diversified insurer), our insurers and reinsurers generally participate in multiple types of insurance
businesses, which helps to diversify their risk exposure.
The table below displays the concentration of our single-family credit risk exposure to our ACIS counterparties.
Table 40 - Single-Family ACIS Counterparties
December 31, 2024
December 31, 2023
(In millions)
Maximum Coverage(1)
% of Total
Maximum Coverage(1)
% of Total
Top five ACIS counterparties
$8,156
50 %
$8,311
47 %
All other ACIS counterparties
8,318
50
9,336
53
Total
$16,474
100 %
$17,647
100 %
(1)
Represents maximum coverage exclusive of the collateral posted to secure the counterparties' obligations.
As of December 31, 2024 and December 31, 2023, our ACIS counterparties posted collateral, which may include cash, U.S.
Treasury securities, and agency securities, of $3.7 billion and $4.3 billion, respectively. There is a possibility that, if our ACIS
counterparties become insolvent, a third-party involved in the restructure process could cancel a contract or contracts and
prevent us from accessing collateral for future claims despite current collateral provisions.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
72
Financial Intermediaries, Clearinghouses, and Other Counterparties
Derivative Counterparties
We use cleared derivatives, exchange-traded derivatives, OTC derivatives, and forward sales and purchase commitments to
mitigate risk, and are exposed to the non-performance of each of the related financial intermediaries, clearinghouses, and
individual counterparties. Our financial intermediaries and clearinghouse credit exposure relates principally to interest-rate
derivative contracts. We maintain internal standards for approving new derivative counterparties, clearinghouses, and clearing
members.
Cleared and exchange-traded derivatives expose us to counterparty credit risk of central clearinghouses and our clearing
members. The use of cleared and exchange-traded derivatives mitigates our counterparty credit risk exposure to individual
counterparties because a central counterparty is substituted for individual counterparties, and changes in the value of open
contracts are settled daily via payments made through the clearinghouse. We are required to post initial and variation margin to
the clearinghouses. The amount of initial margin we must post for cleared and exchange-traded derivatives may be based, in
part, on S&P or Moody's credit rating of our long-term senior unsecured debt securities. Our obligation to post margin may
increase as a result of the lowering or withdrawal of our credit rating by S&P or Moody's.
OTC derivatives expose us to counterparty credit risk of individual counterparties because these transactions are executed and
settled directly between us and each counterparty, exposing us to potential losses if a counterparty fails to meet its contractual
obligations. When a counterparty in OTC derivatives that is subject to a master netting agreement has a net obligation to us,
generally, the counterparty is obligated to deliver collateral in the form of cash, securities, or a combination of both, to satisfy its
obligation to us under the master netting agreement. Our OTC derivatives also require us to post collateral to counterparties
when we are in a derivative liability position. See Note 9 for additional information on our collateral posting for our OTC
derivatives.
We also execute forward purchase and sale commitments of mortgage-related securities, that are treated as derivatives for
accounting purposes and utilize the MBSD/FICC as a clearinghouse. As a clearing member of the clearinghouse, we post
margin to the MBSD/FICC and are exposed to the counterparty credit risk of the organization. In the event a clearing member
fails and causes losses to the MBSD/FICC, we could be subject to the loss of the margin that we have posted to the MBSD/
FICC. Moreover, our exposure could exceed the amount of margin we have posted to the MBSD/FICC, as clearing members
are generally required to cover losses caused by defaulting members on a pro rata basis. As of December 31, 2024, the gross
fair value of such forward purchase and sale commitments that were in derivative asset positions was $24 million.
Over time, our exposure to derivative counterparties varies depending on changes in fair values, which are affected by changes
in interest rates and other factors. Due to risk limits with certain counterparties, we may be forced to execute transactions with
lower returns with other counterparties when managing our interest-rate risk. We manage our exposure through master netting
and collateral agreements and stress-testing to evaluate potential exposure under possible adverse market scenarios.
Collateral is typically transferred within one business day based on the values of the related derivatives. We regularly review the
market values of the securities pledged to us, primarily agency and U.S. Treasury securities, to manage our exposure to loss.
We conduct additional reviews of our exposure when market conditions dictate or certain events affecting an individual
counterparty occur. When non-cash collateral is posted to us, we require collateral in excess of our exposure to satisfy the net
obligation to us in accordance with the counterparty agreement.
In the event a counterparty defaults, our economic loss may be higher than the uncollateralized exposure of our derivatives if
we are not able to replace the defaulted derivatives in a timely and cost-effective fashion (e.g., due to a significant interest rate
movement during the period or other factors). We could also incur economic losses if non-cash collateral posted to us by the
defaulting counterparty cannot be liquidated at prices that are sufficient to recover the amount of such exposure.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
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The table below compares the gross fair value of our derivative asset positions after counterparty netting with our net exposure
to these positions after considering cash and non-cash collateral held.
Table 41 - Derivative Counterparty Credit Exposure
December 31, 2024
(Dollars in millions)
Number of
Counterparties
Fair Value -
Gain Positions
Fair Value -
Gain Positions,
Net of Collateral
OTC interest-rate swap and swaption counterparties (by rating):
AA- or above
2
$368
$22
A+, A, or A-
12
2,086
7
Cleared and exchange-traded derivatives
2
74
136
Total
16
$2,528
$165
Approximately 99% of our exposure at fair value for OTC interest-rate swap and option-based derivatives, excluding amounts
related to our posting of cash collateral in excess of our derivative liability determined at the counterparty level, was
collateralized at December 31, 2024. The remaining exposure was generally due to market movements between the
measurement of a derivative at fair value and our receipt of the related collateral. The concentration of our derivative exposure
among our primary OTC derivative counterparties remains high and could further increase.
Other Investments Counterparties
We are exposed to the non-performance of institutions relating to other investments (including non-mortgage-related securities
and cash and cash equivalents) transactions, including those entered into on behalf of our securitization trusts. Our policies
require that the institution be evaluated using our internal rating model prior to our entering into such transactions. We monitor
the financial strength of these institutions and may use collateral maintenance requirements to manage our exposure to
individual counterparties.
The major financial institutions with which we transact regarding our other investments (including non-mortgage-related
securities and cash and cash equivalents) include other GSEs, Treasury, the Federal Reserve Bank of New York, GSD/FICC,
highly-rated supranational institutions, depository and non-depository institutions, brokers and dealers, and government money
market funds. For additional information on our other investments portfolio, see MD&A - Liquidity and Capital Resources.
We utilize the GSD/FICC as a clearinghouse to transact many of our trades involving securities purchased under agreements to
resell, securities sold under agreements to repurchase, and other non-mortgage related securities. As a clearing member of
GSD/FICC, we are required to post initial and variation margin payments and are exposed to the counterparty credit risk of
GSD/FICC (including its clearing members). In the event a clearing member fails and causes losses to the GSD/FICC clearing
system, we could be subject to the loss of the margin that we have posted to the GSD/FICC. Moreover, our exposure could
exceed that amount, as members are generally required to cover losses caused by defaulting members on a pro rata basis.
As part of our other investments portfolio, we enter into secured lending arrangements to provide financing for certain Freddie
Mac securities and other assets related to our guarantee businesses. These transactions differ from those we use for liquidity
purposes, as the borrowers may not be major financial institutions, potentially exposing us to the institutional credit risk of
these institutions. We also provide liquidity to certain lenders through our early funding programs, where we advance funds to
lenders for mortgage loans prior to the loans being pooled and securitized. In some cases, the early funded mortgages are
ultimately delivered through cash window purchase transactions.
Forward Settlement Counterparties
We are exposed to the non-performance (settlement risk) of counterparties relating to the forward settlement of loans and
securities (including agency debt, agency residential mortgage-backed securities, and cash window loans). Our policies require
that the counterparty be evaluated using our internal counterparty rating model prior to our entering into such transactions. We
monitor the financial strength of these counterparties and may use collateral maintenance requirements or offsetting
transactions to manage our exposure to individual counterparties.
Fannie Mae
We have counterparty credit risk exposure to Fannie Mae through our ability to commingle TBA-eligible Fannie Mae collateral in
certain of our resecuritization products. When we resecuritize Fannie Mae securities in our commingled resecuritization
products, our guarantee covers timely payments of principal and interest on such securities. If Fannie Mae were to fail to make
a payment on a Fannie Mae security that we resecuritized, we would be responsible for making the payment to the securities
holders. We will be dependent on FHFA, Fannie Mae, and Treasury (pursuant to Fannie Mae's and our respective Purchase
Agreements with Treasury) to avoid a liquidity event or default in the event of a payment failure by Fannie Mae. For additional
information on commingled resecuritizations and the associated risks, see MD&A - Our Business Segments - Single-
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
74
Family and Risk Factors.
Document Custodians
We use third-party document custodians to provide loan document certification and custody services for the loans that we
purchase and securitize. In many cases, our sellers and servicers or their affiliates also serve as document custodians for us.
Our ownership rights to the loans that we own or that back our securitization products could be challenged if a seller or servicer
intentionally or negligently pledges, sells, or fails to obtain a release of prior liens on the loans that we purchased, which could
result in financial losses to us. When a seller or servicer, or one of its affiliates, acts as a document custodian for us, the risk
that our ownership interest in the loans may be adversely affected is increased, particularly in the event the seller or servicer
were to become insolvent. To manage these risks, we establish qualifying standards for our document custodians and maintain
legal and contractual arrangements that identify our ownership interest in the loans. We also monitor the financial strength of
our document custodians on an ongoing basis in accordance with our counterparty credit risk management framework, and we
require transfer of documents to a different third-party document custodian if we have concerns about the solvency or
competency of the document custodian.
Custodial Depository Institutions
We require our mortgage servicers to open and use custodial accounts at an FDIC- or NCUSIF-insured depository institution to
hold, on our behalf, custodial funds, including principal and interest payments, received for Freddie Mac-owned and Freddie
Mac guaranteed mortgages. As a result, the failure of a custodial depository institution holding such funds may expose Freddie
Mac to financial losses if the account balances are in excess of applicable deposit insurance protection and impacted servicers
are unable or unwilling to cover the shortfall. To manage this risk, the Guide requires Freddie Mac servicers to utilize depository
institutions that are rated as "well capitalized" by their regulator and in compliance with minimum financial ratings criteria. We
also monitor the financial strength of the depository institutions on an ongoing basis in accordance with our counterparty credit
risk management framework and may require the replacement of a depository institution if we have concerns about its solvency
or competency.
Market Risk
Overview
Our business segments have embedded exposure to market risk, which is the economic risk associated with adverse changes
in interest rates, volatility, and spreads. Market risk can adversely affect future cash flows, or economic value, as well as
earnings and net worth. The primary sources of interest-rate risk are from our investments in mortgage-related assets, the debt
we issue to fund these assets, and our Single-Family guarantees.
Our mortgage-related assets are held in both business segments and consist of unsecuritized mortgage loans and mortgage-
related securities. Typically, an existing loan or bond investment in our investments portfolio is worth less to an investor when
interest rates (yields) rise and worth more when they decline. For a majority of our single-family mortgage-related assets, the
borrower has the option to make unscheduled principal payments at any time before maturity without incurring a prepayment
penalty. Thus, our mortgage-related asset portfolio is also exposed to uncertainty as to when borrowers will exercise their
option and pay the outstanding principal balance of their loans. We face similar (and in most cases directionally opposite)
exposure related to unsecured debt. Unsecured debt is typically worth less to an investor when interest rates (yields) rise and
worth more when they decline. In addition, we issue debt with embedded options, such as an option to call, which provides us
flexibility concerning the timing of our debt maturities.
Our Single-Family guarantee market risk exposure results from upfront fees (including buy-downs), buy-ups, and float. Upfront
fees are cash we receive at loan acquisition as compensation for our guarantee. From an interest-rate risk standpoint, receiving
upfront fees increases risk as the actual prepayment rate of the loans we purchase may be different than our original estimates
and may vary based on changes in interest rates. As interest rates decrease, loans typically prepay more quickly, resulting in
accelerated recognition of upfront fees in earnings and a higher annualized rate of income. The opposite occurs as interest
rates increase, resulting in slower recognition of upfront fees in earnings and a lower annualized rate of income. We incorporate
upfront fees in our interest-rate risk metrics by assuming upfront fees are equivalent to the sale of an interest-only asset,
allowing for modeling and aggregation of the interest-rate exposure of upfront fees with the rest of our interest-rate exposures.
Conversely, buy-ups are treated as the purchase of an interest-only asset as they represent the excess borrower interest
payments remaining from the securitization process that we effectively purchase from the seller.
Interest-rate risk related to float arises from the timing differences between the borrowers' principal payments on the loans and
the reduction of the security balance. This can lead to significant interest expense if the interest amount paid to a security
investor is higher than the reinvestment amount earned by the securitization trust on payments received from borrowers and
paid to us as trust management income. In general, as interest rates decrease and prepayments increase, this expense to
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
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Freddie Mac increases. Conversely, as interest rates increase and prepayments decrease, this expense to Freddie Mac
decreases.
We actively manage our economic exposure to interest rate fluctuations. Our primary goal in managing interest-rate risk is to
reduce the amount of change in the value of our future cash flows due to future changes in interest rates. We use models to
analyze possible future interest-rate scenarios, along with the cash flows of our assets and liabilities over those scenarios.
Our interest-rate risk limits as of December 31, 2024 essentially required the duration of our assets to equal the duration of our
liabilities, net of derivatives. In accordance with those risk limits, if the amount of our assets increased relative to the amount of
our liabilities (i.e., our capital increased), we were required to maintain the duration of our assets equal to the duration of our
liabilities by investing the additional net assets in investments with little to no duration (e.g., overnight reverse repurchase
agreements), increasing our earnings sensitivity to short-term interest rates. In 1Q 2025, we updated our interest-rate risk limits
to allow for longer-term investments, which reduces our earnings sensitivity to changes in short-term interest rates.
Management of Market Risk
We employ risk management practices that seek to maintain certain interest-rate characteristics of our assets and liabilities
within our risk limits through a number of different strategies, including:
n Asset selection and structuring, such as acquiring or structuring mortgage-related securities with certain expected
prepayment and other characteristics;
n Issuance of both callable and non-callable unsecured debt; and
n Use of interest-rate derivatives, including swaps, swaptions, and futures.
Our use of derivatives is an important part of our strategy to manage interest-rate risk. When deciding to use derivatives to
mitigate our exposures, we consider a number of factors, including cost, exposure to counterparty credit risks, and our overall
risk management strategy. See MD&A - Risk Management - Counterparty Credit Risk and Risk Factors for additional
discussion of our market risk exposures, including those related to derivatives, institutional counterparties, and other market
risks.
Although we have limited ability to manage spread risk, we employ the following strategies:
n Limiting the size of our assets that are exposed to spread risk;
n Using short-TBA positions to hedge certain assets, primarily loans acquired through our cash window that are awaiting
securitization and portions of our agency mortgage-related securities portfolio; and
n Entering into certain transactions and spread-related derivatives to offset our spread exposures.
Interest-Rate Risk
Interest-rate risk is the economic risk related to adverse changes in the level or volatility of interest rates. A change in the level
of interest rates (represented by a parallel shift of the yield curve, all else constant) exposes our assets and liabilities to risk,
potentially affecting expected future cash flows and their present values. This is reflected in our PVS-L and duration gap
disclosures. Similarly, changes in the shape or slope of the yield curve (often reflecting changes in the market's expectation of
future interest rates) expose our assets and liabilities to risk, potentially affecting expected future cash flows and their present
values. This is reflected in our PVS-YC disclosure. Volatility risk is the risk that changes in the market's expectation of the
magnitude of future variations in interest rates will adversely affect our economic value. We are exposed to volatility risk in both
our mortgage-related assets and liabilities, especially in instruments with embedded options.
Measurement of Interest-Rate Risk
We calculate our exposure to changes in interest rates for our interest-rate sensitive assets and liabilities using effective
duration and effective convexity, based on our models.
n Effective duration measures the percentage change in the price of financial instruments from a 100 bps change in interest
rates. Financial instruments with positive duration increase in value as interest rates decline. Conversely, financial
instruments with negative duration increase in value as interest rates rise.
n Effective convexity measures the change in effective duration for a 100 bps change in interest rates. Effective duration is
not constant over the entire yield curve and effective convexity measures how effective duration changes over large
changes in interest rates.
Together, effective duration and effective convexity provide a measure of an instrument's overall price sensitivity to changes in
interest rates. We utilize the concepts of effective duration and effective convexity in calculating our primary interest-rate risk
measures: duration gap and PVS.
n Duration gap - The net effective duration of our overall portfolio of interest-rate sensitive assets and liabilities is expressed
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
76
in months as our duration gap. Duration gap measures the difference in price sensitivity to interest rate changes between
our financial assets and liabilities and is expressed in months relative to the value of assets. For example, assets with a six-
month duration and liabilities with a five-month duration would result in a positive duration gap of one month.
The table below shows various duration gap measurements and the effects that changes in interest rates would generally have
on portfolio value.
Negative Duration Gap
Zero Duration Gap
Positive Duration Gap
Asset Duration < Liability Duration
Asset Duration = Liability Duration
Asset Duration > Liability Duration
Net portfolio will increase in value when interest
rates rise and decrease in value when interest
rates fall.
Net portfolio economic value will be unchanged.
The change in the value of assets from an
instantaneous move in interest rates, either up or
down, would be expected to be accompanied by
an equal and offsetting change in the value of
liabilities.
Net portfolio will increase in value when interest
rates fall and decrease in value when interest
rates rise.
We actively measure and manage our duration gap exposure. In addition to duration gap management, we also measure and
manage the price sensitivity of our portfolio to a number of different specific interest rate changes along the yield curve. The
price sensitivity of an instrument to specific changes in interest rates is known as the instrument's key rate duration risk. By
managing our duration exposure both in aggregate through duration gap and to specific changes in interest rates through key
rate duration, we expect to limit our exposure to interest rate changes for a wide range of interest rate yield curve scenarios.
n PVS - PVS is an estimate of the change in the present value of the cash flows of our financial assets and liabilities from an
instantaneous shock to interest rates, assuming spreads are held constant and no rebalancing actions are undertaken.
PVS is measured in two ways, one measuring the estimated sensitivity of our portfolio's value to a 50 bps parallel
movement in interest rates (PVS-L) and the other to a nonparallel movement (PVS-YC), resulting from a 25 bps change in
slope of the yield curve. The 50 bps shift and 25 bps change in slope of the yield curve used for our PVS measures reflect
reasonably possible near-term changes that we believe provide a meaningful measure of our interest-rate risk sensitivity.
To calculate PVS, the interest rate shock is applied to the duration (and convexity for PVS-L) of all interest-rate sensitive
financial instruments. The resulting change in value for the aggregate portfolio is computed for both the up-rate and down-
rate shock, and whichever produces the more adverse outcome is the PVS. In cases where both the up-rate and down-rate
shocks result in a positive effect, the PVS is zero. PVS results are shown on a pre-tax basis.
Interest-Rate Risk Results
The following tables provide our duration gap, estimated point-in-time, and minimum and maximum PVS-L and PVS-YC results,
and an average of the daily values and standard deviation. The table below also provides PVS-L estimates assuming an
immediate 100 bps shift in the yield curve. The interest-rate sensitivity of a mortgage portfolio varies across a wide range of
interest rates.
Table 42 - PVS-YC and PVS-L Results Assuming Shifts of the Yield Curve
December 31, 2024
December 31, 2023
PVS-YC
PVS-L
PVS-YC
PVS-L
(In millions)
25 bps
50 bps
100 bps
25 bps
50 bps
100 bps
Assuming shifts of the yield curve, (gains)
losses on:(1)
Assets:
Investments
($326)
$3,749
$7,415
($301)
$3,150
$6,229
Guarantees(2)
33
(421)
(769)
34
(369)
(678)
Total assets
(293)
3,328
6,646
(267)
2,781
5,551
Liabilities
(34)
(1,322)
(2,744)
(52)
(1,519)
(3,073)
Derivatives
329
(1,995)
(3,920)
322
(1,274)
(2,547)
Total
$2
$11
($18)
$3
($12)
($69)
PVS
$2
$11
$—
$3
$—
$—
(1)
The categorization of the PVS impact between assets, liabilities, and derivatives on this table is based upon the economic characteristics of those assets and
liabilities, not their accounting classification. For example, purchase and sale commitments of mortgage-related securities and debt of consolidated trusts held by
the mortgage-related investments portfolio are both categorized as assets on this table.
(2)
Represents the interest-rate risk from our guarantees, which include buy-ups, float, and upfront fees (including buy-downs).
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
77
Table 43 - Duration Gap and PVS Results
Year Ended December 31,
2024
2023
(Duration gap in months, dollars in millions)
Duration
Gap
PVS-YC
25 bps
PVS-L
50 bps
Duration
Gap
PVS-YC
25 bps
PVS-L
50 bps
Average
0.1
$3
$1
—
$3
$2
Minimum
(0.5)
—
—
(0.2)
—
—
Maximum
0.3
10
37
0.3
9
31
Standard deviation
0.1
2
4
0.1
2
6
The disclosure in our Monthly Volume Summary reports, which are available on our website www.freddiemac.com/investors/
financials/monthly-volume-summaries.html, reflects the average of the daily PVS-L, PVS-YC, and duration gap estimates for
a given reporting period (a month, a quarter, or a year).
Derivatives enable us to reduce our economic interest-rate risk exposure as we continue to align our derivative portfolio with
the changing duration of our economically hedged assets and liabilities. The table below shows that the PVS-L risk levels,
assuming a 50 bps shift in the yield curve for the periods presented, would have been higher if we had not used derivatives.
Table 44 - PVS-L Results Before Derivatives and After Derivatives
(In millions)
December 31, 2024
December 31, 2023
PVS-L (50 bps):
Before derivatives
$2,006
$1,261
After derivatives
11
—
Effect of derivatives
(1,995)
(1,261)
Spread Risk
Spread risk is the risk that yields in different asset classes may not move together and may adversely affect our economic
value. This risk arises principally because interest rates on our mortgage-related investments may not move in tandem with
interest rates on our financial liabilities and derivatives, potentially affecting the effectiveness of our hedges. We are exposed to
the following types of market spread risk:
n Market spread risk arising from mortgage-related investments, including loans and securities, and certain non-mortgage
investments;
n Market spread risk arising from our use of SOFR and Treasury-based instruments in our risk management activities; and
n Market spread risk arising from the difference in time between when we commit to purchase a mortgage loan through our
pipeline path and when we either securitize or hedge the loan. During this time, market spreads can widen, causing losses
due to changes in fair value.
Spread duration measures the percentage change in the price of financial instruments from a change in spread over the
benchmark interest rates. Unlike effective duration, spread duration typically only impacts the discounting of an instrument’s
cash flows, and not the underlying cash flows themselves. This discounting impact creates a measure that is typically positive,
where the instrument increases in value as spreads decline and decreases in value as spreads widen.
Limitations of Interest-Rate Risk Measures
While we believe that PVS and duration gap are useful risk management tools, they should be understood as estimates rather
than as precise measurements. Mis-estimation of economic market risk could result in over or under hedging of interest-rate
risk, significant economic losses, and an adverse impact on earnings. The limitations of our economic market risk measures
include the following:
n Our PVS and duration gap estimates are determined using models that involve our judgment of interest-rate and
prepayment assumptions.
n There could be times when we hedge differently than our model estimates during the period, such as when we are making
changes or market updates to these models.
n PVS and duration gap do not capture the potential effect of certain other market risks, such as changes in volatility and
market spread risk. The effect of these other market risks can be significant.
n Our sensitivity analyses for PVS and duration gap contemplate only certain movements in interest rates and are performed
at a particular point in time based on the estimated fair value of our existing portfolio.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
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n Although the mortgage-related investments portfolio and Single-Family guarantees are the primary sources of interest-rate
risk to the company, other core activities also contribute to our interest-rate risk and may be managed differently. We have
certain assets that have a relatively short holding period. As a result, we may manage the risk of these assets based on
their disposition, while our risk measures use long-term cash flows. Hedging these businesses at times requires additional
assumptions concerning risk metrics to accommodate changes in pricing that may not be related to the future cash flow of
the assets. This could create a perceived risk exposure as the hedged risk may differ from the modeled risk.
n The choice of the benchmark rate used to model and hedge our positions is a significant assumption. The effectiveness of
our hedges ultimately depends on how closely the different instruments (assets, liabilities, and derivatives) react to the
underlying chosen benchmark. In the simplest example, all instruments would have interest-rate risk based on the same
underlying benchmark, in our case, the swap rate. In practice, however, different instruments react differently versus the
benchmark rate, which creates a market spread between the benchmark rate and the instrument. As the market spreads of
these instruments move differently, our ability to predict the behavior of each instrument relative to the others is reduced,
potentially affecting the effectiveness of our hedges.
n Our reported measurements do not include the sensitivity to interest-rate changes of net worth and the following assets
and liabilities:
l Credit guarantee activities - We currently do not hedge the interest-rate exposure of our credit guarantees except for
the interest-rate exposure related to upfront fees (including buy-downs), buy-ups, float, and STACR debt notes.
l Other assets and other liabilities - We do not include other miscellaneous assets and liabilities, primarily deferred tax
assets, accounts payable and receivable, and non-cash basis adjustments.
GAAP Fair Value Sensitivity to Market Risk
The GAAP accounting treatment for our financial assets and liabilities (i.e., some are measured at amortized cost, while others
are measured at fair value) creates variability in our GAAP earnings when interest rates and spreads change. We manage this
variability of GAAP earnings, which may not reflect the economics of our business, using fair value hedge accounting.
Interest Rate Related GAAP Fair Value Sensitivity
While we manage our interest-rate risk exposure on an economic basis to a low level as measured by our models, our GAAP
financial results are subject to significant earnings variability from period to period based on changes in market conditions.
In an effort to reduce our GAAP earnings variability and better align our GAAP results with the economics of our business, we
elect hedge accounting for certain single-family mortgage loans and certain debt instruments. See Note 9 for additional
information on hedge accounting.
GAAP Fair Value Sensitivity to Changes in Interest Rates
We evaluate a range of interest rate scenarios to determine the sensitivity of our earnings due to changes in interest rates and
to determine our fair value hedge accounting strategies. The interest rate scenarios evaluated include parallel shifts in the yield
curve in which interest rates increase or decrease by 100 bps, non-parallel shifts in the yield curve in which long-term interest
rates increase or decrease by 100 bps, and non-parallel shifts in the yield curve in which short-term and medium-term interest
rates increase or decrease by 100 bps. This evaluation identifies the net effect on comprehensive income from changes in fair
value attributable to changes in interest rates for financial instruments measured at fair value, including the effects of fair value
hedge accounting, for each of the identified scenarios. This evaluation does not include the net effect on comprehensive
income from interest-rate sensitive items that are not measured at fair value (e.g., amortization of mortgage loan premiums and
discounts, changes in fair value of held-for-sale mortgage loans for which we have not elected the fair value option, etc.) or
from changes in our future contractual net interest income due to repricing of our interest-bearing assets and liabilities. The
before-tax results of this evaluation are shown in the table below.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
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Table 45 - GAAP Fair Value Sensitivity to Changes in Interest Rates
(In millions)
December 31, 2024
December 31, 2023
Interest rate scenarios(1)
Parallel yield curve shifts:
+100 bps
($16)
($2)
-100 bps
16
2
Non-parallel yield curve shifts - long-term interest rates:
+100 bps
297
177
-100 bps
(297)
(177)
Non-parallel yield curve shifts - short-term and medium-term interest rates:
+100 bps
(312)
(179)
-100 bps
312
179
(1)
The earnings sensitivity presented is calculated using the change in interest rates and net effective duration exposure.
The actual effect of changes in interest rates on our comprehensive income in any given period may vary based on a number of
factors, including, but not limited to, the composition of our assets and liabilities, the actual changes in interest rates that are
realized at different terms along the yield curve, and the effectiveness of our hedge accounting strategies. Even if implemented
properly, our hedge accounting programs may not be effective in reducing earnings volatility, and our hedges may fail in any
given future period, which could expose us to significant earnings variability in that period. In addition, after dedesignation of a
fair value hedging relationship, the amount of amortization of the fair value hedging basis adjustment associated with the
previously designated hedged item that we recognize in a period may differ from the change in fair value of the previously
designated hedging instrument during that period, which may create variability in our earnings. See Risk Factors - Market
Risks - Changes in interest rates could negatively affect the fair value of our financial assets and liabilities, results of
operations, and net worth for additional information.
Spread-Related Earnings Sensitivity
We have limited ability to manage our spread risk exposure and, therefore, the volatility of market spreads may contribute to
significant GAAP earnings variability. For financial assets measured at fair value, we generally recognize fair value losses when
market spreads widen. Conversely, for financial liabilities measured at fair value, we generally recognize fair value gains when
market spreads widen. Certain accounting elections we make, such as election of the fair value option, may affect the amount
of spread volatility recognized in our results of operations.
Operational Risk
Operational risk is the risk of direct or indirect loss resulting from inadequate or failed internal processes, people, or systems or
from external events. Operational risk is inherent in all of our activities. Operational risk events include breakdowns related to
people, process, and/or technology that could result in financial loss, legal actions, regulatory fines and restrictions, and
reputational harm.
Operational Risk Management and Risk Profile
Our operational risk management methodology includes risk identification, measurement, monitoring, control, and reporting.
When operational risk events are identified, our policies require that the events be documented and analyzed to determine
whether changes are required in our systems, people, and/or processes to mitigate the risk of future events.
In order to evaluate and monitor the risks associated with business processes, each business line periodically completes an
assessment using the risk assessment methodology. The methodology is designed to identify and assess the business line's
exposure to operational risk and determine if action is required to manage the risk to an acceptable level.
In addition to the risk and control self-assessment process, we employ several tools to identify, measure, and monitor
operational risks, including loss event data, key risk indicators, root cause analysis, and testing. Our operational risk
methodology requires that the primary responsibility for managing both the day-to-day risk and longer-term or emerging risks
lies with the business divisions, with independent oversight performed by the second line.
We continue to face heightened operational risk and expect the risk to remain elevated for the near term. This elevated risk
profile is due to the layering impact of several factors including: legacy systems requiring upgrade for operational resiliency;
reliance on manual processes and models; volume and complexity of business initiatives, including new initiatives we are
pursuing as required by the Conservatorship Scorecard; external events such as cybersecurity incidents, other security
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
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incidents, and third-party failures; and issues requiring remediation. Other factors contributing to our heightened operational
risk are discussed in Risk Factors - Operational Risks.
While our operational risk profile remains elevated, we are continuing to strengthen our control environment by further
developing metrics to monitor and report on our risk and control environment.
Operational Resiliency Risk
Operational resiliency risk refers to the potential threats and vulnerabilities that an organization faces in maintaining continuous
and reliable operations. It involves the ability to anticipate, prepare for, and operate through disruptions, including technological
failures, cybersecurity incidents, natural disasters, supply chain disruptions, and human error. The inability to manage resiliency
risk to our critical business processes can impact the achievement of business objectives. To reduce operational resiliency risk,
Freddie Mac has implemented strategies, continuity plans, dual-site technology operations, and other risk mitigation measures
designed to meet desired recovery time objectives and minimize the impact of a disruption.
CSP
We continue to make investments to support the ongoing development and maintenance of the CSP. The CSP is owned and
operated by CSS, which is jointly owned by Freddie Mac and Fannie Mae. While we exercise influence over CSS through our
representation on the CSS Board of Managers, we do not control its day-to-day operations. Freddie Mac, Fannie Mae, FHFA,
and CSS continue to work together to monitor the operational effectiveness of the platform.
We rely on CSS and the CSP for the operation of many of our single-family securitization activities. Our business activities
would be adversely affected and the market for Freddie Mac securities would be disrupted if the CSP were to fail or otherwise
become unavailable to us or if CSS were unable to perform its obligations to us. As the CSP has an operational dependency on
Fannie Mae to administer Freddie Mac issued commingled securities, an operational failure at Fannie Mae could also adversely
impact the ability of CSS to perform its obligations to Freddie Mac. In the event of a CSS operational failure, we may be unable
to issue certain new single-family mortgage-related securities, and investors in mortgage-related securities hosted on the CSS
platform may experience payment delays or errors.
For additional information, see Risk Factors - Operational Risks - A failure in our operational systems or infrastructure,
or those of third parties, could impair our ability to provide market liquidity, disrupt our business operations, damage
our reputation, expose us to legal risk, and cause financial losses.
Cybersecurity Risk
Cybersecurity Risk Management and Strategy
We manage cybersecurity risk using a three lines risk management model and governance structure that is integrated into our
enterprise-wide Risk Framework with oversight by the Board of Directors and its committees and senior management positions,
including our EVP – EO&T and Chief Information Security Officer (who reports to our EVP – EO&T). For additional information on
our enterprise Risk Framework, see Risk Management – Overview, Risk Management – Enterprise Risk Framework,
and Risk Management – Enterprise Risk Governance Structure. Our cybersecurity program continues to evolve based on
the changing needs of our business, the evolving threat landscape, and the evolving legal and regulatory requirements.
Our cybersecurity program is designed to implement a defense in depth strategy. This approach employs overlapping layers of
protection at the perimeter, network, platform, application, and data levels with security incident response and identity lifecycle
management employed at all levels. This strategy is designed so that if one safeguard fails then additional layers are in place to
prevent, detect or mitigate risks from cybersecurity threats. Our key capabilities include solutions designed to protect our
perimeter and network, manage our authentication and access, scan to identify vulnerabilities, monitor and respond to
suspicious activity and protect our most sensitive data. We validate our capabilities according to the Risk Framework and use
third-party vendors and service providers to help enhance our cybersecurity capabilities and to assist us with cybersecurity
program assessments and testing. Our cybersecurity program is also designed to align with the National Institute of Standards
and Technology 800-53 moderate baseline control framework.
We exercise due diligence over our third parties and service providers, including risk assessments and contractual
expectations. However, our control over the security posture of our third-party vendors and service providers and their supply
chain connections is limited.
Material Effects from Cybersecurity Incidents
Our operations rely on the secure, accurate and timely receipt, storage, transmission, use, disclosure, and other processing of
confidential and other information (including personal information) in our systems and networks. We also rely on the secure,
accurate and timely receipt, storage, transmission, use, disclosure, and other processing of confidential and other information
(including personal information) in the systems and networks of our customers and third parties, including suppliers, sellers and
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
81
servicers, financial market utilities, and other third parties. Cybersecurity risks for companies like ours continue to increase. Like
many companies and government entities, from time to time we have been, and expect to continue to be, the target of
attempted cybersecurity incidents and other information security threats, including those from nation-state and nation-state
supported actors. With respect to third parties, there can be no assurance that we can prevent, mitigate, or remediate the risk
of any compromise or failure in the systems, networks, and other technology assets owned or controlled by our third parties.
To date, we are not aware of any cybersecurity incidents that have materially affected or are reasonably likely to materially
affect the company, including our business strategy, results of operations, or financial condition. However, there is no
assurance that our cybersecurity risk management program will prevent cybersecurity incidents from having such impacts in
the future.
For additional information, see Risk Factors - Operational Risks - Cybersecurity threats are changing rapidly and
advancing in sophistication. We may not be able to protect our systems and networks, or the confidentiality of our
confidential or other information (including personal information), from cybersecurity incidents and other unauthorized
access, disclosure, and disruption.
Cybersecurity Governance
The Board of Directors and two of its committees, the Operations and Technology and Risk Committees, oversee the
company's information and cybersecurity operations and risks from cybersecurity threats by receiving periodic reports from our
EVP – EO&T, the Chief Information Security Officer, and other members of management.
Management
Our management is responsible for assessing and managing cybersecurity risks by establishing and maintaining processes and
programs designed to prevent, detect, respond to, and mitigate potential cybersecurity risks. Senior management is regularly
informed by our cybersecurity personnel on cybersecurity matters. Our management also engages in periodic cybersecurity
exercises and internal cybersecurity incident simulations, including tabletop exercises relating to cyberattacks, ransomware,
and other security events. Escalation of specific incidents from our cybersecurity personnel to senior management follow
written, risk-based procedures. Our management periodically reports to the Board of Directors, and its committees. These
reports include information regarding management's ongoing efforts to manage cybersecurity risk and the steps management
has taken towards addressing and mitigating the evolving cybersecurity threat environment. Management discusses
cybersecurity developments with the Chairs of the Operations and Technology Committee and the Risk Committee and other
Board members between Board and committee meetings, as necessary. Our cybersecurity personnel, and those senior
managers who oversee them, including our EVP – EO&T and Chief Information Security Officer, possess demonstrated
expertise with cybersecurity matters. For example, our Chief Information Security Officer and members of the Chief Information
Security Officer’s leadership team have, on average, over 15 years of work experience in information security or cybersecurity
fields and achieved such professional certifications as Certified Information Systems Security Professional (CISSP), Certified
Information Security Manager (CISM), and Factor Analysis of Information Risk (FAIR). For additional information on the
background of our EVP - EO&T, see Directors, Corporate Governance, and Executive Officers - Executive Officers.
Board of Directors
As discussed above, the Operations and Technology Committee and Risk Committee are the committees of the Board of
Directors that oversee our cybersecurity risks. Members of the Board of Directors also receive reports from management
regarding certain internal and industry-wide trends and exercises relating to these matters to assist with their oversight
responsibilities. The company has written, risk-based procedures to escalate information regarding certain cybersecurity
incidents to the appropriate Board members in a timely fashion. Board members have also participated in cybersecurity training
exercises. Additionally, certain Board members are informed of, and have an opportunity to provide feedback on
management's internal cybersecurity incident simulations referenced above. The Board of Directors and its committees also
have authority, as they deem appropriate, to fulfill Board or committee responsibilities, to engage outside consultants or
advisors, including technology and cybersecurity experts, and oversee the company's information security program. See
Directors, Corporate Governance, and Executive Officers - Corporate Governance - Board of Directors and
Board Committee Information for additional information on the Board of Directors' committees.
Third-Party Risk
Third-party risk is the risk of failure of an individual or entity engaged to deliver a product, service, or process to, or on behalf
of, Freddie Mac. We rely on third parties, and their supply chains, to support critical processes and core functions, and are
exposed to operational risks as a result of this reliance. These third parties could experience, directly or through their supply
chains, failures due to process breakdowns, technology outages, cybersecurity incidents and other security incidents, adverse
financial conditions, or other disruptions. We continue to enhance our enterprise capabilities to manage third-party operational
risks. While we continue to mature our program, we may be exposed to associated elevated risks. Our use of third parties
increases exposure to cybersecurity incidents through third parties that access, store, and otherwise process our data
(including personal information) and their supply chains. We also continue to strengthen our processes related to identifying
material subcontractors and service providers of the third parties with which we do business and managing the associated
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
82
operational risk. We closely monitor third parties with which we do business that we deem to be critical to our operations;
however, our control over their security posture remains limited, and there can be no assurance that we can prevent, mitigate,
or remediate the operational risk profile associated with such third parties.
In addition to credit risk exposure, sellers and servicers expose us to operational risk, including operational resilience,
information, and reporting risks. Sellers and servicers also expose us to compliance risk resulting from non-compliance with
applicable laws, regulations, and FHFA supervisory or conservator requirements. For additional information on our monitoring
of our sellers and servicers and related risks, see MD&A - Risk Management - Counterparty Credit Risk and Risk
Factors - Operational Risks - We rely on third parties, including our sellers and servicers, or their vendors and other
business partners, for certain important functions. Any failures by those third parties to deliver products or services, or
to manage risks effectively, could disrupt our business operations or servicing of our portfolio, or expose us to other
operational risks.
Model Risk
Model risk is the potential for adverse consequences from incorrect or insufficient data inputs and model errors or decisions
based on the incorrect use or application of model outputs. Models, in general, face significant challenges in accurately
forecasting key inputs into our financial projections. These can include, but are not limited to, projections of mortgage rates,
house prices, credit defaults, yields, and prepayments. In response, we are managing this risk by closely monitoring model
performance and applying model overlays/adjustments when deemed appropriate. These model overlays/adjustments will be
driven by the latest developments and emerging trends in the economy, as well as any additional government interventions and
internal policy changes. These model overlays/adjustments incorporate subjectivity and may be based upon judgment. Actual
results could differ from our estimates, and the use of different judgments and assumptions related to these estimates could
have a material impact on our consolidated financial statements.
Model development, changes to existing models, and model risks are managed in each business line according to our three
lines framework. New model development and changes to existing models undergo a review process. Each business
periodically reviews model performance, embedded assumptions, limitations, and modeling techniques, and updates its
models as it deems appropriate. ERM independently validates the work done by the business lines (e.g., conducting
independent assessments of ongoing monitoring results, model risk ratings, performance monitoring, and reporting against
thresholds and alerts).
Given the importance and complexity of models in our business, model development may take significant time to complete.
Delays in our model development process could affect our ability to make sound business and risk management decisions, and
increase our exposure to risk. We have procedures designed to manage this risk.
For additional information, see Risk Factors - Operational Risks - We face risks and uncertainties associated with the
models that we use to inform business and risk management decisions and for financial accounting and reporting
purposes.
Compliance Risk
Compliance risk is the risk of non-compliance with applicable laws, regulations, FHFA supervisory or conservator requirements,
trustee agreement requirements, or ethical standards (collectively, regulatory obligations). We have established a compliance
program, leveraging the three lines enterprise Risk Framework, to oversee and manage compliance risk, including effective
challenge of our business areas’ compliance with such obligations, as appropriate. We maintain policies and procedures that
provide the governance framework for the identification, measurement, monitoring, testing, reporting, and remediation of
compliance issues. We have continued to enhance our overall compliance program, including risk assessments, monitoring,
testing, and reporting. To the extent that regulatory concerns are identified, we coordinate with FHFA and our internal auditors
to assess the impact and remediate the concerns, as appropriate. For additional information relating to our compliance
program, see Risk Factors - Legal and Compliance Risks.
Effectiveness of Our Disclosure Controls and Procedures
Management, including our CEO and CFO, conducted an evaluation of the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2024. As of that date, we
had one material weakness related to conservatorship, which remained unremediated, causing us to conclude that our
disclosure controls and procedures were not effective at a reasonable level of assurance. For additional information, see
Controls and Procedures.
Management's Discussion and Analysis
Risk Management
FREDDIE MAC | 2024 Form 10-K
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LIQUIDITY AND CAPITAL RESOURCES
Overview
Our business activities require that we maintain adequate liquidity to meet our financial obligations as they come due and meet
the needs of customers in a timely and cost-efficient manner. We also must maintain adequate capital resources to avoid being
placed into receivership by FHFA.
Sources and Uses of Funds
Our primary source of funding for the assets on our balance sheet is the issuance of debt. In addition to the funding provided
by issuing debt, our other sources of funds include:
n Principal payments on and sales of securities and loans that we own;
n Repurchase transactions;
n Interest income on securities and loans that we own; and
n Guarantee fees (inclusive of fees that we receive at the time we purchase a loan).
We use these sources to fund the assets on our balance sheet. Our primary uses of funds include:
n Principal payments upon the maturity, redemption, or repurchase of our debt;
n Payments of interest on our debt and non-interest expenses, including costs related to CRT transactions;
n Purchases of mortgage loans, including purchases of seriously delinquent or modified loans underlying our securities,
mortgage-related securities, and other investments; and
n Payments related to derivative contracts and posting or pledging of collateral to third parties in connection with secured
financing and daily trade activities.
In addition to the sources and uses of cash described above, we are involved in various legal proceedings, including those
discussed in Legal Proceedings, which may result in a need to use cash to settle claims or pay certain costs or receipt of
cash from settlements.
Our securities and other obligations are not guaranteed by the U.S. government and do not constitute a debt or obligation of
the U.S. government or any agency or instrumentality thereof, other than Freddie Mac. We continue to manage our debt
issuances to remain in compliance with the aggregate indebtedness limits set forth in the Purchase Agreement.
Liquidity
Liquidity Management Framework
The support provided by Treasury pursuant to the Purchase Agreement enables us to have adequate liquidity to conduct our
normal business activities. However, the costs and availability of our debt funding could vary for a number of reasons, including
the uncertainty about the future of the GSEs and any future downgrades in our credit ratings or the credit ratings of the U.S.
government.
We are required to comply with minimum short-, medium-, and long-term liquidity requirements established by FHFA. These
requirements are based on cash flows needed under a stressed scenario that assumes, among other things, that for short- and
medium-term debt, we may not have access to funding from the market for an extended period of time and therefore must fund
our cash needs utilizing certain assets in our portfolio.
The minimum liquidity requirements have four components:
n A 30-day cash flow stress test that assumes we continue to provide liquidity to the market while holding a $10 billion buffer
above outflows;
n A 365-day metric that requires us to hold liquidity to meet our expected cash outflows over 365 days and to continue to
provide liquidity to the market under certain stress conditions;
n A specified minimum long-term debt to less-liquid asset ratio. Less-liquid assets are those that are not eligible to be
pledged as collateral to the FICC; and
n A requirement that we fund our assets with liabilities that have a specified minimum term relative to the term of the assets.
We make extensive use of the Federal Reserve's payment system in our business activities. The Federal Reserve requires that
we fully fund our accounts at the Federal Reserve Bank of New York to the extent necessary to cover cash payments on our
Management's Discussion and Analysis
Liquidity and Capital Resources
FREDDIE MAC | 2024 Form 10-K
84
debt and mortgage-related securities each day, before the Federal Reserve Bank of New York, acting as our fiscal agent, will
initiate such payments. Although we seek to maintain sufficient intraday liquidity to fund our activities through the Federal
Reserve's payment system, we have limited access to cash once the debt markets are closed for the day. Insufficient cash may
cause our account to be overdrawn, potentially resulting in delayed payments on our securities, penalties, and reputational
harm.
Maintaining sufficient liquidity is of primary importance to, and a cost of, our business. Under our liquidity management
practices and policies, we:
n Manage intraday cash needs and provide for the contingency of an unexpected cash demand;
n Maintain cash and non-mortgage investments to enable us to meet ongoing cash obligations for a limited period of time,
assuming no access to unsecured debt markets;
n Maintain unencumbered securities with a value greater than or equal to the largest projected daily cash shortfall for an
extended period of time, assuming no access to unsecured debt markets; and
n Manage the maturity of our unsecured debt based on our asset profile.
To facilitate cash management, we forecast cash outflows and inflows using assumptions and models. These forecasts help us
to manage our liabilities with respect to the timing of our cash flows. Differences between actual and forecasted cash flows
have resulted in higher costs from issuing a higher amount of debt than needed or unexpectedly needing to issue debt, and
may do so in the future. Differences between actual and forecasted cash flows also could result in our account at the Federal
Reserve Bank of New York being overdrawn. We maintain daily cash reserves to manage this risk.
Primary Sources of Liquidity
The following table lists the sources of our liquidity, the balances as of the dates shown, and a brief description of their
importance to Freddie Mac.
Table 46 - Liquidity Sources
(In millions)
December 31, 2024(1)
December 31, 2023(1)
Description
Other Investments Portfolio -
Liquidity and Contingency
Operating Portfolio
$134,405
$124,098
The liquidity and contingency operating portfolio, included
within our other investments portfolio, is primarily used for
short-term liquidity management.
Mortgage-Related Investments
Portfolio
24,144
24,469
The portion of our mortgage-related securities that can be
pledged or sold for liquidity purposes. The amount of cash we
may be able to raise from these activities may be substantially
less than the balance.
(1) Represents carrying value for the liquidity and contingency operating portfolio, included within our other investments portfolio, and UPB for the portion of our mortgage-
related securities that can be pledged as collateral or sold for liquidity purposes.
Other Investments Portfolio
Our other investments portfolio is important to our cash flow, collateral management, asset and liability management, and
ability to provide liquidity and stability to the mortgage market.
Our liquidity and contingency operating portfolio primarily includes securities purchased under agreements to resell and non-
mortgage-related securities. Our non-mortgage-related securities consist of U.S. Treasury securities and other investments that
we could sell to provide us with an additional source of liquidity to fund our business operations. We also maintain non-interest-
bearing deposits at the Federal Reserve Bank of New York and interest-bearing deposits at commercial banks. Our interest-
bearing deposits at commercial banks totaled $5.1 billion as of both December 31, 2024 and December 31, 2023. See MD&A -
Our Portfolios - Investments Portfolio - Other Investments Portfolio for additional information about our other
investments portfolio.
Management's Discussion and Analysis
Liquidity and Capital Resources
FREDDIE MAC | 2024 Form 10-K
85
Mortgage-Related Investments Portfolio
We invest principally in mortgage-related investments, certain categories of which are largely unencumbered. Our primary
source of liquidity among these mortgage assets is our holdings of agency securities. See MD&A - Our Portfolios -
Investments Portfolio - Mortgage-Related Investments Portfolio for additional information about our mortgage loans and
mortgage-related securities.
In addition, we hold certain single-family loans and multifamily loans that could be securitized and would then be available for
sale or for use as collateral for repurchase agreements. Due to the size of our portfolio of mortgage-related assets, the amount
of mortgage-related assets that we may successfully sell or borrow against in the event of a liquidity crisis or significant market
disruption may be substantially less than the amount of mortgage-related assets we hold. There would likely be insufficient
market demand for large amounts of these assets over a prolonged period of time, which would limit our ability to sell or borrow
against these assets.
We hold other mortgage assets, but given their characteristics, they may not be available for immediate sale or for use as
collateral for repurchase agreements. These assets principally consist of single-family delinquent and modified loans.
We are subject to limits on the amount of mortgage assets we can sell in any calendar month without review and approval by
FHFA and, if FHFA so determines, Treasury. See Conservatorship and Related Matters - Limits on Our Mortgage-
Related Investments Portfolio and Indebtedness for additional details.
Primary Sources of Funding
The following table lists the sources of our funding, the balances as of the dates shown, and a brief description of their
importance to Freddie Mac.
Table 47 - Funding Sources
(In millions)
December 31, 2024(1)
December 31, 2023(1)
Description
Debt of Freddie Mac
$182,008
$166,419
Debt of Freddie Mac is used to fund our business activities.
Debt of Consolidated Trusts
3,122,941
3,041,927
Debt of consolidated trusts is used primarily to fund our Single-
Family guarantee activities. This type of debt is principally repaid
by the cash flows of the associated mortgage loans. As a result,
our repayment obligation is limited to amounts paid pursuant to our
guarantee of principal and interest and to purchase modified or
seriously delinquent loans from the trusts.
(1) Represents the carrying value of debt balances after consideration of offsetting arrangements.
Debt of Freddie Mac
We issue debt of Freddie Mac to fund our operations. Competition for funding can vary with economic, financial market, and
regulatory environments. The amount, type, and term of debt issued is based on a variety of factors and is designed to meet
our ongoing cash needs and to comply with our Liquidity Management Framework.
We may use the following types of products as part of our funding and liquidity management activities:
n Securities sold under agreements to repurchase - Collateralized short-term borrowings where we sell securities to
a counterparty with an agreement to repurchase those securities at a future date.
n Discount notes and Reference Bills® - Short-term instruments with maturities of one year or less. These products are
generally sold on a discounted basis, paying principal only at maturity. Reference Bills are auctioned to dealers on a regular
schedule, while discount notes are issued in response to investor demand and our cash needs.
n Medium-term notes - A variety of fixed-rate and variable-rate medium-term notes, including callable and noncallable
securities, and zero-coupon securities, with various maturities.
n Reference Notes® securities - Reference Notes securities are non-callable fixed-rate securities, which we generally
issue with original maturities greater than or equal to one year.
As of December 31, 2024, our aggregate indebtedness, calculated as the par value of debt of Freddie Mac, was $187.7 billion,
which was below the $270.0 billion debt cap limit imposed by the Purchase Agreement. Our aggregate indebtedness to meet
our funding needs is constrained by the debt cap limit. We disclose the amount of our indebtedness on this basis monthly
under the caption "Indebtedness Pursuant to the Purchase Agreement - Total Debt Outstanding" in our Monthly Volume
Summary reports, which are available on our website at www.freddiemac.com/investors/financials/monthly-volume-
summaries.html.
Management's Discussion and Analysis
Liquidity and Capital Resources
FREDDIE MAC | 2024 Form 10-K
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To fund our business activities, we depend on the continuing willingness of investors to purchase our debt securities. Changes
or perceived changes in the government's support of us could have a severe negative effect on our access to the debt markets
and on our debt funding costs.
In addition, any change in applicable legislative or regulatory exemptions, including those described in Regulation and
Supervision, could adversely affect our access to some debt investors, thereby potentially increasing our debt funding costs.
The table below summarizes the par value and the average rate of debt of Freddie Mac securities we issued or paid off,
including regularly scheduled principal payments, payments resulting from calls, and payments for repurchases. We call,
exchange, or repurchase our outstanding debt securities from time to time for a variety of reasons, including managing our
funding composition and supporting the liquidity of our debt securities.
Table 48 - Debt of Freddie Mac Activity
Year Ended December 31,
2024
2023
(Dollars in millions)
Par Value
Average Rate(1)
Par Value
Average Rate(1)
Short-term:
Beginning balance
$6,032
5.39 %
$7,716
3.49 %
Issuances
100,593
5.13
93,794
4.50
Repayments
—
—
—
—
Maturities
(91,909)
5.23
(95,478)
4.33
Total short-term debt
14,716
4.59
6,032
5.39
Long-term:
Beginning balance
168,009
3.31
170,363
2.22
Issuances
107,453
5.18
53,078
5.52
Repayments
(72,972)
5.57
(13,743)
5.57
Maturities
(29,547)
2.49
(41,690)
2.52
Total long-term debt
172,943
3.65
168,008
3.31
Total debt of Freddie Mac, net
$187,659
3.73 %
$174,040
3.38 %
(1)
Average rate is weighted based on par value.
Our callable debt provides us with the option to repay the outstanding principal balance of the debt prior to its contractual
maturity date. As of December 31, 2024, $75.1 billion of the outstanding $113.9 billion of callable debt may be called within one
year, not including callable debt due to contractually mature within one year.
Management's Discussion and Analysis
Liquidity and Capital Resources
FREDDIE MAC | 2024 Form 10-K
87
Maturity and Redemption Dates
The following table presents the par value of debt of Freddie Mac by contractual maturity date and earliest redemption date.
The earliest redemption date refers to the earliest call date for callable debt and the contractual maturity date for all other debt
of Freddie Mac.
Table 49 - Maturity and Redemption Dates
As of December 31, 2024
As of December 31, 2023
(In millions)
Contractual Maturity Date Earliest Redemption Date
Contractual Maturity Date Earliest Redemption Date
Debt of Freddie Mac(1):
1 year or less
$62,951
$138,053
$47,276
$144,232
1 year through 2 years
45,007
36,281
61,187
15,249
2 years through 3 years
20,068
370
15,645
447
3 years through 4 years
8,307
345
12,530
305
4 years through 5 years
28,579
2,055
10,947
345
Thereafter
21,423
9,231
24,278
11,285
STACR and SCR debt(2)
1,324
1,324
2,177
2,177
Total debt of Freddie Mac
$187,659
$187,659
$174,040
$174,040
(1)
As of December 31, 2024 and December 31, 2023, excludes $8.2 billion and $10.2 billion, respectively, of payables related to securities sold under agreements to
repurchase that we offset against receivables related to securities purchased under agreements to resell on our consolidated balance sheets.
(2)
STACR debt notes and SCR debt notes are subject to prepayment risk as their payments are based upon the performance of a reference pool of mortgage assets that
may be prepaid by the related mortgage borrowers at any time generally without penalty and are, therefore, included as a separate category in the table.
Debt of Consolidated Trusts
The largest component of debt on our consolidated balance sheets is debt of consolidated trusts, which relates to
securitization transactions that we consolidate for accounting purposes. We primarily issue this type of debt by securitizing
mortgage loans to finance our guarantee activities. When we consolidate securitization trusts, we recognize on our
consolidated balance sheets the assets held by the trusts, the majority of which are mortgage loans, and the debt issued by the
trusts, the majority of which are Level 1 Securitization Products.
Debt of consolidated trusts represents our liability to third parties that hold beneficial interests in our consolidated securitization
trusts. Debt of consolidated trusts is principally repaid from the cash flows of the mortgage loans held by the securitization
trusts that issued the debt. In circumstances when the cash flows of the mortgage loans are not sufficient to repay the debt, we
make up the shortfall because we have guaranteed the payment of principal and interest on the debt. In certain circumstances,
we have the right and/or obligation to purchase the loan from the trust prior to its contractual maturity. For additional
information on our purchases of loans from trusts, see Our Business Segments - Single-Family - Business Overview.
At December 31, 2024, our estimated net exposure to this type of debt (including the amounts that are due to Freddie Mac for
debt of consolidated trusts that we purchased) is recognized as the allowance for credit losses on mortgage loans held by
consolidated trusts. See Note 6 for details on our allowance for credit losses.
The table below shows the issuance and extinguishment activity for the debt of our consolidated trusts.
Table 50 - Debt of Consolidated Trusts Activity
Year Ended December 31,
(In millions)
2024
2023
Beginning balance
$2,999,893
$2,929,567
Issuances
483,680
423,303
Repayments and extinguishments
(397,592)
(352,977)
Ending balance
3,085,981
2,999,893
Unamortized premiums and discounts
36,960
42,034
Debt of consolidated trusts
$3,122,941
$3,041,927
Management's Discussion and Analysis
Liquidity and Capital Resources
FREDDIE MAC | 2024 Form 10-K
88
Credit Ratings
Our ability to access the capital markets and other sources of funding, as well as our cost of funds, may be affected by our
credit ratings. The table below indicates our credit ratings as of January 31, 2025.
Table 51 - Freddie Mac Credit Ratings
Nationally Recognized Statistical Rating Organization
S&P
Moody's
Fitch
Senior long-term debt
AA+
Aaa
AA+
Short-term debt
A-1+
P-1
F-1+
Preferred stock(1)
D
Ca
C
Outlook
Stable
Negative
Stable
(1)
Does not include senior preferred stock issued to Treasury.
Our credit ratings and outlooks are primarily based on the support we receive from Treasury and, therefore, are affected by
changes in the credit ratings and outlooks of the U.S. government.
A security rating is not a recommendation to buy, sell, or hold securities. It may be subject to revision or withdrawal at any time
by the assigning rating organization. Each rating should be evaluated independently of any other rating.
Contractual Obligations
Our contractual obligations affect our liquidity and capital resource needs and primarily include the debt (and associated
interest payments) and derivative liabilities recognized on our consolidated balance sheets. We also have contractual
obligations recognized in other liabilities on our consolidated balance sheets, including payments to our qualified and non-
qualified defined contribution plans and other benefit plans, and future cash payments due under our obligations to make
delayed equity contributions to LIHTC partnerships.
We also have contractual obligations associated with our commitments to purchase loans and mortgage-related securities from
third parties, most of which are accounted for as derivatives, as well as certain other off-balance sheet obligations that are
legally binding and enforceable, including guarantees, unfunded lending arrangements, and obligations to advance funds upon
the occurrence of certain events. See Off-Balance Sheet Arrangements for additional information on the potential effects of
our off-balance sheet obligations on our liquidity and capital resources.
The amount and timing of payments due related to debt of Freddie Mac are discussed in Primary Sources of Funding. Most of
our purchase commitments are scheduled to occur within the next 12 months. The amount and timing of certain other of our
contractual obligations are uncertain, including future payments of principal and interest related to debt of consolidated trusts
held by third parties, STACR and MSCR transactions, cash settlements on derivative agreements not yet accrued, guarantee
payments, and commitments to advance funds under certain off-balance sheet arrangements.
Off-Balance Sheet Arrangements
We enter into certain business arrangements that are not recorded on our consolidated balance sheets or that may be recorded
in amounts that differ from the full contractual or notional amount of the transaction that affect our short- and long-term liquidity
needs. These off-balance sheet arrangements primarily consist of guarantees and commitments. Certain of these arrangements
present credit risk exposure. See MD&A - Risk Management - Credit Risk for additional information on our credit risk
exposure on off-balance sheet arrangements.
Guarantees
We have certain off-balance sheet arrangements related to our mortgage-related guarantee activities. Our off-balance sheet
arrangements related to mortgage-related guarantees primarily consist of guaranteed K Certificates. Our guarantee of these
securities and other mortgage-related guarantees may result in liquidity needs to cover potential cash flow shortfalls from
borrower defaults.
We have the ability to commingle TBA-eligible Fannie Mae collateral in certain of our resecuritization products. When we
resecuritize Fannie Mae securities in our commingled resecuritization products, our guarantee covers timely payments of
principal and interest on such securities. Accordingly, commingling Fannie Mae collateral in our resecuritization transactions
increases our off-balance sheet liquidity exposure as we do not have control over the Fannie Mae collateral. See Note 3 and
Note 5 for additional information on our mortgage-related guarantees and guarantees of Fannie Mae securities.
Management's Discussion and Analysis
Liquidity and Capital Resources
FREDDIE MAC | 2024 Form 10-K
89
Commitments
We enter into certain commitments, including commitments to purchase securities under agreements to resell, commitments to
purchase multifamily loans, and unfunded multifamily lending arrangements, that are not recorded on our consolidated balance
sheets. We have elected the fair value option for certain of our commitments to purchase multifamily loans. We also have
entered into other commitments to purchase or sell mortgage loans or mortgage-related securities that are accounted for as
derivative instruments. These commitments are recognized on our consolidated balance sheets at fair value.
In addition, in connection with certain of our multifamily other mortgage-related guarantee arrangements and other
securitization products, we have provided commitments to advance funds, commonly referred to as "liquidity guarantees."
These guarantees require us to advance funds to third parties that enable them to repurchase tendered bonds or securities that
are unable to be remarketed. At both December 31, 2024 and December 31, 2023, there were no liquidity guarantee advances
outstanding. See Note 5 and Note 9 for additional information on our commitments.
Cash Flows
n 2024 vs. 2023 - Cash and cash equivalents (including restricted cash and cash equivalents) decreased slightly from $6.0
billion as of December 31, 2023 to $5.5 billion as of December 31, 2024.
n 2023 vs. 2022 - Cash and cash equivalents (including restricted cash and cash equivalents) decreased slightly from $6.4
billion as of December 31, 2022 to $6.0 billion as of December 31, 2023.
Capital Resources
The GSE Act specifies certain capital requirements for us and authorizes FHFA to establish other capital requirements as well
as to increase our minimum capital levels or establish additional capital and reserve requirements for particular purposes. In
October 2008, FHFA suspended capital classification of us during conservatorship, in light of the Purchase Agreement.
Our entry into conservatorship resulted in significant changes to the assessment of our capital adequacy and our management
of capital. We entered into the Purchase Agreement with Treasury, pursuant to which we issued to Treasury both senior
preferred stock and a warrant to purchase 79.9% of our common stock outstanding on a fully diluted basis on the date of
exercise. Under the Purchase Agreement, Treasury made a commitment to provide us with equity funding in certain conditions
to eliminate deficits in our net worth. Our ability to obtain equity funding from Treasury pursuant to its commitment under the
Purchase Agreement has enabled us to avoid being placed into receivership by FHFA and maintain the confidence of the debt
markets as having very high-quality credit, upon which our business model is dependent. The amount of available funding
remaining under the Purchase Agreement was $140.2 billion as of December 31, 2024, which will be reduced by any future
draws.
Pursuant to the Purchase Agreement, we will not have a dividend requirement to Treasury on the senior preferred stock until
our Net Worth Amount exceeds the amount of adjusted total capital necessary to meet capital requirements and buffers set
forth in the ERCF. Based on our Net Worth Amount of $59.6 billion as of December 31, 2024, no dividend is payable to
Treasury for the quarter ended December 31, 2024. Under the Purchase Agreement, the payment of dividends does not reduce
the outstanding liquidation preference on the senior preferred stock. Our cumulative senior preferred stock dividend payments
totaled $119.7 billion as of December 31, 2024.
The aggregate liquidation preference of the senior preferred stock owned by Treasury was $129.0 billion as of December 31,
2024. The aggregate liquidation preference of the senior preferred stock will be increased, at the end of each fiscal quarter
through the Capital Reserve End Date, by an amount equal to the increase in the Net Worth Amount, if any, during the
immediately prior fiscal quarter. In addition, to the extent that we draw additional funds in the future, the aggregate liquidation
preference will increase by the amount of those draws. For additional information on the Purchase Agreement, warrant and
senior preferred stock, including our dividend requirement on the senior preferred stock and the commitment fee to be paid to
Treasury after the Capital Reserve End Date, see MD&A - Conservatorship and Related Matters, Note 2, and Note 11.
Management's Discussion and Analysis
Liquidity and Capital Resources
FREDDIE MAC | 2024 Form 10-K
90
The table below presents activity related to our net worth.
Table 52 - Net Worth Activity
Year Ended December 31,
(In millions)
2024
2023
2022
Beginning balance, January 1
$47,722
$37,018
$28,033
Comprehensive income
11,853
10,704
8,985
Capital draws from Treasury
—
—
—
Senior preferred stock dividends declared
—
—
—
Total equity / net worth
$59,575
$47,722
$37,018
Remaining Treasury funding commitment
$140,162
$140,162
$140,162
Aggregate draws under Purchase Agreement
71,648
71,648
71,648
Aggregate cash dividends paid to Treasury
119,680
119,680
119,680
Liquidation preference of the senior preferred stock
129,038
117,309
107,878
ERCF
FHFA established the ERCF as a new enterprise regulatory capital framework for Freddie Mac and Fannie Mae in December
2020. FHFA published a final rule in November 2023 amending several provisions of the ERCF, with most of the amendments
becoming effective in April 2024. Our current capital levels are significantly below the levels that would be required under the
ERCF. The ERCF has a transition period for compliance, and we are not required to comply with the regulatory capital
requirements or the buffer requirements while in conservatorship. In general, the compliance date for the regulatory capital
requirements will be the later of the date of termination of our conservatorship and any later compliance date provided in a
transition order, and the compliance date for buffer requirements in the ERCF will be the date of termination of our
conservatorship. With respect to the ERCF’s advanced approaches requirements, the compliance date is January 1, 2028 or
any later compliance date specified by FHFA.
The ERCF establishes risk-based and leverage capital requirements and includes capital requirements relating to the amount
and form of the capital we hold, based largely on definitions of capital used in U.S. banking regulators' regulatory capital
framework. The ERCF capital requirements contain both statutory capital elements (total capital and core capital) and
regulatory capital elements (CET1 capital, Tier 1 capital, and adjusted total capital). The ERCF also includes a requirement that
we hold prescribed capital buffers that can be drawn down in periods of financial stress and then rebuilt over time as economic
conditions improve. If we fall below the prescribed buffer amounts, we must restrict capital distributions such as stock
repurchases and dividends, as well as discretionary bonus payments to executives, until the buffer amounts are restored.
Risk-Based Capital Requirements
Under the ERCF risk-based capital requirements, we must maintain our CET1 capital, Tier 1 capital, and adjusted total capital
ratios equal to at least 4.5%, 6.0%, and 8.0%, respectively, of RWA. We must also maintain statutory total capital equivalent to
at least 8.0% of the total RWA. To avoid limitations on capital distributions and discretionary bonus payments tied to executive
compensation, we also must maintain CET1 capital that exceeds the risk-based capital requirements by at least the amount of
the PCCBA. The PCCBA consists of three separate component buffers—a stress capital buffer, a stability capital buffer, and a
countercyclical capital buffer.
n The stress capital buffer must be at least 0.75% of our ATA as of the last day of the previous calendar quarter. FHFA will
periodically re-size the stress capital buffer to the extent that FHFA’s eventual program for supervisory stress tests
determines that our peak capital exhaustion under a severely adverse stress scenario would exceed 0.75% of ATA.
n The stability capital buffer is tailored to the risk that our default or other financial distress could pose to the liquidity,
efficiency, competitiveness, or resiliency of national housing finance markets. The stability capital buffer is based on our
share of residential mortgage debt outstanding. As of December 31, 2024, our stability capital buffer was 0.75% of ATA.
n The countercyclical capital buffer is currently set at 0.0% of our ATA. FHFA has indicated that it will adjust the
countercyclical capital buffer taking into account the macro-financial environment in which we operate, such that the buffer
would be deployed only when excess aggregate credit growth is judged to be associated with a build-up of system-wide
risk.
Leverage Capital Requirements
Under the ERCF leverage capital requirements, we must maintain our Tier 1 capital ratio equal to at least 2.5% of ATA. We
must also maintain our statutory core capital ratio equal to at least 2.5% of ATA. To avoid limitations on capital distributions
Management's Discussion and Analysis
Liquidity and Capital Resources
FREDDIE MAC | 2024 Form 10-K
91
and discretionary bonus payments tied to executive compensation, we also must maintain Tier 1 capital that exceeds the
leverage capital requirements by at least the amount of the PLBA. The PLBA is equal to 50% of our stability capital buffer.
Oversight, Governance, and Reporting
Our capital management is governed by policies, standards, and procedures. The Capital Committee, composed primarily of
executive officers across the various divisions (including the CFO, CRO, and heads of business), provides governance across
overall capital management. In addition, ERM and Internal Audit conduct independent assessments of capital management and
implementation. These assessments are intended to help ensure that our capital execution, assessment, and monitoring are
consistent and in compliance with the ERCF.
Under the ERCF, we are required to submit quarterly ERCF capital reports to FHFA. These requirements include quarterly
quantitative information to support the ERCF capital amount and ratio calculations and the underlying enterprise risk weighting
calculations. We are also required to publish quarterly ERCF public disclosures and submit an annual capital plan to FHFA.
Pursuant to an FHFA rule on stress testing of regulated entities, we are required to conduct annual stress tests using scenarios
specified by FHFA to determine whether we have sufficient capital to absorb losses as a result of adverse economic conditions.
Under the rule, we must publicly disclose the results of the stress test under the "severely adverse" scenario. See MD&A -
Regulation and Supervision - Capital Standards and Public Disclosures for additional information on the ERCF including
our reporting requirements.
Capital Metrics
The table below presents the components of our regulatory capital.
Table 53 - Regulatory Capital Components
(In millions)
December 31, 2024
December 31, 2023
Total equity
$59,575
$47,722
Less:
Senior preferred stock
72,648
72,648
Preferred stock
14,109
14,109
Common equity
(27,182)
(39,035)
Less: deferred tax assets arising from temporary differences that exceed 10% of CET1 capital
and other regulatory adjustments
5,123
4,108
Common equity Tier 1 capital
(32,305)
(43,143)
Add: Preferred stock
14,109
14,109
Tier 1 capital
(18,196)
(29,034)
Tier 2 capital adjustments
—
—
Adjusted total capital
($18,196)
($29,034)
The table below presents the components of our statutory capital.
Table 54 - Statutory Capital Components
(In millions)
December 31, 2024
December 31, 2023
Total equity
$59,575
$47,722
Less:
Senior preferred stock
72,648
72,648
AOCI, net of taxes
(27)
(22)
Core capital
(13,046)
(24,904)
General allowance for foreclosure losses(1)
7,239
6,849
Total statutory capital
($5,807)
($18,055)
(1)
Represents our allowance for credit losses.
Management's Discussion and Analysis
Liquidity and Capital Resources
FREDDIE MAC | 2024 Form 10-K
92
The table below presents our capital metrics under the ERCF.
Table 55 - Capital Metrics Under ERCF
(In billions)
December 31, 2024
December 31, 2023
Adjusted total assets
$3,817
$3,775
Risk-weighted assets (standardized approach):
Credit risk
988
884
Market risk
58
54
Operational risk
72
71
Total risk-weighted assets
$1,118
$1,009
(In billions)
December 31, 2024
December 31, 2023
Stress capital buffer
$28
$28
Stability capital buffer
29
23
Countercyclical capital buffer amount
—
—
PCCBA
$57
$51
PLBA
$14
$11
December 31, 2024
(Dollars in billions)
Minimum
Capital
Requirement
Applicable
Buffer
Capital
Requirement
(Including Buffer(1))
Available
Capital (Deficit)
Capital
Shortfall
Risk-based capital amounts:
Total capital (statutory)
$89
N/A
$89
($6)
($95)
CET1 capital
50
$57
107
(32)
(139)
Tier 1 capital
67
57
124
(18)
(142)
Adjusted total capital
89
57
146
(18)
(164)
Risk-based capital ratios(2):
Total capital (statutory)
8.0 %
N/A
8.0 %
(0.5) %
(8.5) %
CET1 capital
4.5
5.1 %
9.6
(2.9)
(12.5)
Tier 1 capital
6.0
5.1
11.1
(1.6)
(12.7)
Adjusted total capital
8.0
5.1
13.1
(1.6)
(14.7)
Leverage capital amounts:
Core capital (statutory)
$95
N/A
$95
($13)
($108)
Tier 1 capital
95
$14
109
(18)
(127)
Leverage capital ratios(3):
Core capital (statutory)
2.5 %
N/A
2.5 %
(0.3) %
(2.8) %
Tier 1 capital
2.5
0.4 %
2.9
(0.5)
(3.4)
Management's Discussion and Analysis
Liquidity and Capital Resources
FREDDIE MAC | 2024 Form 10-K
93
December 31, 2023
(Dollars in billions)
Minimum
Capital
Requirement
Applicable
Buffer(1)
Capital
Requirement
(Including Buffer)
Available
Capital (Deficit)
Capital
Shortfall
Risk-based capital amounts:
Total capital
$81
N/A
$81
($18)
($99)
CET1 capital
45
$51
96
(43)
(139)
Tier 1 capital
60
51
111
(29)
(140)
Adjusted total capital
81
51
132
(29)
(161)
Risk-based capital ratios(2):
Total capital
8.0 %
N/A
8.0 %
(1.8) %
(9.8) %
CET1 capital
4.5
5.0 %
9.5
(4.3)
(13.8)
Tier 1 capital
6.0
5.0
11.0
(2.9)
(13.9)
Adjusted total capital
8.0
5.0
13.0
(2.9)
(15.9)
Leverage capital amounts:
Core capital
$95
N/A
$95
($25)
($120)
Tier 1 capital
95
$11
106
(29)
(135)
Leverage capital ratios(3):
Core capital
2.5 %
N/A
2.5 %
(0.7) %
(3.2) %
Tier 1 capital
2.5
0.3 %
2.8
(0.8)
(3.6)
(1)
PCCBA for risk-based capital and PLBA for leverage capital.
(2)
As a percentage of RWA.
(3)
As a percentage of ATA.
At December 31, 2024, our maximum payout ratio under the ERCF was 0.0%, which applies to limit our capital distributions
and discretionary bonus payments discussed under the risk-based and leverage capital requirements.
Management's Discussion and Analysis
Liquidity and Capital Resources
FREDDIE MAC | 2024 Form 10-K
94
CONSERVATORSHIP AND RELATED MATTERS
Conservator Powers Over Our Company
FHFA has broad powers when acting as our Conservator. Upon its appointment, the Conservator immediately succeeded to all
rights, titles, powers, and privileges of Freddie Mac and of any stockholder, officer, or director of Freddie Mac with respect to
Freddie Mac and its assets. The Conservator also succeeded to the title to all books, records, and assets of Freddie Mac held
by any other legal custodian or third party.
Under the GSE Act, the Conservator may take any actions it determines are necessary to put us in a safe and solvent condition
and appropriate to carry on our business and preserve and conserve our assets and property. The Conservator's powers
include the ability to transfer or sell any of our assets or liabilities, subject to certain limitations and post-transfer notice
provisions, without any approval, assignment of rights or consent of any party. However, the GSE Act provides that loans and
mortgage-related assets that have been transferred to a Freddie Mac securitization trust must be held by the Conservator for
the beneficial owners of the trust and cannot be used to satisfy our general creditors.
We conduct our business subject to the direction of FHFA as our Conservator. The Conservator has authorized the Board of
Directors to oversee management's conduct of our business operations so we can operate in the ordinary course. The directors
serve on behalf of, exercise authority as provided by, and owe their fiduciary duties of care and loyalty to the Conservator. The
Conservator retains the authority to withdraw or revise the authority it has provided at any time. The Conservator also retains
certain significant authorities for itself and has not provided them to the Board of Directors. The Conservator continues to
provide strategic direction for the company and directs the efforts of the Board of Directors and management to implement its
strategy. Many management decisions are subject to review and/or approval by FHFA and management frequently receives
direction from FHFA on various matters involving day-to-day operations.
Our current business objectives reflect direction we have received from the Conservator, including in the Conservatorship
Scorecards. Certain actions that we have taken pursuant to such direction are intended to help homeowners, renters, and the
mortgage market and could have a negative impact on our business, operating results, or financial condition. For additional
information on our business objectives, see Note 2.
Purchase Agreement, Warrant, and Senior Preferred Stock
In connection with our entry into conservatorship, we entered into the Purchase Agreement with Treasury. Under the Purchase
Agreement, we issued to Treasury both senior preferred stock and a warrant to purchase common stock. The Purchase
Agreement, warrant, and senior preferred stock do not contain any provisions causing them to terminate or cease to exist upon
the termination of conservatorship. The conservatorship, Purchase Agreement, warrant, and senior preferred stock materially
limit the rights of our common and preferred stockholders (other than Treasury).
Pursuant to the Purchase Agreement we issued to Treasury one million shares of Variable Liquidation Preference Senior
Preferred Stock with an initial liquidation preference of $1 billion and a warrant to purchase, for a nominal price, shares of our
common stock equal to 79.9% of the total number of shares outstanding. The senior preferred stock and warrant were issued
to Treasury as an initial commitment fee in consideration of Treasury's commitment to provide funding to us under the
Purchase Agreement. We did not receive any cash proceeds from Treasury as a result of issuing the senior preferred stock or
the warrant. Under the Purchase Agreement, our ability to repay the liquidation preference of the senior preferred stock is
limited, and we will not be able to do so for the foreseeable future, if at all.
The Purchase Agreement provides that, on a quarterly basis, we generally may draw funds up to the amount, if any, by which
our total liabilities exceed our total assets, as reflected on our GAAP consolidated balance sheets for the applicable fiscal
quarter, provided that the aggregate amount funded under the Purchase Agreement may not exceed Treasury's commitment.
The amount of any draw will be added to the aggregate liquidation preference of the senior preferred stock and will reduce the
amount of available funding remaining. Deficits in our net worth have made it necessary for us to make substantial draws on
Treasury's funding commitment under the Purchase Agreement, with the majority of these draws occurring from 2008 to 2011.
In addition, increases in our Net Worth Amount since December 2017 have been, and will be, added to the aggregate
liquidation preference of the senior preferred stock. The liquidation preference of the senior preferred stock will continue to be
increased at the end of each fiscal quarter through the Capital Reserve End Date, by an amount equal to the increase in the Net
Worth Amount, if any, during the immediately prior fiscal quarter. As of December 31, 2024, the aggregate liquidation
preference of the senior preferred stock was $129.0 billion, and the amount of available funding remaining under the Purchase
Agreement was $140.2 billion, which will be reduced by any future draws.
For additional information on the Purchase Agreement, warrant, and senior preferred stock, see Note 2.
The Purchase Agreement and warrant contain covenants that significantly restrict our business and capital activities. For
example, the Purchase Agreement provides that, until the senior preferred stock is repaid or redeemed in full, we may not,
without the prior written consent of Treasury:
Management's Discussion and Analysis
Conservatorship and Related Matters
FREDDIE MAC | 2024 Form 10-K
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n Pay dividends on our equity securities, other than the senior preferred stock or warrant, or repurchase our equity securities;
n Issue any additional equity securities, except in limited instances;
n Exit from conservatorship, except in limited circumstances;
n Sell, transfer, lease, or otherwise dispose of any assets, other than dispositions for fair market value in the ordinary course
of business, consistent with past practices, and in other limited circumstances; and
n Issue any subordinated debt.
The Purchase Agreement also places limits on our mortgage-related investments portfolio, indebtedness, secondary market
activities, and single-family loan acquisitions, as described below. For additional information on the Purchase Agreement
covenants, see Note 2, and for related risks, see Risk Factors - Conservatorship and Related Matters.
Limits on Our Mortgage-Related Investments Portfolio and
Indebtedness
Our ability to acquire and sell mortgage assets is significantly constrained by limitations under the Purchase Agreement and
other limitations imposed by FHFA:
n The Purchase Agreement limits the size of our mortgage-related investments portfolio to a maximum of $225 billion. The
calculation of mortgage assets subject to the Purchase Agreement cap includes the UPB of mortgage assets and 10% of
the notional value of interest-only securities. Our mortgage-related investments portfolio was $123.5 billion as of
December 31, 2024, including $22.5 billion representing 10% of the notional amount of the interest-only securities we held
as of December 31, 2024.
n With respect to the composition of our mortgage-related investments portfolio, FHFA instructed us to (1) hold no more than
$20 billion in Single-Family agency MBS with all dollar caps to be based on UPB and (2) hold no collateralized mortgage
obligations (CMOs), which are also sometimes referred to as REMICs. We have a holding period limit to sell any new CMO
tranches created but not sold at issuance. CMOs do not include tranches initially retained from reperforming loans senior
subordinate securitizations.
n Under the Purchase Agreement, we may not incur indebtedness that would result in the par value of our aggregate
indebtedness exceeding 120% of the amount of mortgage assets we are permitted to own on December 31 of the
immediately preceding calendar year. Our debt cap under the Purchase Agreement decreased to $270 billion on January 1,
2023 as a result of the decrease in the mortgage assets limit under the Purchase Agreement to $225 billion on December
31, 2022. As of December 31, 2024, our aggregate indebtedness for purposes of the debt cap was $187.7 billion.
n FHFA has indicated that any portfolio sales should be commercially reasonable transactions that consider impacts to the
market, borrowers, and neighborhood stability.
Our decisions with respect to managing the mortgage-related investments portfolio affect our business segments. In order to
achieve all of our portfolio goals, it is possible that we may forgo economic opportunities in one business segment in order to
pursue opportunities in the other business segment.
Limits on Our Secondary Market Activities and Single-Family Loan
Acquisitions
The Purchase Agreement restricts our secondary market activities and single-family loan acquisitions:
n Secondary Market Activities - We cannot vary the pricing or any other term of the acquisition of a single-family loan based
on the size, charter type, or volume of business of the seller of the loan and are required to:
l Offer to purchase loans for cash consideration and operate this cash window with non-discriminatory pricing and
l Comply with directives, regulations, restrictions, or other requirements prescribed by FHFA related to equitable
secondary market access by community lenders.
n Single-Family Loan Acquisitions - We are required to limit our acquisition of certain single-family mortgage loans.
l
Subject to such exceptions as FHFA may prescribe to permit us to acquire single-family mortgage loans that are
currently eligible for acquisition, we were required to implement a program reasonably designed to ensure that each
single-family mortgage is:
–
A qualified mortgage;
–
Expressly exempt from the CFPB’s ability-to-repay requirements;
–
Secured by an investment property;
–
A refinancing with streamlined underwriting for high LTV ratios;
Management's Discussion and Analysis
Conservatorship and Related Matters
FREDDIE MAC | 2024 Form 10-K
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–
A loan with temporary underwriting flexibilities due to exigent circumstances, as determined in consultation with
FHFA; or
–
Secured by manufactured housing.
We will continue to manage these activities in accordance with our risk limits and limitations imposed by FHFA.
Limits on Our Multifamily Loan Purchase Activity
The amount and type of multifamily loans that we purchase are influenced by the loan purchase cap established by FHFA for
our multifamily business. In November 2024, FHFA announced that the 2025 loan purchase cap for the multifamily business will
be $73 billion, up from $70 billion in 2024. FHFA will continue to require at least 50% of the Multifamily new business activity to
be mission-driven, affordable housing. For 2025, loans classified as supporting workforce housing properties will be exempt
from the volume caps. FHFA will continue to monitor the multifamily mortgage market and may increase the multifamily caps if
necessary to support liquidity in the market. However, if FHFA determines the actual size of the market is smaller than was
initially projected, FHFA will not reduce the caps.
FHFA's Strategic Plan: Fiscal Years 2022-2026 and
Conservatorship Scorecard
In April 2022, FHFA released its Strategic Plan for fiscal years 2022-2026. This Strategic Plan provides a framework that
outlines FHFA's priorities for these years as regulator of the Federal Home Loan Bank System and as regulator and conservator
of Freddie Mac and Fannie Mae. The Strategic Plan continues the existing priorities and formalizes areas of focus for FHFA and
its regulated entities by establishing three goals:
n
Secure the regulated entities' safety and soundness;
n
Foster housing finance markets that promote equitable access to affordable and sustainable housing; and
n
Reasonably steward FHFA's infrastructure.
In January 2024, FHFA released the 2024 Conservatorship Scorecard. The purpose of this Scorecard is to hold the Enterprises
and CSS accountable for fulfilling their core mission requirements by promoting sustainable and equitable access to affordable
housing and operating in a safe and sound manner. For additional information on the 2024 Conservatorship Scorecard, see
Executive Compensation - CD&A - Determination of 2024 At-Risk Deferred Salary - At-Risk Deferred Salary Based
on Conservatorship Scorecard Performance.
On January 31, 2025, FHFA released an updated 2025 Conservatorship Scorecard. Each year, FHFA releases an annual
Scorecard to communicate and provide public awareness of its priorities and expectations for the Enterprises and CSS. For
additional information on the 2025 Conservatorship Scorecard, see our Current Report on Form 8-K filed on December 26,
2024, as amended by our Current Report on Form 8-K/A filed on February 5, 2025.
For additional information on the conservatorship and related matters, see MD&A - Regulation and Supervision, Risk
Factors - Conservatorship and Related Matters, Note 2, Note 11, and Directors, Corporate Governance, and
Executive Officers - Corporate Governance - Board of Directors and Board Committee Information - Authority of
the Board of Directors and Board Committees.
Pilot Transparency Framework
FHFA has created a pilot transparency framework for the Enterprises. This framework requires Freddie Mac and Fannie Mae to
publish and maintain a list of pilots and test-and-learn activities on their public websites.
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Conservatorship and Related Matters
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REGULATION AND SUPERVISION
In addition to our oversight by FHFA as our Conservator, we are subject to regulation and oversight by FHFA under our Charter
and the GSE Act and to certain regulation by other government agencies. Furthermore, regulatory activities by other
government agencies can affect us indirectly, even if we are not directly subject to such agencies' regulation or oversight, such
as regulations that modify requirements applicable to the purchase or servicing of mortgages.
Federal Housing Finance Agency
FHFA is an independent agency of the federal government responsible for oversight of the operations of Freddie Mac, Fannie
Mae, and the FHLBs.
Under the GSE Act, FHFA has safety and soundness authority that is comparable to, and in some respects broader than, that
of the federal banking agencies. FHFA is responsible for implementing the various provisions of the GSE Act that were added
by the Reform Act.
Receivership and Resolution Planning
Under the GSE Act, FHFA must place us into receivership if FHFA determines in writing that our assets are less than our
obligations or we have not been paying our debts as they become due, in each case for a period of 60 days. FHFA has notified
us that the measurement period for any mandatory receivership determination with respect to our assets and obligations would
commence no earlier than the SEC public filing deadline for our quarterly or annual financial statements and would continue for
60 calendar days after that date. FHFA has also advised us that, if, during such a 60-day period, we receive funds from
Treasury in an amount at least equal to the deficiency amount under the Purchase Agreement, the Director of FHFA will not
make a mandatory receivership determination.
In addition, we could be put into receivership at the discretion of the Director of FHFA at any time for other reasons, consistent
with the GSE Act and the Purchase Agreement, to the extent applicable by law. For additional information, see our Current
Report on Form 8-K filed on January 8, 2025. The statutory grounds for discretionary appointment of a receiver include: a
substantial dissipation of assets or earnings due to unsafe or unsound practices; the existence of an unsafe or unsound
condition to transact business; an inability to meet our obligations in the ordinary course of business; a weakening of our
condition due to unsafe or unsound practices or conditions; critical undercapitalization; undercapitalization and no reasonable
prospect of becoming adequately capitalized; the likelihood of losses that will deplete substantially all of our capital; or by
consent.
Certain aspects of conservatorship and receivership operations of Freddie Mac, Fannie Mae, and the FHLBs are addressed in
an FHFA rule on conservatorship and receivership. Among other provisions, FHFA generally will not permit payment of
securities litigation claims during conservatorship, and claims by current or former shareholders arising as a result of their
status as shareholders would receive the lowest priority of claim in receivership. In addition, administrative expenses of the
conservatorship will be deemed to be administrative expenses of receivership and capital distributions may not be made during
conservatorship, except as specified in the rule.
In May 2021, FHFA published a final rule that requires Freddie Mac and Fannie Mae to develop credible resolution plans, also
known as living wills. The purpose of the rule is to require each Enterprise to develop a resolution plan to facilitate its rapid and
orderly resolution under FHFA’s receivership authority in a manner that: (1) minimizes disruption in the national housing finance
markets by providing for the continued operation of the core business lines of the Enterprise in receivership by a newly
constituted LLRE; (2) preserves the value of the Enterprise's franchise and assets; (3) facilitates the division of assets and
liabilities between the LLRE and the receivership estate; (4) ensures that investors in mortgage-backed securities guaranteed by
the Enterprises and in Enterprise unsecured debt bear losses in accordance with the priority of payments established in the
GSE Act, while minimizing unnecessary losses and costs to these investors; and (5) fosters market discipline by making clear
that no extraordinary government support will be available to indemnify investors against losses or fund the resolution of an
Enterprise. The rule also addresses procedural requirements related to the frequency and timing for submission of resolution
plans to FHFA. The rule provides a set of required and prohibited assumptions when developing the resolution plans, including
assuming that receivership may occur under the severely adverse economic conditions provided by FHFA in conjunction with
any stress testing required or another scenario provided by FHFA, not assuming the provision or continuation of extraordinary
government support (including support under the Purchase Agreement), and reflecting statutory provisions that obligations and
securities of the Enterprises are not guaranteed by the United States and do not constitute a debt or obligation of the United
States.
The appointment of FHFA as receiver would immediately terminate the conservatorship. In the event of receivership, the GSE
Act requires FHFA, as the receiver, to organize a LLRE with respect to Freddie Mac. Among other requirements, the GSE Act
provides that this LLRE:
Management's Discussion and Analysis
Regulation and Supervision
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n Would succeed to Freddie Mac's Charter and thereafter operate in accordance with and subject to such Charter;
n Would assume, acquire, or succeed to our assets and liabilities to the extent that such assets and liabilities are transferred
by FHFA to the LLRE; and
n Would not be permitted to assume, acquire, or succeed to any of our obligations to shareholders.
Placement into receivership would likely have a material adverse effect on holders of our common stock and preferred stock,
and could have a material adverse effect on holders of our debt securities and Freddie Mac mortgage-related securities. Should
we be placed into receivership, different assumptions may be required to determine the carrying value of our assets, which
could lead to substantially different financial results. For additional information on the risks to our business relating to
receivership and uncertainties regarding the future of our business, see Risk Factors - Conservatorship and Related
Matters.
Capital Standards and Public Disclosures
The GSE Act specifies certain capital requirements for us and authorizes FHFA to establish other capital requirements as well
as to increase our minimum capital requirements or to establish additional capital and reserve requirements for particular
purposes. In 2008, FHFA suspended capital classification of us during conservatorship, in light of the Purchase Agreement.
Originally published in December 2020, the ERCF rule was amended by FHFA three times in 2022 and once in 2023.
The ERCF establishes capital requirements for the Enterprises and includes requirements relating to the amount and form of the
capital we hold, based largely on definitions of capital used in U.S. banking regulators' regulatory capital framework. The rule
includes leverage-based and risk-based requirements, which together determine the requirements for each tier of capital. The
rule also includes a requirement that we hold prescribed capital buffers that can be drawn down in periods of financial stress
and then rebuilt over time as economic conditions improve. If we fall below the prescribed buffer amounts, we must restrict
capital distributions such as stock repurchases and dividends, as well as discretionary bonus payments to executives, until the
buffer amounts are restored. Pursuant to the rule, we publish quarterly capital reports on our public website.
Our current capital levels are significantly below the levels that would be required under the ERCF. The ERCF has a transition
period for compliance. In general, the compliance date for the regulatory capital requirements in the ERCF will be the later of
the date of termination of our conservatorship and any compliance date provided in a consent order or other transition order.
The compliance date for buffer requirements in the ERCF will be the date of termination of our conservatorship. With respect to
the ERCF’s advanced approaches for measuring risk-weighted assets, the compliance date is January 1, 2028, or any later
compliance date specified by FHFA. Further, prior to January 2, 2025, the Purchase Agreement included a covenant requiring
us to comply with the ERCF as published in December 2020, disregarding any subsequent amendment or other modifications
to the final rule. Consistent with FHFA instruction, we are reporting our regulatory capital requirements under the ERCF as
subsequently amended by FHFA. Therefore, we were not in compliance with this Purchase Agreement covenant. FHFA has
acknowledged this noncompliance. Effective January 2, 2025, the Purchase Agreement requires us to comply with the ERCF as
amended from time to time.
In 2023, FHFA amended the ERCF to modify certain provisions related to guarantees on commingled securities, multifamily
mortgage exposures secured by properties with government subsidies, and derivatives and cleared transactions, among other
modifications. The provisions related to derivatives and cleared transactions will be effective January 1, 2026; the other
provisions of the 2023 amendments became effective in April 2024. In addition, the amendments also extended the compliance
date for the advanced approaches from January 1, 2025 to January 1, 2028.
For additional information on these capital standards, see Note 18. For additional information on risks related to non-
compliance with the Purchase Agreement, see Risk Factors – Conservatorship and Related Matters - The Purchase
Agreement and the terms of the senior preferred stock significantly limit our business activities. In the event of non-
compliance with any Purchase Agreement covenants, Treasury may be entitled to specific performance, damages, and
other remedies, and if the corrective actions we were to take were determined by FHFA to be insufficient, FHFA could
impose penalties on us or take other remedial actions.
Pursuant to an FHFA rule on stress testing of regulated entities, Freddie Mac and Fannie Mae are required to conduct annual
stress tests using scenarios specified by FHFA to determine whether each Enterprise has sufficient capital to absorb losses as
a result of adverse economic conditions. Under the rule, the Enterprises must publicly disclose the results of the stress test
under the "severely adverse" scenario.
New Products
The GSE Act requires Freddie Mac and Fannie Mae to obtain the prior approval of FHFA before offering a new product to the
market, subject to certain exclusions. The GSE Act also requires us to provide FHFA with written notice of any new activity that
we consider not to be a product. While FHFA published an interim final rule on prior approval of new products to implement
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these statutory requirements in July 2009, it also stated that permitting us to engage in new products is inconsistent with the
goals of conservatorship and instructed us not to submit such requests under the interim final rule. In December 2022, FHFA
published a final rule that outlines the process for FHFA review and timelines for approving a new product, which is defined as
any new activity that FHFA determines merits public notice and comment about whether it is in the public interest. The rule
states that FHFA may approve a new product if the Director of FHFA determines that it is authorized under specific provisions
of the Enterprise’s Charter, is in the public interest, and is consistent with the safety and soundness of the Enterprise or the
mortgage finance system. The rule also establishes objective criteria for determining what constitutes new activity, and clarifies
certain exclusions.
On June 21, 2024, FHFA announced its conditional approval for Freddie Mac to engage in a limited pilot to purchase certain
single-family closed-end second-lien mortgages, following FHFA’s initial publication of the proposed new product for public
comment under FHFA’s Prior Approval for Enterprise Products requirement. This conditional approval includes several
incremental limitations on the product, including:
n A maximum volume of $2.5 billion in purchases for the pilot;
n A maximum duration of 18 months for the pilot;
n A maximum loan amount of $78,277, corresponding to certain subordinate-lien loan thresholds in the CFPB's definition of
Qualified Mortgage;
n A minimum seasoning period of 24 months for the first mortgage; and
n Eligibility only for primary residences.
Upon the pilot’s conclusion, FHFA will analyze the data on Freddie Mac’s purchases of second-lien mortgages to determine
whether the objectives of the pilot were met. FHFA has determined that any increase to the volume or extension of the duration
of the pilot, or conversion of the pilot to a programmatic activity, would be treated as a new product that is subject to public
notice and comment and FHFA approval. Any subsequent approval would be informed by the preliminary results of the pilot.
Enterprise Fair Lending and Fair Housing Compliance
In April 2024, FHFA published a final rule to provide FHFA's supervisory expectations and guidance to Freddie Mac and Fannie
Mae on fair lending and fair housing compliance, which became effective in July 2024. FHFA considers ensuring Enterprise
compliance with fair lending laws part of FHFA's obligation to further the purposes of the Fair Housing Act in its program of
regulatory and supervisory oversight of the Enterprises and its responsibility to ensure that the Enterprises comply with
applicable laws.
FHFA's fair lending policy statement generally articulates its policy on fair lending and how FHFA uses its authorities to ensure
compliance with fair lending laws. The Enterprises are subject to several associated fair lending requirements, such as
requirements to obtain and maintain data relevant to ensuring compliance with fair lending laws, report certain information to
FHFA pursuant to FHFA's reporting order on fair lending, include certain information related to fair lending in their annual
housing reports, and comply with fair lending requirements associated with other FHFA processes and requirements. The
Enterprises are also subject to HUD oversight related to fair housing. FHFA and HUD have signed a memorandum of
understanding regarding cooperation and coordination with respect to fair housing and fair lending. In certain circumstances,
FHFA will provide notification to HUD and the U.S. Department of Justice of information that suggests a violation of the Fair
Housing Act or that indicates a possible pattern or practice of discrimination in violation of the Fair Housing Act.
Affordable Housing Goals
We are subject to annual affordable housing goals. We view the purchase of loans that are eligible to count toward our
affordable housing goals to be a principal part of our mission and business, and we are committed to facilitating the financing
of affordable housing for very low-, low-, and moderate-income families. In light of the affordable housing goals, we may make
adjustments to our strategies for purchasing loans, which could potentially increase our credit losses. These strategies could
include entering into purchase and securitization transactions with lower expected economic returns than our typical
transactions.
FHFA housing goals applicable to our 2024 purchases consist of four goals and two subgoals for single-family owner-occupied
housing, two multifamily affordable housing goals, and one multifamily affordable housing subgoal. The single-family goals are
expressed as a percentage of the total number of eligible loans underlying our total single-family loan purchases, and the
multifamily goals are expressed as a percentage of units financed.
We may achieve a single-family or multifamily housing goal by meeting or exceeding the FHFA benchmark level for that goal
(Benchmark Level). We also may achieve a single-family goal by meeting or exceeding the actual share of the market that
meets the criteria for that goal (Market Level).
If the Director of FHFA finds that we failed (or there is a substantial probability that we will fail) to meet a housing goal and that
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achievement of the housing goal was or is feasible, the Director may require the submission of a housing plan that describes
the actions we will take to achieve the unmet goal. FHFA has the authority to take actions against us if we fail to submit a
required housing plan, submit an unacceptable plan, fail to comply with a plan approved by FHFA, or fail to submit certain
mortgage purchase data, information or reports as required by law. See Risk Factors - Legal and Compliance Risks - We
may not achieve our housing goals, Duty to Serve, and equitable housing finance requirements, and we also may make
certain changes to our business in an attempt to meet these goals and requirements, both of which may expose us to
additional legal and compliance risk, damage our reputation, and adversely affect our business, financial condition, and
results of operations.
Affordable Housing Goals Results
In October 2024, FHFA informed us that, for 2023, we achieved all six of our single-family housing goals and subgoals, and all
three of our multifamily goals and subgoals. Our performance on the goals, as determined by FHFA, is set forth in the table
below.
Table 56 - 2023 and 2022 Affordable Housing Goals Results
2023
2022
Affordable Housing Goals
Benchmark
Level
Market
Level
Results
Benchmark
Level
Market
Level
Results
Single-Family:
Low-income home purchase goal
28 %
26.3 %
28.5 %
28 %
26.8 %
29.0 %
Very low-income home purchase goal
7
6.5
6.8
7
6.8
7.1
Low-income areas home purchase goal(1)
20
28.1
29.5
20
28.0
28.7
Minority census tracts home purchase subgoal
10
12.2
13.2
10
12.1
12.8
Low-income census tracts home purchase subgoal
4
9.8
9.4
4
9.7
9.1
Low-income refinance goal
26
40.3
43.2
26
37.3
37.1
Multifamily:
Low-income goal
61 %
N/A
67.1 %
415,000 units
N/A
420,107 units
Very low-income subgoal
12
N/A
20.6
88,000 units
N/A
127,733 units
Small multifamily (5-50 units) low-income subgoal
2.5
N/A
4.1
23,000 units
N/A
27,103 units
(1)
The low-income areas home purchase goal benchmark level is the sum of (1) the minority census tracts home purchase subgoal, (2) the low-income census tracts
home purchase subgoal, and (3) a disaster areas increment set in accordance with existing practice. Each year, FHFA notifies Freddie Mac by letter of the disaster
areas increment for that year only. The disaster areas increment for 2023 was set at 6%, the same level as 2022.
Affordable Housing Goals for 2025-2027
In December 2024, FHFA issued a final rule that establishes new affordable housing goals for the loan purchases of Freddie Mac
and Fannie Mae over the next three years. The final rule also establishes new “measurement buffers” to help determine if an
Enterprise that misses certain single-family housing goals during the 2025–2027 cycle must develop a housing plan (which is an
action plan to demonstrate how it will improve its performance). A housing plan may be required if the Enterprise fails to meet a
single-family housing goal and the gap between the Enterprise’s performance and the market level for that goal is greater than
the measurement buffers provided in the final rule.
Our current and 2025-2027 affordable housing goal benchmark levels are set forth below.
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Table 57 - Current and 2025-2027 Affordable Housing Goal Benchmark Levels
Affordable Housing Goals
Benchmark
Levels for
2024
Benchmark
Levels for
2025-2027
Single-Family:
Low-income home purchase goal
28 %
25 %
Very low-income home purchase goal
7
6
Low-income areas home purchase goal(1)
19
TBD
Minority census tracts home purchase subgoal
10
12
Low-income census tracts home purchase subgoal
4
4
Low-income refinance goal
26
26
Multifamily (percentage of overall qualified units):
Low-income goal
61 %
61 %
Very low-income goal
12
14
Low-income small multifamily (5-50 units) subgoal
2.5
2
(1)
The low-income areas home purchase goal benchmark level is the sum of (1) the minority census tracts home purchase subgoal, (2) the low-income census tracts
home purchase subgoal, and (3) a disaster areas increment set in accordance with existing practice. Each year, FHFA notifies Freddie Mac by letter of the disaster
areas increment for that year only. The disaster areas increment for 2024 was set at 5%.
Duty to Serve Underserved Markets Plan
The GSE Act establishes a duty for Freddie Mac and Fannie Mae to serve three underserved markets (manufactured housing,
affordable housing preservation, and rural areas) by providing leadership in developing loan products and flexible underwriting
guidelines to facilitate a secondary market for mortgages for very low-, low-, and moderate-income families in those markets.
Under a final rule issued by FHFA to implement our duty to serve these underserved markets, we are required to establish
three-year plans that describe the activities and objectives we will undertake to serve each underserved market.
Freddie Mac is currently operating under an underserved markets plan for 2025-2027. In 2024, FHFA evaluated Freddie Mac
and Fannie Mae’s 2023 Duty to Serve performance under their respective Plans and determined that each Enterprise complied
with its Duty to Serve requirements in all three underserved markets. For 2023, FHFA assigned Freddie Mac a rating of Low
Satisfactory for its activities in the affordable housing preservation market, a rating of Low Satisfactory for its activities in the
manufactured housing market, and a rating of Low Satisfactory for its activities in the rural housing market.
Affordable Housing Fund Allocations
The GSE Act requires us to set aside in each fiscal year an amount equal to 4.2 basis points of each dollar of total new
business purchases and pay such amount to certain housing funds. FHFA suspended this requirement when we were placed
into conservatorship. However, in December 2014, FHFA terminated the suspension and instructed us to begin setting aside
and paying amounts into those funds, subject to any subsequent guidance or instruction from FHFA.
During 2024, we completed $0.4 trillion of new business purchases subject to this requirement and accrued $173 million of
related expense, of which $112 million is related to the Housing Trust Fund administered by HUD and $61 million is related to
the Capital Magnet Fund administered by Treasury. We are prohibited from passing through the costs of these allocations to
the originators of the loans that we purchase.
Equitable Housing Finance Plan
In December 2024, FHFA announced the public release of the Enterprises’ Equitable Housing Finance Plans for 2025-2027. The
2025-2027 plan activities are intended to identify and address barriers experienced by renters, aspiring homeowners, and
current homeowners – particularly in traditionally underserved minority communities, including using SPCPs to originate loans.
The plan activities are updated annually.
Portfolio Activities
The GSE Act provides FHFA with the power to regulate the size and composition of our mortgage-related investments portfolio.
The GSE Act requires FHFA to establish, by regulation, criteria governing portfolio holdings to ensure the holdings are backed
by sufficient capital and consistent with our mission and safe and sound operations. FHFA adopted the portfolio holdings
criteria established in the Purchase Agreement, as it may be amended from time to time, for so long as we remain subject to
the Purchase Agreement. See MD&A - Conservatorship and Related Matters - Limits on Our Mortgage-Related
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Investments Portfolio and Indebtedness for additional information.
Multifamily Tenant Protections
In July 2024, FHFA announced a set of required tenant protections, also known as minimum residential lease standards, for
multifamily properties financed by the Enterprises. Covered housing providers will be required to provide tenants with the
following:
n 30-day written notice of a rent increase;
n 30-day written notice of a lease's scheduled expiration; and
n 5-day grace period for late rent payments.
Freddie Mac will monitor and enforce these tenant protections, and failure to comply could result in the exercise of remedies
under the applicable loan documents.
These protections will apply to properties for which new loan applications are signed on or after the policy effective date,
February 28, 2025. Freddie Mac published a detailed description of the tenant protection policy on its website on August 28,
2024.
Quality Control Standards for Automated Valuation Models
In August 2024, six federal regulatory agencies, including FHFA, published a final rule, pursuant to the Dodd-Frank Act,
designed to help ensure the credibility and integrity of models used in valuations for certain mortgages secured by a
consumer’s principal dwelling. In particular, the rule will implement quality control standards for AVMs used by mortgage
originators and secondary market issuers in valuing those homes.
Under the final rule, the agencies will require institutions that engage in certain transactions secured by a consumer’s principal
dwelling to adopt policies, practices, procedures, and control systems designed to ensure a high level of confidence in
estimates produced by AVMs; protect against data manipulation; seek to avoid conflicts of interest; require random sample
testing and reviews; and comply with nondiscrimination laws. The rule takes effect on October 1, 2025.
FICO 10T and VantageScore 4.0
In October 2022, FHFA announced the validation and approval of the FICO 10T and VantageScore 4.0 credit score models for
use by Freddie Mac and Fannie Mae, as well as the transition to a bi-merge credit reporting requirement. Under a bi-merge
approach, lenders may obtain credit reports from two, rather than three, of the national consumer reporting agencies for each
borrower.
In February 2024 after a public engagement process on the initiative, FHFA announced further updates to the implementation of
new credit score requirements for single-family loans acquired by the Enterprises.
In July 2024, FHFA announced the publication of historical VantageScore 4.0 credit scores on loans acquired by the Enterprises
during the 10-year period from April 1, 2013 to March 31, 2023, to support the implementation of Freddie Mac and Fannie
Mae’s updated credit score and credit reporting requirements. FHFA and the Enterprises will continue to work towards
providing similar data to support the transition to the FICO 10T model, contingent upon achieving the necessary conditions for
acquisition and publication of this data.
On January 16, 2025, FHFA and the Enterprises announced an update to the credit score models and reports initiative to revise
the implementation date from the fourth quarter of 2025 to a to-be-determined date for the Enterprises to incorporate the new
credit score model requirements into mortgage processes and implement optional bi-merge credit reports.
Policies on Appraisals, Loan Repurchase Alternatives, and Pricing
Notifications
On October 28, 2024, FHFA announced updates to several Freddie Mac and Fannie Mae policies that are intended to enhance
efficiencies and promote cost savings in the single-family mortgage market. These policy updates cover the following key
areas:
n Expanded eligibility for appraisal waivers on purchase loans from 80% to 90% maximum LTV ratio;
n Expanded eligibility for appraisal waivers with a property data report from 80% to program limits (e.g., 97% for Home
Possible loans);
n Expanded UAD to include FHA data;
n Expanded eligibility for Freddie Mac performing loan repurchase alternative pilot; and
n 60 days advance notice of Enterprise pricing increases greater than 1 basis point.
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January 2025 Letter Agreement and the Purchase Agreement
The January 2025 Letter Agreement amended the Purchase Agreement to remove certain provisions that generally limited
Freddie Mac’s ability to acquire certain types of mortgage loans. These provisions had been suspended since September 2021.
The removed provisions include the limitations on: acquiring for cash from any single seller in a year single-family mortgage
loans with an aggregated principal balance in excess of $1.5 billion; the acquisition of certain loans with more than one higher-
risk characteristic; and the acquisition of loans secured by investment properties or second homes.
The January 2025 Letter Agreement also removes the multifamily loan purchase cap and the requirement that a certain
percentage of multifamily loan acquisitions are classified as mission-driven pursuant to FHFA’s guidelines. However, the
multifamily loan purchase cap established annually by FHFA and included in the Conservatorship Scorecard remains in effect.
The January 2025 Letter Agreement also removes a provision in the Purchase Agreement that required compliance with the
ERCF as published in December 2020, regardless of subsequent amendments to the ERCF. The January 2025 Letter
Agreement requires that Freddie Mac comply with the ERCF as it is amended from time to time.
Finally, the January 2025 Letter Agreement and the Purchase Agreement place limits on our ability to exit from conservatorship.
For additional information on the January 2025 Letter Agreement, see our Current Report on Form 8-K filed on January 8, 2025.
Department of Housing and Urban Development
HUD has regulatory authority over Freddie Mac with respect to fair lending. All aspects of the credit or housing-related business
practices of Freddie Mac are potentially subject to federal anti-discrimination laws, as well as state and local fair housing and
fair lending statutes. In addition, the GSE Act prohibits discriminatory practices in our loan purchase activities, requires us to
submit data to HUD to assist in its fair lending investigations of primary market lenders with which we do business, and requires
us to undertake remedial actions against such lenders found to have engaged in discriminatory lending practices. HUD may
impose fines for noncompliance. HUD periodically reviews and comments on our underwriting and appraisal guidelines for
consistency with the Fair Housing Act and the anti-discrimination provisions of the GSE Act.
Department of the Treasury
Treasury has significant rights and powers as a result of the Purchase Agreement. In addition, under our Charter, the Secretary
of the Treasury has approval authority over our issuances of notes, debentures, and substantially identical types of unsecured
debt obligations (including the interest rates and maturities of these securities), as well as new types of mortgage-related
securities issued subsequent to the enactment of the Financial Institutions Reform, Recovery and Enforcement Act of 1989. The
Secretary of the Treasury has performed this debt securities approval function by coordinating GSE debt offerings with
Treasury funding activities. Our Charter also authorizes Treasury to purchase Freddie Mac debt obligations not exceeding
$2.25 billion in aggregate principal amount at any time.
Consumer Financial Protection Bureau
The CFPB regulates consumer financial products and services. The CFPB has adopted a number of final rules relating to loan
origination, finance, and servicing practices. These rules include an ability-to-repay rule, which requires loan originators to make
a reasonable and good faith determination that a borrower has a reasonable ability to repay the loan according to its terms.
This rule provides certain protection from liability for originators making loans that satisfy the definition of a qualified mortgage.
The ability-to-repay rule applies to most loans acquired by Freddie Mac, and for loans covered by the rule, FHFA has directed
us to limit our single-family acquisitions to those that generally would constitute qualified mortgages under that rule. CFPB or
FHFA may impose fines for noncompliance with these requirements.
Securities and Exchange Commission
We are subject to the reporting requirements applicable to registrants under the Exchange Act, including the requirement to file
with the SEC annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. Although our
common stock is required to be registered under the Exchange Act, we continue to be exempt from certain federal securities
law requirements, including the following:
n Securities we issue or guarantee are "exempted securities" and may be sold without registration under the Securities Act
of 1933;
n We are excluded from the definitions of "government securities broker" and "government securities dealer" under the
Exchange Act;
n The Trust Indenture Act of 1939 does not apply to securities issued by us; and
n We are exempt from the Investment Company Act of 1940 and the Investment Advisers Act of 1940, as we are an "agency,
authority, or instrumentality" of the U.S. for purposes of such Acts.
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Final Rule Regarding Conflicts of Interest in Securitizations
In November 2023, the SEC adopted a final rule that generally would prohibit “securitization participants” (e.g., underwriters or
sponsors) from, directly or indirectly, engaging in any transaction that would involve or result in any material conflict of interest
between the securitization participant and an investor in the asset-backed security (ABS) during a specified period of time. The
rule provides exceptions for certain: (1) risk-mitigating hedging activities; (2) bona fide market-making activities; and (3) liquidity
commitments. We believe that the risk-mitigating hedging exception will enable us to continue to conduct our credit risk
transfer transactions. Securitization participants must comply with the rule with respect to any ABS the first closing of the sale
of which occurs on or after June 9, 2025.
Management's Discussion and Analysis
Regulation and Supervision
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CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with GAAP requires us to make a number of judgments and assumptions
that affect estimates of the reported amounts within our consolidated financial statements. Critical accounting estimates are
important to the presentation of our financial condition and results of operations and require management to make difficult,
complex, or subjective judgments and estimates, often regarding matters that are inherently uncertain. Actual results could
differ from our estimates, and the use of different judgments and assumptions related to these estimates could have a material
impact on our consolidated financial statements.
Our critical accounting estimates and policies relate to the Single-Family allowance for credit losses. For additional information
about our critical accounting estimates and significant accounting policies, see the notes accompanying our consolidated
financial statements.
Single-Family Allowance for Credit Losses
The Single-Family allowance for credit losses represents our estimate of expected credit losses over the contractual term of the
mortgage loans. The Single-Family allowance for credit losses pertains to all single-family loans classified as held-for-
investment on our consolidated balance sheets.
Determining the appropriateness of the Single-Family allowance for credit losses is a complex process that is subject to
numerous estimates and assumptions requiring significant management judgment about matters that involve a high degree of
subjectivity. This process involves the use of models that require us to make judgments about matters that are difficult to
predict. Our estimate of expected credit losses incorporates these judgments into an internally-based model that uses a Monte
Carlo simulation which generates many possible house price scenarios for up to 40 years for each MSA. These scenarios are
used to estimate loan-level expected future cash flows and credit losses based on each loan's individual characteristics.
Changes in forecasted house price growth rates can have a significant effect on our allowance for credit losses estimates.
These growth rates are used to develop the detailed forecasted life-of-loan house price growth rates for each MSA. The table
below shows our nationwide forecasted house price growth rates that were used in determining our allowance for credit losses.
See Note 6 for additional information regarding our current period provision for credit losses and estimation process.
Table 58 - Forecasted House Price Growth Rates
December 31, 2024
December 31, 2023
12-Month Forward
2.7 %
2.8 %
13- to 24-Month Forward
3.3
2.0
The sensitivity of our allowance for credit losses to house price growth rates changes over time depending on current and
forecasted economic conditions and the current characteristics of our portfolio. To assess the sensitivity of our allowance for
credit loss estimates to forecasted house price growth rates for the current period end, we compared the estimates under the
above December 31, 2024 forecast to model estimates using a decrease of 300 bps to the forecasted house price growth rate
12 months from the current period end, including generating an updated Monte Carlo simulation of house price scenarios, with
all other factors held constant. The comparison did not result in a material increase in our allowance for credit losses.
This sensitivity analysis assesses hypothetical changes to our forecasted house price growth rates which are calculated
separately from our allowance for credit losses process. The sensitivity analysis is not reflected in management's forecast of
house price growth rates nor in our allowance for credit losses for the current period end. Further, it is not intended to imply
management’s expectation of future changes in our forecasts or any other variables that may change as a result. It is difficult to
estimate how potential changes in any one factor or input might affect the allowance for credit losses because management
considers a wide variety of factors and inputs in estimating expected credit losses, and changes in one factor or input may
offset changes in other factors or inputs. In addition, changes in forecasted house price growth rates result in non-linear
impacts to the measurement of the allowance for credit losses and are therefore not incrementally proportional.
We regularly evaluate the underlying estimates and models we use when determining the Single-Family allowance for credit
losses and update our assumptions to reflect our historical experience and current view of economic factors. For additional
information on uncertainty and risks related to models, see Risk Factors - Operational Risks - We face risks and
uncertainties associated with the models that we use to inform business and risk management decisions and for
financial accounting and reporting purposes. Changes in our forecasts or the occurrence of actual economic conditions that
differ significantly from our forecasts may significantly affect the measurement of our Single-Family allowance for credit losses.
We believe the level of our Single-Family allowance for credit losses is appropriate based on internal reviews of the factors and
methodologies used. No single statistic or measurement determines the appropriateness of the allowance for credit losses.
Changes in one or more of the estimates or assumptions used to calculate the Single-Family allowance for credit losses could
have a material impact on the allowance for credit losses and provision for credit losses.
Management's Discussion and Analysis
Critical Accounting Estimates
FREDDIE MAC | 2024 Form 10-K
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Risk Factors
RISK FACTORS SUMMARY
The summary of risks below provides an overview of the principal risks that could affect our business, financial condition,
results of operations, cash flows, reputation, strategies, and/or prospects. This summary does not contain all of the information
that may be important to you, and you should read the more detailed discussion of risks that follows this summary.
Conservatorship and Related Matters
n Freddie Mac's future is uncertain.
n FHFA, as our Conservator, controls our business activities. We may be required to take actions that reduce our profitability,
are difficult to implement, or expose us to additional risk.
n The Purchase Agreement and the terms of the senior preferred stock significantly limit our business activities. In the event
of non-compliance with any Purchase Agreement covenants, Treasury may be entitled to specific performance, damages,
and other remedies, and if the corrective actions we were to take were determined by FHFA to be insufficient, FHFA could
impose penalties on us or take other remedial actions.
n If FHFA placed us into receivership, the treatment of our assets and liabilities would be uncertain. We may be limited or
precluded from repaying the full liquidation preference of our preferred stock, making payments on our securities, or
making any distribution to our common stockholders.
n Our business and results of operations may be materially adversely affected if we are unable to attract and retain well-
qualified employees across the company. The conservatorship, uncertainty of our future, and limitations on our executive
and employee compensation put us at a disadvantage compared to other companies in attracting and retaining
employees.
Credit Risks
n We are subject to mortgage credit risk. Credit losses and costs related to this risk could adversely affect our financial
results.
n We face significant risks related to our delegated underwriting process for single-family loans, including risks related to
sellers' origination operations, data accuracy, and mortgage fraud. Our delegated process relies on sellers' ability to
originate and deliver loans that consistently meet our underwriting standards, and their failure to do so may impact the
credit quality of the loans we purchase.
n Mortgage fraud and other financial crimes could result in significant financial losses and harm to our reputation.
n Declines in national or regional house prices, other adverse changes in the housing market, declines in the value of
Multifamily properties, deterioration of property conditions, or adverse macroeconomic conditions, could negatively affect
our Single-Family and Multifamily businesses.
n We are exposed to counterparty credit risk with respect to our business counterparties. Our financial results may be
adversely affected if one or more of our counterparties fail to meet their contractual obligations to us.
n Our loss mitigation activities may be unsuccessful or costly and may adversely affect our financial results.
n We have been, and continue to be, adversely affected by deficiencies and delays in the single-family and multifamily
foreclosure process.
n We are exposed to increased credit losses and credit-related expenses in the event of a natural disaster or catastrophic
event.
n New issuance market for our CRT transactions may not be available to us in adverse economic conditions. These
transactions also increase our expenses.
Market Risks
n Changes in interest rates could negatively affect the fair value of our financial assets and liabilities, results of operations,
and net worth.
n Changes in market spreads could negatively affect the fair value of our financial assets and liabilities, results of operations,
and net worth.
n A significant decline in the price performance of, or demand for, our UMBS could have an adverse effect on the volume
and/or profitability of our Single-Family business activity.
n If the UMBS does not continue to receive widespread market acceptance, the liquidity and price performance of our
Single-Family mortgage-related securities and our market share and profitability could be adversely affected.
n Commingling certain Fannie Mae securities in resecuritizations has increased our counterparty risk.
n The profitability of our Multifamily business could be adversely affected by market competition and/or decreased investor
demand for our securities.
Risk Factors
FREDDIE MAC | 2024 Form 10-K
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Liquidity Risks
n Our activities may be adversely affected if funding is limited or unavailable, or if the cost is increased.
n Any downgrade in the credit ratings of the U.S. government would likely be followed by a downgrade in our credit ratings.
A downgrade in the credit ratings of our debt could adversely affect our liquidity and other aspects of our business.
Operational Risks
n A failure in our operational systems or infrastructure, or those of third parties, could impair our ability to provide market
liquidity, disrupt our business operations, damage our reputation, expose us to legal risk, and cause financial losses.
n Cybersecurity threats are changing rapidly and advancing in sophistication. We may not be able to protect our systems
and networks, or the confidentiality of our confidential or other information (including personal information), from
cybersecurity incidents and other unauthorized access, disclosure, and disruption.
n We rely on third parties, including our sellers and servicers, or their vendors and other business partners, for certain
important functions. Any failures by those third parties to deliver products or services, or to manage risks effectively, could
disrupt our business operations or servicing of our portfolio, or expose us to other operational risks.
n We face risks and uncertainties associated with the models that we use to inform business and risk management decisions
and for financial accounting and reporting purposes.
n The use of Artificial Intelligence-based technologies and methods contain inherent risks that may expose us to unexpected
losses, damage our reputation, have an adverse impact on our business operations, and violate our legal and regulatory
obligations.
n Natural disasters could adversely affect our business.
n Legislative, regulatory, or judicial changes or actions could require operational changes that could adversely affect our
business activities and financial results.
Legal and Compliance Risks
n We face risk of non-compliance with our legal and regulatory obligations.
n We face risk of non-compliance with our contractual and other requirements which may result in legal action, fines,
monetary and other penalties, and harm to our reputation that may adversely affect our results of operations and financial
condition.
n Changes in legal requirements or standards through government or judicial action or our contractual obligations may
subject us to regulatory investigations, enforcement, or legal actions, and harm to our reputation, and adversely impact our
financial results.
n We may not achieve our housing goals, Duty to Serve, and equitable housing finance requirements, and we also may make
certain changes to our business in an attempt to meet these goals and requirements, both of which may expose us to
additional legal and compliance risk, damage our reputation, and adversely affect our business, financial condition, and
results of operations.
General Risks
n Changes in global or domestic economic and political conditions may have an adverse effect on our business.
Conservatorship and Related Matters
Freddie Mac's future is uncertain.
Our future structure and role in the mortgage industry will be determined by the Administration, Congress, and FHFA. It is
possible, and perhaps likely, that there will be significant changes that will materially affect our business model and results of
operations. For example, the current Administration has nominated a new Director of FHFA who may change our priorities and
strategy in various ways including ending the conservatorship, and could direct us to undertake new business activities and
limit or cease existing activities. Some or all of our functions could be transferred to other institutions, and we could cease to
exist as a stockholder-owned company. If any of these events occur, our shares could diminish in value, or cease to have any
value. Our stockholders may not receive any compensation for such loss in value.
Bills have been and may continue to be introduced in Congress concerning the future status of Freddie Mac, Fannie Mae, and
the mortgage finance system, including bills that provide for the wind down of Freddie Mac and Fannie Mae and modification of
the terms of the Purchase Agreement.
The conservatorship is indefinite in duration. The likelihood, timing, and circumstances under which we might emerge from
conservatorship are uncertain. Our current capital levels are significantly below the levels that would be required under the
ERCF. It will likely be very difficult for us to build the requisite amount of CET1 capital under the ERCF, as we may be required
to start paying dividends to Treasury on the senior preferred stock under the net worth sweep dividend requirement before we
reach such amount of CET1 capital. Once we start paying such dividends to Treasury, we will generally not be able to increase
our capital through retained earnings. While we are currently increasing our net worth as a result of changes to our senior
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preferred stock dividend requirement, the increases in our net worth since September 30, 2019 have been or will be added to
the aggregate liquidation preference of the senior preferred stock. In addition, our ability to increase our capital, other than
through retained earnings, is limited, and it may not be possible for us to raise private capital on acceptable terms, if at all.
Under the Purchase Agreement, we can raise up to $70.0 billion of capital through the issuance of common stock only after
Treasury has exercised in full its warrant to purchase 79.9% of our common stock and pending material conservatorship-
related litigation has been resolved or settled. Treasury’s potential substantial equity ownership in our company, along with
restrictions imposed on our business and post-recapitalization dividends and fees we will be required to pay to Treasury, will
reduce our attractiveness as an investment opportunity for third-party investors. It is uncertain whether or when we will be able
to retain or raise sufficient capital to permit an end to our conservatorship, and this may not happen for several years or at all.
For additional information on the conservatorship, Purchase Agreement, and terms of the senior preferred stock, see Note 2.
Even if the conservatorship ends and the voting rights of common stockholders are restored, we could effectively remain under
the control of the U.S. government because of the Purchase Agreement, Treasury's warrant to acquire nearly 80% of our
common stock for nominal consideration, or Treasury’s ownership of our common stock after it exercises its warrant. If
Treasury exercises the warrant, the ownership interest of our existing common stockholders will be substantially diluted.
Further, even if the conservatorship is terminated, we would remain subject to the Purchase Agreement and the terms of the
senior preferred stock unless they are terminated or amended.
FHFA, as our Conservator, controls our business activities. We may be required to take actions that reduce our
profitability, are difficult to implement, or expose us to additional risk.
We are under the control of FHFA, as our Conservator, and are not managed to maximize stockholder returns. FHFA
determines our strategic direction. We face a variety of different, and sometimes competing, business objectives and FHFA-
mandated activities, such as the initiatives we are pursuing under the Conservatorship Scorecards. Some of the activities FHFA
has required us to undertake have been costly and/or difficult to implement, such as development and support of the CSP. The
previous Administration and FHFA Director indicated that their areas of focus in the housing market include issues related to
affordability, equity, sustainability, and climate change. For example, our 2024 Conservatorship Scorecard included several
objectives related to promoting sustainable and equitable housing finance markets, affordable housing opportunities, and
consideration of climate risks. The Director of FHFA could change our priorities and strategy in various ways, and could direct
us to undertake new business activities and limit or cease existing activities. In addition to oversight by FHFA as our
Conservator, we are subject to regulation and oversight by FHFA under our Charter and the GSE Act and to certain regulation
by other government agencies. FHFA has the power to require us to change our processes, take action, and/or stop taking
action that could impact our business; FHFA exercises this power from time to time.
FHFA has required and may again in the future require us to make changes to our business that have adversely affected our
business or financial results and could require us to make additional changes at any time. FHFA may require us to undertake
activities that (1) reduce our profitability; (2) expose us to additional credit, market, funding, operational, legal, and other risks;
or (3) provide additional support for the mortgage market that serves our mission, but adversely affects our business or financial
results. Examples of these changes include amendments to the ERCF, Advisory Bulletins, and other instructions as FHFA may
deliver from time to time.
FHFA also has required us to take other actions that may adversely affect our business or financial results, such as requiring us
to maintain increased liquidity and directing us to amend the CSS LLC agreement in a manner that limits our influence over
CSS Board decisions. During conservatorship, the CSS Board Chair must be designated by FHFA, and all CSS Board decisions
require the affirmative vote of the Board Chair. FHFA also has the right to appoint up to three additional CSS Board members.
One of these seats has not been filled, and if FHFA appoints an additional independent member, the CSS Board members we
and Fannie Mae appoint could be outvoted by FHFA-designated Board members on any matter during conservatorship and on
a number of significant matters after conservatorship. It is possible that FHFA may require us to make additional changes to the
CSS LLC agreement, or may otherwise impose restrictions or provisions relating to CSS or the UMBS, that may adversely
affect us. FHFA's and Treasury's support are critical to the continued success of the UMBS and the fungibility of Freddie Mac-
and Fannie Mae-issued UMBS. FHFA and Treasury may discontinue or alter this support at any time.
From time to time, FHFA has prevented us from engaging in business activities or transactions that we believe would be
profitable or otherwise beneficial to our business, and it may do so again in the future. For example, FHFA has limited the size
and composition of our mortgage-related investments portfolio and the amount and type of new single-family and multifamily
loans we may acquire. We may be required to adopt business practices that help serve our mission and other non-financial
objectives, but that may negatively affect our future financial results. Congress or FHFA may require us to set aside or
otherwise pay monies to fund third-party initiatives, such as the existing requirement under the GSE Act that we allocate
amounts for certain housing funds. FHFA also could require us to take actions that would adversely affect our ability to
compete and innovate, such as through its rule for new GSE products and activities; changing our risk appetite (including risk
limits); and limiting our control over pricing. FHFA is also Conservator of Fannie Mae, our primary competitor. FHFA’s actions,
as Conservator of both companies, has required, and could in the future require, us and Fannie Mae to take a uniform approach
to certain activities, limiting innovation and competition and possibly putting us at a competitive disadvantage because of
differences in our respective businesses. FHFA also could limit our ability to compete with new entrants and other institutions.
The combination of the restrictions on our business activities and our potential inability to generate sufficient revenue through
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our guarantee activities to offset the effects of those restrictions may have an adverse effect on our results of operations and
financial condition.
Furthermore, the conservatorship has resulted in one material weakness in our internal control over financial reporting that
could result in errors in our reported results, which could have a material adverse effect on our business and operations. Our
material weakness relates specifically to the impact of the conservatorship on our disclosure controls and procedures. Because
we are under the control of FHFA, some of the information that we may need to meet our disclosure obligations may be solely
within the knowledge of FHFA. As our Conservator, FHFA has the power to take actions without our knowledge that could be
material to our shareholders and other stakeholders, and could significantly affect our financial performance or our continued
existence as an ongoing business. Because FHFA currently functions as both our regulator and our Conservator, there are
inherent structural limitations on our ability to design, implement, test or operate effective disclosure controls and procedures
relating to information known only to FHFA. As a result, we have not been able to update our disclosure controls and
procedures in a manner that adequately ensures the accumulation and communication to management of information known
only to FHFA that is needed to meet our disclosure obligations under the federal securities laws, including disclosures affecting
our financial statements. Given the structural nature of this material weakness, we do not expect to remediate this weakness
while we are under conservatorship. See Controls and Procedures for further discussion of management’s conclusions on
our disclosure controls and procedures and internal control over financial reporting.
The Purchase Agreement and the terms of the senior preferred stock significantly limit our business activities. In
the event of non-compliance with any Purchase Agreement covenants, Treasury may be entitled to specific
performance, damages, and other remedies, and if the corrective actions we were to take were determined by
FHFA to be insufficient, FHFA could impose penalties on us or take other remedial actions.
The Purchase Agreement and the terms of the senior preferred stock place significant restrictions on our ability to manage our
business, including limiting (1) our secondary market activities; (2) our single-family loan acquisitions; (3) the amount of
indebtedness we may incur; (4) the size of our mortgage-related investments portfolio; and (5) our ability to pay dividends,
transfer certain assets, raise capital, pay down the liquidation preference of the senior preferred stock, and exit
conservatorship. FHFA and Treasury can amend the Purchase Agreement and the terms of the senior preferred stock at any
time.
The Purchase Agreement prohibits us from taking a variety of actions without Treasury's consent. Treasury has the right to
withhold its consent for any reason. The restrictions on our business under the Purchase Agreement, senior priority position
and net worth sweep dividend provisions of the senior preferred stock, and warrant held by Treasury could adversely affect our
ability to attract capital from the private sector in the future, should we be in a position to do so. For additional information, see
Conservatorship and Related Matters - Freddie Mac's Future is Uncertain.
In the event of non-compliance with any Purchase Agreement covenants, Treasury may be entitled to specific performance,
damages, and other such remedies as may be available at law or in equity.
If FHFA placed us into receivership, the treatment of our assets and liabilities would be uncertain. We may be
limited or precluded from repaying the full liquidation preference of our preferred stock, making payments on
our securities, or making any distribution to our common stockholders.
We can be put into receivership at the discretion of the Director of FHFA at any time for a number of reasons consistent with
the GSE Act and the Purchase Agreement, to the extent applicable by law. For additional information, see our Current Report
on Form 8-K filed on January 8, 2025. Bills have been and may continue to be introduced in Congress that provide for Freddie
Mac to be placed into receivership. In addition, FHFA could be required to place us into receivership if Treasury were unable to
provide us with funding requested under the Purchase Agreement to address a deficit in our net worth. Treasury might not be
able to provide the requested funding if, for example, the U.S. government were not fully operational because Congress had
failed to approve funding or the government had reached its borrowing limit. For additional information, see MD&A -
Regulation and Supervision.
Being placed into receivership would terminate our conservatorship. The appointment of FHFA as our receiver would terminate
all rights and claims that our stockholders and creditors might have against our assets or under our Charter as a result of their
status as stockholders or creditors, other than possible payment contingent upon the value of the assets remaining in the
receivership entity. FHFA would have broad power as receiver to make decisions with respect to Freddie Mac's assets and
liabilities in receivership; it is uncertain how the exercise of those powers would affect the interests of our stockholders and
creditors.
The GSE Act provides that, if we were placed into receivership, the mortgages underlying our mortgage-related securities (and
the payments thereon) would be held for the benefit of the holders of those securities and not for the benefit of any receivership
estate or LLRE. However, payments on the mortgages underlying our mortgage-related securities might not be sufficient to
make full payments of principal and interest on the securities. If we were unable to fulfill our guarantee, the holders of our
mortgage-related securities would experience delays in receiving payments because the relevant systems are not designed to
make partial payments, and they could ultimately suffer losses on their investments to the extent the payments on the
mortgages underlying our mortgage-related securities were not sufficient to make full payments of principal and interest on the
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FREDDIE MAC | 2024 Form 10-K
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securities. In addition, when administering the receivership claims process, FHFA could treat similarly situated creditors
unequally, including treating creditors with claims related to senior unsecured debt securities and creditors with claims related
to guarantee obligations on mortgage-related securities unequally, if FHFA determines such treatment is necessary to maximize
the value of the assets of Freddie Mac, to maximize the present value return from the sale or other disposition of the assets of
Freddie Mac, or to minimize the amount of any loss realized upon the sale or other disposition of the assets of Freddie Mac, as
long as all creditors would receive at least as much as they would in a liquidation. During receivership or conservatorship, FHFA
may take any authorized action that FHFA determines is in the best interest of Freddie Mac or FHFA, including the public that
FHFA serves.
FHFA has the power to order the liquidation of our remaining assets in receivership. If our assets were liquidated, the liquidation
proceeds might not be sufficient to pay the secured and unsecured claims against us (including claims on our guarantees),
repay the liquidation preference on any series of our preferred stock, or make any distribution to our common
stockholders. Proceeds would first be applied to the secured and unsecured claims against us, the administrative expenses of
the receiver, and the liquidation preference of the senior preferred stock. Any remaining proceeds would then be available to
repay the liquidation preference of other series of preferred stock. Only after the liquidation preference of all series of preferred
stock is repaid would any proceeds be available for distribution to the holders of our common stock.
Our business and results of operations may be materially adversely affected if we are unable to attract and retain
well-qualified employees across the company. The conservatorship, uncertainty of our future, and limitations on
our executive and employee compensation put us at a disadvantage compared to other companies in attracting
and retaining employees.
Our business is highly dependent on the talents and efforts of our employees.
The conservatorship, uncertainty of our future, and limitations on executive and employee compensation have had, and are
likely to continue to have, an adverse effect on our ability to retain and recruit talent. The restrictions on the type of
compensation we may pay while under conservatorship include:
n
The Equity in Government Compensation Act of 2015 limits the compensation and benefits for our Chief Executive Officer
to the level that was in place as of January 1, 2015 while we are in conservatorship or receivership. Accordingly, annual
direct compensation for our CEO is limited to base salary at an annual rate of $600,000.
n
The Stop Trading on Congressional Knowledge Act of 2012, known as the STOCK Act, and related FHFA regulations
prohibit our senior executives from receiving bonuses during conservatorship.
n
FHFA, as our Conservator, has the authority to approve the terms and amount of our executive compensation and may
require us to make changes to our EMCP. For additional information on restrictions on executive compensation, see
Executive Compensation – CD&A – Other Executive Compensation Considerations – Legal, Regulatory, and
Conservator Restrictions on Executive Compensation.
n
The terms of the Purchase Agreement with Treasury contain specified restrictions relating to compensation, including a
prohibition on selling or issuing equity securities without Treasury’s prior written consent except under limited
circumstances, which effectively eliminates our ability to offer equity-based compensation to our employees.
These restrictions may reduce our flexibility to offer compensation deemed competitive, which may adversely affect our ability
to attract and retain executives and other employees. These restrictions also prohibit our ability to motivate and reward high
performance with compensation structures that provide upside potential to our executives, putting us at a disadvantage to
other companies in attracting and retaining executives. In addition, the uncertainty of potential action by Congress or the
Administration with respect to our future – including whether we will exit conservatorship, how long it may take before we exit
conservatorship, or whether housing finance reform will result in a significant restructuring of the company or the company no
longer continuing to exist – also negatively affects our ability to recruit and retain executives and other employees.
The cap on our CEO compensation historically has made retention and succession planning for this position difficult, and it may
make it difficult to attract qualified candidates for this critical role in the future.
We face competition from the financial services and technology industries, and from businesses outside of these industries, for
well-qualified talent. This competition has made the attraction and retention of executive and employee talent more challenging.
If this increased competition persists and if we are unable to attract and retain executives and other employees with the
necessary skills and talent, or the market for talent further intensifies, we may face increased operational risk, and our business
or financial results could be materially adversely affected. Leadership departures, especially multiple departures at
approximately the same time, could also materially adversely affect our business, results of operations, and financial condition.
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Credit Risks
We are subject to mortgage credit risk. Credit losses and costs related to this risk could adversely affect our
financial results.
Mortgage credit risk is the risk that a borrower will fail to make timely payments on a loan we own or guarantee. This exposes
us to the risk of credit losses and credit-related expenses, which could adversely affect our financial results. We are primarily
exposed to mortgage credit risk with respect to the single-family and multifamily loans and securities reflected as assets on our
consolidated balance sheets. We are also exposed to mortgage credit risk with respect to guaranteed securities and guarantee
arrangements that are not reflected as assets on our consolidated balance sheets, including most senior subordinate
securitizations and other mortgage-related guarantees. Periods of economic difficulty or higher unemployment may heighten
our credit risk because borrowers may not make their required payments in a timely manner or not make payments at all.
Additionally, in a high interest rate environment where there is higher than customary house price appreciation, we could be
exposed to higher delinquencies, which could cause additional losses if the house price appreciation declines significantly.
We have loans in our Single-Family mortgage portfolio with certain characteristics that are typically associated with higher
levels of credit risk. See MD&A - Risk Management - Single-Family Mortgage Credit Risk - Monitoring Loan
Performance and Characteristics for additional information on the characteristics of the loans in our Single-Family mortgage
portfolio. We may continue to acquire loans with higher LTV ratios, as well as loans with higher DTI ratios, generally up to 50%,
which will increase our exposure to credit risk. Our current and/or future efforts to increase eligible borrowers' access to single-
family mortgage credit, including our affordable housing program, changes in loan products, and our plan for fulfilling our duty
to serve underserved markets and FHFA requirements and guidance related to equitable housing, may expose us to increased
mortgage credit risk. At any time, the characteristics of the loans we acquire may change due to new or revised guidance from
FHFA.
We face significant risks related to our delegated underwriting process for single-family loans, including risks
related to sellers' origination operations, data accuracy, and mortgage fraud. Our delegated process relies on
sellers' ability to originate and deliver loans that consistently meet our underwriting standards, and their failure
to do so may impact the credit quality of the loans we purchase.
We delegate to our sellers the underwriting for the single-family loans we purchase or securitize. Our contracts with sellers
describe mortgage eligibility and underwriting standards, and the sellers represent and warrant to us that the loans they deliver
to us meet these standards.
We rely on the strength of our sellers' origination processes and controls. We perform operational risk evaluations to test our
counterparties' control environments. However, our review may not detect weak operations that could lead to errors in seller
decisions concerning, for example, loan underwriting, correspondent approvals, property valuations, and insurance coverage.
We do not independently verify most of the information provided to us before we purchase or securitize a loan. This exposes us
to the risk that one or more of the parties involved in a transaction (such as the borrower, property seller, broker, appraiser, title
agent, loan officer, or lender) misrepresented facts about the borrower, property, or loan, or otherwise engaged in fraud.
We review a sample of loans after we purchase them to determine if they comply with our contractual standards. However, our
review may not detect any misrepresentations by the parties involved in the transaction, detect loan fraud, or reduce our
exposure to these risks.
We can exercise certain contractual remedies for loans that do not meet our standards. Our representation and warranty
framework relieves sellers of certain repurchase obligations with respect to single-family loans. We may face greater exposure
to credit and other losses because our ability to enforce repurchases from sellers may be limited. In addition, to the extent that
we accept alternatives to repurchase, we may ultimately recover less than if we had enforced repurchase rights. We are
accepting more alternatives to repurchase, such as fee-based and fee-only options, which may further increase our exposure to
credit and other losses.
Our suite of tools, collectively referred to as Loan Advisor, offers limited representation and warranty relief for certain loan
components that satisfy automated data analytics related to appraisal quality, collateral valuation, certain condominium project
requirements, borrower assets, borrower income, and borrower employment status. In general, limited representation and
warranty relief is offered when information is validated against independent data sources and/or Freddie Mac analytics and risk
assessments. However, there is a risk that the enhanced tools and processes provided by Loan Advisor will not enable us to
identify all breaches in a timely manner. In addition, there is a risk that data provided by the independent data sources is not
accurate, impacting the representation and warranty relief decision. In turn, this could increase our exposure to credit and other
losses. For additional information, see MD&A - Risk Management - Single-Family Mortgage Credit Risk and MD&A -
Risk Management - Operational Risk - Third-Party Risk.
Mortgage fraud and other financial crimes could result in significant financial losses and harm to our reputation.
In the process of purchasing, securitizing, and servicing mortgage loans, we rely on information provided to us by third parties.
We also rely on the representation of such third parties as to the accuracy and completeness of the information. This exposes
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us to the risk that one or more of the third parties involved in a transaction (for example, the borrower, seller, broker, appraiser,
title agent, loan officer, or servicer) will intentionally or negligently engage in fraud by misrepresenting facts about a mortgage
loan. While we have certain measures to protect against mortgage fraud, there is no guarantee our measures will prevent or
reduce our exposure to this risk.
Other financial crimes, including money laundering, wire fraud, payment fraud, bribery, terrorist financing, and sanctions
violations, may be committed by, against, or through us. While we have certain policies and procedures designed to prevent
various financial crimes and to protect us against any resulting losses, there is no guarantee our measures will prevent or
reduce our exposure to these risks.
We have experienced financial losses resulting from mortgage fraud, including institutional fraud perpetrated by counterparties.
In the future, we may experience additional financial losses or reputational damage as a result of mortgage fraud or other
financial crimes.
Declines in national or regional house prices, other adverse changes in the housing market, declines in the value
of Multifamily properties, deterioration of property conditions, or adverse macroeconomic conditions, could
negatively affect both our Single-Family and Multifamily businesses.
Our financial results and business volumes can be negatively affected by declines in house prices, other adverse changes in the
housing market, declines in the value of Multifamily properties, deterioration of property conditions, or adverse macroeconomic
conditions. This could (1) significantly increase our expected credit losses; (2) result in higher stress losses for both the Single-
Family and Multifamily mortgage portfolios; (3) increase our losses, including losses resulting from our inability to recoup the full
amount of investments or advances made to improve property conditions, with respect to foreclosure alternatives, third-party
sales, and dispositions of REO properties; (4) reduce our returns or result in losses on our Single-Family and Multifamily
guarantee businesses, as default rates could be higher than we expected when we issued the guarantees; (5) negatively affect
the value of our unsecuritized loans, which could cause us to change our disposition strategies for our Single-Family delinquent
and modified loans; or (6) adversely impact our ability to transfer credit risk. For additional information regarding these risks,
see MD&A - Risk Management - Credit Risk.
Rapid changes in interest rates significantly impact affordability for both single-family and multifamily housing, and may also
influence borrower behavior and performance in ways that we may not anticipate. The proportion of refinance loan purchases
to total loan purchases in our Single-Family business has decreased during periods of elevated mortgage interest rates. Cash-
out refinance loans acquired in a higher interest-rate environment expose us to greater mortgage credit risk. Some of our seller/
servicer counterparties are highly dependent on refinance loan volumes. A decrease in such volumes could adversely affect
these counterparties, which could increase our exposure to counterparty credit risk.
Increases in interest rates may also reduce the ability of multifamily borrowers to refinance their loans, most of which have
balloon balances at maturity. In addition, in a rising interest rate environment, multifamily borrowers with floating rate loans may
have difficulty making higher monthly payments if cash flows generated by the properties are not increasing at a similar pace.
While we generally require multifamily borrowers with floating rate loans to purchase an interest rate cap to protect against
large movements in interest rates, purchasing or replacing a required interest rate cap, especially one with a longer term and/or
lower strike rate, becomes more expensive in volatile and rising interest rate environments. Furthermore, when the cost of
interest rate caps rises, there is no guarantee that the escrow established for the cost to purchase these caps will be sufficient.
For additional information, see MD&A - Risk Management - Credit Risk - Multifamily Mortgage Credit Risk - Completing
Our Own Underwriting, Credit, and Legal Review for New Business Activity.
We are exposed to counterparty credit risk with respect to our business counterparties. Our financial results may
be adversely affected if one or more of our counterparties fail to meet their contractual obligations to us.
We depend on our institutional counterparties to provide services that are critical to our business. We face the risk that one or
more of our counterparties may fail to meet their contractual obligations to us. Our major counterparties include sellers,
servicers, credit enhancement providers, custodial depository institutions, and counterparties to derivatives, short-term lending,
and other funding transactions (e.g., cash and other investments transactions). For additional information, see MD&A - Risk
Management - Counterparty Credit Risk.
Many of our major counterparties provide several types of services to us. The concentration of our exposure to our
counterparties remains high. Efforts we take to reduce exposure to financially weak counterparties could increase the relative
concentration of our exposure to other counterparties, increase our costs, and reduce our revenue. It is possible that our
counterparties could experience challenging market conditions or other events that could adversely affect their liquidity and
financial condition and cause some of them to become insolvent or otherwise fail to perform their obligations to us. Many of our
counterparties are subject to increasingly complex regulatory requirements and oversight, which place additional stress on their
resources and may affect their ability or willingness to do business with us.
Credit risk related to Single-Family seller/servicers
We are exposed to credit risk from the seller/servicers of our Single-Family loans, as described below.
n
A decline in servicing performance - A decline in a servicer's performance, such as delayed foreclosures or missed
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opportunities for foreclosure alternatives, could significantly affect our ability to mitigate credit losses and could affect the
overall credit performance of our Single-Family mortgage portfolio. A large volume of seriously delinquent loans, the
complexity of the servicing function, and heightened liquidity requirements are significant factors contributing to the risk of
a decline in performance by servicers. Servicers may experience financial and other difficulties due to the advances they
are required to make to us on delinquent single-family mortgages, including mortgages subject to forbearance plans. We
could be adversely affected if our servicers lack appropriate controls, experience a failure in their controls, or experience a
disruption in their ability to service loans, including as a result of a cybersecurity incident, legal or regulatory actions, or
financial difficulties. We also are exposed to fraud by third parties in the loan servicing function, particularly with respect to
short sales and other dispositions of non-performing assets. Additionally, we rely on the accuracy of information provided
by servicers, which exposes us to the risk that the data provided to us may be inaccurate.
We could attempt to mitigate our exposure to a poorly performing servicer by terminating its right to service our loans;
however, in a highly adverse economic environment, there could be scarce capacity in the marketplace and we may not be
able to find successor servicers who have the capacity to service the affected loans and who are also willing to assume the
representations and warranties of the terminated servicer. In addition, terminating a large servicer may not be feasible
because of the operational and capacity challenges related to transferring large servicing portfolios. There is also a
possibility that the performance of some loans may degrade during the transition to new servicers. During a period of
heightened delinquencies, we may incur costs and potential increases in servicing fees if we replace a servicer with a high
concentration of loans in default, which are more costly to service. We may also be exposed to concentrations of credit
risk among certain servicers.
n
A failure by seller/servicers to fulfill their obligations to repurchase loans or indemnify us as a result of breaches of
representations and warranties - While we may have the contractual right to require a seller or servicer to repurchase
loans from us, it may be difficult, expensive, and time-consuming to enforce such repurchase obligations. We could enter
into settlements to resolve repurchase obligations; however, the amounts we receive under any such settlements may be
less than the losses we ultimately incur on the underlying loans.
Under our representation and warranty framework, as may be revised from time to time in response to FHFA instruction,
we are required in some cases to utilize an alternative remedy, such as indemnification, in lieu of repurchase. The amount
we recover under an alternative remedy may be less than the amount we could have recovered in a repurchase.
n
Significant exposure to non-depository institutions - A large volume of our single-family loans is acquired from and
serviced by non-depository institutions. Some of these institutions may not have the same financial strength or operational
capacity, or be subject to the same level of regulatory oversight, as large depository institutions. As a result, we face
increased risk that these counterparties could fail or otherwise be unable to perform their obligations to us. In particular,
non-depository servicers grew their servicing portfolios in the last several years. This rapid growth could expose us to
increased risks if any operational strain adversely affects these servicers' servicing performance or their financial strength.
These institutions also service portfolios for other investors and guarantors (i.e., Fannie Mae and Ginnie Mae) and
operational issues related to those portfolios could affect the performance of our portfolio. In addition, these servicers may
not always have ready access to appropriate sources of liquidity to finance their operations, particularly during periods
when the mortgage market is experiencing a downturn. If these servicers reduce their servicing portfolios, overall servicing
capacity may be constrained.
Credit risk related to Multifamily seller/servicers
Our seller/servicers also have a significant role in servicing loans in our Multifamily mortgage portfolio. We are exposed to the
risk that multifamily seller/servicers could come under financial pressure. The financial pressure could potentially cause a
decline in their servicing performance and cause us to take remedial action against them including terminating their right to
service our loans, potentially resulting in further concentration of exposure to other seller/servicers.
We are also exposed to settlement risk from the non-performance of sellers and servicers as a result of our forward settlement
loan purchase programs in our Single-Family and Multifamily businesses.
Credit risk related to counterparties to derivatives, funding, short-term lending, securities, and other transactions
We have significant exposure to institutions in the financial services industry relating to derivatives, funding, short-term lending,
securities, securities purchased under agreements to resell, secured lending, forward settlement of loans and securities, and
other transactions (e.g., cash and other investments transactions). These transactions are critical to our business, including our
ability to:
n
Manage interest-rate risk and other risks related to our investments in mortgage-related assets;
n
Fund our business operations; and
n
Service our customers.
We face the risk of failure of the clearing members, clearinghouses, or other financial intermediaries we use to facilitate
derivatives, short-term lending, securities, and other transactions. We also clear trades at clearinghouses through clearing
members. We would be subject to losses on certain trades if a clearing member fails to comply with the requirement to
segregate customer funds or if a clearing member's customer causes a clearing member to default.
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We are a clearing member of the clearinghouses through which we execute mortgage-related and Treasury securities
transactions. As a result, we could be subject to losses because we are required to participate in the coverage of losses
incurred by other clearing members if they fail to meet their obligations to the clearinghouse.
If our counterparties to short-term lending transactions fail, we are exposed to losses to the extent the transaction is unsecured
or the collateral posted to us is insufficient.
Credit risk related to mortgage insurers and other credit enhancement providers
If a mortgage insurer fails to meet its obligations to reimburse us for claims, our credit losses could increase. In addition, if a
regulator determines that a mortgage insurer lacks sufficient capital to pay all claims when due, the regulator could take action
that might affect the timing and amount of claim payments made to us. We face similar risks with respect to our counterparties
on ACIS and comparable transactions.
We cannot differentiate pricing based on the strength of a mortgage insurer or revoke a mortgage insurer's status as an eligible
insurer without FHFA approval. In addition, we generally do not select the mortgage insurance provider on a specific loan
because the selection is usually made by the lender at the time the loan is originated. As a result, we could acquire a
concentration of risk to certain insurance providers.
Our loss mitigation activities may be unsuccessful or costly and may adversely affect our financial results.
Our loss mitigation activities may not be successful. The costs we incur related to loan modifications and other loss mitigation
activities have been, and could continue to be, significant. For example, we generally bear the full cost of the monthly payment
reductions related to modifications of loans we own or guarantee, as well as all applicable servicer incentive fees for our single-
family mortgage modifications.
We could be required to make changes to our loss mitigation activities that could make these activities more costly to us.
FHFA, as Conservator and regulator, may continue to issue directives and Advisory Bulletins to assist borrowers and align
servicing practices for the GSEs. These directives and Advisory Bulletins could make these activities more costly to us,
especially with regard to loan modification initiatives. FHFA may continue to issue these directives and Advisory Bulletins for a
variety of reasons, including consumer relief and alignment of the prepayment behavior of our and Fannie Mae's respective
UMBS.
We have loans on trial period plans as required under certain loan modification programs. Some of these loans may fail to
complete the trial period or fail to qualify for our other borrower assistance programs. For these loans, the trial period will have
effectively delayed the foreclosure process and could increase our costs.
The type of loss mitigation activities we pursue could affect prepayments on our Single-Family securities (e.g., UMBS, 55-day
MBS, PCs, and REMICs), which could affect the value of these securities or the earnings from the assets in our mortgage-
related investments portfolio. In addition, loss mitigation activities may adversely affect our ability to securitize, resecuritize, and
sell the loans subject to those activities.
We devote significant resources to our borrower assistance initiatives. The size and scope of these efforts may compete with
other business opportunities or corporate initiatives.
For additional information on our loss mitigation activities, see MD&A - Our Business Segments - Single-Family -
Products and Activities - Loss Mitigation Activities and MD&A - Risk Management - Single-Family Mortgage Credit
Risk - Engaging in Loss Mitigation Activities.
We have been, and could continue to be, adversely affected by deficiencies and delays in the single-family and
multifamily foreclosure process.
Delays in the foreclosure process could cause our expenses to increase. For example, properties awaiting foreclosure could
deteriorate until we acquire them, resulting in increased expenses to repair and maintain the properties. Foreclosure process
delays could also adversely affect trends in property prices regionally or nationally, which could adversely affect our financial
results. Additionally, there have been instances where it has been impracticable for us to exercise our foreclosure remedies on
multifamily properties. While past instances have not had a material effect on our financial results, future instances may
adversely affect our financial results.
We are exposed to increased credit losses and credit-related expenses in the event of a natural disaster or
catastrophic event.
The occurrence, severity, and duration of a catastrophic event, such as a pandemic or other health crisis; terrorism, war,
political instability, or other political conflict or crisis; or natural disaster such as a flood in an area where we own or guarantee
mortgage loans could increase our credit losses and credit-related expenses. A catastrophic event that damages or destroys
single-family or multifamily real estate underlying mortgage loans that we own or guarantee, or negatively affects the ability of
borrowers to continue to make payments on mortgage loans that we own or guarantee, could increase our serious delinquency
rates and average loan loss severity in the affected areas. Such catastrophic events could generate credit losses and credit-
related expenses and have a material adverse effect on our business and financial results. While homeowner's and flood
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insurance may offset some of the risk of natural disasters, insurance coverage may not be adequate or always available and
borrowers may not be required or choose to purchase certain types of insurance, such as earthquake insurance or flood
insurance for properties located outside SFHAs. Rising costs or limited availability of insurance could also lead borrowers to
underinsure, which could result in higher uninsured costs and unrepaired properties. Additionally, rising insurance costs could
impact consumers' ability to make mortgage payments, and higher insurance costs could decrease the availability of affordable
housing for buyers.
Increases in the severity and frequency of natural disasters and the continued existence of conditions that could lead to a
natural disaster, particularly with respect to flooding in areas not designated as SFHAs (i.e., in areas where we do not require
flood insurance), as well as any decrease in the willingness of insurers to provide coverage in certain areas for certain perils,
would increase the foregoing risks. In addition, the unpredictability of natural disasters and the complexity of forecasting
negatively affect our ability to forecast losses from such events.
We also face climate transition risk, which includes policy, legal, technology, financial and economic changes from any
potential transition to a lower-carbon economy. Changing policies, coupled with changing market preferences, could affect
housing and could result in a significant financial burden to our borrowers. Actions taken by Congress, the Administration, state
and municipal governments, and FHFA in response to climate change concerns may create transition risks that specifically
impact the housing market and our business. Such a transition could impact certain industries and regional economies,
affecting property values and the ability of borrowers in those industries or regions to pay their mortgage loans. The impacts of
climate transition risk may also expose us to reputational, compliance, and/or litigation risk due to increased legal and
regulatory scrutiny or negative public sentiment. For additional information on our climate-related risks, see MD&A - Risk
Management - Credit Risk - Natural Disaster and Climate-Related Risk Management.
New issuance market for our CRT transactions may not be available to us in adverse economic conditions. These
transactions also increase our expenses.
Our ability to transfer credit risk (and the cost to us of doing so) could change rapidly depending on market conditions. Adverse
market conditions may result in insufficient investor demand for CRT transactions at acceptable prices. For example, high
interest rates, elevated inflation, and other market uncertainty could delay or otherwise impact our planned CRT transactions. It
is possible that our CRT strategies and structuring decisions may not prevent us from incurring substantial losses. For instance,
it takes time to transfer risk and we are exposed to credit losses during this pipeline period. Additionally, some of our CRT
transactions have early termination clauses or maturity dates that are earlier than the maturities of the reference mortgage
loans, and we may also seek to terminate certain CRT transactions by repurchasing the related securities. We will be exposed
to increased credit risk on the reference mortgage loans after termination of such transactions. Additionally, we retain a portion
of the risk of future losses on loans covered by CRT transactions, including all or a portion of the first loss risk in Single-Family
STACR and ACIS transactions and Multifamily MCIP and MSCR transactions. The costs associated with CRT transactions are
significant and may increase. For some CRT transactions, there may be a significant difference in time between when we
recognize a credit loss in earnings and when we recognize the related recovery in earnings, and this lag could adversely affect
our financial results in the earlier period. Changes in regulatory guidance, such as capital requirements under the ERCF, may
cause us to modify our CRT activities.
Market Risks
Changes in interest rates could negatively affect the fair value of our financial assets and liabilities, results of
operations, and net worth.
Our financial results, including the amount of interest income we receive and interest expense we pay, can be significantly
affected by changes in interest rates.
Interest rates can fluctuate for many reasons, including changes in the fiscal and monetary policies of the federal government
and its agencies as well as geopolitical events or changes in general economic conditions, such as increased inflation. The
amount and timing of the impact of changes in interest rates depends on the magnitude, speed, and duration of the changes in
interest rates.
Changes in interest rates could adversely affect the cash flows and prepayment rates on assets that we own and related debt
and derivatives. In addition, changes in interest rates could adversely affect the prepayment rate or default rate on the loans
that we guarantee. For example, when interest rates decrease, borrowers are more likely to prepay their loans by refinancing
them at a lower rate. An increased likelihood of prepayment on the loans underlying our mortgage-related securities may
adversely affect the value of these securities.
Additionally, we may issue callable debt instruments to manage the duration and prepayment risk of expected cash flows of the
mortgage assets we own. We may exercise the option to repay the outstanding principal balance when interest rates decrease.
However, we may replace the called debt at a higher spread due to the market conditions at that time. In the event we decide
not to call our debt, we may incur higher hedging costs.
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We incur costs as a result of our risk management activities, which may not be successful. Our interest-rate risk management
activities are designed to reduce our economic exposure to changes in interest rates to a low level as measured by our models.
However, the accounting treatment for certain of our assets and liabilities, including derivatives, creates variability in our
earnings when interest rates fluctuate, as some assets and liabilities are measured at amortized cost and some are measured at
fair value, while all derivatives are measured at fair value. While we use hedge accounting to attempt to reduce interest-rate-
related earnings volatility, our hedge accounting programs may not be effective in reducing this variability. In addition,
differences in amortization between our assets and the liabilities we use to fund them, including amortization of fair value
hedging basis adjustments, may also be affected by changes in interest rates and prepayment rates and may contribute to
earnings variability.
Changes in market spreads could negatively affect the fair value of our financial assets and liabilities, results of
operations, and net worth.
Changes in market conditions, including changes in interest rates, liquidity, prepayment, and/or default expectations and the
level of uncertainty in the market for a particular asset class, may cause fluctuations in market spreads. Our financial results and
net worth can be significantly affected by changes in market spreads, especially results driven by financial instruments that are
measured at fair value. These instruments include trading securities, available-for-sale securities, derivatives, loans held-for-
sale, and loans and debt with the fair value option elected.
A narrowing or tightening of the market spreads on a given asset is typically associated with an increase in the fair value of that
asset. Narrowing market spreads may reduce the number of attractive investment opportunities and could increase the cost of
activities we may undertake to support the liquidity and price performance of our UMBS and other securities. Consequently, a
tightening of the market spreads on our assets may adversely affect our future financial results and net worth. A widening of the
market spreads on a given asset is typically associated with a decline in the fair value of that asset or tightening of the market
spread on a given liability is typically associated with an increase in the fair value of that liability, which may adversely affect our
near-term financial results and net worth. While wider market spreads may create favorable investment opportunities, our ability
to take advantage of any such opportunities is limited due to various restrictions on the size and composition of our mortgage-
related investments portfolio. See MD&A - Conservatorship and Related Matters for additional information on these
restrictions.
Changes in market spreads also affect the fair value of our debt with the fair value option elected. A narrowing or tightening of
the market spreads on a given liability is typically associated with an increase in the fair value of that liability, which is
recognized as a loss by us.
A significant decline in the price performance of, or demand for, our UMBS could have an adverse effect on the
volume and/or profitability of our Single-Family business activity.
Our UMBS are an integral part of our loan purchase program. Our competitiveness in purchasing single-family loans from our
sellers and the volume and profitability of our Single-Family business activity are directly affected by the price performance of
UMBS issued by us relative to comparable Fannie Mae-issued UMBS. If our UMBS were to trade at a discount relative to
comparable Fannie Mae securities due to prepayment performance or other factors, such a difference in relative pricing may
create an incentive for sellers to conduct a disproportionate share of their single-family business with Fannie Mae.
It is possible that a liquid market for our UMBS may not be sustained, which could adversely affect their price performance and
our single-family market share. A significant reduction in our market share, and thus in the volume of loans that we securitize, or
a reduction in the trading volume of our UMBS could reduce the liquidity of our UMBS. While we may decide to employ various
strategies to support the liquidity and price performance of our UMBS, any such strategies may fail or adversely affect our
business and financial results. We may cease any such activities at any time, or FHFA could require us to do so, which could
adversely affect the liquidity and price performance of our UMBS. We may incur costs to support our presence in the agency
securities market and to support the liquidity and price performance of our securities.
Liquidity-related price differences could occur between UMBS issued by us and comparable Fannie Mae-issued UMBS due to
factors that are largely outside of our control. For example, the level of the Federal Reserve's purchases and sales of agency
mortgage-related securities could affect the demand for and values of our UMBS. Therefore, any strategies we employ to
reduce any liquidity-related price differences may not reduce or eliminate any such price differences over the long term.
We may experience price differences with Fannie Mae on individual new production pools of TBA-eligible mortgages,
particularly with respect to specified pools and our multilender securities. From time to time, we may need to adjust our pricing
for a particular new production pool category or introduce new initiatives to maintain alignment and competitiveness with
Fannie Mae with respect to the acquisition of such pools. Depending on the amount of pricing adjustments in any period, it is
possible that they could adversely affect the profitability of our Single-Family business for that period. We manage our cash
window activities in accordance with our risk limits and limitations imposed by FHFA; this may limit our ability to manage
alignment. For additional information, see MD&A - Our Business Segments - Single-Family - Business Overview -
Products and Activities.
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If the UMBS does not continue to receive widespread market acceptance, the liquidity and price performance of
our Single-Family mortgage-related securities and our market share and profitability could be adversely affected.
As part of the combined UMBS market, we have been required by FHFA to align certain of our Single-Family mortgage
purchase offerings, servicing, and securitization programs, policies and practices with Fannie Mae to achieve and maintain
market acceptance of the UMBS. We cannot provide any assurance that these efforts will prevent the occurrence of the types
of pricing disparities discussed above over the long-term. A number of factors may make it difficult for us to maintain alignment
with Fannie Mae, including increased refinances, the introduction or expansion of automation and other innovations, and
changes in the industry. These alignment activities may adversely affect our business and our ability to compete with Fannie
Mae. We may be required to further align our business processes with those of Fannie Mae. Uncertainty concerning the extent
of the alignment between Freddie Mac's and Fannie Mae's mortgage purchase, servicing, and securitization programs, policies,
and practices may affect the degree to which the UMBS maintains market acceptance.
If investors do not continue to accept the fungibility of Freddie Mac and Fannie Mae UMBS and instead prefer Fannie Mae
UMBS over Freddie Mac UMBS, this could affect the liquidity or market value of our Single-Family mortgage-related securities
and have a significant adverse impact on our business, liquidity, financial condition, net worth, and results of operations, and
could affect the liquidity or market value of our Single-Family mortgage-related securities. Investor preferences could also result
in the emergence of enterprise-specific markets for these securities.
The ERCF requires us to hold capital to account for the counterparty credit risk of Fannie Mae. Given the resulting risk weights
for commingled securities or crossholding of Enterprise UMBS, it is possible that the fungibility of UMBS will be reduced and
that enterprise-specific markets will re-emerge. The ERCF risk weighting may cause each Enterprise to choose whether to
stipulate delivery of its own UMBS or to provision excess capital to account for the risk of receiving the other Enterprise’s
UMBS. Further, the ERCF requirements and the resulting 50 bps fee we and Fannie Mae implemented for newly-issued
commingled securities caused such issuances effectively to cease after July 1, 2022, undermining the goal of fungibility of
Freddie Mac and Fannie Mae UMBS. Although the fee was reduced to 9.375 bps effective April 1, 2023 resulting in an increase
in these issuances, there is no assurance that this reduction will result in the resumption of commingled security issuance at
previous levels.
Commingling certain Fannie Mae securities in resecuritizations has increased our counterparty risk.
We have counterparty credit exposure to Fannie Mae due to investors' ability to commingle certain Freddie Mac and Fannie
Mae securities in resecuritizations. When we resecuritize Fannie Mae securities, our guarantee of timely principal and interest
extends to the underlying Fannie Mae securities. In the event that Fannie Mae were to fail to make a payment on a Fannie Mae
security that we resecuritized, Freddie Mac would be responsible for making the payment. We do not control or limit the
amount of resecuritized Fannie Mae securities that we could be required to guarantee. We will be dependent on FHFA, Fannie
Mae, and Treasury (pursuant to Fannie Mae's and our respective Purchase Agreements with Treasury) to avoid a liquidity event
or default in the event of a payment default by Fannie Mae. We have not modified our liquidity strategies to address the
possibility of non-timely payment by Fannie Mae, but we may do so in the future.
We and Fannie Mae both rely on the Federal Reserve Banks to make payments on our respective mortgage-related securities.
As noted above, in the event that Fannie Mae were to fail to make a payment on a Fannie Mae security that we resecuritized,
Freddie Mac would be responsible for providing the Federal Reserve Banks with the funds to make the payment. If we failed to
provide the Federal Reserve Banks with all funds to make such payment on such resecuritized Fannie Mae securities, the
Federal Reserve Banks would not make any payment on any of our outstanding Freddie Mac-issued UMBS, Supers, Single-
Family REMICs, or other Single-Family mortgage-related securities to be paid on that payment date, regardless of whether
such Freddie Mac-issued securities were backed by Fannie Mae-issued securities.
In addition, UMBS have created significant interdependence between the single-family mortgage securitization programs of
Freddie Mac and Fannie Mae. Accordingly, the market value and liquidity profile of our Single-Family mortgage-related
securities could be affected by financial and operational incidents relating to Fannie Mae, even if those incidents do not directly
relate to us or our securities. Similarly, any disruption in Fannie Mae’s securitization activities or any adverse events affecting
Fannie Mae’s significant mortgage lenders and servicers also could adversely affect the market value of our Single-Family
mortgage-related securities.
The profitability of our Multifamily business could be adversely affected by market competition and/or decreased
investor demand for our securities.
Our current Multifamily business model is highly dependent on our ability to purchase and securitize loans at terms that provide
us with an appropriate economic return. The actions of our competitors, including their pricing, credit standards, and loan
structures, along with the actions we and our competitors take to support affordable multifamily housing could reduce the
volume and profitability of our multifamily business. A significant decrease in demand for our securities could have an adverse
impact on our profitability to the extent that our holding period for the loans increases and we are exposed to credit, spread,
and other market risks for a longer period of time or receive reduced proceeds from securitization. We employ various
strategies to support the liquidity of our securities, but those strategies could fail or adversely affect our business. We may
cease such activities at any time, or FHFA could require us to do so, which could adversely affect the liquidity and price
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performance of our securities.
Liquidity Risks
Our activities may be adversely affected if funding is limited or unavailable, or if the cost is increased.
The amount, type, and cost of our unsecured funding directly affects our interest expense and results of operations. A number
of factors could make such financing more difficult to obtain; more expensive; or unavailable on any terms, including market
and other factors, monetary policy, changes in U.S. government support for us, and reduced demand for our debt securities.
Market and Other Factors
Our ability to obtain funding in the public unsecured debt markets or by selling or pledging mortgage-related and other
securities as collateral to other institutions could change rapidly or cease. The cost of available funding could increase
significantly due to changes in monetary policy, interest rates, market confidence, operational risks, regulatory requirements, or
other factors such as competing supply.
Prolonged wide market spreads on long-term debt could cause us to reduce our long-term debt issuances and increase our
reliance on short-term debt issuances. Such increased reliance on short-term debt could increase the risk that we may be
unable to refinance our debt when it becomes due and result in a greater use of derivatives. Greater derivatives use could
increase the variability of our comprehensive income or increase our credit exposure to our counterparties. Additionally, we
may incur higher hedging costs in the event that we decide not to call our debt.
We may incur higher funding costs due to our liquidity management requirements, practices, and procedures, including FHFA
minimum liquidity requirements that limit the size and the allowable investments in our other investments portfolio. Our
practices and procedures may not provide us with sufficient liquidity to meet our ongoing cash obligations under all
circumstances. In particular, we believe that our liquidity contingency plans may be inadequate or difficult to execute during a
liquidity crisis or period of significant market turmoil. If we cannot access the unsecured debt markets, our ability to repay
maturing indebtedness, make payments on our mortgage-related securities, and fund our operations could be significantly
impaired or eliminated, as our alternative sources of liquidity (e.g., cash and other investments) may not be sufficient to meet
our liquidity needs. We have limited ability to use the less liquid assets in our mortgage-related investments portfolio as a
significant source of liquidity (e.g., through sales or as collateral in secured borrowing transactions).
We make extensive use of the Federal Reserve's payment system in our business activities, and the Federal Reserve Bank of
New York acts as our fiscal agent with respect to our book-entry securities. The Federal Reserve Banks require that we fully
fund accounts at the Federal Reserve Bank of New York to the extent necessary to cover cash payments on our debt and
mortgage-related securities each day, before the Federal Reserve Bank of New York will draw from our accounts and initiate
such payments. Although we seek to maintain sufficient intraday liquidity to fund our activities through the Federal Reserve's
payment system, we have limited access to cash once the debt markets are closed for the day. Insufficient cash may cause our
accounts to be overdrawn, potentially resulting in penalties, delays in payments on our securities, and reputational harm. Unlike
certain of our competitors, we do not have access to the Federal Reserve's discount window.
Changes in U.S. Government Support
Treasury supports us through the Purchase Agreement and Treasury's ability to purchase up to $2.25 billion of our obligations
under its permanent statutory authority. Changes or perceived changes in the U.S. government's support for us could have a
severe negative effect on our access to the unsecured debt markets and our debt funding costs. Our access to the unsecured
debt markets and the costs of our debt funding could be adversely affected by several factors relating to U.S. government
support, including uncertainty about the future of the GSEs; any concerns by debt investors that we face increasing risk of
being placed in receivership; future draws that significantly reduce the amount of available funding remaining under the
Purchase Agreement; uncertainty regarding a breach of the U.S. debt ceiling; and the risk of a U.S. government shutdown.
Pursuant to the Purchase Agreement, it is possible that we may be required to pay a dividend to Treasury in the future that
would cause us to fall below our capital requirements under the ERCF. In addition, we and Treasury are required to agree to a
periodic commitment fee that we will pay to Treasury for a five-year period (after we have reached prescribed capital levels) in
return for Treasury's remaining funding commitment.
Reduced Demand for Debt Securities
If investor demand for our debt securities were to decrease, our liquidity, business, and results of operations could be materially
adversely affected. The willingness of investors to purchase and hold our debt securities can be influenced by many factors,
including changes in the world economy, changes in inflation and exchange rates, and regulatory and political factors (including
our being placed into receivership), as well as the availability of and investor preferences for other investments. We compete for
debt funding with Fannie Mae, the FHLBs, and other institutions. Our funding costs and liquidity contingency plans may also be
affected by changes in the amount of, and demand for, debt issued by Treasury. Our debt is considered an HQLA because it
can be easily and immediately converted into cash at little or no loss of value. Any changes by investors in how they view our
debt or regulatory changes causing our debt to no longer be considered an HQLA could significantly increase our debt funding
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costs or reduce our ability to issue debt.
If investors were to reduce their purchases of our debt securities or divest their holdings, our funding costs could increase and
our business activities could be curtailed. The market for our debt securities may become less liquid as a result of our having
reached the Purchase Agreement limits on the size of our mortgage-related investments portfolio and the amount of our
unsecured debt, or future reductions in those limits. This could lead to a decrease in demand for our debt securities and an
increase in our funding costs.
Any downgrade in the credit ratings of the U.S. government would likely be followed by a downgrade in our credit
ratings. A downgrade in the credit ratings of our debt could adversely affect our liquidity and other aspects of
our business.
Any downgrade in the credit ratings of the U.S. government would be expected to be accompanied by a downgrade in our
credit ratings. In addition to a downgrade in the credit ratings of or outlook on the U.S. government, several other events could
adversely affect our credit ratings, including actions by governmental entities, changes in government support for us, changes
in regulatory designations of our debt, future GAAP losses, and additional draws under the Purchase Agreement. Any such
downgrades could lead to major disruptions in the mortgage and financial markets and to our business due to lower liquidity
and prices for our securities, higher borrowing costs, lower asset values, and higher credit losses, and could cause us to
experience net losses and net worth deficits. Downgrades in our credit ratings also may trigger additional collateral or funding
obligations or restrictions which, could have a material adverse effect on our liquidity, including as a result of credit-related
contingent features in certain of our derivative contracts.
For additional information, see MD&A - Liquidity and Capital Resources.
Operational Risks
A failure in our operational systems or infrastructure, or those of third parties, could impair our ability to provide
market liquidity, disrupt our business operations, damage our reputation, expose us to legal risk, and cause
financial losses.
Operational risk continues to be elevated due to the volume, complexity, and pace of change across the company. We face
significant levels of operational risk due to a variety of factors, including the size and complexity of our business operations, the
amount of change to our core systems required to keep pace with market demands, regulatory requirements, and business
initiatives, and the ever-changing cybersecurity landscape. Shortcomings or failures in our internal processes, people, or
systems, or those of third parties with which we interact, could lead to a variety of adverse events, including impairment of our
liquidity, disruption of our business (e.g., purchasing mortgages, issuing debt and mortgage-related securities, or entering into
CRT transactions), incorrect or late payments on our securities and other obligations, including CRT transactions, errors in our
financial statements, liability to customers or investors, further legislative or regulatory intervention, fines, or penalties,
reputational damage, and financial and economic loss.
Our business is highly dependent on our ability to process a large number of transactions on a daily basis and collect, manage
and analyze significant amounts of information, much of which is provided by third parties. This information may be incorrect,
our receipt of information may be delayed, or we may fail to properly manage or analyze it. The inability to correctly process
transactions and information could lead to the execution of business transactions, including CRT transactions, that fail to meet
our economic return thresholds, cause financial and economic loss, cause reputational damage, and cause other disruptions to
our business operations.
The transactions we process are complex and are subject to various legal, accounting, tax, and regulatory standards, which
can change rapidly. Our financial, accounting, payment, data processing, or other operating systems and facilities may contain
design flaws or may fail to operate properly, adversely affecting our ability to process transactions, including our ability to
compile and process legally required information. We have certain systems that require manual support and intervention, which
may lead to heightened risk of system failures. The inability of our systems to accommodate a high volume of transactions or
new types of transactions or offerings could constrain our ability to pursue new business initiatives or improve existing business
activities.
Our technological connections with our customers and third parties, including suppliers, sellers and servicers, financial market
utilities, and other third parties, are substantial and expose us to risk, which increases our risk exposure with respect to an
operational failure of their infrastructure or systems. We have developed, and expect to continue to develop, software tools for
use by our customers in the customers' loan production, loan servicing, and other processes. These tools may fail to operate
properly, which could disrupt our, or our customers', business and adversely affect our relationships with our customers.
We continue to leverage third-party cloud infrastructure for both customer-facing applications and internal use applications. If
we do not implement changes in a well-managed, secure, and effective manner, we may experience unplanned service
disruptions or unplanned costs which may harm our business and operating results. In addition, our cloud infrastructure
providers, or other service providers, have experienced and may in the future experience service disruptions, system
breakdowns or failures, outages, downtime, defective system or software updates, or other cybersecurity incidents, as well as
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adverse changes to financial condition, bankruptcy, or other adverse conditions, which could have a material adverse effect on
our business and reputation. Thus, our plans to increase the amount of our infrastructure that we outsource to the cloud or to
other third parties may increase our risk exposure.
From time to time, we evaluate new technologies, including Artificial Intelligence-based technologies and methods, for our
internal use or our customers' use. Utilizing such rapidly evolving technologies may increase our operational and regulatory
risks. If we choose not to utilize such technologies, we could be at a competitive disadvantage. Moreover, some of our long-
term initiatives designed to reduce our operational risk, or to increase operational efficiencies, particularly those relating to the
implementation of new technology and the transition to third-party cloud-based platforms, increase our operational risk over
the short term as we implement the changes, as many involve significant changes to our business processes, controls, systems
and infrastructure. If we fail to implement these initiatives in a well-managed, secure and effective manner, we may experience
significant service disruptions, system breakdowns or failures, outages, downtime, defective system or software updates, other
cybersecurity incidents or other unforeseen costs or other unintended consequences which could result in material harm to our
business and results of operations. Further, there can be no assurance that these initiatives will be successful in reducing our
operational risk or increasing our operational efficiencies or otherwise result in our intended outcomes. For additional
information see Risk Factors - Operational Risks - The use of Artificial Intelligence-based technologies and methods
contain inherent risks that may expose us to unexpected losses, damage our reputation, have an adverse impact on
our business operations, and violate our legal and regulatory obligations.
We also face significant operational and other risks related to CSS and the operation and continued development of the CSP.
We rely on CSS and the CSP (which is owned and operated by CSS) for the operation of many of our Single-Family
securitization activities. Our business operations would be adversely affected and the market for Freddie Mac securities would
be disrupted if the CSP were to fail or otherwise become unavailable to us or if CSS were unable to perform its obligations to
us. As the CSP has an operational dependency on Fannie Mae to administer Freddie Mac-issued commingled securities, an
operational failure at Fannie Mae could also adversely impact the ability of CSS to perform its obligations to Freddie Mac. In the
event of a CSS operational failure, we may be unable to issue certain new single-family mortgage-related securities, and
investors in mortgage-related securities hosted on the CSS platform may experience payment delays or errors. Any measures
we could take to mitigate these risks might not be sufficient to prevent our business from being harmed. We update our internal
systems and processes on a regular basis, including to improve existing processes and respond to market and regulatory
developments. We could be adversely affected if CSS and/or the CSP are unable to make any necessary corresponding
changes to their systems and processes in a timely manner. CSS could adopt or prioritize strategies that could adversely affect
its ability to perform its obligations to us.
We face an operational resiliency risk that can result from the inability to quickly adapt and respond to disruptions while
maintaining continuous business operations and safeguarding our people, assets, and overall reputation.
Most of our key business activities are conducted in the Washington D.C. metropolitan area and represent a concentrated risk
of people, technology, and facilities. As a result, an infrastructure disruption in or around our offices or affecting the power grid,
such as from a terrorist event, active shooter, or natural disaster, could significantly adversely affect our ability to conduct
normal business operations. Any measures we take to mitigate this risk may not be sufficient to respond to the full range of
events that may occur or allow us to resume normal business operations in a timely manner.
Cybersecurity threats are changing rapidly and advancing in sophistication. We may not be able to protect our
systems and networks, or the confidentiality of our confidential or other information (including personal
information), from cybersecurity incidents and other unauthorized access, disclosure, and disruption.
Our operations rely on the secure, accurate, and timely receipt, storage, transmission, and other processing of confidential and
other information (including personal information) in our systems and networks and with counterparties (e.g., seller/servicers),
vendors, service providers, and financial institutions.
Cybersecurity risks for companies like ours continue to increase, in part because of the proliferation of new technologies, such
as Artificial Intelligence-based technologies and methods, the use of the internet and telecommunications technologies to
conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, "hacktivists,"
terrorists, and other external parties, including nation-states and foreign state-sponsored actors. There have been several
highly publicized cases involving financial services companies, consumer-based companies, and other organizations, including
some of our counterparties, reporting the unauthorized disclosure, dissemination, theft, or destruction of client, customer, or
other confidential information (including personal information), corporate information, intellectual property, cash, or other
valuable assets. There have also been several highly publicized cases where hackers have requested "ransom" payments in
exchange for not disclosing customer information (including personal information) or for not making the targets' computer
systems unavailable. In addition, there have been cases where hackers have misled company personnel into making
unauthorized transfers of funds to the hackers' accounts.
Like many companies and government entities, from time to time we have experienced, and expect to continue to experience,
cybersecurity incidents. Such incidents may include software or hardware failure, malware, ransomware, denial-of-service
attacks, social engineering, unauthorized access, human error, theft or misconduct, fraud, and phishing, any of which may be
part of an effort to disrupt operations, potentially test cybersecurity capabilities, or obtain confidential, proprietary, or other
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information (including personal information). We could also be adversely affected by cybersecurity incidents that target the
infrastructure of the internet, as such incidents could cause widespread unavailability of websites and degrade website
performance. Our risk and exposure to these matters remain heightened because of, among other things, the evolving nature
and increasing frequency, levels of persistence, sophistication, and intensity of these threats, our role in the financial services
industry, the outsourcing of some of our business operations, and the current global economic and political environment.
Remote work environments may increase the risk that we may experience cybersecurity incidents as a result of our employees,
vendors, counterparties, service providers, and other third parties with which we interact working remotely on less secure
systems and environments.
Because we are interconnected with and dependent on third-party vendors, counterparties (e.g., seller/servicers), exchanges,
clearinghouses, fiscal and paying agents, and other financial institutions, we could be adversely affected if any of them are
subject to a successful cybersecurity incident. Third parties with which we do business have been, and may continue to be,
sources of cybersecurity or other technology risks. We routinely transmit and receive confidential, proprietary, and other
information (including personal information) by electronic means. This information could be subject to interception, misuse, or
mishandling. Our exposure to these risks could increase as a result of our migration of core systems and applications to a third-
party cloud environment. While we generally perform cybersecurity diligence on our key vendors, because we do not control
third parties with whom we do business and our ability to monitor their and their supply chain's cybersecurity posture is limited,
we cannot ensure that the cybersecurity measures they take will be sufficient to protect any information we share with them.
Due to applicable laws and regulations or contractual obligations, we may have liability for certain data breaches resulting from
cybersecurity incidents attributed to third parties with whom we do business in relation to the information we share with them.
Our measures designed to protect critical assets and provide employee awareness training about phishing, malware, and other
cybersecurity risks may not provide effective security. Our computer systems, software, end point devices, and networks may
be vulnerable to cybersecurity incidents, supply chain disruptions, or other attempts to harm them or misuse or steal
information (including personal information). The scale and effectiveness of such attempts may be further enhanced by the use
of Artificial Intelligence-based technologies and methods. We routinely identify cybersecurity threats as well as vulnerabilities in
our systems and work to address them, but these efforts may be insufficient. Outside parties may attempt to induce
employees, customers, third parties, including suppliers, sellers and servicers, financial market utilities, and other third parties,
or other users of our systems or networks to disclose confidential, proprietary, or other information (including personal
information) in order to gain access to our systems and networks and the information they contain. Unauthorized access or
disclosure, or breaches of our security, also may result from human error. Insider threats remain a risk given our workforce
diversification to include contractors, remote workers, part-time employees, and full-time employees. We may not be able to
anticipate, prevent, detect, recognize, or react to threats to our systems, networks, and assets, or implement effective
preventative or remedial measures against cybersecurity incidents, especially because the techniques used change frequently
or are not recognized until launched.
A cybersecurity incident could occur and persist for an extended period of time without detection. We expect that any
investigation of such an incident would take time, during which we would not necessarily know the extent of the harm or how
best to remediate it. Our cybersecurity risk management program may not prevent such a cybersecurity incident from having a
material impact. We have obtained insurance coverage relating to cybersecurity risks, but this insurance may not be sufficient
to provide adequate loss coverage (including if the insurer denies future claims) and may not continue to be available to us on
economically reasonable terms, or at all. Further, we cannot ensure that any limitations of liability provisions in our agreements
with vendors, counterparties, customers, and other third parties with which we do business would be enforceable or adequate
or would otherwise protect us from any liabilities or damages with respect to any particular claim in connection with a
cybersecurity incident.
The occurrence of one or more cybersecurity incidents could result in thefts of important assets (such as cash or source code)
or the unauthorized loss, disclosure, misuse, or corruption of confidential, proprietary, and other information (including personal
and other information about our borrowers, our customers, or our counterparties) or could otherwise cause interruptions,
malfunctions, or other failures in our systems, networks, or operations or those of our customers or counterparties. This could
result in significant losses or reputational damage, adversely affect our relationships with our customers and counterparties,
negatively affect our competitive position, or otherwise harm our business or investors in our securities. We could also face
regulatory and other legal action, including for any failure to provide timely disclosure concerning, or to appropriately limit
trading in our securities following, an incident. We might be required to expend significant additional resources to modify or add
to our internal controls and other protective measures or to investigate and remediate vulnerabilities or other exposures, and we
might be subject to litigation and financial losses that are not fully insured, if at all. In addition, customers, third parties,
including suppliers, sellers and servicers, financial market utilities, and other third parties, and governmental organizations may
not be adequately protecting the information that we share with them. As a result, a cybersecurity incident on their systems and
networks, or a breach of their cybersecurity measures, may result in harm to our business and business relationships and
expose us to operational, legal, and reputational risk.
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We rely on third parties, including our sellers and servicers, or their vendors and other business partners, for
certain important functions. Any failures by those third parties to deliver products or services, or to manage risks
effectively, could disrupt our business operations or servicing of our portfolio, or expose us to other operational
risks.
Our use of third parties, including suppliers, sellers and servicers, financial market utilities, and other third parties, exposes us
to the risk of failures in their risk and control environments. We outsource certain key functions to these external parties,
including some that are critical to financial reporting, our mortgage-related investment activity, loan underwriting, loan servicing,
securities issuance and administration (i.e., CSS), and data storage and processing. We may enter into other key outsourcing
relationships in the future and continue to expand our existing reliance on public cloud services. Additionally, we may be fully
reliant on a third party to complete certain business operations (e.g., financial market utilities that provide the infrastructure for
transferring, clearing, and settling payments on securities and other financial transactions). If one or more of these key external
parties were not able to perform their functions for a period of time, perform them at an acceptable service level or handle
changing volumes, or if one or more of them experiences a disruption in its own business or technology from any cause, our
business operations could be constrained, disrupted, or otherwise negatively affected. Our use of third parties also exposes us
to operational disruptions, financial losses, fraud, risk of regulatory action, or damage to our reputation if one or more of these
third parties fails to maintain adequate risk and control environments. For example, a third party could experience a
cybersecurity incident that negatively impacts the security and integrity of our data. As another example, if a court were to find
a servicer liable for damages to borrowers because of their servicing practices, and the servicer did not have enough money to
satisfy the judgment, the court may seek the remaining amounts from the securitization trust(s) into which the underlying loans
were pooled. As an additional example, the properties underlying our Multifamily loans are maintained by borrowers who may
not maintain these properties in accordance with the Multifamily Seller/Service Guide requirements. Our ability to monitor the
activities or performance of certain third parties may be limited based on restricted access to and availability of risk
management information for the third party, which may make it difficult for us to assess and manage the risks associated with
these relationships.
We face risks and uncertainties associated with the models that we use to inform business and risk management
decisions and for financial accounting and reporting purposes.
We use models in our businesses under a variety of scenarios. Certain models make projections over long periods of time.
Models are inherently imperfect predictors of actual results. There is inherent uncertainty associated with model projections of
economic variables and the downstream projections dependent on these variables.
Uncertainty and risks related to models may arise from a number of sources, including the following:
n We could fail to design, implement, operate, adjust, or use our models as intended. We may fail to code a model correctly,
we could use incorrect or insufficient data inputs or fail to fully understand the data inputs, or model implementation
software could malfunction. We may not have performed user acceptance testing appropriately or correctly, including
allowing sufficient testing time and resources and using the right subject matter experts before deploying the model. The
complexity and interconnectivity of our models create additional risk regarding the accuracy of model output. We may not
be able to deploy or update models in a timely manner.
n
When market conditions change in unforeseen ways, our model projections may not accurately reflect these conditions, or
we may not fully understand the model outputs. For example, models may not fully reflect the effect of certain government
policy changes or new industry trends. In such cases, it is often necessary to make assumptions and judgments to
accommodate the effect of scenarios that are not sufficiently well represented in the historical data. While we may adjust
our models in response to new events, considerable residual uncertainty remains. Our models face challenges in
forecasting key inputs into our financial projections due to volatility in economic conditions. These can include, but are not
limited to, projections of mortgage and other interest rates, house prices, credit defaults, yields, and prepayments. In
addition, in periods of low transaction volume for certain types of assets, the limited data available may reduce the
reliability of model outputs.
n
We also use selected third-party models. While the use of such models may reduce our risk where no internal model is
available, it exposes us to additional risk, as third parties typically do not provide us with proprietary information regarding
their models. We have little control over the processes by which these models are adjusted or changed. As a result, we
may be unable to fully evaluate the risks associated with the use of such models.
Our use of models could affect decisions concerning the purchase, sale, securitization, and CRT activities of loans; the
purchase and sale of securities; funding; the setting of guarantee fee prices; and the management of interest-rate, market,
liquidity, and credit risk. Our use of models also affects our quality-control sampling strategies for loans in our Single-Family
mortgage portfolio and potential settlements with our counterparties. Models are part of the process used to grant
representation and warranty relief, which may be granted inappropriately if the models are incorrect. We also use models in our
financial reporting process, including when measuring our allowance for credit losses and applying hedge accounting. See
MD&A - Risk Management - Market Risk and Critical Accounting Estimates for additional information on our use of
models.
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The use of Artificial Intelligence-based technologies and methods contain inherent risks that may expose us to
unexpected losses, damage our reputation, have an adverse impact on our business operations, and violate our
legal and regulatory obligations.
Artificial Intelligence-based technologies and methods are rapidly evolving technologies that are being adopted by us, third
parties with whom we do business and other market participants and such adoption may become more significant over time.
Artificial Intelligence-based technologies and methods contain inherent risks, such as: the increased chance of identifying
patterns in training data that are not representative of real effects and which could negatively impact Artificial Intelligence-based
technologies and methods predictions when using new data; production of false or "hallucinatory" inferences or outputs;
holding of certain biases; and predictions that are not easily interpretable which make testing the model and its predictions to
make sure it meets human intuition difficult; and generation of otherwise inaccurate, incomplete, misleading, or unexpected
results, errors, or inadequacies, any of which may not be easily detectable. Artificial Intelligence-based technologies and
methods can present ethical issues and may subject us to new or heightened legal, regulatory, ethical, or other challenges, and
inappropriate or controversial data practices by developers and end-users or other factors adversely affecting public opinion of
Artificial Intelligence-based technologies and methods could impair the acceptance of Artificial Intelligence-based technologies
and methods, including those incorporated in our business and operations. If the Artificial Intelligence-based technologies and
methods that we use are deficient, inaccurate, or controversial, we could incur operational inefficiencies, competitive harm,
legal and regulatory liability, brand or reputational harm, or other adverse impacts on our business and financial results. Further,
there can be no assurance that our use of Artificial Intelligence-based technologies and methods will be successful in reducing
our operational risk or increasing our operational efficiencies or otherwise result in our intended outcomes. Artificial Intelligence-
based technologies and methods and the use thereof are also subject to a variety of existing laws and regulations, including fair
lending, consumer protection, intellectual property, privacy, equal opportunity, and are expected to be subject to new laws and
regulations or new applications of existing laws and regulations. It is possible that we will not be able to anticipate how to
respond to these rapidly developing laws and regulations. If we do not have sufficient rights to use the data or other material or
content on which our Artificial Intelligence-based technologies and methods or other Artificial Intelligence-based technologies
and methods tools we use rely, we also may incur liability through the violation of applicable laws and regulations, such as fair
lending laws and regulations, third-party intellectual property, privacy or other rights, or contracts to which we are a party. We
may not be able to sufficiently mitigate or detect any of the foregoing limitations or risks given the lack of experience with using
Artificial Intelligence-based technologies and methods in our business, the pace of technological change, and rapid adoption of
Artificial Intelligence-based technologies and methods by our business partners and competitors. This exposes us to potential
damage to our reputation, adverse impacts on our business operations, and violation of legal and regulatory obligations.
Natural disasters could adversely affect our business.
Natural disasters may affect housing affordability, property values, and the terms and conditions of mortgages available for
purchase. Legislative or public policy changes and changes in consumer sentiment due to natural disasters and the response
thereto could negatively impact the businesses and financial condition of both our customers and seller/servicers, which may
decrease revenues from those counterparties and increase credit risk associated with loans and other credit exposures to
those counterparties. In connection with any potential transition to a lower-carbon economy, legislative or public policy
changes and changes in consumer sentiment could negatively impact the businesses and financial condition of both our
customers and seller/servicers, which may decrease revenues from those counterparties and increase credit risk associated
with loans and other credit exposures to those counterparties. Additionally, governmental and supervisory focus on natural
disasters could result in our becoming subject to new, heightened, or potentially inconsistent regulatory requirements related to
operational resiliency, climate risk disclosure, or stress testing for various climate stress scenarios. Any such requirements
could result in increased regulatory, compliance, or other costs or higher capital requirements. For additional information on our
climate-related risks, see Risk Factors - Credit Risks – We are exposed to increased credit losses and credit-related
expenses in the event of a natural disaster or catastrophic event.
Legislative, regulatory, or judicial changes or actions could require operational changes that could adversely
affect our business activities and financial results.
Our business or operations may be directly adversely affected by future legislative, regulatory, or judicial actions at the federal,
state, and local levels. Such actions could affect us in a number of ways, including by imposing significant additional legal,
compliance, and other costs on us, limiting our business activities, and diverting management attention or other resources.
Such actions, and any required changes to our business or operations or those of third parties upon whom we rely in response
thereto (e.g., seller/servicers), could have an adverse effect on our business activities and financial results. For example, we
may be required to increase supervision of our servicers' payment collection practices and policies which would impose
significant additional operational costs on our business. For additional information, see Risk Factors – Operational Risks -
We rely on third parties, including our sellers and servicers, or their vendors and other business partners, for certain
important functions. Any failures by those third parties to deliver products or services, or to manage risks effectively,
could disrupt our business operations or servicing of our portfolio, or expose us to other operational risks.
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Legal and Compliance Risks
We face risk of non-compliance with our legal and regulatory obligations.
We operate in a highly regulated industry and are subject to heightened supervision from FHFA, as both our regulator and our
Conservator, which places increased demand on our compliance systems. Our compliance systems and programs may not be
adequate to confirm that we are in compliance with all legal, regulatory, and other requirements. We also rely upon third parties
with whom we do business and their respective compliance risk management programs. The failure or limitations of our or any
third-party compliance programs may expose us to legal and compliance risk. Failure to comply with applicable legal and
regulatory requirements could result in enforcement actions, investigations, fines, monetary and other penalties, additional
restrictions on our business activities imposed by FHFA, and harm to our reputation that may adversely affect our results of
operations and financial condition.
We face risk of non-compliance with our contractual and other requirements which may result in legal action,
fines, monetary and other penalties, and harm to our reputation that may adversely affect our results of
operations and financial condition.
We rely on and have interdependence with third parties due to the number and complexity of our contractual and other
obligations. These contracts expose us to the risk that we could fail to perform our obligations in a satisfactory manner and that
a contractual counterparty could commence legal proceedings against us for deficiencies related to our performance.
Additionally, an investor in any of our securities could claim our securitization or unsecured debt offering documents contained
materially false or misleading statements. For additional information on our litigation, see Note 17. If we were not to comply
with our contractual and other obligations, this could result in legal action, fines, monetary and other penalties, and harm to our
reputation that may adversely affect our results of operations and financial condition.
Changes in legal requirements or standards through government or judicial action or our contractual obligations
may subject us to regulatory investigations, enforcement, or legal actions, and harm to our reputation, and
adversely impact our financial results.
We are currently and will likely continue to be subject to a variety of complex and evolving laws, regulations, rules, and
standards in the United States (at the federal, state, and local levels), as well as contractual obligations. For example, we are
currently subject to fair lending requirements such as the Fair Housing Act, Equal Credit Opportunity Act, and similar laws and
regulations. Fair lending, housing affordability, housing equity, and climate change were a focus of the previous Administration.
The current Administration may change these focuses or interpret our legal obligations in a different way.
As an additional example, privacy and cybersecurity are currently areas of considerable legislative and regulatory attention, with
new or modified laws, regulations, rules, and standards being frequently adopted and potentially subject to divergent
interpretation or application from jurisdiction to jurisdiction in a manner that may create inconsistent or conflicting requirements
for businesses. The uncertainty and compliance risk created by these legislative and regulatory developments are compounded
by the rapid pace of technology development in disciplines that may impact the use or security of data, and in particular the
use or security of personal information, such as Artificial Intelligence-based technologies and methods and advancements in
the field of data science. Privacy and cybersecurity laws and regulations often impose strict requirements regarding the
collection, storage, handling use, disclosure, transfer, security, and other processing of personal information, which may have
adverse consequences on our business, including incurring significant compliance costs, requiring changes to our business or
operations, and imposing severe penalties for non-compliance. Further, we could face scrutiny and adverse legal and
regulatory action for any failure or perceived failure to comply with our public privacy policies and other public statements
about our privacy and cybersecurity program. Failure to comply with our legal requirements and standards could potentially
subject us to regulatory investigations, enforcement, or legal actions, and harm to our reputation and, fines, monetary or other
penalties, and other damage to our business and results.
We may not achieve our housing goals, Duty to Serve, and equitable housing finance requirements, and we also
may make certain changes to our business in an attempt to meet these goals and requirements, both of which
may expose us to additional legal and compliance risk, damage our reputation, and adversely affect our business,
financial condition, and results of operations.
If we do not meet our housing goals, duty to serve, or equitable housing finance requirements, and FHFA finds that the goals or
requirements were feasible, we may become subject to a housing plan that could require us to take additional steps that could
potentially damage our reputation and adversely affect our profitability. While we may achieve these housing goals by meeting
or exceeding either the FHFA benchmark level or the market level, these increases to the benchmark levels may require
additional changes to our business, and we may not meet these heightened housing goals. If we fail to meet a single-family
housing goal and the gap between our performance and the market level for that goal is greater than the measurement buffers
provided in the final rule, we may be required to develop a housing plan, requiring additional changes to our business. Further,
any changes we make to how we conduct our business in order to achieve our housing goals could create incremental legal
and compliance risk. In addition, because we did not meet one of our housing goals for 2020 and FHFA determined that
achievement of that goal was feasible, FHFA required us to submit a housing plan that indicates (1) how we plan to meet the
missed goal during 2022 to 2024, (2) how we will monitor to ensure that low- and moderate-income borrowers are better served
Risk Factors
FREDDIE MAC | 2024 Form 10-K
125
in future refinance markets, and (3) what we can do to help low- and moderate-income borrowers who did not refinance in the
2020-2021 refinance market. If we fail to comply with a housing plan that is approved by FHFA, FHFA could take additional
action against us.
We may make adjustments to our loan sourcing and purchase strategies in an effort to meet our housing goals and subgoals
set by FHFA, including modifying some of our underwriting standards and expanding the use of targeted initiatives to reach
underserved populations. For example, we may purchase loans that offer lower expected returns on our investment and
potentially increase our exposure to credit losses. We may also make changes to our business in response to our duty to serve
underserved markets or equitable housing finance requirements that could adversely affect our profitability, and our ability to
meet our targeted return requirements established by FHFA.
General Risks
Changes in global or domestic economic and political conditions may have an adverse effect on our business.
Our business, financial condition, and results of operations could be adversely affected, directly and indirectly, by changes in
global or domestic economic and political conditions, including, acts of terrorism, civil unrest, geopolitical instability or conflict,
public health events, epidemics or pandemics, uncertainty regarding a breach of the U.S. debt ceiling, government shutdowns,
or default by the U.S. government on its obligations, and actual or perceived instability in the U.S. banking system. Although
our business is limited to the United States housing market, we may still be affected by such events because volatility or
uncertainty in global or domestic sociopolitical conditions can affect the macroeconomic environment and financial markets,
inflationary pressures, monetary policy or potential for an economic recession, as well as the housing market itself and
industries that support it.
Risk Factors
FREDDIE MAC | 2024 Form 10-K
126
Legal Proceedings
We are involved, directly or indirectly, in a variety of legal proceedings arising from time to time in the ordinary course of
business and in connection with the conservatorship and Purchase Agreement. See Note 17 for additional information
regarding our involvement as a party to various legal proceedings, including those in connection with the conservatorship and
Purchase Agreement.
Over the last several years, numerous lawsuits have been filed against the U.S. government and, in some cases, the Secretary
of the Treasury and the Director of FHFA, challenging certain government actions related to the conservatorship (including
actions taken in connection with the imposition of conservatorship) and the Purchase Agreement. Freddie Mac is not a party to
all of these lawsuits. Several of the lawsuits seek to invalidate the net worth sweep dividend provisions of the senior preferred
stock, which were implemented pursuant to the August 2012 amendment to the Purchase Agreement. Some of these cases
also have challenged the constitutionality of the structure of FHFA. A number of cases have been dismissed (some of which
have been appealed), and others remain pending.
These cases include one that was filed in the U.S. Court of Federal Claims as a derivative lawsuit, purportedly on behalf of
Freddie Mac as a “nominal” defendant: Reid and Fisher vs. the United States of America and Federal Home Loan Mortgage
Corporation. This case was filed on February 26, 2014. The complaint alleges, among other items, that the net worth sweep
dividend provisions of the senior preferred stock constitute an unlawful taking of private property for public use without just
compensation. The plaintiffs ask that Freddie Mac be awarded just compensation for the U.S. government's alleged taking of
its property, attorneys' fees, costs, and other expenses. The Court dismissed the case with prejudice on September 1, 2023
and entered judgment for the defendants. On October 31, 2023, the plaintiffs filed a notice of appeal to the Federal Circuit,
which has been fully briefed since May 22, 2024.
Legal Proceedings
FREDDIE MAC | 2024 Form 10-K
127
Market for Registrant's Common Equity, Related
Stockholder Matters, and Issuer Purchases of
Equity Securities
MARKET INFORMATION
Common Stock
Our common stock is traded in the over-the-counter market and quoted on the OTCQB, operated by OTC Markets Group Inc.,
under the ticker symbol "FMCC." Over-the-counter market quotations for our common stock reflect inter-dealer prices, without
retail mark-up, mark-down, or commission, and may not necessarily represent actual transactions.
Holders
As of January 31, 2025, we had 1,413 common stockholders of record.
Recent Sales of Unregistered Securities
The securities we issue are "exempted securities" under the Securities Act of 1933. As a result, we do not file registration
statements with the SEC with respect to offerings of our securities.
Following our entry into conservatorship, we suspended the operation of, and ceased making grants under, equity
compensation plans. Previously, we had provided equity compensation under these plans to employees and members of our
Board of Directors. Under the Purchase Agreement, we cannot issue any new options, rights to purchase, participations, or
other equity interests without Treasury's prior approval. However, grants outstanding as of the date of the Purchase Agreement
remain outstanding in accordance with their terms. As of December 31, 2024, no RSUs and no stock options were outstanding.
See Note 11 for additional information.
ISSUER PURCHASES OF EQUITY SECURITIES
We did not repurchase any of our common or preferred stock during 2024. Additionally, we do not currently have any
outstanding authorizations to repurchase common or preferred stock. Under the Purchase Agreement, we cannot repurchase
our common or preferred stock without Treasury's prior consent, and we may only purchase or redeem the senior preferred
stock in certain limited circumstances set forth in the certificate of designation of the senior preferred stock.
TRANSFER AGENT AND REGISTRAR
Computershare Trust Company, N.A.
P.O. Box 43006
Providence, RI 02940-3006
Telephone: 877-373-6374
https://www-us.computershare.com/investor
Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
FREDDIE MAC | 2024 Form 10-K
128
Financial Statements and Supplementary Data
Financial Statements
FREDDIE MAC | 2024 Form 10-K
129
Report of Independent Registered Public
Accounting Firm
To the Board of Directors and Stockholders of Federal Home Loan Mortgage Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Federal Home Loan Mortgage Corporation and its
subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of income and
comprehensive income, of equity and of cash flows for each of the three years in the period ended December 31, 2024,
including the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the
Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over
financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the COSO because a material weakness in internal control over financial reporting existed as of that date related to
disclosure controls and procedures that did not adequately ensure the accumulation and communication to management of
information known to the Federal Housing Finance Agency (FHFA) that is needed to meet their disclosure obligations under the
federal securities laws, including disclosures affecting their consolidated financial statements.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there
is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or
detected on a timely basis. The material weakness referred to above is described in Management’s Report on Internal Control
over Financial Reporting appearing under Item 9A. We considered this material weakness in determining the nature, timing, and
extent of audit tests applied in our audit of the 2024 consolidated financial statements, and our opinion regarding the
effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated
financial statements.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in management's report referred to above. Our responsibility is to express opinions on the Company’s consolidated financial
statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all
material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of
internal control over financial reporting included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in
the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Emphasis of Matter – Conservatorship
As discussed in Note 2, in September 2008, the Company was placed into conservatorship by FHFA. The U.S. Department of
the Treasury has committed financial support to the Company, and FHFA, as Conservator, provided for the Board of Directors
to perform certain functions and to oversee management and the Board of Directors delegated to management authority to
conduct business operations during conservatorship.
Financial Statements
Report of Independent Registered Public Accounting Firm
FREDDIE MAC | 2024 Form 10-K
130
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Allowance for Credit Losses for Single-Family Mortgage Loans Held-for-Investment
As described in Note 6 to the consolidated financial statements, the Company's allowance for credit losses for single-family
mortgage loans held-for-investment was $6.4 billion as of December 31, 2024. As disclosed by management, determining the
appropriateness of the allowance for credit losses for single-family mortgage loans held-for-investment is a complex process
that is subject to numerous estimates and assumptions requiring significant management judgment about matters that involve
a high degree of subjectivity. This process involves the use of models that require management to make judgments about
matters that are difficult to predict. Management estimates the allowance for credit losses for single-family mortgage loans
held-for-investment on a pooled basis using a discounted cash flow model that evaluates a variety of factors to estimate the
cash flows the Company expects to collect. Management projects cash flows the Company expects to collect using historical
experience, such as historical default rates and severity of loss based on loan characteristics. These cash flow estimates
incorporate probability of default and severity of losses and are adjusted for current and forecasted economic conditions.
The principal considerations for our determination that performing procedures relating to the allowance for credit losses for
single-family mortgage loans held-for-investment is a critical audit matter are (i) the significant judgment by management when
developing the allowance for credit losses for single-family mortgage loans held-for-investment; (ii) a high degree of auditor
judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumption related to the
probability of default; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the
development of the allowance for credit losses for single-family mortgage loans held-for-investment, including controls over the
probability of default assumption. These procedures also included, among others (i) testing management’s process for
developing the allowance for credit losses for single-family mortgage loans held-for-investment, (ii) testing the completeness
and accuracy of certain data used in the models, and (iii) the involvement of professionals with specialized skill and knowledge
to assist in evaluating (a) the appropriateness of management’s methodology and models, and (b) the reasonableness of the
probability of default assumption.
/s/ PricewaterhouseCoopers LLP
Washington, District of Columbia
February 13, 2025
We have served as the Company's auditor since 2002.
Financial Statements
Report of Independent Registered Public Accounting Firm
FREDDIE MAC | 2024 Form 10-K
131
FREDDIE MAC
Consolidated Statements of Income and Comprehensive Income
Year Ended December 31,
(In millions, except share-related amounts)
2024
2023
2022
Net interest income
Interest income
$117,877
$105,363
$83,458
Interest expense
(98,140)
(86,821)
(65,453)
Net interest income
19,737
18,542
18,005
Non-interest income
Guarantee income
1,611
1,615
783
Investment gains, net
2,076
707
1,969
Other income
488
365
507
Non-interest income
4,175
2,687
3,259
Net revenues
23,912
21,229
21,264
(Provision) benefit for credit losses
(476)
872
(1,841)
Non-interest expense
Salaries and employee benefits
(1,677)
(1,606)
(1,509)
Professional services, technology, and occupancy
(1,166)
(1,189)
(1,079)
Credit enhancement expense
(2,345)
(2,339)
(2,118)
Benefit for (decrease in) credit enhancement recoveries
(36)
(189)
236
Legislative and regulatory assessments
(3,233)
(3,131)
(3,131)
Other expense
(201)
(448)
(218)
Non-interest expense
(8,658)
(8,902)
(7,819)
Income before income tax expense
14,778
13,199
11,604
Income tax expense
(2,920)
(2,661)
(2,277)
Net income
11,858
10,538
9,327
Other comprehensive income (loss), net of taxes and reclassification adjustments
(5)
166
(342)
Comprehensive income
$11,853
$10,704
$8,985
Net income
$11,858
$10,538
$9,327
Amounts attributable to senior preferred stock
(11,853)
(10,704)
(8,985)
Net income (loss) attributable to common stockholders
$5
($166)
$342
Net income (loss) per common share
$0.00
($0.05)
$0.11
Weighted average common shares (in millions)
3,234
3,234
3,234
The accompanying notes are an integral part of these consolidated financial statements.
Financial Statements
Consolidated Statements of Income and Comprehensive Income
FREDDIE MAC | 2024 Form 10-K
132
FREDDIE MAC
Consolidated Balance Sheets
December 31,
(In millions, except share-related amounts)
2024
2023
Assets
Cash and cash equivalents (includes $1,165 and $978 of restricted cash and cash equivalents)
$5,534
$6,019
Securities purchased under agreements to resell
100,118
95,148
Investment securities, at fair value
55,771
43,275
Mortgage loans held-for-sale (includes $11,394 and $7,356 at fair value)
15,560
12,941
Mortgage loans held-for-investment (net of allowance for credit losses of $6,774 and $6,383 and includes
$2,413 and $1,806 at fair value)
3,172,329
3,083,665
Accrued interest receivable
11,029
9,925
Deferred tax assets, net
5,018
4,076
Other assets (includes $5,870 and $6,095 at fair value)
21,333
25,927
Total assets
$3,386,692
$3,280,976
Liabilities and equity
Liabilities
Accrued interest payable
$9,822
$8,812
Debt (includes $2,339 and $2,476 at fair value)
3,304,949
3,208,346
Other liabilities (includes $978 and $873 at fair value)
12,346
16,096
Total liabilities
3,327,117
3,233,254
Commitments and contingencies
Equity
Senior preferred stock (liquidation preference of $129,038 and $117,309)
72,648
72,648
Preferred stock, at redemption value
14,109
14,109
Common stock, $0.00 par value, 4,000,000,000 shares authorized, 725,863,886 shares issued and
650,059,553 shares outstanding
—
—
Retained earnings
(23,270)
(35,128)
AOCI, net of taxes, related to:
Available-for-sale securities
66
72
Other
(93)
(94)
AOCI, net of taxes
(27)
(22)
Treasury stock, at cost, 75,804,333 shares
(3,885)
(3,885)
Total equity
59,575
47,722
Total liabilities and equity
$3,386,692
$3,280,976
The table below presents the carrying value and classification of the assets and liabilities related to consolidated VIEs on our consolidated balance sheets.
December 31,
(In millions)
2024
2023
Assets:
Cash and cash equivalents (includes $1,055 and $890 of restricted cash and cash equivalents)
$1,056
$891
Securities purchased under agreements to resell
12,764
9,396
Investment securities, at fair value
1
65
Mortgage loans held-for-investment
3,114,937
3,039,461
Accrued interest receivable
9,900
8,885
Other assets
5,881
4,858
Total assets of consolidated VIEs
$3,144,539
$3,063,556
Liabilities:
Accrued interest payable
$8,469
$7,527
Debt
3,122,941
3,041,927
Total liabilities of consolidated VIEs
$3,131,410
$3,049,454
The accompanying notes are an integral part of these consolidated financial statements.
Financial Statements
Consolidated Balance Sheets
FREDDIE MAC | 2024 Form 10-K
133
FREDDIE MAC
Consolidated Statements of Equity
Shares Outstanding
Senior
Preferred
Stock
Preferred
Stock, at
Redemption
Value
Common
Stock, at
Par Value
Retained
Earnings
AOCI,
Net of
Tax
Treasury
Stock,
at Cost
Total
Equity
(In millions)
Senior
Preferred
Stock
Preferred
Stock
Common
Stock
Balance at December 31, 2021
1
464
650
$72,648
$14,109
$—
($54,993)
$154
($3,885)
$28,033
Comprehensive income:
Net income
—
—
—
—
—
—
9,327
—
—
9,327
Other comprehensive income (loss):
Changes in net unrealized gains (losses) on
available-for-sale securities (net of taxes of
$96 million)
—
—
—
—
—
—
—
(362)
—
(362)
Reclassification adjustment for (gains)
losses on available-for-sale securities
included in net income (net of taxes of $5
million)
—
—
—
—
—
—
—
(19)
—
(19)
Other (net of taxes of $10 million)
—
—
—
—
—
—
—
39
—
39
Comprehensive income
—
—
—
—
—
—
9,327
(342)
—
8,985
Ending balance at December 31, 2022
1
464
650
$72,648
$14,109
$—
($45,666)
($188)
($3,885)
$37,018
Comprehensive income:
Net income
—
—
—
—
—
—
10,538
—
—
10,538
Other comprehensive income (loss):
Changes in net unrealized gains (losses)
on available-for-sale securities (net of
taxes of $5 million)
—
—
—
—
—
—
—
18
—
18
Reclassification adjustment for (gains)
losses on available-for-sale securities
included in net income (net of taxes of $36
million)
—
—
—
—
—
—
—
138
—
138
Other (net of taxes of $2 million)
—
—
—
—
—
—
—
10
—
10
Comprehensive income
—
—
—
—
—
—
10,538
166
—
10,704
Ending balance at December 31, 2023
1
464
650
$72,648
$14,109
$—
($35,128)
($22)
($3,885)
$47,722
Comprehensive income:
Net income
—
—
—
—
—
—
11,858
—
—
11,858
Other comprehensive income (loss):
Changes in net unrealized gains (losses) on
available-for-sale securities (net of taxes of
$1 million)
—
—
—
—
—
—
—
(4)
—
(4)
Reclassification adjustment for (gains)
losses on available-for-sale securities
included in net income (net of taxes of $1
million)
—
—
—
—
—
—
—
(2)
—
(2)
Other (net of taxes of $0 million)
—
—
—
—
—
—
—
1
—
1
Comprehensive income
—
—
—
—
—
—
11,858
(5)
—
11,853
Ending balance at December 31, 2024
1
464
650
$72,648
$14,109
$—
($23,270)
($27)
($3,885)
$59,575
The accompanying notes are an integral part of these consolidated financial statements.
Financial Statements
Consolidated Statements of Equity
FREDDIE MAC | 2024 Form 10-K
134
FREDDIE MAC
Consolidated Statements of Cash Flows
Year Ended December 31,
(In millions)
2024
2023
2022
Cash flows from operating activities
Net income
$11,858
$10,538
$9,327
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization of cost basis adjustments
726
827
(1,264)
Provision (benefit) for credit losses
476
(872)
1,841
Investment gains, net
(2,433)
(1,853)
(2,763)
Deferred income tax expense and changes in income taxes receivable/payable
255
1,762
(223)
Mortgage loans acquired as held-for-sale:
Purchases
(31,496)
(29,339)
(45,093)
Proceeds from sales and repayments
27,661
27,347
49,389
Net change in:
Accrued interest receivable
(1,103)
(1,389)
(1,038)
Accrued interest payable
1,020
1,507
1,041
Other, net
(337)
(913)
708
Net cash provided by (used in) operating activities
6,627
7,615
11,925
Cash flows from investing activities
Investment securities:
Purchases
(94,394)
(101,238)
(132,913)
Proceeds from sales
68,572
78,799
122,442
Proceeds from maturities and repayments
10,811
14,247
13,821
Mortgage loans acquired held-for-investment:
Purchases
(146,854)
(101,262)
(160,884)
Proceeds from sales
3,009
7,581
3,438
Proceeds from repayments
278,965
245,037
352,204
Advances under secured lending arrangements
(113,097)
(96,666)
(170,456)
Net (increase) decrease in securities purchased under agreements to resell
(2,945)
(6,107)
(20,750)
Cash flows related to derivatives
5,728
4,326
4,769
Other, net
(171)
(464)
(273)
Net cash provided by (used in) investing activities
9,624
44,253
11,398
Cash flows from financing activities
Debt of consolidated trusts:
Proceeds from issuance
253,894
205,523
359,806
Repayments and redemptions
(282,087)
(251,762)
(388,033)
Debt of Freddie Mac:
Proceeds from issuance
207,529
146,506
137,339
Repayments
(194,038)
(150,585)
(140,970)
Net increase (decrease) in securities sold under agreements to repurchase
(2,025)
(1,746)
4,658
Other, net
(9)
(145)
87
Net cash provided by (used in) financing activities
(16,736)
(52,209)
(27,113)
Net increase (decrease) in cash and cash equivalents (includes restricted cash and cash equivalents)
(485)
(341)
(3,790)
Cash and cash equivalents (includes restricted cash and cash equivalents) at the beginning of year
6,019
6,360
10,150
Cash and cash equivalents (includes restricted cash and cash equivalents) at end of period
$5,534
$6,019
$6,360
Supplemental cash flow information
Cash paid for:
Debt interest
$100,136
$87,610
$75,441
Income taxes
2,750
900
2,500
Non-cash investing and financing activities (Notes 4 and 7)
The accompanying notes are an integral part of these consolidated financial statements.
Financial Statements
Consolidated Statements of Cash Flows
FREDDIE MAC | 2024 Form 10-K
135
Notes to Consolidated Financial Statements
NOTE 1
Summary of Significant Accounting Policies
Freddie Mac is a GSE chartered by Congress in 1970, with a mission to provide liquidity, stability, and affordability to the U.S.
housing market. We are regulated by FHFA, the SEC, HUD, and Treasury, and are currently operating under the
conservatorship of FHFA. For additional information on the roles of FHFA and Treasury, see Note 2. Throughout our
consolidated financial statements and related notes, we use certain acronyms and terms which are defined in the Glossary.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with GAAP and include our accounts
as well as the accounts of other entities in which we have a controlling financial interest. All intercompany balances and
transactions have been eliminated.
We are operating under the basis that we will realize assets and satisfy liabilities in the normal course of business as a going
concern and in accordance with the authority provided by FHFA to our Board of Directors to oversee management's conduct of
our business operations.
Use of Estimates
The preparation of our consolidated financial statements requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, revenues and expenses, and disclosure of contingent assets and liabilities.
Management has made significant estimates to report the allowance for credit losses on single-family mortgage loans. Actual
results could be different from these estimates.
Significant Accounting Policies
Cash and Cash Equivalents
Highly liquid investment securities that have an original maturity of three months or less are accounted for as cash equivalents.
Original maturity means the original maturity to us when we acquire the investment, not the original maturity of the instrument
itself. Cash collateral accepted from counterparties that we do not have the right to use for general corporate purposes is
classified as restricted cash and cash equivalents on our consolidated balance sheets. Restricted cash and cash equivalents
includes cash remittances received from servicers of the underlying assets of our consolidated trusts which are deposited into
a separate custodial account. We invest the cash held in the custodial account in short-term investments; and we are entitled to
the interest income earned on these short-term investments, which is recorded as interest income on our consolidated
statements of income.
Comprehensive Income
Comprehensive income includes all changes in equity during a period, except those resulting from investments by, or
distributions to, stockholders. Comprehensive income consists of net income plus other comprehensive income, including
unrealized gains and losses on available-for-sale securities.
Financial Statements
Notes to Consolidated Financial Statements | Note 1
FREDDIE MAC | 2024 Form 10-K
136
Other Significant Accounting Policies
The table below identifies our other significant accounting policies and the related note in which information about each policy
can be found.
Note
Accounting Policy
Note 3
Securitization and Consolidation
Note 4
Mortgage Loans
Note 5
Guarantees and Other Off-Balance Sheet Credit Exposures
Note 6
Allowance for Credit Losses
Note 7
Investment Securities
Note 8
Debt
Note 9
Derivatives
Note 10
Collateralized Agreements
Note 11
Stockholders' Equity
Note 11
Earnings Per Share
Note 13
Income Taxes
Note 14
Segment Reporting
Note 16
Fair Value Disclosures
ASU 2023-02,
Investments - Equity
Method and Joint
Ventures (Topic 323):
Accounting for
Investments in Tax Credit
Structures Using the
Proportional Amortization
Method
The amendments in this Update expand the use of the
proportional amortization method of accounting to equity
investments in other tax credit structures that meet
certain conditions. This Update also amends those
conditions primarily to assess projected benefits on a
discounted basis and expands the disclosure
requirements of those investments.
January 1, 2024
The adoption of these amendments did not
have a material effect on our consolidated
financial statements.
ASU 2023-07, Segment
Reporting (Topic 280):
Improvements to
Reportable Segment
Disclosures
The amendments in this Update require the disclosure of
more detailed quantitative and qualitative information
about significant segment expenses that are regularly
provided to the CODM and included in each reported
measure of segment profit or loss.
December 31, 2024 The adoption of these amendments did not
have a material effect on our consolidated
financial statements. In connection with the
adoption of these amendments, we have
reclassified certain amounts within non-
interest expense in our consolidated
statements of income to better present the
significant drivers of our non-interest
expense activity. Prior period amounts have
been reclassified to conform to the current
period presentation. See Note 14 for the
incremental disclosures required by this
ASU.
Recently Adopted Accounting Guidance
Standard
Description
Date of Adoption
Effect on Consolidated Financial
Statements
Financial Statements
Notes to Consolidated Financial Statements | Note 1
FREDDIE MAC | 2024 Form 10-K
137
Recently Issued Accounting Guidance, Not Yet Adopted Within Our Consolidated Financial Statements
Standard
Description
Date of
Planned
Adoption
Effect on Consolidated Financial
Statements
ASU 2023-09, Income Taxes
(Topic 740): Improvements to
Income Tax Disclosures
The amendments in this Update require annual
disclosure of more detailed tax rate reconciliation
categories and income taxes paid by geography and
jurisdiction.
January 1,
2025
We do not expect the adoption of
these amendments to have a
material effect on our consolidated
financial statements.
ASU 2024-03, Income
Statement - Reporting
Comprehensive Income -
Expense Disaggregation
Disclosures (Subtopic 220-40):
Disaggregation of Income
Statement Expenses
The amendments in this Update require disaggregated
disclosures for certain expense categories.
December 31.
2026
We do not expect the adoption of these
amendments to have a material effect on
our consolidated financial statements.
Financial Statements
Notes to Consolidated Financial Statements | Note 1
FREDDIE MAC | 2024 Form 10-K
138
NOTE 2
Conservatorship and Related Matters
Business Objectives
We operate under the conservatorship that commenced on September 6, 2008, conducting our business under the direction of
FHFA, as our Conservator. The conservatorship and related matters significantly affect our management, business activities,
financial condition, and results of operations. Upon its appointment, FHFA, as Conservator, immediately succeeded to all
rights, titles, powers, and privileges of Freddie Mac, and of any stockholder, officer, or director thereof, with respect to the
company and its assets. The Conservator also succeeded to the title to all books, records, and assets of Freddie Mac held by
any other legal custodian or third party. The Conservator provided for the Board of Directors to perform certain functions and to
oversee management, and the Board of Directors delegated to management authority to conduct business operations so that
the company can continue to operate in the ordinary course. The directors serve on behalf of, and perform such functions as
provided by, the Conservator.
We are subject to certain constraints on our business activities under the Purchase Agreement. However, the support provided
by Treasury pursuant to the Purchase Agreement currently enables us to maintain our access to the debt markets and to have
adequate liquidity to conduct our normal business activities, although the costs of our debt funding could vary. Our ability to
access funds from Treasury under the Purchase Agreement is critical to keeping us solvent.
Our current business objectives reflect direction we have received from the Conservator (including the Conservatorship
Scorecards). At the direction of the Conservator, we have made changes to certain business practices that are designed to
provide support for the mortgage market in a manner that serves our mission and other non-financial objectives but may not
contribute to our profitability. Certain of these objectives are intended to help homeowners and the mortgage market and may
help to mitigate future credit losses. Some of these initiatives affect our near- and long-term financial results. Given our mission
and the important role the Administration and our Conservator have placed on Freddie Mac in addressing housing and
mortgage market conditions, we may be required to take actions that could have a negative impact on our business, operating
results, or financial condition.
Under the Purchase Agreement, we cannot 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. Our Conservator
has not made us aware of any plans to make any significant changes that would affect our ability to continue as a going
concern. Our future structure and role will be determined by the Administration, Congress, and FHFA. It is possible, and
perhaps likely, that there will be significant changes to our business beyond the near term.
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, August 17, 2012, December 21, 2017, September 27, 2019, January 14, 2021, September 14, 2021,
and January 2, 2025. The amount of available funding remaining under the Purchase Agreement was $140.2 billion as of
December 31, 2024. 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 consolidated balance
sheets). 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, that it will be mandated by law to appoint a receiver for us unless we receive these
funds from Treasury. In exchange for Treasury's funding commitment, we issued to Treasury, as an aggregate initial
commitment fee, one million shares of Variable Liquidation Preference Senior Preferred Stock with an initial liquidation
preference of $1 billion, which we refer to as the senior preferred stock, and a warrant to purchase, for a nominal price, shares
of our common stock equal to 79.9% of the total number of shares of our common stock outstanding on a fully diluted basis at
the time the warrant is exercised, which we refer to as the warrant. We received no cash proceeds or other consideration from
Treasury for issuing the senior preferred stock or the warrant. The amount of any draw will be added to the aggregate
liquidation preference of the senior preferred stock. Deficits in our net worth have made it necessary for us to make substantial
draws on Treasury's funding commitment under the Purchase Agreement. Pursuant to the December 2017 Letter Agreement,
the liquidation preference of the senior preferred stock increased by $3.0 billion on December 31, 2017. Pursuant to the
September 2019 Letter Agreement and January 2021 Letter Agreement, increases in the Net Worth Amount, if any, during the
immediately prior fiscal quarter have been, or will be, added to the liquidation preference of the senior preferred stock at the
Financial Statements
Notes to Consolidated Financial Statements | Note 2
FREDDIE MAC | 2024 Form 10-K
139
end of each fiscal quarter, from September 30, 2019 through the Capital Reserve End Date. The liquidation preference of the
senior preferred stock was $129.0 billion on December 31, 2024 and will increase to $132.2 billion on March 31, 2025 based on
the increase in our Net Worth Amount during 4Q 2024. Under the Purchase Agreement, our ability to repay the liquidation
preference of the senior preferred stock is limited, and we will not be able to do so for the foreseeable future, if at all. In addition
to increases based on quarterly increases in our Net Worth Amount, as discussed above, the liquidation preference will
increase if we receive additional draws under the Purchase Agreement or if any dividends or quarterly commitment fees
payable under the Purchase Agreement are not paid in cash.
Treasury, as the holder of the senior preferred stock, is entitled to receive quarterly cash dividends, when, as, and if declared by
our Board of Directors. The dividends we have paid to Treasury on the senior preferred stock have been declared by, and paid
at the direction of, the Conservator, acting as successor to the rights, titles, powers, and privileges of the Board of Directors.
Through December 31, 2012, the senior preferred stock accrued quarterly cumulative dividends at a rate of 10% per year.
Under the August 2012 amendment to the Purchase Agreement, the fixed dividend rate was replaced with a net worth sweep
dividend beginning in the first quarter of 2013.
Accordingly, our cash dividend requirement for each quarter from January 1, 2013 until the Capital Reserve End Date is the
amount, if any, by which our Net Worth Amount at the end of the immediately preceding fiscal quarter, less the applicable
Capital Reserve Amount, exceeds zero. The term Net Worth Amount is defined as the total assets of Freddie Mac (excluding
Treasury's commitment and any unfunded amounts thereof), less our total liabilities (excluding any obligation in respect of
capital stock), in each case as reflected on our consolidated balance sheets prepared in accordance with GAAP. If the
calculation of the dividend payment for a quarter does not exceed zero, then no dividend will accrue or be payable for that
quarter. The applicable Capital Reserve Amount is currently the amount of adjusted total capital necessary to meet capital
requirements and buffers set forth in the ERCF. This Capital Reserve Amount will remain in effect until the last day of the
second consecutive fiscal quarter during which we have reached and maintained such level of capital (the Capital Reserve End
Date). As a result, we will not be required to pay a dividend on the senior preferred stock to Treasury until we have built
sufficient net worth to meet the capital requirements and buffers set forth in the ERCF. If for any reason we were not to pay our
dividend requirement on the senior preferred stock in full in any future period until the Capital Reserve End Date, the unpaid
amount would be added to the liquidation preference and the applicable Capital Reserve Amount would thereafter be zero.
Based on our Net Worth Amount at December 31, 2024 and the applicable Capital Reserve Amount, we will not have a dividend
requirement to Treasury in March 2025. Since the beginning of the conservatorship through December 31, 2024, we have paid
cash dividends of $119.7 billion to Treasury at the direction of the Conservator.
After the Capital Reserve End Date, we will be subject to a new periodic cash dividend requirement. Our quarterly senior
preferred stock dividend requirement will be an amount equal to the lesser of (1) 10% per annum on the then-current liquidation
preference of the senior preferred stock and (2) a quarterly amount equal to the increase in the Net Worth Amount, if any, during
the immediately prior fiscal quarter. If for any reason we were not to pay our dividend requirement on the senior preferred stock
in full in any future period after the Capital Reserve End Date, the unpaid amount would be added to the liquidation preference
and immediately following such failure and for all dividend periods thereafter until the dividend period following the date on
which we shall have paid in cash full cumulative dividends, the dividend amount will be 12% per annum on the then-current
liquidation preference of the senior preferred stock. The amounts payable for dividends on the senior preferred stock could be
substantial and will have an adverse impact on our financial position and net worth. The senior preferred stock is senior in
liquidation preference to our common stock and all other series of preferred stock.
In addition to the issuance of the senior preferred stock and warrant, we are required under the Purchase Agreement to pay a
quarterly commitment fee to Treasury. Under the Purchase Agreement, the fee was to be determined in an amount mutually
agreed to by us and Treasury with reference to the market value of Treasury's funding commitment as then in effect. However,
pursuant to the August 2012 amendment to the Purchase Agreement, as further amended by the January 2021 Letter
Agreement, for each quarter commencing January 1, 2013, no periodic commitment fee under the Purchase Agreement will be
set, accrue, or be payable. Pursuant to the January 2021 Letter Agreement, by the Capital Reserve End Date, we and Treasury,
in consultation with the Chairman of the Federal Reserve, will mutually agree on a periodic commitment fee that we will pay for
Treasury's remaining funding commitment with respect to the five-year period commencing on the first January 1 after the
Capital Reserve End Date.
The Purchase Agreement includes significant restrictions on our ability to manage our business, including limits on the amount
of indebtedness we can incur, the size of our mortgage-related investments portfolio, our secondary market activities, and our
single-family loan acquisitions.
The Purchase Agreement has an indefinite term and can terminate only in limited circumstances, which do not include the end
of the conservatorship. The Purchase Agreement therefore could continue after the conservatorship ends. Treasury has the
right to exercise the warrant, in whole or in part, at any time on or before September 7, 2028.
Financial Statements
Notes to Consolidated Financial Statements | Note 2
FREDDIE MAC | 2024 Form 10-K
140
Purchase Agreement Covenants
The Purchase Agreement provides that, until the senior preferred stock is repaid or redeemed in full, we may not, without the
prior written consent of Treasury:
n Declare or pay any dividend (preferred or otherwise) or make any other distribution with respect to any Freddie Mac equity
securities (other than with respect to the senior preferred stock or warrant);
n Redeem, purchase, retire, or otherwise acquire any Freddie Mac equity securities (other than the senior preferred stock or
warrant);
n Sell or issue any Freddie Mac equity securities (other than the senior preferred stock, warrant, and common stock issuable
upon exercise of the warrant and certain issuance(s) of common stock after the occurrence of both Treasury's exercise in
full of its warrant to acquire 79.9% of our common stock and resolution of currently pending material litigation relating to
our conservatorship and the Purchase Agreement);
n Terminate the conservatorship (other than in connection with a mandatory receivership);
n Sell, transfer, lease, or otherwise dispose of any assets, other than dispositions for fair market value:
l To a limited life regulated entity (in the context of a receivership);
l Of assets and properties in the ordinary course of business, consistent with past practice;
l Of assets and properties having fair market value individually or in aggregate less than $250 million in one transaction
or a series of related transactions;
l In connection with our liquidation by a receiver;
l Of cash or cash equivalents for cash or cash equivalents; or
l To the extent necessary to comply with the covenant described below relating to the reduction of our mortgage-
related investments portfolio.
n Issue any subordinated debt;
n Enter into a corporate reorganization, recapitalization, merger, acquisition, or similar event; or
n Engage in transactions with affiliates unless the transaction is:
l Pursuant to the Purchase Agreement, the senior preferred stock, or the warrant;
l Upon arm's length terms; or
l A transaction undertaken in the ordinary course or pursuant to a contractual obligation or customary employment
arrangement in existence on the date of the Purchase Agreement.
Effective January 2, 2025, the Purchase Agreement requires us to comply with the ERCF, as amended from time to time. For
additional information on the ERCF, see Note 18.
The Purchase Agreement limits the size of our mortgage-related investments portfolio to a maximum amount of $225 billion.
The calculation of mortgage assets subject to the Purchase Agreement cap includes the UPB of mortgage assets and 10% of
the notional value of interest-only securities. Our mortgage-related investments portfolio for purposes of the FHFA and
Purchase Agreement caps was $123.5 billion at December 31, 2024, including $22.5 billion representing 10% of the notional
amount of the interest-only securities we held as of December 31, 2024. Our ability to acquire and sell mortgage assets
continues to be significantly constrained by limitations imposed by the Purchase Agreement and FHFA.
With respect to the composition of our mortgage-related investments portfolio, FHFA has instructed us to (1) hold no more than
$20 billion in Single-Family agency MBS with all dollar caps to be based on UPB and (2) hold no CMOs, which are also
sometimes referred to as REMICs. We will have a holding period limit to sell any new CMO tranches created but not sold at
issuance. CMOs do not include tranches initially retained from reperforming loans senior subordinate securitizations.
Under the Purchase Agreement, we also may not, without the prior written consent of Treasury, incur indebtedness that would
result in the par value of our aggregate indebtedness exceeding 120% of the amount of mortgage assets we are permitted to
own on December 31 of the immediately preceding calendar year. Our debt cap under the Purchase Agreement was
$270 billion on January 1, 2023 as a result of the decrease in the mortgage assets limit under the Purchase Agreement to
$225 billion on December 31, 2022. The mortgage asset and indebtedness limitations are determined without giving effect to
the changes to the accounting guidance for transfers of financial assets and consolidation of VIEs, under which we
consolidated certain VIEs in our consolidated financial statements as of January 1, 2010. As of December 31, 2024, our
aggregate indebtedness for purposes of the debt cap was $187.7 billion. Our aggregate indebtedness calculation primarily
includes the par value of short- and long-term debt.
In addition, the Purchase Agreement provides that we may not enter into any new compensation arrangements or increase
amounts or benefits payable under existing compensation arrangements of any named executive officer or other executive
officer (as such terms are defined by SEC rules) without the consent of the Director of FHFA, in consultation with the Secretary
of the Treasury.
Financial Statements
Notes to Consolidated Financial Statements | Note 2
FREDDIE MAC | 2024 Form 10-K
141
The Purchase Agreement also provides that, on an annual basis, we are required to deliver a risk management plan to Treasury
setting out our strategy for reducing our enterprise-wide risk profile and the actions we will take to reduce the financial and
operational risk associated with each of our reportable business segments.
The Purchase Agreement also restricts our secondary market activities and single-family loan acquisitions:
n Secondary Market Activities - We cannot vary the pricing or any other term of the acquisition of a single-family loan based
on the size, charter type, or volume of business of the seller of the loan and are required to:
l Offer to purchase loans for cash consideration and operate this cash window with non-discriminatory pricing; and
l Comply with directives, regulations, restrictions, or other requirements prescribed by FHFA related to equitable
secondary market access by community lenders.
n Subject to such exceptions as FHFA may prescribe to permit us to acquire single-family mortgage loans that are currently
eligible for acquisition, we are required to implement a program reasonably designed to ensure that each single-family
mortgage is:
l A qualified mortgage;
l Expressly exempt from the CFPB’s ability-to-repay requirements;
l Secured by an investment property;
l A refinancing with streamlined underwriting for high LTV ratios;
l A loan with temporary underwriting flexibilities due to exigent circumstances, as determined in consultation with FHFA;
or
l Secured by manufactured housing.
Warrant Covenants
The warrant we issued to Treasury includes, among others, the following covenants:
n Our SEC filings under the Exchange Act will comply in all material respects as to form with the Exchange Act and the rules
and regulations thereunder;
n Without the prior written consent of Treasury, we may not permit any of our significant subsidiaries to issue capital stock or
equity securities, or securities convertible into or exchangeable for such securities, or any stock appreciation rights or other
profit participation rights to any person other than Freddie Mac or its wholly-owned subsidiaries;
n We may not take any action that will result in an increase in the par value of our common stock;
n Unless waived or consented to in writing by Treasury, we may not take any action to avoid the observance or performance
of the terms of the warrant and we must take all actions necessary or appropriate to protect Treasury's rights against
impairment or dilution; and
n We must provide Treasury with prior notice of specified actions relating to our common stock, such as setting a record
date for a dividend payment, granting subscription or purchase rights, authorizing a recapitalization, reclassification,
merger or similar transaction, commencing a liquidation of the company, or any other action that would trigger an
adjustment in the exercise price or number or amount of shares subject to the warrant.
Termination Provisions
The Purchase Agreement provides that the Treasury's funding commitment will terminate under any of the following
circumstances:
n The completion of our liquidation and fulfillment of Treasury's obligations under its funding commitment at that time;
n The payment in full of, or reasonable provision for, all of our liabilities (whether or not contingent, including mortgage
guarantee obligations); and
n The funding by Treasury of the maximum amount of the commitment under the Purchase Agreement.
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.
Financial Statements
Notes to Consolidated Financial Statements | Note 2
FREDDIE MAC | 2024 Form 10-K
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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:
n The amount necessary to cure the payment defaults on our debt securities and mortgage guarantee obligations and
n The lesser of:
l The deficiency amount and
l 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.
See Note 11 for additional information on the conservatorship and the Purchase Agreement.
Related Parties as a Result of Conservatorship
As a result of our issuance to Treasury of the warrant to purchase shares of our common stock equal to 79.9% of the total
number of shares of our common stock outstanding, on a fully diluted basis, we are deemed a related party to the U.S.
government. During the years ended December 31, 2024, 2023, and 2022, no transactions outside of normal business activities
have occurred between us and the U.S. government (or any of its related parties), except for the following:
n The transactions with Treasury discussed above in Purchase Agreement and Warrant;
n The transactions entered into whereby we and Fannie Mae, in conjunction with Treasury, provided assistance to state and
local HFAs. Treasury will reimburse Freddie Mac for initial guarantee losses on these transactions;
n The allocation or transfer of 4.2 bps of each dollar of new business purchases to certain housing funds as required under
the GSE Act. During the years ended December 31, 2024, 2023, and 2022, we recognized $0.2 billion, $0.1 billion, and
$0.3 billion, respectively, of expense related to the affordable housing funds. These amounts are included in legislative and
regulatory assessments on our consolidated statements of income; and
n The legislated guarantee fees on single-family loans that are remitted to Treasury as required by law. During the years
ended December 31, 2024, 2023, and 2022, we recognized $2.9 billion, $2.9 billion, and $2.8 billion, respectively, of
expense related to the legislated guarantee fees. These amounts are included in legislative and regulatory assessments on
our consolidated statements of income.
In addition, we are deemed a related party with Fannie Mae as both we and Fannie Mae have the same relationships with FHFA
and Treasury. All transactions between us and Fannie Mae have occurred in the normal course of business in conservatorship
other than our relationship with CSS discussed below.
In October 2013, FHFA announced the formation of CSS. CSS is a limited liability company equally-owned by Freddie Mac and
Fannie Mae, and CSS is also deemed a related party. In connection with the formation of CSS, we and Fannie Mae signed
governance and operating agreements for CSS, including an updated customer services agreement with Fannie Mae and CSS.
We have also entered into an agreement with Fannie Mae regarding the commingling of certain of our mortgage securities and
related indemnification obligations. During the year ended December 31, 2024, we contributed $68 million of capital to CSS,
and we have contributed $938 million since the fourth quarter of 2014. The carrying value of our investment in CSS was
($5) million and ($1) million as of December 31, 2024 and December 31, 2023. respectively.
In January 2020, FHFA directed Freddie Mac and Fannie Mae to amend the LLC agreement for CSS to change the structure of
the Board of Managers (CSS Board). Under the revised CSS LLC agreement, the CSS Board includes two Freddie Mac and two
Fannie Mae representatives and additional members: the Chief Executive Officer of CSS and an independent, non-Executive
Chair. During conservatorship, the CSS Board Chair shall be designated by FHFA, and all CSS Board decisions will require the
affirmative vote of the Board Chair. During conservatorship, FHFA also may appoint up to three additional independent
members to the CSS Board, who along with the CSS Board Chair and the Chief Executive Officer of CSS may continue to serve
on the CSS Board after conservatorship. As of December 31, 2024, FHFA appointed the current CSS Board Chair and two
additional independent directors to the CSS Board. The current structure may reduce Freddie Mac’s and Fannie Mae’s ability to
control CSS Board decisions, even after conservatorship, including decisions about strategy, business operations, and funding.
Financial Statements
Notes to Consolidated Financial Statements | Note 2
FREDDIE MAC | 2024 Form 10-K
143
NOTE 3
Securitization and Consolidation
For each entity with which we are involved, we determine whether the entity should be consolidated in our financial statements.
We consolidate entities in which we have a controlling financial interest. The method for determining whether a controlling
financial interest exists varies depending on whether the entity is a VIE. For entities that are not VIEs, we hold a controlling
financial interest in entities where we hold a majority of the voting rights or a majority of a limited partnership's kick-out rights
through voting interests. We do not currently consolidate any entities which are not VIEs. We use the equity method to account
for our interests in entities in which we do not have a controlling financial interest, but over which we have significant influence.
Our primary business activities in the Single-Family and Multifamily segments involve the securitization of loans or other
mortgage-related assets using trusts that are VIEs. These trusts issue beneficial interests in the loans or other mortgage-related
assets that they own. We guarantee the principal and interest payments on some or all of the issued beneficial interests in
substantially all of our securitization transactions. We also use trusts that are VIEs in certain CRT products.
Consolidated VIEs
We consolidate VIEs when we have a controlling financial interest in the VIE and are therefore considered the primary
beneficiary of the VIE. We are the primary beneficiary of a VIE when we have both the power to direct the activities of the VIE
that most significantly impact its economic performance and exposure to losses or benefits of the VIE that could potentially be
significant to the VIE. We evaluate whether we are the primary beneficiary of VIEs in which we have interests at both inception
and on an ongoing basis, and the primary beneficiary determination may change over time as our interest in the VIE changes.
Generally, the assets of our consolidated VIEs can be used only to settle obligations of the VIE, and the creditors of our
consolidated VIEs have recourse to the general credit of Freddie Mac only to the extent that we have provided a guarantee to
the VIE.
When we consolidate a VIE, we recognize the assets and liabilities of the VIE on our consolidated balance sheets and account
for those assets and liabilities based on the applicable GAAP for each specific type of asset or liability. Assets and liabilities that
we transfer to a VIE at, after, or shortly before the date we become the primary beneficiary of the VIE are initially measured at
the same amounts that they would have been measured if they had not been transferred, and no gain or loss is recognized on
these transfers. For all other VIEs that we consolidate, we recognize the assets and liabilities of the VIE at fair value, and we
recognize a gain or loss for the difference between:
n
The sum of the fair value of the consideration paid, the fair value of any noncontrolling interests, and the reported amount
of any previously held interests and
n
The fair value of the net identifiable assets recognized.
Single-Family
Securitization Products
Level 1 Securitization Products
Level 1 Securitization Products consist of UMBS, 55-day MBS, ARM PCs and Gold PCs, which are all pass-through debt
securities that represent undivided beneficial interests in a pool of loans held by a securitization trust. All Level 1 Securitization
Products are backed only by mortgage loans we have acquired. We serve as both administrator and guarantor for these trusts.
As administrator, we have the right to establish servicing terms and direct loss mitigation activities for the loans held by these
trusts. As guarantor, we guarantee the payment of principal and interest on these securities in exchange for a guarantee fee,
and we have the right to purchase delinquent loans from the trust to help improve the economic performance of the trust. We
absorb all credit losses of these trusts through our guarantee of the principal and interest payments.
The economic performance of these trusts is most significantly affected by the performance of the underlying loans. Our rights
as administrator and guarantor provide us with the power to direct the activities that most significantly affect the performance
of the underlying loans. We also have the obligation to absorb losses of these trusts that could potentially be significant through
our guarantee of principal and interest payments. Accordingly, we concluded that we are the primary beneficiary of and,
therefore, consolidate these trusts.
Loans held by these trusts are recognized on our consolidated balance sheets as mortgage loans held-for-investment. The
corresponding securities held by third parties are recognized on our consolidated balance sheets as debt. We extinguish the
outstanding debt of the related consolidated trust and recognize gains or losses on debt extinguishment for the difference
between the consideration paid and the debt carrying value when we purchase these securities as investments in our
mortgage-related investments portfolio. Sales of these securities that were previously held as investments in our mortgage-
related investments portfolio are accounted for as debt issuances.
Financial Statements
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We were the primary beneficiary of and, therefore, consolidated Level 1 securitization trusts with assets totaling $3.0 trillion at
both December 31, 2024 and December 31, 2023. Our exposure for guarantees to consolidated securitization trusts is generally
equal to the UPB of the loans recorded on our consolidated balance sheets.
Other Securitization Products
We are the primary beneficiary of and, therefore, consolidate the trusts used to issue certain of our Single-Family other
securitization products when we have the ability to direct the activities that most significantly affect the economic performance
of the trusts and we have the obligation to absorb credit losses through our guarantee of some or all of the issued securities. As
a result, we consolidated trusts used to issue these products with underlying assets totaling $4.1 billion and $4.5 billion at
December 31, 2024 and December 31, 2023, respectively.
Multifamily
Securitization Products
Multifamily PCs
Multifamily PCs are fully guaranteed pass-through securities with a 55-day payment delay that are collateralized by a single
underlying mortgage loan held by a securitization trust. We serve as both administrator and guarantor for these trusts. As
administrator, we have the right to establish servicing terms and direct loss mitigation activities for the loans held by these
trusts. As guarantor, we guarantee the payment of principal and interest on these securities in exchange for a guarantee fee,
and we have the right to purchase a delinquent loan from the trust. We absorb all credit losses of these trusts through our
guarantee of the principal and interest payments.
The economic performance of these trusts is most significantly affected by the performance of the underlying loans. Our rights
as administrator and guarantor provide us with the power to direct the activities that most significantly affect the performance
of the underlying loans. We also have the obligation to absorb losses of these trusts that could potentially be significant through
our guarantee of principal and interest payments. Accordingly, we concluded that we are the primary beneficiary of and,
therefore, consolidate these trusts.
We consolidated VIEs used in these securitizations with underlying assets totaling $64.8 billion and $44.1 billion at
December 31, 2024 and December 31, 2023, respectively.
K Certificates and Other Securitization Products
We are the primary beneficiary of and, therefore, consolidate the trusts used to issue fully guaranteed K Certificates and certain
of our Multifamily other securitization products when we have the ability to direct the activities that most significantly affect the
economic performance of the VIEs and we have the obligation to absorb credit losses through our guarantee of the issued
securities.
We consolidated VIEs used in these securitizations with underlying assets totaling $5.7 billion and $3.2 billion at December 31,
2024 and December 31, 2023, respectively.
WI K-Deal Certificates
In a WI K-Deal Certificate transaction, we forward sell a K Certificate to be issued in the future to WI K Certificate investors
thereby reducing our exposure to future changes in interest rates and K Certificate spreads. The WI K-Deal trust simultaneously
issues guaranteed securities (WI Certificates).
The economic performance of our WI K-Deal trusts is most significantly affected by the performance of the underlying assets.
We manage the underlying assets of the trust prior to the delivery of the K Certificate and determine which K Certificate will be
delivered into the trust. Therefore, we have the power to direct the activities that are most significant to the WI K-Deal trust. We
also initially have economic exposure to the variability of the trust through our guarantee of the issued WI Certificates. As a
result, we are the primary beneficiary of and, therefore, initially consolidate the trusts used to issue WI Certificates. Upon
delivering the K Certificate into the trust, we no longer have a variable interest and therefore deconsolidate the WI K-Deal trust.
During 2024 and 2023, we issued $2.9 billion and $4.9 billion, respectively, of WI Certificates, and initially consolidated the
trusts. We did not consolidate any WI K-Deal trusts at December 31, 2024 and we consolidated WI K-Deal trusts with
underlying assets totaling $0.5 billion at December 31, 2023.
Nonconsolidated VIEs
Single-Family
Securitization Products
We do not consolidate certain of our Single-Family other securitization products, including senior subordinate securitizations
Financial Statements
Notes to Consolidated Financial Statements | Note 3
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backed by seasoned loans, because we do not have the ability to direct the loss mitigation activities of the underlying loans,
which is the most significant activity affecting the economic performance of the VIE. When we sell loans in this type of
transaction, we derecognize the transferred loans and account for our guarantee to the nonconsolidated VIE. We account for
our investments in the beneficial interests issued by the nonconsolidated VIE, if any, as investments in debt securities. We also
do not consolidate the trusts used to issue certain other types of our Single-Family other securitization products when we do
not have the ability to direct the activities that most significantly affect the economic performance of the VIE.
Resecuritization Products
We create resecuritization products primarily by using Level 1 Securitization Products, our previously issued resecuritization
products, or similar TBA-eligible products issued and guaranteed by Fannie Mae as the underlying collateral. In a typical
resecuritization transaction, previously issued Level 1 Securitization Products or resecuritization products are transferred to a
resecuritization trust that issues beneficial interests in the underlying collateral. We establish parameters that define eligibility
standards for assets that may be used as collateral for each of our resecuritization programs. Resecuritization products can
then be created based on the parameters that we have established. Similar to our Level 1 Securitization Products, we
guarantee the payment of principal and interest to the investors in our resecuritization products.
The main types of resecuritization products we create are single-class resecuritization products (Supers, Giant MBS, and Giant
PCs) and multiclass resecuritization products (REMICs and Strips).
n Single-class resecuritization products - These securities are direct pass-throughs of the cash flows of the underlying
collateral, which may be previously issued Level 1 Securitization Products, single-class resecuritization products, or similar
TBA-eligible products issued and guaranteed by Fannie Mae. We do not consolidate the trusts used in these transactions
unless we have the unilateral ability to liquidate the trust (for example if we own all of the trust's issued beneficial interests),
as these transactions do not result in any new or incremental risk to the holders of the securities issued by the
resecuritization trust and because we are not exposed to any incremental rights to receive benefits or obligations to absorb
losses that could be significant to the resecuritization trust.
We account for purchases of single-class resecuritization products that we issue that are substantially the same as the
underlying collateral as debt extinguishment of a pro-rata portion of the underlying Level 1 Securitization Product. We
account for purchases of single-class resecuritization products that we issue that are not considered substantially the
same as the underlying collateral as investments in debt securities. Single-class resecuritization products that we issue
that are backed entirely by Freddie Mac collateral are considered substantially the same as the underlying collateral, while
commingled single-class resecuritization products that we issue are not considered substantially the same as the
underlying collateral.
n Multiclass resecuritization products - These securities are multiclass resecuritizations of the cash flows of the underlying
collateral, which may be previously issued Level 1 Securitization Products, single-class resecuritization products,
multiclass resecuritization products, or similar TBA-eligible products issued and guaranteed by Fannie Mae. The activity
that most significantly impacts the economic performance of our multiclass resecuritization trusts is typically the initial
design and structuring of the trust. Substantially all multiclass resecuritization trusts are created as part of transactions in
which an investor or dealer participates in the decisions made during the design and establishment of the trust. As a result,
we do not have the unilateral ability to direct the activities of our multiclass resecuritization trusts that most significantly
impact the economic performance of those trusts. In addition, unless we retain a portion of the issued multiclass
resecuritization products, we do not have the right to receive benefits or the obligation to absorb losses that could
potentially be significant to the trusts because we have already provided a guarantee on the underlying assets. As a result,
we have concluded that we are not the primary beneficiary of our multiclass resecuritization trusts and, therefore, do not
consolidate those trusts unless we have the unilateral ability to liquidate the trust.
When we purchase a multiclass resecuritization product as an investment in our mortgage-related investments portfolio,
we record the security as an investment in debt securities rather than extinguishment of debt since we are investing in the
debt securities of a nonconsolidated entity. Similarly, sales of multiclass resecuritization products previously held as
investments in our mortgage-related investments portfolio are accounted for as sales of investments in debt securities. See
Note 7 for additional information on accounting for investments in debt securities.
With the exception of commingled securities, our investments in, and guarantees of, securities issued by resecuritization trusts
do not create any incremental exposure to loss because we already guarantee the underlying collateral. As a result, we do not
receive any incremental guarantee fees in exchange for our guarantee, and, accordingly, we do not recognize any additional
guarantee assets, guarantee obligations, or reserves for guarantee losses related to resecuritization trusts. In a typical
multiclass resecuritization, we receive a one-time transaction fee which represents compensation for both the structuring and
creation of the securities and for our ongoing administrative responsibilities to service the securities. We recognize the portion
of the transaction fee related to creation of the securities immediately in earnings. We defer the portion of the fee related to
ongoing administrative responsibilities and amortize it over the life of the associated trust.
When we issue commingled resecuritization products, our guarantee of the Fannie Mae securities used as collateral creates
incremental exposure to loss because our guarantee covers timely payment of principal and interest on such products from
underlying Fannie Mae securities. If Fannie Mae were to fail to make a payment on a Fannie Mae security that we resecuritized,
Financial Statements
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we would be responsible for making the payment. However, we view the likelihood of being required to perform on our
guarantee of Fannie Mae securities as remote due to both Freddie Mac and Fannie Mae being under the common control of
FHFA, and due to Fannie Mae’s status as a GSE and the funding commitment available to it through its senior preferred stock
purchase agreement with Treasury. We did not charge an incremental fee for commingled securities issued prior to July 1,
2022; however, effective July 1, 2022, we began to charge a fee for any commingled security issued after that date.
CRT Products
We transfer credit risk exposure on certain mortgage loans that we own or guarantee using CRT products, including STACR
Trust notes. In STACR Trust notes transactions, a trust issues credit-linked notes whose repayments are based on the credit
performance of a reference pool of mortgage loans. The trust uses the proceeds from the issuance of the notes to purchase
short-term eligible investments and makes periodic payments of principal and interest on the notes to investors. We make
payments to the trust to support payment of the interest due on the notes, and we receive payments from the trust that
otherwise would have been made to the noteholders to the extent there are credit events on the mortgages in the reference
pool. The note balances are reduced by the amount of the payments to us. The trust was designed to create and pass along to
its interest holders the variability related to the credit risk of the mortgages in the reference pool. We do not have a variable
interest in the risk that the trust was designed to create and pass along to its interest holders or the power to direct the
activities that most significantly affect the economic performance of the VIE. As a result, we do not consolidate the trusts used
in the STACR Trust note transactions.
We account for our obligations to make certain payments to the STACR Trust note VIEs to support payment of the interest due
on the notes as derivative instruments. We account for our rights to receive payments from the STACR Trust note VIEs to the
extent there are credit events on the mortgages in the reference pool as freestanding credit enhancement contracts.
Freestanding contracts are entered into separately and apart from any other financial instrument or in conjunction with some
other transaction and are legally detachable and separately exercisable. We recognize the payments we make to transfer credit
risk under freestanding credit enhancements, which primarily consist of STACR Trust notes and ACIS transactions in Single-
Family, in credit enhancement expense in our consolidated statements of income when they are incurred. We recognize
expected recoveries from such transactions in other assets with an offsetting reduction to non-interest expense, at the same
time that we recognize an allowance for credit losses on the covered loans, measured on the same basis as the allowance for
credit losses on the covered loans. Credit enhancements that are not freestanding contracts are considered when measuring
our allowance for credit losses. See Note 6 for additional information on credit enhancements that are not freestanding
contracts.
Multifamily
Securitization Products
K Certificates
In a senior subordinate K Certificate transaction, we sell multifamily loans to a non-Freddie Mac trust that issues senior and
subordinate securities, and simultaneously purchase and place the senior securities into a Freddie Mac trust that issues
guaranteed K Certificates. In these transactions, we guarantee the senior securities issued by the non-Freddie Mac trust but do
not issue or guarantee the subordinate securities. We receive a guarantee fee in exchange for our guarantee. In certain of our K
Certificate securitizations, we may also serve as master servicer. However, in contrast to most single-family transactions, the
rights to direct loss mitigation activities of the underlying loans and to purchase delinquent loans from the securitization trust
are generally held by the investor in the most subordinate remaining securities issued by the non-Freddie Mac trust, and
therefore we do not have the power to direct those activities unless we are the investor in the most subordinate remaining
securities. We do not typically invest in the subordinate securities issued in our K Certificate transactions.
The economic performance of our K Certificate trusts is most significantly affected by the performance of the underlying loans.
We do not consolidate our K Certificate securitization trusts that have subordination because we do not have the ability to
direct the loss mitigation activities of the underlying loans, which is the most significant activity affecting the economic
performance of the VIE.
When we sell loans in a senior subordinate K Certificate transaction, we derecognize the transferred loans and account for our
guarantee to the nonconsolidated VIE. We account for our investments in the beneficial interests issued by the trusts used in
our senior subordinate K Certificate transactions as investments in debt securities.
Financial Statements
Notes to Consolidated Financial Statements | Note 3
FREDDIE MAC | 2024 Form 10-K
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Other Securitization Products
We do not consolidate the trusts used to issue our other securitization products when we do not have the ability to direct the
activities that most significantly affect the economic performance of the VIE. For those products, we account for our guarantee
to the nonconsolidated VIE. We account for our investments in the beneficial interests issued by the trusts used in our other
securitization products as investments in debt securities.
CRT Products
In Multifamily, we may transfer credit risk on certain mortgage loans that we own or guarantee by entering into MSCR note
transactions, which are similar to STACR Trust note transactions in Single-Family. We do not consolidate the trusts used in
MSCR note transactions and account for MSCR note transactions in the same manner as we account for STACR Trust note
transactions.
Assets and Liabilities of Nonconsolidated VIEs
The following table presents the carrying amounts and classification of the assets and liabilities recorded on our consolidated
balance sheets that relate to our variable interests in VIEs for which we are not the primary beneficiary and with which we were
involved in the design and creation and have a significant continuing involvement, our maximum exposure to loss as a result of
our involvement with such VIEs, and the total assets of the VIEs. Our involvement with such VIEs primarily consists of
guarantees that we have issued to the VIE, some of which are accounted for as derivative instruments, and investments in debt
securities issued by the VIE. See Note 5 for additional information on our guarantees to nonconsolidated VIEs.
Total assets shown in the table below represents the remaining UPB of the mortgage loans or other noncash financial assets
held by the VIE and excludes cash and nonfinancial assets held by the VIE. Maximum exposure to loss shown in the table
below is primarily based on the remaining UPB of the guaranteed securities issued by the VIE and represents the contractual
amounts that could be lost if the assets of the VIE (including the assets in the related reference pool for CRT products) became
worthless at the balance sheet date, without consideration of proceeds from related collateral liquidation and possible
recoveries under credit enhancements. We do not believe the maximum exposure to loss from our involvement with
nonconsolidated VIEs is representative of the actual loss we are likely to incur based on our historical loss experience and after
consideration of proceeds from related collateral liquidation and available credit enhancements.
Financial Statements
Notes to Consolidated Financial Statements | Note 3
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Table 3.1 - Nonconsolidated VIEs
December 31, 2024
Carrying Amounts of the Assets and Liabilities On the
Consolidated Balance Sheets
Total Assets
Maximum Exposure
to Loss
(In millions)
Investment
securities
Accrued Interest
Receivable and
Other Assets(1)
Liabilities(1)
Single-Family:
Securitization products
$1,633
$157
$458
$30,038
$24,470
Resecuritization products(2)
5,159
69
701
104,120
104,120
CRT products(3)
—
89
171
27,224
7
Total Single-Family
6,792
315
1,330
161,382
128,597
Multifamily:
Securitization products(4)
5,263
5,171
4,374
355,108
317,611
CRT products(3)
—
29
15
1,738
22
Total Multifamily
5,263
5,200
4,389
356,846
317,633
Other
—
7
5
79
472
Total
$12,055
$5,522
$5,724
$518,307
$446,702
December 31, 2023
Carrying Amounts of the Assets and Liabilities On the
Consolidated Balance Sheets
Total Assets
Maximum Exposure
to Loss
(In millions)
Investment
securities
Accrued Interest
Receivable and
Other Assets(1)
Liabilities(1)
Single-Family:
Securitization products
$1,272
$172
$427
$30,298
$24,600
Resecuritization products(2)
4,952
67
626
110,320
110,320
CRT products(3)
—
92
220
29,126
14
Total Single-Family
6,224
331
1,273
169,744
134,934
Multifamily:
Securitization products(4)
5,985
5,082
4,652
360,928
321,262
CRT products(3)
—
11
7
1,359
8
Total Multifamily
5,985
5,093
4,659
362,287
321,270
Other
—
7
5
117
468
Total
$12,209
$5,431
$5,937
$532,148
$456,672
(1)
Other assets primarily include our guarantee assets. Liabilities primarily include our guarantee obligations.
(2)
Total assets and maximum exposure to loss are based on the UPB of Fannie Mae securities underlying commingled Freddie Mac resecuritization trusts. We exclude
noncommingled resecuritization trusts from these amounts as we have already guaranteed the underlying collateral and therefore noncommingled resecuritizations
do not involve any incremental assets or create any incremental exposure to credit risk. Total assets exclude less than $0.1 billion and $0.1 billion as of
December 31, 2024 and December 31, 2023, respectively, of Fannie Mae securities that we have guaranteed that are included in resecuritization trusts that we
have consolidated as we own all of the outstanding securities issued by the VIE.
(3) Maximum exposure to loss is based on our expected recovery receivables and excludes our obligations to make certain payments to the VIE to support payment of
the interest due on the notes issued by the VIE, which we account for as derivative instruments. The notional value of these derivative instruments is equal to the
total assets of the VIE.
(4)
Includes total assets of $0.7 billion and $0.3 billion as of December 31, 2024 and December 31, 2023, respectively, related to VIEs in which our interest would no
longer absorb significant variability as the guaranteed securities have completely paid off.
We also obtain interests in various other entities created by third parties through the normal course of business that may be
VIEs, such as through purchases of multifamily loans, guarantees of multifamily housing revenue bonds, as a derivative
counterparty, or through other activities. To the extent that we were not involved in the design or creation of these VIEs, they
are excluded from the table above. Our interests in these VIEs are generally passive in nature and are not expected to result in
us obtaining a controlling financial interest in these VIEs in the future. As a result, we do not consolidate these VIEs and we
account for our interests in these VIEs in the same manner that we account for our interests in other third-party transactions.
Investments in Low Income Housing Tax Credits
We invest in LIHTC partnerships to support and preserve the supply of affordable housing. These investments do not provide
us with a controlling financial interest in the underlying partnerships and we therefore do not consolidate these entities. We
Financial Statements
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have elected to account for these investments using the proportional amortization method when applicable. The carrying
amount of our investments in LIHTC partnerships is presented in other assets on our consolidated balance sheets and totaled
$4.3 billion as of December 31, 2024, and $3.5 billion as of December 31, 2023.
Financial Statements
Notes to Consolidated Financial Statements | Note 3
FREDDIE MAC | 2024 Form 10-K
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NOTE 4
Mortgage Loans
The table below provides details of the loans on our consolidated balance sheets.
Table 4.1 - Mortgage Loans
December 31, 2024
December 31, 2023
(In millions)
Single-Family
Multifamily
Total
Single-Family
Multifamily
Total
Held-for-sale UPB
$2,984
$13,265
$16,249
$3,527
$9,905
$13,432
Cost basis and fair value adjustments, net
(586)
(103)
(689)
(712)
221
(491)
Total held-for-sale loans, net
2,398
13,162
15,560
2,815
10,126
12,941
Held-for-investment UPB
3,063,211
87,416
3,150,627
2,996,509
59,203
3,055,712
Cost basis and fair value adjustments, net(1)
28,926
(450)
28,476
34,627
(291)
34,336
Allowance for credit losses
(6,381)
(393)
(6,774)
(6,057)
(326)
(6,383)
Total held-for-investment loans, net(2)
3,085,756
86,573
3,172,329
3,025,079
58,586
3,083,665
Total mortgage loans, net
$3,088,154
$99,735
$3,187,889
$3,027,894
$68,712
$3,096,606
(1)
Includes ($0.7) billion and ($0.2) billion of basis adjustments maintained on a closed portfolio basis related to existing portfolio layer method fair value hedge
relationships as of December 31, 2024 and December 31, 2023, respectively.
(2)
Includes $2.4 billion and $1.8 billion of multifamily held-for-investment loans for which we have elected the fair value option as of December 31, 2024 and
December 31, 2023, respectively.
We own both single-family loans, which are secured by one- to four-unit residential properties, and multifamily loans, which are
secured by properties with five or more residential rental units. Our single-family loans are predominantly first lien, fixed-rate
loans secured by the borrower's primary residence. We do not typically acquire loans that have experienced more-than-
insignificant deterioration in credit quality since origination as of our acquisition date, although we may acquire such loans in
connection with certain of our securitization activities or other mortgage-related guarantees.
Upon acquisition, we classify a loan as either held-for-investment or held-for-sale. Loans that we have the ability and intent to
hold for the foreseeable future, including loans held by consolidated trusts and loans we intend to securitize using an entity we
will consolidate, are classified as held-for-investment. Loans that we intend to sell are classified as held-for-sale.
Held-for-investment loans for which we have not elected the fair value option are reported on our consolidated balance sheets
at their amortized cost basis, net of the allowance for credit losses. The amortized cost basis is based on a loan's outstanding
UPB, net of deferred fees and other cost basis adjustments (including unamortized premiums and discounts, fees we receive or
pay when we acquire loans, commitment-related derivative basis adjustments, hedge accounting-related basis adjustments,
and other pricing adjustments), excluding accrued interest receivable. Accrued interest receivable for both held-for-investment
and held-for-sale loans is separately presented on our consolidated balance sheets and excluded for the purposes of
disclosure of the amortized cost basis of mortgage loans held-for-investment.
Held-for-sale loans for which we have not elected the fair value option are reported at lower-of-cost-or-fair-value determined on
an individual loan basis on our consolidated balance sheets. Any excess of a held-for-sale loan's cost over its fair value is
recognized as a valuation allowance in investment gains, net on our consolidated statements of income, with subsequent
changes in this valuation allowance also being recorded in investment gains, net. Premiums, discounts, and other cost basis
adjustments (including lower-of-cost-or-fair-value adjustments) are deferred and not amortized.
We elect the fair value option for certain multifamily loans. Loans for which we have elected the fair value option are measured
at fair value on a recurring basis, with subsequent gains or losses related to changes in fair value reported in investment gains,
net on our consolidated statements of income. All fees, upfront costs, and other cost basis adjustments are recognized in
earnings as incurred.
Cash flows related to loans originally classified as held-for-investment are classified as either investing activities (e.g., principal
repayments) or operating activities (e.g., interest payments received from borrowers included within net income) on our
consolidated statements of cash flows. Cash flows related to loans originally classified as held-for-sale are classified as
operating activities on our consolidated statements of cash flows.
Financial Statements
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The table below provides details of the UPB of loans we purchased and sold during the periods presented.
Table 4.2 - Loans Purchased and Sold
Year Ended December 31,
(In millions)
2024
2023
2022
Single-Family:
Purchases:
Held-for-investment loans
$346,408
$299,886
$540,472
Sales of held-for-sale loans(1)
2,072
1,253
2,211
Multifamily:
Purchases:
Held-for-investment loans
30,003
16,814
25,052
Held-for-sale loans
31,712
29,415
44,997
Sales of held-for-sale loans(2)
27,883
34,034
50,280
(1)
Our sales of single-family loans reflect the sale of single-family seasoned loans.
(2)
Our sales of multifamily loans occur primarily through the issuance of Multifamily K Certificates.
Reclassifications
We reclassify loans from held-for-investment to held-for-sale depending on our intent and ability to hold the loan for the
foreseeable future. Upon reclassification from held-for-investment to held-for-sale, we perform a collectability assessment.
When we determine that a loan to be reclassified has experienced more-than-insignificant deterioration in credit quality since
origination, the excess of the loan’s amortized cost basis over its fair value is written off against the allowance for credit losses
prior to the reclassification. If the charge-off amount exceeds the existing allowance for credit losses amount, an additional
provision for credit losses is recognized. Any remaining allowance for credit losses after the charge-off is reversed through
provision for credit losses.
We reclassify loans from held-for-sale to held-for-investment when we have both the intent and ability to hold the loan for the
foreseeable future. Upon reclassification from held-for-sale to held-for-investment, we reverse the loan’s held-for-sale valuation
allowance, if any, and establish an allowance for credit losses as needed.
The table below presents the allowance for credit losses or valuation allowance that was reversed or established due to loan
reclassifications between held-for-investment and held-for-sale during the periods presented.
Table 4.3 - Loan Reclassifications(1)
2024
2023
(In millions)
UPB
Allowance for
Credit Losses
Reversed or
(Established)
Valuation
Allowance
(Established)
or Reversed
UPB
Allowance for
Credit Losses
Reversed or
(Established)
Valuation
Allowance
(Established)
or Reversed
Single-Family reclassifications from:
Held-for-investment to held-for-sale
$2,285
$75
$—
$1,968
$37
$—
Held-for-sale to held-for-investment(2)
233
19
19
191
16
20
Multifamily reclassifications from:
Held-for-investment to held-for-sale
1,322
12
(61)
6,760
4
(58)
Held-for-sale to held-for-investment
833
—
10
861
(1)
19
(1)
Amounts exclude reclassifications related to loans for which we have elected the fair value option.
(2)
Allowance for credit losses established upon loan reclassifications from held-for-sale to held-for-investment to reflect the net amount we expect to collect on the
loan. Loans with prior charge-offs may have a negative allowance for credit losses established upon reclassification.
Interest Income
We recognize interest income on an accrual basis except when we believe the collection of principal and interest in full is not
reasonably assured, which generally occurs when a loan is three monthly payments or more past due, at which point we place
the loan on non-accrual status unless the loan is well secured and in the process of collection based upon an individual loan
assessment. A loan is considered past due if a full payment of principal and interest is not received within one month of its due
date. We charge off outstanding accrued interest receivable through interest income when loans are placed on non-accrual
status and recognize interest income on a cash basis while a loan is on non-accrual status.
Financial Statements
Notes to Consolidated Financial Statements | Note 4
FREDDIE MAC | 2024 Form 10-K
152
Cost basis adjustments on held-for-investment loans are amortized into interest income over the contractual life of the loan
using the effective interest method. No amortization is recognized during periods in which a loan is on non-accrual status.
A non-accrual loan is returned to accrual status when the collectability of principal and interest in full is reasonably assured. For
single-family loans, we generally determine that collectability is reasonably assured when the loan returns to current payment
status. For multifamily loans, the collectability of principal and interest is considered reasonably assured based on an analysis
of the factors specific to the loan being assessed. Upon a loan's return to accrual status, all previously reversed interest income
is recognized and amortization of any basis adjustments into interest income is resumed.
The table below presents the amortized cost basis of non-accrual loans as of the beginning and the end of the periods
presented, including the interest income recognized for the period that is related to the loans on non-accrual status as of the
period end.
Table 4.4 - Amortized Cost Basis of Held-for-Investment Loans on Non-Accrual(1)
Non-Accrual Amortized Cost Basis
Interest Income Recognized(2)
(In millions)
December 31, 2024
December 31, 2023
Year Ended December 31, 2024
Single-Family:
20- and 30-year or more, amortizing fixed-rate
$15,157
$12,682
$307
15-year or less, amortizing fixed-rate
511
519
8
Adjustable-rate and other
240
257
5
Total Single-Family
15,908
13,458
320
Total Multifamily
125
64
3
Total Single-Family and Multifamily
$16,033
$13,522
$323
Non-Accrual Amortized Cost Basis
Interest Income Recognized(2)
(In millions)
December 31, 2023
December 31, 2022
Year Ended December 31, 2023
Single-Family:
20- and 30-year or more, amortizing fixed-rate
$12,682
$9,307
$256
15-year or less, amortizing fixed-rate
519
427
7
Adjustable-rate and other
257
361
5
Total Single-Family
13,458
10,095
268
Total Multifamily
64
42
3
Total Single-Family and Multifamily
$13,522
$10,137
$271
(1)
Excludes amounts related to loans for which we have elected the fair value option.
(2)
Represents the amount of payments received during the period, including those received while the loans were on accrual status, for the held-for-investment loans on
non-accrual status as of period end.
The table below provides the amount of accrued interest receivable presented on our consolidated balance sheets and the
amount of accrued interest receivable related to loans on non-accrual status at the end of the periods that was charged off.
Table 4.5 - Accrued Interest Receivable and Related Charge-offs
Accrued Interest Receivable
Accrued Interest Receivable Related Charge-offs
(In millions)
December 31, 2024
December 31, 2023
Year Ended December 31, 2024 Year Ended December 31, 2023
Single-Family loans
$9,776
$8,833
($223)
($232)
Multifamily loans
431
287
(1)
(2)
Credit Quality
Single-Family
The current LTV ratio is one key factor we consider when estimating our allowance for credit losses for single-family loans. As
current LTV ratios increase, the borrower's equity in the home decreases, which may negatively affect the borrower's ability to
refinance or to sell the property for an amount at or above the balance of the outstanding loan.
The tables below present the amortized cost basis of single-family held-for-investment loans by current LTV ratio. Our current
LTV ratios are estimates based on available data through the end of each period presented.
Financial Statements
Notes to Consolidated Financial Statements | Note 4
FREDDIE MAC | 2024 Form 10-K
153
Table 4.6 - Amortized Cost Basis of Single-Family Held-for-Investment Loans by Current LTV Ratio and Vintage
December 31, 2024
Year of Origination
Total
(In millions)
2024
2023
2022
2021
2020
Prior
Current LTV ratio:
20- and 30-year or more, amortizing fixed-rate
≤ 60
$47,642 $42,978 $109,174 $566,114 $544,209 $465,059 $1,775,176
> 60 to 80
125,634 106,407 182,774 225,774
48,905
9,859
699,353
> 80 to 90
52,612
69,714
61,282
10,650
813
311
195,382
> 90 to 100
70,104
20,274
8,820
949
124
74
100,345
> 100
168
435
777
59
19
56
1,514
Total 20- and 30-year or more, amortizing fixed-rate
296,160 239,808 362,827 803,546 594,070 475,359
2,771,770
Gross charge-offs for the period(1)
1
10
40
45
35
222
353
15-year or less, amortizing fixed-rate
≤ 60
5,664
4,353
21,308 110,094
85,662
52,305
279,386
> 60 to 80
5,326
3,012
3,986
927
44
7
13,302
> 80 to 90
856
338
103
7
—
—
1,304
> 90 to 100
377
19
10
—
—
—
406
> 100
2
—
—
—
—
—
2
Total 15-year or less, amortizing fixed-rate
12,225
7,722
25,407 111,028
85,706
52,312
294,400
Gross charge-offs for the period(1)
—
—
1
1
1
2
5
Adjustable-rate and other
≤ 60
384
438
1,793
3,355
1,338
11,123
18,431
> 60 to 80
1,065
1,309
2,457
661
49
139
5,680
> 80 to 90
466
766
767
17
1
12
2,029
> 90 to 100
241
150
112
2
—
3
508
> 100
—
2
11
—
—
1
14
Total adjustable-rate and other
2,156
2,665
5,140
4,035
1,388
11,278
26,662
Gross charge-offs for the period(1)
—
—
—
1
—
1
2
Total for all loan product types by current LTV ratio:
≤ 60
53,690
47,769 132,275 679,563 631,209 528,487
2,072,993
> 60 to 80
132,025 110,728 189,217 227,362
48,998
10,005
718,335
> 80 to 90
53,934
70,818
62,152
10,674
814
323
198,715
> 90 to 100
70,722
20,443
8,942
951
124
77
101,259
> 100
170
437
788
59
19
57
1,530
Total Single-Family loans
$310,541 $250,195 $393,374 $918,609 $681,164 $538,949 $3,092,832
Total gross charge-offs for the period(1)
$1
$10
$41
$47
$36
$225
$360
Financial Statements
Notes to Consolidated Financial Statements | Note 4
FREDDIE MAC | 2024 Form 10-K
154
December 31, 2023
Year of Origination
Total
(In millions)
2023
2022
2021
2020
2019
Prior
Current LTV ratio:
20- and 30-year or more, amortizing fixed-rate
≤ 60
$39,500 $93,279 $513,267 $542,449 $94,348 $411,663 $1,694,506
> 60 to 80
105,384 183,251 318,965
95,102
12,402
7,296
722,400
> 80 to 90
55,973
90,785
27,750
1,272
213
262
176,255
> 90 to 100
51,994
23,460
1,542
71
16
77
77,160
> 100
28
912
24
9
5
88
1,066
Total 20- and 30-year or more, amortizing fixed-rate
252,879 391,687 861,548 638,903 106,984 419,386
2,671,387
Gross charge-offs for the period(1)
—
12
37
43
45
243
380
15-year or less, amortizing fixed-rate
≤ 60
4,221
20,246 121,709
98,338
12,488
56,493
313,495
> 60 to 80
3,973
8,314
4,491
278
19
5
17,080
> 80 to 90
623
509
25
—
—
—
1,157
> 90 to 100
198
33
1
—
—
—
232
> 100
1
1
—
—
—
1
3
Total 15-year or less, amortizing fixed-rate
9,016
29,103 126,226
98,616
12,507
56,499
331,967
Gross charge-offs for the period(1)
—
1
2
1
—
2
6
Adjustable-rate and other
≤ 60
356
1,650
3,325
1,465
586
12,950
20,332
> 60 to 80
1,153
2,651
1,105
89
25
227
5,250
> 80 to 90
689
1,040
48
3
—
18
1,798
> 90 to 100
317
276
2
—
—
8
603
> 100
—
16
—
—
—
4
20
Total adjustable-rate and other
2,515
5,633
4,480
1,557
611
13,207
28,003
Gross charge-offs for the period(1)
—
—
—
—
—
1
1
Total for all loan product types by current LTV ratio:
≤ 60
44,077 115,175 638,301 642,252 107,422 481,106
2,028,333
> 60 to 80
110,510 194,216 324,561
95,469
12,446
7,528
744,730
> 80 to 90
57,285
92,334
27,823
1,275
213
280
179,210
> 90 to 100
52,509
23,769
1,545
71
16
85
77,995
> 100
29
929
24
9
5
93
1,089
Total Single-Family loans
$264,410 $426,423 $992,254 $739,076 $120,102 $489,092 $3,031,357
Total gross charge-offs for the period(1)
$—
$13
$39
$44
$45
$246
$387
(1)
Excludes charge-offs related to accrued interest receivable and advances of pre-foreclosure costs.
Multifamily
The table below presents the amortized cost basis of our multifamily held-for-investment loans, for which we have not elected
the fair value option, by credit quality indicator, based on available data through the end of each period presented. These
indicators involve significant management judgment and are defined as follows:
n "Pass" is current and adequately protected by the borrower's current financial strength and debt service capacity;
n "Special mention" has administrative issues that may affect future repayment prospects but does not have current credit
weaknesses. In addition, this category generally includes loans in forbearance;
n "Substandard" has a weakness that jeopardizes the timely full repayment; and
n "Doubtful" has a weakness that makes collection or liquidation in full highly questionable and improbable based on existing
conditions.
Financial Statements
Notes to Consolidated Financial Statements | Note 4
FREDDIE MAC | 2024 Form 10-K
155
Table 4.7 - Amortized Cost Basis of Multifamily Held-for-Investment Loans by Credit Quality Indicator and Vintage
December 31, 2024
Year of Origination
Total
(In millions)
2024
2023
2022
2021
2020
Prior
Revolving
Loans
Category:
Pass
$27,713
$14,471
$16,548
$7,179
$6,201
$7,921
$2,426
$82,459
Special mention
50
76
239
39
86
327
—
817
Substandard
—
29
444
329
200
276
—
1,278
Doubtful
—
—
—
—
—
—
—
—
Total
$27,763
$14,576
$17,231
$7,547
$6,487
$8,524
$2,426
$84,554
December 31, 2023
Year of Origination
Total
(In millions)
2023
2022
2021
2020
2019
Prior
Revolving
Loans
Category:
Pass
$13,804
$17,845
$7,430
$6,345
$4,420
$3,254
$2,266
$55,364
Special mention
20
85
28
43
294
106
—
576
Substandard
—
33
188
259
223
464
—
1,167
Doubtful
—
—
—
—
—
—
—
—
Total
$13,824
$17,963
$7,646
$6,647
$4,937
$3,824
$2,266
$57,107
Past Due Status
The table below presents the amortized cost basis of our single-family and multifamily held-for-investment loans, for which we
have not elected the fair value option, by payment status. We report single-family loans in forbearance as past due during the
forbearance period to the extent that payments are past due based on the loan's original contractual terms, irrespective of the
forbearance plan, based on the information reported to us by our servicers. We report multifamily loans in forbearance as
current as long as the borrower is in compliance with the forbearance agreement, including the agreed upon repayment plan,
even if payments are past due based on the loan's original contractual terms.
Table 4.8 - Amortized Cost Basis of Held-for-Investment Loans by Payment Status(1)
December 31, 2024
(In millions)
Current
One
Month
Past Due
Two
Months
Past Due
Three Months or
More Past Due,
or in Foreclosure(2)
Total
Non-Accrual
With No
Allowance(3)
Single-Family:
20- and 30-year or more, amortizing
fixed-rate
$2,722,336
$27,090
$7,588
$14,756
$2,771,770
$465
15-year or less, amortizing fixed-rate
292,207
1,404
291
498
294,400
5
Adjustable-rate and other
26,019
309
101
233
26,662
33
Total Single-Family
3,040,562
28,803
7,980
15,487
3,092,832
503
Total Multifamily
84,288
60
80
126
84,554
75
Total Single-Family and Multifamily
$3,124,850
$28,863
$8,060
$15,613
$3,177,386
$578
Financial Statements
Notes to Consolidated Financial Statements | Note 4
FREDDIE MAC | 2024 Form 10-K
156
December 31, 2023
(In millions)
Current
One
Month
Past Due
Two
Months
Past Due
Three Months or
More Past Due,
or in Foreclosure(2)
Total
Non-Accrual
With No
Allowance(3)
Single-Family:
20- and 30-year or more, amortizing
fixed-rate
$2,627,763
$25,528
$5,787
$12,309
$2,671,387
$406
15-year or less, amortizing fixed-rate
329,601
1,589
270
507
331,967
4
Adjustable-rate and other
27,317
342
95
249
28,003
49
Total Single-Family
2,984,681
27,459
6,152
13,065
3,031,357
459
Total Multifamily
57,031
12
—
64
57,107
23
Total Single-Family and Multifamily
$3,041,712
$27,471
$6,152
$13,129
$3,088,464
$482
(1)
There were no held-for-investment loans that were three months or more past due and accruing interest as of both December 31, 2024 and December 31, 2023.
(2)
Includes $2.6 billion and $2.0 billion of single-family loans that were in the process of foreclosure as of December 31, 2024 and December 31, 2023, respectively.
(3)
Loans with no allowance for loan losses primarily represent loans that were previously charged off and for which the amount we expect to collect is sufficiently in
excess of the amortized cost to result in recovery of the entire amortized cost basis if the property were foreclosed upon or otherwise subject to disposition. We
exclude the amounts of allowance for credit losses on advances of pre-foreclosure costs when determining whether a loan has an allowance for credit losses.
At the instruction of FHFA, we purchase single-family loans from trusts when they reach 24 months of delinquency, except for
loans that meet certain criteria (e.g., permanently modified or foreclosure referral), which may be purchased sooner. Many
delinquent single-family loans are purchased from trusts before they reach 24 months of delinquency under one of the
exceptions provided. We must obtain FHFA’s approval to implement changes to our policy to purchase loans from trusts.
When we purchase single-family or multifamily loans from the trust, we record an extinguishment of the corresponding portion
of debt of consolidated trusts and we reclassify the loans from mortgage loans held-for-investment by consolidated trusts to
mortgage loans held-for-investment by Freddie Mac. We purchased $8.0 billion and $5.7 billion in UPB of such loans from
consolidated trusts during the years ended December 31, 2024 and December 31, 2023, respectively.
Loan Restructurings
We evaluate all loan restructurings according to the accounting guidance for loan refinancing and restructuring to determine
whether the restructuring should be accounted for as a new loan or a continuation of the existing loan. We derecognize the
existing loan and account for the restructured loan as a new loan if the effective yield on the restructured loan is at least equal
to the effective yield for comparable loans with similar collection risks and the modifications to the original loan are more than
minor. If a loan restructuring does not meet these conditions, we carryforward the existing loan’s amortized cost basis and
account for the restructured loan as a continuation of the existing loan. Substantially all of our loan restructurings involving
borrowers experiencing financial difficulty are accounted for as a continuation of the existing loan.
The discounted cash flow model we use in measuring our Single-Family allowance for credit losses forecasts cash flows we
expect to collect using our historical experience, including the effects of our loss mitigation activities involving borrowers
experiencing financial difficulty. When we account for a loan restructuring as a continuation of the existing loan, we update the
loan’s effective interest rate based on the restructured terms and recognize interest income prospectively using the new
effective rate. We also update the prepayment-adjusted effective interest rate used to discount cash flows in measuring our
allowance for credit losses to reflect the loan’s restructured terms. For loans that were restructured and accounted for as TDRs
prior to our adoption of ASU 2022-02, and that have not been subsequently restructured, we continue to use the loan's
prepayment-adjusted effective interest rate just prior to restructuring, with no adjustments for changes resulting from the
restructuring. As a result, we continue to measure an allowance for credit losses for the economic concession granted to a
borrower for changes in the timing and amount of contractual cash flows for such legacy TDR loans.
Single-Family Loan Restructurings
We offer several types of restructurings to single-family borrowers that may result in a payment delay, interest rate reduction,
term extension, or combination thereof. We do not offer principal forgiveness.
We offer the following types of restructurings to single-family borrowers that result in only a payment delay:
n Forbearance plans - Arrangements that require reduced or no payments during a defined period that provides borrowers
additional time to return to compliance with the original mortgage terms or to implement another type of loan workout
option. Borrowers may exit forbearance by repaying all past due amounts thus fully reinstating the loan, paying off the loan
in full, or entering into a repayment plan, a payment deferral plan, or a trial period plan pursuant to a loan modification. We
offer forbearance of up to 12 months to single-family borrowers experiencing financial difficulty. Borrowers may receive an
Financial Statements
Notes to Consolidated Financial Statements | Note 4
FREDDIE MAC | 2024 Form 10-K
157
initial forbearance term of one to six months and, if necessary, one or more forbearance term extensions of one to six
months, as long as the delinquency of the mortgage does not exceed 12 months.
n Repayment plans - Contractual plans that allow borrowers a specific period of time to return to current status by paying
the normal monthly payment plus additional agreed upon delinquent amounts. Repayment plans must have a term greater
than one month and less than or equal to 12 months and the monthly repayment plan payment amount must not exceed
150% of the contractual mortgage payment amount.
n Payment deferral plans - Arrangements that allow borrowers to return to current status by deferring delinquent principal
and interest into a non-interest-bearing principal balance that is due at the earlier of the payoff date, maturity date, or sale
of the property. The remaining mortgage term, interest rate, payment schedule, and maturity date remain unchanged, and
no trial period plan is required. The number of months of payments deferred varies based upon the type of hardship the
borrower is experiencing.
In addition, we also offer single-family borrowers loan modifications, which are contractual plans that may involve changing the
terms of the loan such as payment delays, interest rate reductions, term extensions, or a combination of these items. Payment
delays in our loan modification programs most commonly consist of adding outstanding indebtedness, such as delinquent
interest, to the UPB of the loan, and may also include principal forbearance, in which a portion of the principal balance
becomes non-interest-bearing and is due at the earlier of the payoff date, maturity date, or sale of the property. Our
modification programs generally require completion of a trial period of at least three months prior to receiving the modification.
During the loan modification trial period, borrowers make payments that are an estimate of the anticipated modified payment
amount, which is generally lower than the amount required by the loan's original contractual terms. As a result, loans in these
modifications are granted a delay in the payment due under the original contractual terms during the trial period. We continue
to report single-family loans in loan modification trial period plans as delinquent to the extent that payments are past due based
on the loan’s original contractual terms.
Most of our modifications involve a combination of: (1) a payment delay in the form of adding outstanding indebtedness to the
UPB of the loan and (2) an interest rate reduction, a term extension, or both.
For purposes of the disclosure related to single-family loan restructurings involving borrowers experiencing financial difficulty,
we exclude loans that were held-for-sale either at the time of restructuring or at the period end. The table below presents the
period-end amortized cost basis of single-family held-for-investment loan restructurings involving borrowers experiencing
financial difficulty that we entered into during the periods presented.
Table 4.9 - Single-Family Loan Restructurings Involving Borrowers Experiencing Financial Difficulty(1)
2024
(Dollars in millions)
Payment
Delay(2)
Payment Delay
and Term
Extension
Payment Delay,
Term Extension,
and Interest Rate
Reduction
Total
Total as % of
Class of
Financing
Receivable(3)
Single-Family:
20- and 30-year or more, amortizing fixed-rate
$18,526
$5,640
$78
$24,244
0.9 %
15-year or less, amortizing fixed-rate
723
—
—
723
0.2
Adjustable-rate and other
177
13
2
192
0.7
Total Single-Family loan restructurings
$19,426
$5,653
$80
$25,159
0.8
2023
(Dollars in millions)
Payment
Delay(2)
Payment Delay
and Term
Extension
Payment Delay,
Term Extension,
and Interest Rate
Reduction
Total
Total as % of
Class of
Financing
Receivable(3)
Single-Family:
20- and 30-year or more, amortizing fixed-rate
$16,774
$4,051
$128
$20,953
0.8 %
15-year or less, amortizing fixed-rate
798
—
—
798
0.2
Adjustable-rate and other
179
19
5
203
0.7
Total Single-Family loan restructurings
$17,751
$4,070
$133
$21,954
0.7
Financial Statements
Notes to Consolidated Financial Statements | Note 4
FREDDIE MAC | 2024 Form 10-K
158
(1)
Type of loan restructurings reflects the cumulative effects of the loan restructurings received during the period. Includes loan modifications in the period in which
the borrower completes the trial period and the loan is permanently modified. The amortized cost basis of loans in the trial period modification plans was $2.4 billion
and $1.7 billion as of December 31, 2024 and December 31, 2023, respectively. Most of these loans are 20- and 30-year or more, amortizing fixed-rate loans.
(2)
Includes $8.0 billion and $8.3 billion related to payment deferral plans for 2024 and 2023, respectively. Also includes forbearance plans, repayment plans, and loan
modifications that only involve payment delays.
(3)
Based on the amortized cost basis as of period end, divided by the total period-end amortized cost basis of the corresponding financing receivable class of single-
family held-for-investment loans.
The table below shows the financial effect of single-family held-for-investment loan restructurings involving borrowers
experiencing financial difficulty that we entered into during the periods presented.
Table 4.10 – Financial Effects of Single-Family Loan Restructurings Involving Borrowers Experiencing Financial
Difficulty(1)
2024
(Dollars in thousands)
Weighted-Average
Interest Rate
Reduction
Weighted-Average
Months of Term
Extension
Weighted-Average
Payment Deferral or
Principal
Forbearance(2)
Single-Family:
20- and 30-year or more, amortizing fixed-rate
0.5 %
168
$16
15-year or less, amortizing fixed-rate
—
10
12
Adjustable-rate and other
1.0
229
15
2023
(Dollars in thousands)
Weighted-Average
Interest Rate
Reduction
Weighted-Average
Months of Term
Extension
Weighted-Average
Payment Deferral or
Principal
Forbearance(2)
Single-Family:
20- and 30-year or more, amortizing fixed-rate
1.0 %
175
$16
15-year or less, amortizing fixed-rate
—
0
15
Adjustable-rate and other
1.6
202
17
(1)
Averages are based on payment deferral plans and loan modifications completed during the periods presented. The financial effects of forbearance plans and
repayment plans consist of a payment delay of between one and twelve months. In addition, the financial effect of a forbearance plan is included at the time the
forbearance plan is completed if the borrower exits forbearance by entering into a payment deferral plan or loan modification.
(2)
Primarily related to payment deferral plans. Amounts are based on non-interest-bearing principal balances on the restructured loans.
The following table provides the amortized cost basis of single-family held-for-investment loans that had a payment default (i.e.,
loans that became two months delinquent) during the periods presented and had been restructured within the previous 12
months preceding the payment default, when the borrower was experiencing financial difficulty at the time of the restructuring.
Table 4.11 - Subsequent Defaults of Single-Family Restructured Loans Involving Borrowers Experiencing Financial
Difficulty(1)
2024
(In millions)
Payment Delay
Payment Delay
and Term
Extension
Payment Delay, Term
Extension, and Interest
Rate Reduction
Total
Single-Family:
20- and 30-year or more, amortizing fixed-rate
$3,287
$1,669
$21
$4,977
15-year or less, amortizing fixed-rate
104
—
—
104
Adjustable-rate and other
36
2
—
38
Total Single-Family
$3,427
$1,671
$21
$5,119
Financial Statements
Notes to Consolidated Financial Statements | Note 4
FREDDIE MAC | 2024 Form 10-K
159
2023
(In millions)
Payment Delay
Payment Delay
and Term
Extension
Payment Delay, Term
Extension, and Interest
Rate Reduction
Total
Single-Family:
20- and 30-year or more, amortizing fixed-rate
$2,488
$905
$302
$3,695
15-year or less, amortizing fixed-rate
97
—
—
97
Adjustable-rate and other
30
6
6
42
Total Single-Family
$2,615
$911
$308
$3,834
(1)
Excludes forbearance plans and repayment plans as borrowers are typically past due based on the loan's original contractual terms at the time the borrowers enter
into these plans.
The following table provides the single-family held-for-investment loan performance in the 12 months after a restructuring
involving borrowers experiencing financial difficulty. While a single-family loan is in a forbearance plan or repayment plan,
payments continue to be due based on the loan’s original contractual terms because the loan has not been permanently
modified. As a result, we report single-family loans in forbearance plans and repayment plans as delinquent to the extent that
payments are past due based on the loan’s original contractual terms. Loans that have been restructured by entering into a
payment deferral plan or loan modification are reported as delinquent to the extent that payments are past due based on the
loan's restructured terms.
Table 4.12 - Amortized Cost Basis of Single-Family Restructured Loans Involving Borrowers Experiencing Financial
Difficulty by Payment Status
December 31, 2024
(In millions)
Current
One Month
Past Due
Two Months
Past Due
Three Months
or More Past
Due
Total
Single-Family:
20- and 30-year or more, amortizing fixed-rate
$11,011
$3,501
$2,685
$7,047
$24,244
15-year or less, amortizing fixed-rate
309
112
86
216
723
Adjustable-rate and other
73
25
19
75
192
Total Single-Family
$11,393
$3,638
$2,790
$7,338
$25,159
December 31, 2023
(In millions)
Current
One Month
Past Due
Two Months
Past Due
Three Months
or More Past
Due
Total
Single-Family:
20- and 30-year or more, amortizing fixed-rate
$11,000
$2,619
$1,525
$5,809
$20,953
15-year or less, amortizing fixed-rate
432
88
57
220
797
Adjustable-rate and other
101
23
17
63
204
Total Single-Family
$11,533
$2,730
$1,599
$6,092
$21,954
Multifamily Loan Restructurings
We offer several types of restructurings to multifamily borrowers that may result in a payment delay, interest rate reduction,
term extension, principal forgiveness, or combination thereof. In certain cases, we offer multifamily borrowers forbearance
plans that allow borrowers to defer monthly payments during a defined period. After the forbearance period ends, the
borrowers are required to repay forborne loan amounts in monthly installments. In addition, in certain cases, for maturing loans
we may provide term extensions with no changes to the effective borrowing rate. In other cases, we may make more significant
modifications of terms for borrowers experiencing financial difficulty, such as interest rate reductions, term extensions, principal
forbearance and/or forgiveness, or some combination of these items. The restructuring activities related to multifamily held-for-
investment loans involving borrowers experiencing financial difficulty were not significant during 2024 and 2023.
Financial Statements
Notes to Consolidated Financial Statements | Note 4
FREDDIE MAC | 2024 Form 10-K
160
Non-Cash Investing and Financing Activities
During the years ended December 31, 2024, December 31, 2023, and December 31, 2022, we acquired $230.6 billion, $215.0
billion, and $396.7 billion, respectively, of loans held-for-investment in exchange for the issuance of debt of consolidated trusts
in guarantor swap transactions. We received approximately $112.7 billion, $96.3 billion, and $174.6 billion of loans held-for-
investment from sellers during the years ended December 31, 2024, December 31, 2023, and December 31, 2022, respectively,
to satisfy advances to lenders that were recorded in other assets on our consolidated balance sheets.
Financial Statements
Notes to Consolidated Financial Statements | Note 4
FREDDIE MAC | 2024 Form 10-K
161
NOTE 5
Guarantees and Other Off-Balance Sheet Credit Exposures
Our guarantee activities primarily consist of mortgage-related guarantees in which we agree to absorb the credit risk of
mortgage loans or other mortgage-related assets. In exchange for providing this guarantee, we receive an upfront or ongoing
guarantee fee that is designed to be commensurate with the risks assumed and that will, over the long-term, provide us with
cash flows that are expected to exceed the credit-related and administrative expenses of the underlying financial instruments.
The profitability of our guarantee activities may vary and will depend on a number of factors, including our guarantee fee and
the actual credit performance of the underlying financial instruments that we have guaranteed.
We do not separately recognize guarantees to consolidated VIEs as we have already recognized the assets and liabilities of
those VIEs on our consolidated balance sheets. When we issue a guarantee to a nonconsolidated VIE or other third party that
exposes us to incremental credit risk, we recognize both a guarantee obligation at fair value and the consideration we receive
for providing the guarantee, which typically consists of a guarantee asset that represents the fair value of future guarantee fees.
As a practical expedient, the measurement of the fair value of the guarantee obligation is set equal to the consideration we
receive to provide the guarantee, and no gain or loss is recognized upon issuance of the guarantee. Subsequently, we
recognize changes in the fair value of the guarantee asset in current period earnings and amortize the guarantee obligation into
earnings as we are released from risk under the guarantee. We also recognize an allowance for expected credit losses over the
contractual period in which we are exposed to credit risk. See Note 6 for additional information on our allowance for credit
losses on financial guarantees and other off-balance sheet credit exposures.
Guarantee Activities
Mortgage-Related Guarantees
Nonconsolidated Securitization Products
The majority of our mortgage-related guarantees involve securitizations of multifamily mortgage loans where we do not
consolidate the securitization trust. In these transactions, we guarantee the principal and interest payments on the senior
classes of beneficial interests issued by the securitization trust(s). Our maximum exposure on these guarantees is generally
limited to the UPB of the beneficial interests that we have guaranteed. We have credit protection in the form of subordination
that will absorb losses prior to us having to absorb losses under our guarantee, thereby reducing our expected credit losses
related to such guarantees. See Note 3 for additional information on nonconsolidated VIEs.
Other Mortgage-Related Guarantees
In certain circumstances, we provide a credit guarantee of mortgage-related assets held by third parties, in exchange for a
guarantee fee, without securitizing those assets. These guarantees consist of the following:
n Long-term standby commitments of single-family loans which obligate us to purchase the covered loans when they
become seriously delinquent. Periodically, certain of our customers seek to terminate long-term standby commitments and
simultaneously enter into guarantor swap transactions to obtain our securities backed by many of the same loans.
n Guarantees of the timely payment of principal and interest for certain multifamily bonds, which primarily consist of
multifamily housing revenue bonds that were issued by HFAs.
Our maximum exposure on these guarantees is limited to the UPB of the mortgage-related assets that we have guaranteed.
Guarantees of Fannie Mae Securities
We have the ability to commingle TBA-eligible Fannie Mae collateral in certain of our resecuritization products. We extend our
guarantee of these products to cover principal and interest that are payable from the underlying Fannie Mae collateral. Because
both Freddie Mac and Fannie Mae are under the common control of FHFA, and due to Fannie Mae’s status as a GSE and the
funding commitment available to it through its senior preferred stock purchase agreement with Treasury, we view the likelihood
of being required to perform on our guarantee of Fannie Mae collateral as remote. See Note 3 for additional information on
guarantees of Fannie Mae securities.
The table below presents information about our mortgage-related guarantees and guarantees of Fannie Mae securities,
including the UPB of the loans or securities underlying the guarantee, the maximum potential amount of future payments that
we could be required to make under the guarantee, the liability we have recognized on our consolidated balance sheets for the
guarantee, and the maximum remaining term of the guarantee. This table does not include our unrecognized guarantees, such
as guarantees to consolidated VIEs or to resecuritization trusts that do not expose us to incremental credit risk. We do not
Financial Statements
Notes to Consolidated Financial Statements | Note 5
FREDDIE MAC | 2024 Form 10-K
162
believe the potential amount of future payments we could be required to make is representative of the actual payments we will
be required to make or the actual loss we are likely to incur, based on our historical loss experience and after consideration of
proceeds from related collateral liquidation, including possible recoveries under credit enhancements.
Table 5.1 - Financial Guarantees
December 31, 2024
(Dollars in millions, terms in years)
UPB
Maximum Exposure
Recognized
Liability(1)
Maximum Remaining
Term
Single-Family mortgage-related guarantees:
Nonconsolidated securitization products(2)
$30,038
$24,470
$413
39
Other mortgage-related guarantees
7,941
7,941
127
27
Total Single-Family mortgage-related guarantees
37,979
32,411
540
Multifamily mortgage-related guarantees:
Nonconsolidated securitization products(2)(3)
$355,108
$317,611
$4,219
35
Other mortgage-related guarantees
10,846
10,831
364
34
Total Multifamily mortgage-related guarantees
365,954
328,442
4,583
Guarantees of Fannie Mae securities(4)
$104,120
$104,120
$—
37
Other
79
472
—
30
December 31, 2023
(Dollars in millions, terms in years)
UPB
Maximum Exposure
Recognized
Liability(1)
Maximum Remaining
Term
Single-Family mortgage-related guarantees:
Nonconsolidated securitization products(2)
$30,289
$24,600
$382
40
Other mortgage-related guarantees
8,692
8,692
161
28
Total Single-Family mortgage-related guarantees
38,981
33,292
543
Multifamily mortgage-related guarantees:
Nonconsolidated securitization products(2)(3)
$360,928
$321,262
$4,577
36
Other mortgage-related guarantees
10,761
10,761
383
35
Total Multifamily mortgage-related guarantees
371,689
332,023
4,960
Guarantees of Fannie Mae securities(4)
$110,320
$110,320
$—
38
Other
117
468
—
30
(1)
Excludes allowance for credit losses on off-balance sheet credit exposures. See Note 6 for additional information on our allowance for credit losses on off-balance
sheet credit exposures.
(2)
Maximum exposure is based on remaining UPB of the guaranteed securities issued by the VIE.
(3)
Includes UPB of $0.7 billion and $0.3 billion as of December 31, 2024 and December 31, 2023, respectively, related to VIEs in which our interest would no longer
absorb significant variability as the guaranteed securities have completely paid off. In addition, includes guarantees that are accounted for as derivatives with UPB of
$2.0 billion and $2.1 billion as of December 31, 2024 and December 31, 2023, respectively.
(4)
Excludes less than $0.1 billion and $0.1 billion as of December 31, 2024 and December 31, 2023, respectively, of Fannie Mae securities that we have guaranteed
that are included in resecuritization trusts that we have consolidated as we own all of the outstanding securities issued by the VIE.
Financial Statements
Notes to Consolidated Financial Statements | Note 5
FREDDIE MAC | 2024 Form 10-K
163
The table below presents the payment status of the mortgage loans underlying our mortgage-related guarantees.
Table 5.2 – UPB of Loans Underlying Our Mortgage-Related Guarantees by Payment Status
December 31, 2024
(In millions)
Current
One
Month
Past Due
Two
Months
Past Due
Three Months or
More Past Due,
or in Foreclosure
Total
Single-Family
$33,454
$2,183
$852
$1,490
$37,979
Multifamily
363,983
335
117
1,519
365,954
Total
$397,437
$2,518
$969
$3,009
$403,933
December 31, 2023
(In millions)
Current
One
Month
Past Due
Two
Months
Past Due
Three Months or
More Past Due,
or in Foreclosure
Total
Single-Family
$34,524
$2,172
$827
$1,458
$38,981
Multifamily
369,785
850
98
956
371,689
Total
$404,309
$3,022
$925
$2,414
$410,670
Other Guarantees
We also enter into certain transactions that are accounted for as derivative instruments and are also considered guarantees
under GAAP. These transactions include our obligation to make certain payments to VIEs to support payment of the interest
due on the notes issued by those VIEs in certain CRT transactions, certain interest-rate guarantees related to our securitization
and resecuritization products, certain market value guarantees, and guarantees of third-party derivative instruments. These
transactions generally provide for no limitation on the maximum potential future payments under the guarantee, and we
generally reduce our exposure to such guarantees through separate derivative contracts with third parties. The approximate
remaining term of these guarantees varies and in many cases is based on the maturity of the underlying mortgage loans. See
Note 9 for additional information on derivative instruments.
Indemnifications
In connection with certain business transactions, we may provide indemnification to counterparties for claims arising out of
breaches of certain obligations (e.g., those arising from representations and warranties) in contracts entered into in the normal
course of business. Our assessment is that the risk of any material loss from such a claim for indemnification is remote and
there are no significant probable and estimable losses associated with these contracts. In addition, we provided indemnification
for litigation defense costs to certain former officers who are subject to ongoing litigation. See Note 17 for information on
ongoing litigation. The recognized liabilities on our consolidated balance sheets related to indemnifications were not significant
at both December 31, 2024 and December 31, 2023.
Other Off-Balance Sheet Credit Exposures
In addition to our guarantees, we enter into other agreements that expose us to off-balance sheet credit risk. These agreements
may require us to transfer cash before or upon settlement of our contractual obligation. We recognize an allowance for credit
losses for those agreements not measured at fair value or otherwise recognized in the financial statements. Most of these
commitments expire in less than one year. See Note 6 for additional discussion of our allowance for credit losses on our off-
balance sheet credit exposures.
Financial Statements
Notes to Consolidated Financial Statements | Note 5
FREDDIE MAC | 2024 Form 10-K
164
The table below presents our other off-balance sheet credit exposures.
Table 5.3 - Other Off-Balance Sheet Credit Exposures
(In millions)
December 31, 2024
December 31, 2023
Mortgage loan purchase commitments(1)
$12,416
$10,378
Unsettled securities purchased under agreements to resell, net(2)
10,650
22,276
Other commitments(3)
4,248
4,701
Total
$27,314
$37,355
(1)
Includes $2.0 billion and $1.9 billion of commitments for which we have elected the fair value option as of December 31, 2024 and December 31, 2023,
respectively. Excludes mortgage loan purchase commitments accounted for as derivative instruments. See Note 9 for additional information on commitments
accounted for as derivative instruments.
(2)
Net of $0.4 billion and $4.0 billion of unsettled securities sold under agreements to repurchase as of December 31, 2024 and December 31, 2023, respectively.
(3)
Consists of unfunded portion of revolving lines of credit, liquidity guarantees, and other commitments.
Financial Statements
Notes to Consolidated Financial Statements | Note 5
FREDDIE MAC | 2024 Form 10-K
165
NOTE 6
Allowance for Credit Losses
For financial assets measured at amortized cost, we recognize an allowance for credit losses that is deducted from or added to
the amortized cost basis of the financial asset to present the net amount expected to be collected on the financial asset on the
balance sheet.
The table below summarizes changes in our allowance for credit losses.
Table 6.1 - Details of the Allowance for Credit Losses
December 31, 2024
December 31, 2023
December 31, 2022
(In millions)
Single-
Family
Multifamily
Total
Single-
Family
Multifamily
Total
Single-
Family
Multifamily
Total
Beginning balance
$6,402
$447
$6,849
$7,746
$147
$7,893
$5,440
$78
$5,518
Provision (benefit) for
credit losses
374
102
476
(1,172)
300
(872)
1,772
69
1,841
Charge-offs
(511)
(2)
(513)
(643)
—
(643)
(505)
—
(505)
Recoveries collected
115
—
115
144
—
144
148
—
148
Other(1)
311
1
312
327
—
327
891
—
891
Ending balance
$6,691
$548
$7,239
$6,402
$447
$6,849
$7,746
$147
$7,893
Components of the ending balance of the allowance for credit losses:
Mortgage loans held-for-
investment
$6,381
$393
$6,774
$6,057
$326
$6,383
$7,314
$77
$7,391
Other(2)
310
155
465
345
121
466
432
70
502
Total ending balance
$6,691
$548
$7,239
$6,402
$447
$6,849
$7,746
$147
$7,893
(1)
Primarily includes capitalization of past due interest related to non-accrual loans that received payment deferral plans and loan modifications.
(2)
Includes allowance for credit losses related to advances of pre-foreclosure costs and off-balance sheet credit exposures.
n
2024 vs. 2023 - The provision for credit losses for 2024 was primarily driven by a credit reserve build in Single-Family
attributable to new acquisitions.
n 2023 vs. 2022 - The benefit for credit losses for 2023 was primarily driven by a credit reserve release in Single-Family due
to improvements in house prices.
In addition, charge-offs decreased in 2024 compared to 2023 primarily due to a decrease in charge-offs of accrued interest
receivable. Charge-offs increased in 2023 compared to 2022 due to a higher volume of transfers of single-family loans from
held-for-investment to held-for-sale and the lower fair value of these loans as a result of higher mortgage interest rates.
Allowance for Credit Losses Methodology
We recognize changes in the allowance for credit losses through provision or benefit for credit losses on our consolidated
statements of income.
Mortgage Loans Held-for-Investment
Our allowance for credit losses on mortgage loans pertains to single-family and multifamily loans classified as held-for-
investment for which we have not elected the fair value option. We measure the allowance for credit losses on a pooled basis
when our loans share similar risk characteristics. We record charge-offs in the period in which a loan is deemed uncollectible.
Proceeds received in excess of amounts previously written off are recorded as a decrease to non-interest expense on our
consolidated statements of income.
Single-Family
We estimate the allowance for credit losses for single-family loans on a pooled basis using a discounted cash flow model that
evaluates a variety of factors to estimate the cash flows we expect to collect. If we determine that foreclosure on the underlying
collateral is probable, we measure the allowance for credit losses for single-family loans based upon the fair value of the
collateral, less costs to sell, adjusted for estimated proceeds from credit enhancements that are not freestanding contracts.
Financial Statements
Notes to Consolidated Financial Statements | Note 6
FREDDIE MAC | 2024 Form 10-K
166
The discounted cash flow model we use to estimate the single-family loan allowance for credit losses forecasts cash flows over
the loan’s remaining contractual term, adjusted for expectations of prepayments. As a result, we do not revert to historical loss
information for single-family loans. Cash flow estimates are discounted at the loan’s prepayment-adjusted effective interest
rate, which is adjusted for projections in the underlying benchmark interest rate for adjustable-rate loans. We project cash flows
we expect to collect using our historical experience (which includes the effects of natural disasters), such as historical default
rates and severity of loss, based on loan characteristics, such as current LTV ratios, delinquency status, geography, and
borrowers' credit scores. These cash flow estimates incorporate probability of default and severity of losses and are adjusted
for current and forecasted economic conditions, such as current and forecasted interest rates and house price growth rates,
and estimated recoveries from loss mitigation activities, credit enhancements that are not freestanding contracts, and
disposition of collateral, less estimated disposition costs.
Our estimate of expected credit losses is sensitive to changes in forecasted house price growth rates, which affect both the
probability of default and severity of expected credit losses, and changes in forecasted interest rates, as declining (increasing)
interest rates typically result in higher (lower) expected prepayments and a shorter (longer) estimated loan life, and therefore
lower (higher) expected credit losses. Our forecast of house price growth rates leverages an internally based model and uses a
nationwide house price growth forecast for the next three years. A Monte Carlo simulation generates many possible house
price scenarios for up to 40 years for each MSA. These scenarios are used to estimate loan-level expected future cash flows
and credit losses based on each loan’s individual characteristics. Our forecast of interest rates incorporates various interest
rate scenarios over the remaining contractual life of the loan based on current interest rates and implied market volatilities.
These projections require significant management judgment. We rely on third parties to provide certain model inputs used in
our projections. At loan delivery, the seller provides us with loan data, which includes borrower and loan characteristics and
underwriting information. Each subsequent month, the servicers provide us with monthly loan-level servicing data, including
delinquency and loss information.
We review the outputs of our model by considering qualitative factors such as current economic events and other external
factors to determine whether the model outputs are consistent with our expectations. Further management adjustments may be
necessary to take into consideration the qualitative factors that have occurred but that are not yet reflected in the factors used
to derive the model outputs or the uncertainty inherent in our projections. Significant judgment is exercised in making these
adjustments.
Credit enhancements that are not freestanding contracts are obtained contemporaneously with, and in contemplation of, the
origination of a financial instrument, and effectively travel with the financial instrument upon sale. Credit enhancements that are
not freestanding contracts include primary mortgage insurance, which provides us with loan-level protection up to a specified
percentage.
Expected recoveries from credit enhancements that are not freestanding contracts are considered in determining the allowance
for loan losses as discussed above, resulting in a reduction in the recognized provision for credit losses by the amount of the
expected recoveries. Subsequent to foreclosure and charge-off of the allowance for credit losses, we reclassify expected
recoveries from credit enhancements that were not freestanding contracts and were previously offset against the allowance for
credit losses as separate receivables. We do not consider potential recoveries from freestanding credit enhancement contracts
when measuring our allowance for credit losses.
Multifamily
We estimate the allowance for credit losses for multifamily loans using a loss-rate method to estimate the net amount of cash
flows we expect to collect over the loan's remaining contractual terms, adjusted for expectations of prepayments. As a result,
we do not revert to historical loss information for multifamily loans. The loss-rate method is based on a probability of default
and loss given default framework that estimates credit losses by considering a loan’s underlying characteristics, our historical
experience (which includes the effects of natural disasters), and current and forecasted economic conditions. Loan
characteristics considered by our model include vintage, loan term, current DSCR, current NOI, current LTV ratio, interest rate
type, underlying property type, and property location. We simulate multiple forecast paths of economic variables, property
values, and NOI over the loan's remaining contractual life. We also consider as model inputs expected prepayments and
expected recoveries from credit enhancements that are not freestanding contracts.
Our loss rates incorporate our own historical loan performance data, along with published historical commercial loan
performance data where our data might be limited. Except for cases of fraud and certain other types of borrower defaults, most
multifamily loans are nonrecourse to the borrower. As a result, the cash flows of the underlying property (including any credit
enhancements that are not freestanding contracts) serve as the primary source of funds for repayment of the loan. For loans
where we determined that the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided
substantially through the operation or sale of the collateral, we measure the allowance for credit losses using the fair value of
the underlying collateral, less estimated costs to sell, adjusted for estimated proceeds from credit enhancements that are not
freestanding contracts. Factors considered by management in determining whether a borrower is experiencing financial
difficulty include the borrower’s current payment status and an evaluation of the underlying property's operating performance
as represented by its current DSCR, its available credit enhancements, the current LTV ratio, the management of the underlying
property, and the property's geographic location.
Financial Statements
Notes to Consolidated Financial Statements | Note 6
FREDDIE MAC | 2024 Form 10-K
167
We review the outputs of our model considering qualitative factors such as current economic events and other factors not
considered within the model to determine whether the model outputs are consistent with our expectations. Further
management adjustments may be necessary to take into consideration the qualitative factors that have occurred but that are
not yet reflected in the factors used to derive the model outputs or the uncertainty inherent in our projections. Significant
judgment is exercised in making these adjustments.
Advances of Pre-foreclosure Costs
We may incur expenses related to a mortgage loan subsequent to its original acquisition but prior to foreclosure (pre-
foreclosure costs). These expenses are incurred generally to protect or preserve our interest or legal right in or to the property
prior to foreclosure, such as property taxes or homeowner's insurance premiums owed by the borrower. Many of these
expenses are advanced by the servicer and are reimbursable from the borrower. If the borrower ultimately defaults, we
reimburse the servicer for the advances it has made. Upon advance by the servicer, we recognize a receivable for the amounts
due from the borrower and a payable for amounts due to the servicer. We recognize an allowance for credit losses for amounts
that we do not ultimately expect to collect from the borrower.
Off-Balance Sheet Credit Exposures
We recognize an allowance for credit losses on off-balance sheet credit exposures for our guarantees that are not measured at
fair value and other off-balance sheet arrangements based on expected credit losses over the contractual period in which we
are exposed to credit risk through a present contractual obligation to extend credit, unless that obligation is unconditionally
cancellable by us. We include this allowance for credit losses on off-balance sheet credit exposures within other liabilities on
our consolidated balance sheets, with changes recognized through provision or benefit for credit losses on our consolidated
statements of income.
Our methodologies for estimating the allowance for credit losses on off-balance sheet credit exposures for our Single-Family
and Multifamily guarantees are generally consistent with our methodologies for estimating the allowance for credit losses for
single-family mortgage loans and multifamily mortgage loans, respectively.
We obtain credit enhancements for certain of our guarantees through the creation of unguaranteed subordinated securities
issued by nonconsolidated securitization trusts that absorb first losses prior to us having to perform on our guarantee of the
senior securities. We consider the effect of subordination and other credit enhancements that are not freestanding contracts
when measuring the allowance for credit losses on off-balance sheet credit exposures and, as a result, recognize such an
allowance only if expected credit losses exceed the remaining amount of subordination. For many of our guarantees, expected
credit losses do not exceed the remaining amount of subordination. We have not recorded an allowance for credit losses on
our guarantees of Fannie Mae securities due to the support provided to Fannie Mae by the U.S. government, the importance of
Fannie Mae to the liquidity and stability of the U.S. housing market, and the long history of zero credit losses on Fannie Mae
securities.
Financial Statements
Notes to Consolidated Financial Statements | Note 6
FREDDIE MAC | 2024 Form 10-K
168
NOTE 7
Investment Securities
The table below summarizes the fair values of our investments in debt securities by classification.
Table 7.1 - Investment Securities
(In millions)
December 31, 2024
December 31, 2023
Trading securities
$51,872
$38,385
Available-for-sale securities
3,899
4,890
Total fair value of investment securities
$55,771
$43,275
We currently classify and account for our securities as either available-for-sale or trading. Securities classified as trading are
reported at fair value with changes in fair value included in investment gains, net, in our consolidated statements of income.
Securities classified as available-for-sale are reported at fair value with changes in fair value included in AOCI, net of taxes. See
Note 16 for additional information on how we determine the fair value of securities.
We record purchases and sales of non-mortgage-related securities on the trade date. We record purchases and sales of
mortgage-related securities on the expected settlement date, with a corresponding derivative recorded on the trade date.
We recognize interest income using the effective interest method, which considers the contractual terms of the security.
Deferred items, including premiums, discounts, and other basis adjustments, are amortized into interest income over the
contractual lives of the securities.
We recognize interest income using the prospective effective interest method for securities that can contractually be prepaid or
otherwise settled in such a way that we may not recover substantially all of our recorded investment. Under this method, we
recognize as interest income, over the expected life of the securities, the excess of the cash flows expected to be collected
over the securities' carrying value. We update our estimates of expected cash flows periodically and recognize changes in the
calculated effective interest rate on a prospective basis.
We classify the cash flows related to both available-for-sale and trading securities as investing activities because we hold these
securities for investment purposes. In cases where the transfer of a security represents a secured borrowing, we classify the
related cash flows as financing activities.
Trading Securities
The table below presents the fair values of our trading securities by major security type. Our non-mortgage-related securities
primarily consist of investments in U.S. Treasury securities.
Table 7.2 - Trading Securities
(In millions)
December 31, 2024
December 31, 2023
Mortgage-related securities
$9,158
$8,113
Non-mortgage-related securities
42,714
30,272
Total fair value of trading securities
$51,872
$38,385
The table below provides details of our net trading gains (losses) recognized during the periods presented.
Table 7.3 - Net Trading Gains (Losses)
Year Ended December 31,
(In millions)
2024
2023
2022
Net trading gains (losses)
$256
$440
($3,531)
Less: Net trading gains (losses) on securities sold
38
105
(1,685)
Net trading gains (losses) related to securities still held at period end
$218
$335
($1,846)
Financial Statements
Notes to Consolidated Financial Statements | Note 7
FREDDIE MAC | 2024 Form 10-K
169
Available-for-Sale Securities
At both December 31, 2024 and December 31, 2023, all available-for-sale securities were mortgage-related securities.
The table below provides details of the securities classified as available-for-sale on our consolidated balance sheets.
Table 7.4 - Available-for-Sale Securities
December 31, 2024
Amortized
Cost
Basis
Gross Unrealized
Gains in Other
Comprehensive
Income
Gross Unrealized
Losses in Other
Comprehensive
Income
Fair Value
Accrued Interest
Receivable
(In millions)
Agency mortgage-related securities
$3,528
$4
($100)
$3,432
$7
Other mortgage-related securities
287
194
(14)
467
3
Total available-for-sale securities
$3,815
$198
($114)
$3,899
$10
December 31, 2023
Amortized
Cost
Basis
Gross Unrealized
Gains in Other
Comprehensive
Income
Gross Unrealized
Losses in Other
Comprehensive
Income
Fair Value
Accrued Interest
Receivable
(In millions)
Agency mortgage-related securities
$4,467
$13
($110)
$4,370
$10
Other mortgage-related securities
340
188
(8)
520
3
Total available-for-sale securities
$4,807
$201
($118)
$4,890
$13
The fair value of our available-for-sale securities held at December 31, 2024 scheduled to contractually mature after ten years
was $1.3 billion, with an additional $1.4 billion scheduled to contractually mature after five years through ten years.
The table below presents available-for-sale securities in a gross unrealized loss position and whether such securities have been
in an unrealized loss position for less than 12 months, or 12 months or greater.
Table 7.5 - Available-for-Sale Securities in a Gross Unrealized Loss Position
December 31, 2024
Less than 12 Months
12 Months or Greater
(In millions)
Fair Value
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
Agency mortgage-related securities
$448
($6)
$2,198
($95)
Other mortgage-related securities
33
—
31
(13)
Total available-for-sale securities in a gross unrealized loss position
$481
($6)
$2,229
($108)
December 31, 2023
Less than 12 Months
12 Months or Greater
(In millions)
Fair Value
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
Agency mortgage-related securities
$374
($1)
$3,006
($108)
Other mortgage-related securities
23
(4)
23
(5)
Total available-for-sale securities in a gross unrealized loss position
$397
($5)
$3,029
($113)
At December 31, 2024, the gross unrealized losses relate to 146 securities.
Gains and losses on the sale of securities are included in investment gains, net, including those gains (losses) reclassified into
earnings from AOCI. We use the specific identification method for determining the cost basis of a security in computing the
gain or loss.
Financial Statements
Notes to Consolidated Financial Statements | Note 7
FREDDIE MAC | 2024 Form 10-K
170
The table below summarizes the total proceeds, gross realized gains, and gross realized losses from sales of available-for-sale
securities.
Table 7.6 - Total Proceeds, Gross Realized Gains and Gross Realized Losses from Sales of Available-for-Sale Securities
Year Ended December 31,
(In millions)
2024
2023
2022
Gross realized gains
$9
$9
$34
Gross realized losses
(13)
(183)
(10)
Net realized gains (losses)
($4)
($174)
$24
Total proceeds
$1,175
$3,164
$1,371
Non-Cash Investing and Financing Activities
During the years ended December 31, 2024, December 31, 2023, and December 31, 2022, we recognized $0.6 billion,
$1.7 billion, and $9.0 billion, respectively, of investments in securities in exchange for the issuance of debt of consolidated
trusts through partial sales of commingled single-class resecuritization products that were previously consolidated.
During the years ended December 31, 2024, December 31, 2023, and December 31, 2022, we derecognized $3.4 billion,
$4.8 billion, and $13.3 billion respectively, of mortgage-related securities and debt of consolidated trusts where we were no
longer deemed the primary beneficiary.
Financial Statements
Notes to Consolidated Financial Statements | Note 7
FREDDIE MAC | 2024 Form 10-K
171
NOTE 8
Debt
The table below summarizes the balances of total debt on our consolidated balance sheets.
Table 8.1 - Total Debt
December 31,
(In millions)
2024
2023
Debt of consolidated trusts
$3,122,941
$3,041,927
Debt of Freddie Mac:
Short-term debt
14,675
5,976
Long-term debt
167,333
160,443
Total debt of Freddie Mac
182,008
166,419
Total debt
$3,304,949
$3,208,346
Debt securities that we issue are classified as either debt of consolidated trusts held by third parties or debt of Freddie Mac.
We issue debt of Freddie Mac to fund our operations.
Our debt is reported at amortized cost, with the exception of certain debt for which we elected the fair value option. Deferred
items, including premiums, discounts, issuance costs, and hedge accounting-related basis adjustments, are reported as a
component of total debt. These items are amortized and reported through interest expense using the effective interest method
over the contractual life of the related indebtedness. Amortization of premiums, discounts, and issuance costs begins at the
time of debt issuance. Amortization of hedge accounting-related basis adjustments begins upon the discontinuation of the
related hedge relationship.
We elected the fair value option on debt that contains embedded derivatives and certain other debt issuances. Changes in the
fair value of these debt obligations are recorded in investment gains, net, with any upfront costs and fees incurred or received
in exchange for the issuance of the debt being recognized in earnings as incurred and not deferred. Related interest expense
continues to be reported as interest expense based on the stated terms of the debt securities. For additional information on our
election of the fair value option, see Note 16.
When we repurchase or call outstanding debt securities, we recognize the difference between the amount paid to redeem the
debt security and the carrying value in earnings as a component of investment gains, net. Contemporaneous transfers of cash
between us and a creditor in connection with the issuance of a new debt security and satisfaction of an existing debt security
are accounted for as either an extinguishment or a modification of an existing debt security. If the debt securities have
substantially different terms, the transaction is accounted for as an extinguishment of the existing debt security. The issuance
of a new debt security is recorded at fair value, fees paid to the creditor are expensed as incurred, and fees paid to third parties
are deferred and amortized into interest expense over the life of the new debt security using the effective interest method. If the
terms of the existing debt security and the new debt security are not substantially different, the transaction is accounted for as
a modification of the existing debt. Fees paid to the creditor are deferred and amortized into interest expense over the life of the
modified debt security using the effective interest method and fees paid to third parties are expensed as incurred.
We also engage in transactions whereby we enter into an agreement to sell and subsequently repurchase (or purchase and
subsequently resell) agency securities. When these transactions involve securities issued by consolidated entities, they are
treated as issuances and extinguishments of debt.
The Purchase Agreement limits the par value of our aggregate indebtedness, which may restrict the amount of debt we are
allowed to issue to fund our operations. See Note 2 for information regarding restrictions on the amount of our indebtedness
under the Purchase Agreement.
Debt of Consolidated Trusts
Debt of consolidated trusts held by third parties represent our liability to third parties that hold beneficial interests in our
consolidated trusts. Debt of consolidated trusts held by third parties are subject to prepayment risk as their payments are
based upon the performance of the underlying mortgage loans that may be prepaid by the related mortgage borrower at any
time generally without penalty.
Financial Statements
Notes to Consolidated Financial Statements | Note 8
FREDDIE MAC | 2024 Form 10-K
172
The table below summarizes the debt of consolidated trusts based on underlying loan product type.
Table 8.2 - Debt of Consolidated Trusts
December 31, 2024
December 31, 2023
(Dollars in millions)
Contractual
Maturity
UPB
Carrying
Amount(1)
Weighted
Average
Coupon(2)
Contractual
Maturity
UPB
Carrying
Amount(1)
Weighted
Average
Coupon(2)
Single-Family:
20-and 30-year or more, fixed-rate
2025 - 2061 $2,701,936 $2,736,057
3.34 %
2024 - 2061 $2,603,100 $2,640,550
3.06 %
15-year or less, fixed-rate
2025 - 2040
291,054
294,875
2.30
2024 - 2039
326,242
331,291
2.20
Adjustable-rate and other
2025 - 2055
22,861
23,224
4.42
2024 - 2054
23,251
23,749
3.93
Total Single-Family
3,015,851 3,054,156
2,952,593 2,995,590
Multifamily
2025 - 2054
70,130
68,785
3.58
2024 - 2053
47,300
46,337
3.35
Total debt of consolidated trusts
$3,085,981 $3,122,941
$2,999,893 $3,041,927
(1)
Includes $2.0 billion and $2.1 billion at December 31, 2024 and December 31, 2023, respectively, of debt of consolidated trusts that represents the fair value of debt
for which the fair value option was elected.
(2)
The effective interest rate for debt of consolidated trusts was 3.01% and 2.73% as of December 31, 2024 and December 31, 2023, respectively.
Short-Term Debt
The table below summarizes the balances and effective interest rates for our short-term debt (debt with original maturities of
one year or less).
Table 8.3 - Short-Term Debt
Year Ended December 31,
(Dollars in millions)
2024
2023
Par value
$14,716
$6,032
Carrying amount
14,675
5,976
Weighted average effective rate
4.59 %
5.39 %
Long-Term Debt
The table below summarizes our long-term debt.
Table 8.4 - Long-Term Debt
December 31, 2024
December 31, 2023
(Dollars in millions)
Contractual
Maturity
Par Value
Carrying
Amount(1)
Weighted
Average
Effective
Rate(2)
Contractual
Maturity
Par Value
Carrying
Amount(1)
Weighted
Average
Effective
Rate(2)
Fixed-rate(3)
2025 - 2054 $130,965 $126,815
3.09 %
2024 - 2050 $159,079 $153,176
3.12 %
Variable-rate(4)
2025 - 2034
35,906
35,893
5.16
2024 - 2028
1,916
1,908
4.89
Zero-coupon
2025 - 2039
4,748
3,254
6.22
2024 - 2039
4,836
3,149
6.17
Other(5)
2025 - 2053
1,324
1,371
10.90
2024 - 2053
2,177
2,210
10.93
Total long-term debt
$172,943 $167,333
3.65 %
$168,008 $160,443
3.30 %
(1)
Represents par value, net of associated discounts or premiums and issuance costs. Includes $0.3 billion and $0.4 billion at December 31, 2024 and December 31,
2023, respectively, of long-term debt that represents the fair value of debt for which the fair value option was elected. Includes hedge-related basis adjustments.
(2)
Based on carrying amount. Excludes hedge-related basis adjustments.
(3)
Includes $112.6 billion and $139.3 billion of callable debt as of December 31, 2024 and December 31, 2023, respectively.
(4)
Includes $1.3 billion and $1.9 billion of callable debt as of December 31, 2024 and December 31, 2023, respectively.
(5)
Includes STACR, SCR debt notes, and IO debt.
A portion of our long-term debt is callable. Callable debt gives us the option to redeem the debt security at par on one or more
specified call dates or at any time on or after a specified call date.
Financial Statements
Notes to Consolidated Financial Statements | Note 8
FREDDIE MAC | 2024 Form 10-K
173
The table below summarizes contractual maturities of long-term debt securities at December 31, 2024.
Table 8.5 - Contractual Maturities of Long-Term Debt(1)
(In millions)
Par Value
2025
$48,235
2026
45,007
2027
20,068
2028
8,307
2029
28,579
Thereafter
21,423
Total
$171,619
(1)
Excludes $1.2 billion of STACR and $0.1 billion of SCR debt notes. Contractual maturities of these debt securities are not presented because they are subject to
prepayment risk, as their payments are based upon the performance of a pool of mortgage assets that may be prepaid by the related mortgage borrowers at any
time generally without penalty.
Financial Statements
Notes to Consolidated Financial Statements | Note 8
FREDDIE MAC | 2024 Form 10-K
174
NOTE 9
Derivatives
We analyze the interest-rate sensitivity of financial assets and liabilities across a variety of interest-rate scenarios based on
market prices, models, and economics. We use derivatives primarily to hedge interest-rate sensitivity mismatches between our
financial assets and liabilities. We principally use interest-rate swaps, purchased or written options (including swaptions), and
exchange-traded futures in our interest-rate risk management activities. We designate certain derivatives as hedging
instruments in qualifying hedge accounting relationships. Interest-rate risk management derivatives that are not designated in
qualifying hedge accounting relationships are economic hedges of financial instruments measured at fair value on a recurring
basis or of other transactions or instruments that expose us to interest-rate risk. When we use derivatives to mitigate our
exposures, we consider a number of factors, including cost, exposure to counterparty credit risk, and our overall risk
management strategy.
We routinely enter into commitments to purchase and sell investments in mortgage-related securities, purchase and sell
mortgage loans, and purchase and extinguish or issue debt of our consolidated trusts. Most of these commitments meet the
definition of a derivative and, therefore, are subject to the accounting guidance for derivatives and hedging. We also enter into
certain types of guarantees that are accounted for as derivatives. These guarantees primarily include our obligation to support
payment of the interest due on the notes issued by VIEs used in certain CRT transactions.
We evaluate whether financial instruments that we purchase or issue contain embedded derivatives. We generally elect to
measure newly acquired or issued financial instruments that contain embedded derivatives at fair value, with changes in fair
value recorded in earnings.
On our consolidated statements of cash flows, cash flows related to derivatives are classified as either operating activities (such
as periodic settlements of interest payments) or investing activities (such as variation margin payments and cash flows related
to the acquisition and termination of derivatives) depending on the nature of the activity. Cash flows related to physical
settlement of forward commitments accounted for as derivative instruments are classified as operating, investing, or financing
activities depending on the financial instruments to which they relate.
Derivative Assets and Liabilities at Fair Value
Derivatives are reported at their fair value on our consolidated balance sheets. Derivatives in a net asset position, including net
derivative interest receivable or payable, are reported as derivative assets, net, which is included in other assets on our
consolidated balance sheets. Similarly, derivatives in a net liability position, including net derivative interest receivable or
payable, are reported as derivative liabilities, net, which is included in other liabilities on our consolidated balance sheets.
Financial Statements
Notes to Consolidated Financial Statements | Note 9
FREDDIE MAC | 2024 Form 10-K
175
The table below presents the notional value and fair value of derivatives reported on our consolidated balance sheets.
Table 9.1 - Derivative Assets and Liabilities at Fair Value
December 31, 2024
December 31, 2023
Notional or
Contractual
Amount
Derivative
Assets
Derivative
Liabilities
Notional or
Contractual
Amount
Derivative
Assets
Derivative
Liabilities
(In millions)
Not designated as hedges
Interest-rate risk management derivatives:
Swaps
$382,761
$1,512
($340)
$351,193
$1,638
($462)
Written options
33,117
—
(1,826)
48,227
—
(1,746)
Purchased options(1)
126,750
4,649
—
89,790
4,251
—
Futures
165,894
—
—
132,982
—
—
Total interest-rate risk management derivatives
708,522
6,161
(2,166)
622,192
5,889
(2,208)
Mortgage commitment derivatives
37,407
26
(40)
26,911
43
(10)
CRT-related derivatives(2)
28,962
—
(186)
30,578
—
(228)
Other
20,505
94
(695)
14,572
3
(567)
Total derivatives not designated as hedges
795,396
6,281
(3,087)
694,253
5,935
(3,013)
Designated as fair value hedges
Interest-rate risk management derivatives:
Swaps
159,086
209
(4,149)
172,202
276
(5,658)
Total derivatives designated as fair value hedges
159,086
209
(4,149)
172,202
276
(5,658)
Receivables (payables)
91
—
17
(36)
Netting adjustments(3)
(6,080)
6,282
(5,742)
7,834
Total derivative portfolio, net
$954,482
$501
($954)
$866,455
$486
($873)
(1)
Includes swaptions on credit indices with a notional or contractual amount of $6.8 billion and $6.4 billion at December 31, 2024 and December 31, 2023,
respectively, and a fair value of $1.0 million at both December 31, 2024 and December 31, 2023.
(2)
Includes derivative instruments related to CRT transactions that are considered freestanding credit enhancements.
(3)
Represents counterparty netting and cash collateral netting.
Derivative Counterparty Credit Risk
Cleared derivatives refer to interest-rate swaps that the U.S. Commodity Futures Trading Commission has determined are
subject to the central clearing requirement of the Dodd-Frank Act. Exchange-traded derivatives refer to standardized interest-
rate futures contracts and options on futures contracts. OTC derivatives refer to those derivatives that are bilaterally negotiated
with counterparties and settled with those counterparties.
Our use of cleared derivatives, exchange-traded derivatives, and OTC derivatives exposes us to counterparty credit risk in the
event our counterparties fail to meet their contractual obligations. We are required to post margin in connection with our
derivatives transactions. The use of cleared and exchange-traded derivatives decreases our credit risk exposure to individual
counterparties because a central counterparty is substituted for individual counterparties. OTC derivatives expose us to the
credit risk of individual counterparties because transactions are executed and settled between us and each counterparty,
exposing us to potential losses if a counterparty fails to meet its obligations.
Our use of interest-rate swaps and option-based derivatives is subject to internal credit and legal reviews. On an ongoing basis,
we review the credit fundamentals of all of our derivative counterparties, clearinghouses, and clearing members to confirm that
they continue to meet our internal risk management standards.
The majority of our interest-rate swaps are subject to the central clearing requirement. Changes in the value of open exchange-
traded contracts and cleared derivatives are settled daily via payments made through the clearinghouse. We net our exposure
to cleared derivatives by clearinghouse and clearing member. A downgrade in our credit ratings could cause the clearing
members we use for our cleared and exchange-traded derivatives to demand additional collateral.
Many of our transactions involving forward purchase and sale commitments of mortgage-related securities utilize the MBSD/
FICC as a clearinghouse. As a clearing member of the clearinghouse, we post margin to the MBSD/FICC and are exposed to
the counterparty credit risk of the organization (including its clearing members). In the event a clearing member fails and causes
losses to the MBSD/FICC clearing system, we could be subject to loss, as members are generally required to cover losses
caused by defaulting members on a pro rata basis. It is difficult to estimate our maximum exposure under these transactions,
as this would require an assessment of transactions that we and other members of the MBSD/FICC may execute in the future.
Financial Statements
Notes to Consolidated Financial Statements | Note 9
FREDDIE MAC | 2024 Form 10-K
176
We use master netting and collateral agreements to reduce our credit risk exposure to our OTC derivative counterparties for
interest-rate swap and option-based derivatives. Master netting agreements provide for the netting of amounts receivable and
payable from an individual counterparty, as well as posting of collateral in the form of cash, Treasury securities or agency
mortgage-related or debt securities, or a combination of both by either the counterparty or us, depending on which party is in a
liability position. On a daily basis, the market value of each counterparty's derivatives outstanding is calculated to determine the
amount of our net credit exposure, which is equal to the market value of derivatives in a net gain position by counterparty after
giving consideration to collateral posted. In the event a counterparty defaults on its obligations under the derivatives agreement
and the default is not remedied in the manner prescribed in the agreement, we have the right under the agreement to sell the
collateral. As a result, our use of master netting and collateral agreements reduces our exposure to our counterparties in the
event of default. We offset fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash
collateral against fair value amounts recognized for derivative instruments executed with the same counterparty under a master
netting agreement. Non-cash collateral held is not recognized on our consolidated balance sheets as we do not obtain effective
control over the collateral, and non-cash collateral posted is not derecognized from our consolidated balance sheets as we do
not relinquish effective control over the collateral. Therefore, non-cash collateral held or posted is not presented as an offset
against derivative assets or derivative liabilities on our consolidated balance sheets. See Note 10 for additional information on
our collateralized arrangements. Although it is our practice not to repledge assets held as collateral, these agreements may
allow us or our counterparties to repledge all or a portion of the collateral.
A significant majority of our net uncollateralized exposure to OTC derivative counterparties is concentrated with three
counterparties, all of which were investment grade as of December 31, 2024. We regularly review the market value of securities
pledged as collateral and derivative counterparty collateral posting thresholds, where applicable, in an effort to manage our
exposure to losses.
For certain OTC derivatives, the amount of collateral we pledge to counterparties related to our derivative instruments is
determined after giving consideration to our credit rating. None of our OTC derivative instruments containing credit-risk related
contingent features, netted by counterparty, were in a liability position at December 31, 2024 or December 31, 2023 and, as a
result, we did not post cash or non-cash collateral in the normal course of business. Therefore, as of both December 31, 2024
and December 31, 2023, a downgrade in our credit ratings would not have required us to post additional collateral to our
counterparties.
The table below presents offsetting and collateral information related to derivatives which are subject to enforceable master
netting agreements or similar arrangements.
Table 9.2 - Offsetting of Derivatives
December 31, 2024
December 31, 2023
Derivative
Assets
Derivative
Liabilities
Derivative
Assets
Derivative
Liabilities
(In millions)
OTC derivatives
$6,360
($6,315)
$6,165
($7,866)
Cleared and exchange-traded derivatives
74
—
13
(36)
Mortgage commitment derivatives
53
(40)
47
(10)
Other
94
(881)
3
(795)
Total derivatives
6,581
(7,236)
6,228
(8,707)
Counterparty netting
(3,906)
3,906
(4,210)
4,210
Cash collateral netting(1)
(2,174)
2,376
(1,532)
3,624
Net amount presented in the consolidated balance sheets
501
(954)
486
(873)
Gross amount not offset in the consolidated balance sheets(2)
(190)
11
(366)
47
Net amount
$311
($943)
$120
($826)
(1)
Excess cash collateral held is presented as a derivative liability, while excess cash collateral posted is presented as a derivative asset.
(2)
Does not include the fair value amount of non-cash collateral posted or held that exceeds the associated net asset or liability, netted by counterparty, presented on
the consolidated balance sheets.
Financial Statements
Notes to Consolidated Financial Statements | Note 9
FREDDIE MAC | 2024 Form 10-K
177
Gains and Losses on Derivatives
The table below presents the gains and losses on derivatives not designated in qualifying hedge relationships. These amounts
are reported on our consolidated statements of income as investment gains, net.
Table 9.3 - Gains and Losses on Derivatives
Year Ended December 31,
(In millions)
2024
2023
2022
Interest-rate risk management derivatives:
Swaps
$514
$359
$970
Written options
(134)
170
(903)
Purchased options
452
(335)
1,794
Futures
556
197
2,249
Total interest-rate risk management derivatives fair value gains (losses)
1,388
391
4,110
Mortgage commitment derivatives
103
17
2,743
CRT-related derivatives(1)
75
(176)
(172)
Other
(134)
11
(225)
Total derivatives not designated as hedges fair value gains (losses)
$1,432
$243
$6,456
(1)
Includes derivative instruments related to CRT transactions that are considered freestanding credit enhancements.
Hedge Accounting
We apply fair value hedge accounting to certain single-family mortgage loans where we hedge the changes in fair value of
these loans attributable to the designated benchmark interest rate, using interest-rate swaps. We also apply fair value hedge
accounting to certain issuances of debt where we hedge the changes in fair value of the debt attributable to the designated
benchmark interest rate, using interest-rate swaps. Under the portfolio layer method fair value hedge accounting strategy, we
hedge the changes in fair value of a portion of a closed pool of single-family mortgage loans that is not expected to be affected
by prepayments, defaults, and other events affecting the timing and amount of cash flows. As part of this strategy, we have
also elected to measure the change in fair value of the hedged item on the basis of the benchmark rate component of the
contractual coupon cash flows determined at the hedge inception and by assuming the hedged item has a term that reflects
only the designated cash flows being hedged.
We apply hedge accounting to qualifying hedge relationships. A qualifying hedge relationship exists when changes in the fair
value of a derivative hedging instrument are expected to be highly effective in offsetting changes in the fair value of the hedged
item attributable to the risk being hedged during the term of the hedge relationship. No amounts have been excluded from the
assessment of hedge effectiveness. To assess hedge effectiveness, we use a statistical regression analysis.
At inception of the hedge relationship, we prepare formal contemporaneous documentation of our risk management objective
and strategies for undertaking the hedge.
If a hedge relationship qualifies for fair value hedge accounting, all changes in fair value of the derivative hedging instrument,
including interest accruals, are recognized in the same consolidated statements of income line item used to present the
earnings effect of the hedged item. Therefore, changes in the fair value of the hedged item, mortgage loans and debt,
attributable to the risk being hedged are recognized in interest income and interest expense, respectively, along with the
changes in the fair value of the respective derivative hedging instruments.
Changes in the fair value of the hedged item attributable to the risk being hedged are recognized as a cumulative basis
adjustment against the mortgage loans and debt. The cumulative basis adjustments are amortized to the same consolidated
statements of income line item used to present the changes in fair value of the hedged item using the effective interest method
considering the contractual terms of the hedged item, with amortization beginning no later than the period in which hedge
accounting was discontinued.
Financial Statements
Notes to Consolidated Financial Statements | Note 9
FREDDIE MAC | 2024 Form 10-K
178
The table below presents the effects of fair value hedge accounting by consolidated statements of income line item, including
the gains and losses on derivatives and hedged items designated in qualifying hedge relationships and other components due
to the application of hedge accounting.
Table 9.4 - Gains and Losses on Fair Value Hedges
Year Ended December 31,
2024
2023
2022
(In millions)
Interest
Income
Interest
Expense
Interest
Income
Interest
Expense
Interest
Income
Interest
Expense
Total amounts of income and expense line items
presented in our consolidated statements of income in
which the effects of fair value hedges are recorded:
$117,877
($98,140)
$105,363
($86,821)
$83,458
($65,453)
Interest contracts on mortgage loans held-for-
investment:
Gain (loss) on fair value hedging relationships:
Hedged items
(1,857)
—
671
—
(5,817)
—
Derivatives designated as hedging instruments
1,650
—
(854)
—
5,000
—
Interest accruals on hedging instruments
874
—
948
—
(294)
—
Discontinued hedge related basis adjustments
amortization
202
—
198
—
(79)
—
Interest contracts on debt:
Gain (loss) on fair value hedging relationships:
Hedged items
—
(1,816)
—
(3,080)
—
7,130
Derivatives designated as hedging instruments
—
1,831
—
3,084
—
(7,267)
Interest accruals on hedging instruments
—
(3,261)
—
(4,065)
—
(1,053)
Discontinued hedge related basis adjustment
amortization
—
(8)
—
(377)
—
(8)
Total impact of fair value hedge accounting
$869
($3,254)
$963
($4,438)
($1,190)
($1,198)
The table below presents the cumulative basis adjustments and the carrying amounts of the hedged item by its respective
balance sheet line item.
Table 9.5 - Cumulative Basis Adjustments Due to Fair Value Hedging
December 31, 2024
Carrying
Amount
Assets /
(Liabilities)
Cumulative Amount of Fair Value Hedging Basis
Adjustment Included in the Carrying Amount
Closed Portfolio Under the
Portfolio Layer Method
(In millions)
Total
Under the
Portfolio Layer
Method
Discontinued -
Hedge Related
Total Amount
by Amortized
Cost Basis
Designated
Amount by
UPB
Mortgage loans held-for-investment
$1,117,060
($3,909)
($695)
($3,214)
$56,394
$12,070
Debt
(107,241)
4,050
—
19
—
—
December 31, 2023
Carrying
Amount
Assets /
(Liabilities)
Cumulative Amount of Fair Value Hedging Basis
Adjustment Included in the Carrying Amount
Closed Portfolio Under the
Portfolio Layer Method
(In millions)
Total
Under the
Portfolio Layer
Method
Discontinued -
Hedge Related
Total Amount
by Amortized
Cost Basis
Designated
Amount by
UPB
Mortgage loans held-for-investment
$1,115,454
($2,253)
($220)
($2,033)
$59,786
$11,670
Mortgage loans held-for-sale
128
1
—
1
—
—
Debt
(143,407)
5,821
—
29
—
—
Financial Statements
Notes to Consolidated Financial Statements | Note 9
FREDDIE MAC | 2024 Form 10-K
179
NOTE 10
Collateralized Agreements
Securities Purchased Under Agreements to Resell and Securities Sold
Under Agreements to Repurchase
As an investor, we enter into arrangements to purchase securities under agreements to subsequently resell the identical or
substantially the same securities to our counterparty. Our counterparties to these transactions are required to pledge the
purchased securities as collateral for their obligation to repurchase those securities at a later date. While such transactions
involve the legal transfer of securities, they are accounted for as secured financings because the transferor does not relinquish
effective control over the securities transferred. These agreements may allow us to repledge all, or a portion, of the collateral
pledged to us, and we may repledge such collateral periodically, although it is not typically our practice to repledge collateral
that has been pledged to us.
We consider the types of securities being pledged to us as collateral when determining how much we lend in transactions
involving securities purchased under agreements to resell. Additionally, we regularly review the market values of these
securities compared to amounts loaned in an effort to manage our exposure to losses and we reasonably expect the borrower
to continue to replenish the collateral to meet the requirements of the contract. As of December 31, 2024, all of our securities
purchased under agreements to resell were fully collateralized.
We utilize the GSD/FICC as a clearinghouse to transact many of our trades involving securities purchased under agreements to
resell, securities sold under agreements to repurchase, and other non-mortgage related securities. As a clearing member of
GSD/FICC, we are required to post initial and variation margin payments and are exposed to the counterparty credit risk of
GSD/FICC (including its clearing members). In the event a clearing member fails and causes losses to the GSD/FICC clearing
system, we could be subject to the loss of the margin that we have posted to the GSD/FICC. Moreover, our exposure could
exceed that amount, as members are generally required to cover losses caused by defaulting members on a pro rata basis. It is
difficult to estimate our maximum exposure under these transactions, as this would require an assessment of transactions that
we and other members of the GSD/FICC may execute in the future.
We provide financing to investors in Freddie Mac securities to increase liquidity and expand the investor base for those
securities. These transactions differ from the securities purchased under agreements to resell that we use for liquidity purposes
as the counterparties we face may not be major financial institutions and we are exposed to greater counterparty credit risk for
these institutions. As of December 31, 2024 and December 31, 2023, $2.8 billion and $1.1 billion, respectively, of our securities
purchased under agreements to resell were used to provide financing to investors in Freddie Mac securities.
Securities sold under agreements to repurchase are effectively collateralized borrowings where we sell securities with an
agreement to repurchase such securities at a future date. We are required to pledge the sold securities to the counterparties to
these transactions as collateral for our obligation to repurchase these securities at a later date. Similar to the securities
purchased under agreements to resell transactions, these transactions involve the legal transfer of securities. However, they are
accounted for as secured financings because the transferor does not relinquish effective control over the securities transferred.
These agreements may allow our counterparties to repledge all or a portion of the collateral.
We offset payables related to securities sold under agreements to repurchase against receivables related to securities
purchased under agreements to resell when such amounts meet the conditions for balance sheet offsetting. The table below
presents offsetting and collateral information related to securities purchased under agreements to resell, and securities sold
under agreements to repurchase which are subject to enforceable master netting agreements or similar arrangements.
Financial Statements
Notes to Consolidated Financial Statements | Note 10
FREDDIE MAC | 2024 Form 10-K
180
Table 10.1 - Offsetting and Collateral Information of Certain Financial Assets and Liabilities
December 31, 2024
December 31, 2023
Assets
Liabilities
Assets
Liabilities
(In millions)
Securities
purchased under
agreements to
resell
Securities sold
under
agreements to
repurchase
Securities
purchased under
agreements to
resell
Securities sold
under
agreements to
repurchase
Gross amount recognized
$108,338
($8,220)
$105,393
($10,245)
Amount offset in the consolidated balance sheets
(8,220)
8,220
(10,245)
10,245
Net amount presented in the consolidated balance sheets
100,118
—
95,148
—
Gross amount not offset in the consolidated balance sheets(1)
(100,118)
—
(95,148)
—
Net amount
$—
$—
$—
$—
(1)
For securities purchased under agreements to resell, includes $104.9 billion and $104.2 billion of collateral that we had the right to repledge as of December 31,
2024 and December 31, 2023, respectively. We did not repledge collateral at December 31, 2024 and we repledged $0.4 billion of collateral at December 31, 2023.
The table below presents the remaining contractual maturity of our gross obligations for our securities sold under agreements
to repurchase. The collateral for such obligations consisted primarily of U.S. Treasury securities.
Table 10.2 - Remaining Contractual Maturity
December 31,
(In millions)
2024
2023
Overnight and continuous
$—
$—
30 days or less
8,220
10,245
After 30 days through 90 days
—
—
Greater than 90 days
—
—
Total
$8,220
$10,245
Collateral Pledged
The table below summarizes the fair value of the securities pledged as collateral by us for derivatives and collateralized
borrowing transactions, including securities that the secured party may repledge.
Table 10.3 - Collateral in the Form of Securities Pledged
December 31,
(In millions)
2024
2023
Trading securities
$9,559
$7,902
Other assets
—
4,555
Total
$9,559
$12,457
Financial Statements
Notes to Consolidated Financial Statements | Note 10
FREDDIE MAC | 2024 Form 10-K
181
NOTE 11
Stockholders' Equity and Earnings Per Share
Senior Preferred Stock
Pursuant to the Purchase Agreement described in Note 2, we issued one million shares of senior preferred stock to Treasury
on September 8, 2008, in partial consideration of Treasury's commitment to provide funds to us.
Shares of the senior preferred stock have a par value of $1 and have a stated value and initial liquidation preference of
$1 billion, or $1,000 per share. The liquidation preference of the senior preferred stock is subject to adjustment. See Note 2 for
a detailed discussion of the liquidation preference of the senior preferred stock.
Treasury, as the holder of the senior preferred stock, is entitled to receive quarterly cash dividends, when, as, and if declared by
our Board of Directors. The dividends we have paid to Treasury on the senior preferred stock have been declared by, and paid
at the direction of, the Conservator, acting as successor to the rights, titles, powers, and privileges of the Board of Directors.
See Note 2 for additional information concerning our senior preferred stock dividends.
The senior preferred stock is senior to our common stock and all other outstanding series of our preferred stock, as well as any
capital stock we issue in the future, as to both dividends and rights upon liquidation. The senior preferred stock provides that
we may not, at any time, declare or pay dividends on, make distributions with respect to, redeem, purchase or acquire, or make
a liquidation payment with respect to, any common stock or other securities ranking junior to the senior preferred stock unless:
n Full cumulative dividends on the outstanding senior preferred stock (including any unpaid dividends added to the liquidation
preference) have been declared and paid in cash and
n All amounts required to be paid with the net proceeds of any issuance of capital stock for cash (as described below) have
been paid in cash.
Shares of the senior preferred stock are not convertible. Shares of the senior preferred stock have no general or special voting
rights, other than those set forth in the certificate of designation for the senior preferred stock or otherwise required by law. The
consent of holders of at least two-thirds of all outstanding shares of senior preferred stock is generally required to amend the
terms of the senior preferred stock or to create any class or series of stock that ranks prior to or on parity with the senior
preferred stock.
We are not permitted to redeem the senior preferred stock prior to the termination of Treasury's funding commitment set forth
in the Purchase Agreement; however, we are permitted to pay down the liquidation preference of the outstanding shares of
senior preferred stock to the extent of accrued and unpaid dividends previously added to the liquidation preference and not
previously paid down and quarterly commitment fees previously added to the liquidation preference and not previously paid
down. Pursuant to the January 2021 Letter Agreement, we are permitted to issue common stock with aggregate gross
proceeds of up to $70 billion after Treasury's exercise in full of its warrant to acquire 79.9% of our common stock and
resolution of currently pending material litigation related to our conservatorship and the Purchase Agreement, and we are
permitted to use the net proceeds of such issuance(s) to build capital. If we issue any other shares of capital stock for cash
while the senior preferred stock is outstanding, the net proceeds of such issuances must be used to pay down the liquidation
preference of the senior preferred stock; however, the liquidation preference of each share of senior preferred stock may not be
paid down below $1,000 per share prior to the termination of Treasury's funding commitment. Following the termination of
Treasury's funding commitment, we may pay down the liquidation preference of all outstanding shares of senior preferred stock
at any time, in whole or in part. If, after termination of Treasury's funding commitment, we pay down the liquidation preference
of each outstanding share of senior preferred stock in full, the shares will be deemed to have been redeemed as of the payment
date.
Financial Statements
Notes to Consolidated Financial Statements | Note 11
FREDDIE MAC | 2024 Form 10-K
182
The table below provides a summary of our senior preferred stock outstanding at December 31, 2024.
Table 11.1 - Senior Preferred Stock
(In millions, except initial liquidation
preference price per share)
Shares
Authorized
Shares
Outstanding
Total
Par Value
Initial
Liquidation
Preference
Price per Share
Total
Liquidation
Preference
Non-draw Adjustments:
2008
1.00
1.00
$1.00
$1,000
$1,000
2017
—
—
—
N/A
3,000
2019
—
—
—
N/A
3,674
2020
—
—
—
N/A
7,217
2021
—
—
—
N/A
11,420
2022
—
—
—
N/A
9,919
2023
—
—
—
N/A
9,431
2024
—
—
—
N/A
11,729
Total non-draw adjustments
1.00
1.00
1.00
57,390
Draw Adjustments:
2008
—
—
—
N/A
13,800
2009
—
—
—
N/A
36,900
2010
—
—
—
N/A
12,500
2011
—
—
—
N/A
7,971
2012
—
—
—
N/A
165
2018
—
—
—
N/A
312
Total draw adjustments
—
—
—
71,648
Total senior preferred stock
1.00
1.00
$1.00
$129,038
No cash was received from Treasury under the Purchase Agreement in 2024 because we had positive net worth at December
31, 2023, March 31, 2024, June 30, 2024, and September 30, 2024 and, consequently, FHFA did not request a draw on our
behalf in 2024. At December 31, 2024, our assets exceeded our liabilities under GAAP; therefore, no draw is being requested
from Treasury under the Purchase Agreement.
Common Stock Warrant
Pursuant to the Purchase Agreement described in Note 2, on September 7, 2008, we issued a warrant to purchase common
stock to Treasury, in partial consideration of Treasury's commitment to provide funds to us.
The warrant may be exercised in whole or in part at any time on or before September 7, 2028, by delivery to us of a notice of
exercise, payment of the exercise price of $0.00001 per share, and the warrant. If the market price of one share of our common
stock is greater than the exercise price, then, instead of paying the exercise price, Treasury may elect to receive shares equal to
the value of the warrant (or portion thereof being canceled) pursuant to the formula specified in the warrant. Upon exercise of
the warrant, Treasury may assign the right to receive the shares of common stock issuable upon exercise to any other person.
We account for the warrant in permanent equity. At issuance on September 7, 2008, we recognized the warrant at fair value,
and we do not recognize subsequent changes in fair value while the warrant remains classified in equity. We recorded an
aggregate fair value of $2.3 billion for the warrant as a component of additional paid-in-capital. We derived the fair value of the
warrant using a modified Black-Scholes model. If the warrant is exercised, the stated value of the common stock issued will be
reclassified to common stock on our consolidated balance sheets. The warrant was determined to be in-substance non-voting
common stock, because the warrant's exercise price of $0.00001 per share is considered non-substantive (compared to the
market price of our common stock). As a result, the shares associated with the warrant are included in the computation of basic
and diluted earnings per share. The weighted average shares of common stock for the years ended December 31, 2024, 2023,
and 2022 included shares of common stock that would be issuable upon full exercise of the warrant issued to Treasury.
Preferred Stock
We have the option to redeem our preferred stock on specified dates, at their redemption price plus dividends accrued through
the redemption date. However, without the consent of Treasury, we are restricted from making payments to purchase or
redeem preferred stock as well as paying any preferred dividends, other than dividends on the senior preferred stock. All 24
classes of preferred stock are perpetual and non-cumulative, and carry no significant voting rights or rights to purchase
Financial Statements
Notes to Consolidated Financial Statements | Note 11
FREDDIE MAC | 2024 Form 10-K
183
additional Freddie Mac stock or securities. Costs incurred in connection with the issuance of preferred stock are charged to
additional paid-in capital.
The table below provides a summary of our preferred stock outstanding at their redemption values at December 31, 2024.
Table 11.2 - Preferred Stock
(In millions, except
redemption price per share)
Issue Date
Shares
Authorized
Shares
Outstanding
Total
Par Value
Redemption
Price per
Share
Total
Outstanding
Balance
Redeemable
On or After
OTCQB
Symbol
Preferred stock:
1996 Variable-rate(1)(2)
April 26, 1996
5.00
5.00
$5.00
$50.00
$250
June 30, 2001
FMCCI
5.81%
October 27, 1997
3.00
3.00
3.00
50.00
150
October 27, 1998
(3)
5%
March 23, 1998
8.00
8.00
8.00
50.00
400
March 31, 2003
FMCKK
1998 Variable-rate(1)(4)
September 23 and 29, 1998
4.40
4.40
4.40
50.00
220
September 30, 2003
FMCCG
5.10%
September 23, 1998
8.00
8.00
8.00
50.00
400
September 30, 2003
FMCCH
5.30%
October 28, 1998
4.00
4.00
4.00
50.00
200
October 30, 2000
(3)
5.10%
March 19, 1999
3.00
3.00
3.00
50.00
150
March 31, 2004
(3)
5.79%
July 21, 1999
5.00
5.00
5.00
50.00
250
June 30, 2009
FMCCK
1999 Variable-rate(5)
November 5, 1999
5.75
5.75
5.75
50.00
287
December 31, 2004
FMCCL
2001 Variable-rate(6)
January 26, 2001
6.50
6.50
6.50
50.00
325
March 31, 2003
FMCCM
2001 Variable-rate(1)(7)
March 23, 2001
4.60
4.60
4.60
50.00
230
March 31, 2003
FMCCN
5.81%
March 23, 2001
3.45
3.45
3.45
50.00
173
March 31, 2011
FMCCO
6%
May 30, 2001
3.45
3.45
3.45
50.00
173
June 30, 2006
FMCCP
2001 Variable-rate(8)
May 30, 2001
4.02
4.02
4.02
50.00
201
June 30, 2003
FMCCJ
5.70%
October 30, 2001
6.00
6.00
6.00
50.00
300
December 31, 2006
FMCKP
5.81%
January 29, 2002
6.00
6.00
6.00
50.00
300
March 31, 2007
(3)
2006 Variable-rate(1)(9)
July 17, 2006
15.00
15.00
15.00
50.00
750
June 30, 2011
FMCCS
6.42%
July 17, 2006
5.00
5.00
5.00
50.00
250
June 30, 2011
FMCCT
5.90%
October 16, 2006
20.00
20.00
20.00
25.00
500
September 30, 2011
FMCKO
5.57%
January 16, 2007
44.00
44.00
44.00
25.00
1,100
December 31, 2011
FMCKM
5.66%
April 16, 2007
20.00
20.00
20.00
25.00
500
March 31, 2012
FMCKN
6.02%
July 24, 2007
20.00
20.00
20.00
25.00
500
June 30, 2012
FMCKL
6.55%
September 28, 2007
20.00
20.00
20.00
25.00
500
September 30, 2017
FMCKI
2007 Fixed-to-floating
rate(1)(10)
December 4, 2007
240.00
240.00
240.00
25.00
6,000
December 31, 2012
FMCKJ
Total, preferred stock
464.17
464.17
$464.17
$14,109
(1)
On May 11, 2023, we posted fallback information on our legacy LIBOR-indexed securities, including the classes of our Preferred Stock that used either three-month
LIBOR or 12-month LIBOR as their reference rates. Beginning on July 1, 2023, those classes transitioned from three-month LIBOR and 12-month LIBOR to spread-
adjusted three-month CME Term SOFR and spread-adjusted 12-month CME Term SOFR, respectively.
(2)
Dividend rate resets quarterly and is equal to the sum of spread-adjusted three-month CME Term SOFR plus 1% divided by 1.377, and is capped at 9.00%.
(3)
Issued through private placement.
(4)
Dividend rate resets quarterly and is equal to the sum of spread-adjusted three-month CME Term SOFR plus 1% divided by 1.377, and is capped at 7.50%.
(5)
Dividend rate resets on January 1 every five years after January 1, 2005 based on a five-year Constant Maturity Treasury rate, and is capped at 11.00%. Optional
redemption on December 31, 2004 and on December 31 every five years thereafter.
(6)
Dividend rate resets on April 1 every two years after April 1, 2003 based on the two-year Constant Maturity Treasury rate plus 0.10%, and is capped at 11.00%.
Optional redemption on March 31, 2003 and on March 31 every two years thereafter.
(7)
Dividend rate resets on April 1 every year based on spread-adjusted 12-month CME Term SOFR minus 0.20%, and is capped at 11.00%. Optional redemption on
March 31, 2003 and on March 31 every year thereafter.
(8)
Dividend rate resets on July 1 every two years after July 1, 2003 based on the two-year Constant Maturity Treasury rate plus 0.20%, and is capped at 11.00%.
Optional redemption on June 30, 2003 and on June 30 every two years thereafter.
(9)
Dividend rate resets quarterly and is equal to the sum of spread-adjusted three-month CME Term SOFR plus 0.50% but not less than 4.00%.
(10)
Dividend rate is set at an annual fixed rate of 8.375% from December 4, 2007 through December 31, 2012. For the period beginning on or after January 1, 2013,
dividend rate resets quarterly and is equal to the higher of: (a) the sum of spread-adjusted three-month CME Term SOFR plus 4.16% per annum; or (b) 7.875% per
annum. Optional redemption on December 31, 2012 and on December 31 every five years thereafter.
Financial Statements
Notes to Consolidated Financial Statements | Note 11
FREDDIE MAC | 2024 Form 10-K
184
Stock-Based Compensation
Following the implementation of the conservatorship in September 2008, we suspended the operation of and/or ceased making
grants under our stock-based compensation plans. Under the Purchase Agreement, we cannot issue any new options, rights to
purchase, participations or other equity interests without Treasury's prior approval.
We did not repurchase or issue any of our common shares or non-cumulative preferred stock during 2024 and 2023. At both
December 31, 2024 and December 31, 2023, no RSUs or stock options were outstanding. There were 41,160 shares of
restricted stock outstanding at both December 31, 2024 and December 31, 2023.
Earnings Per Share
Basic earnings per common share is computed as net income attributable to common stockholders divided by the weighted
average common shares for the period. The weighted average common shares for the period includes the weighted average
number of shares that are associated with the warrant for our common stock issued to Treasury pursuant to the Purchase
Agreement. These shares are included since the warrant is unconditionally exercisable by the holder at a minimal cost. We
deduct dividends or increases in liquidation preference attributable to the senior preferred stock from net income attributable to
common stockholders in the period in which such amounts are determinable.
Our diluted earnings per common share is the same as our basic earnings per common share because we had no common
equivalent shares outstanding during the periods presented which could have had a dilutive or antidilutive effect.
Dividends and Dividend Restrictions
We did not declare or pay any dividends in 2024, 2023, and 2022 on our common stock, senior preferred stock, or any other
outstanding series of Freddie Mac preferred stock.
Our payment of dividends is subject to the following restrictions:
n Restrictions Relating to the Conservatorship - The Conservator has prohibited us from paying any dividends on our
common stock or on any series of our preferred stock (other than the senior preferred stock). FHFA has instructed our
Board of Directors that it should consult with and obtain the approval of FHFA before taking actions involving dividends. In
addition, FHFA has adopted a regulation prohibiting us from making capital distributions during conservatorship, except as
authorized by the Director of FHFA.
n Restrictions Under the Purchase Agreement - The Purchase Agreement prohibits us and any of our subsidiaries from
declaring or paying any dividends on Freddie Mac equity securities (other than with respect to the senior preferred stock or
warrant) without the prior written consent of Treasury.
n Restrictions Under the GSE Act - Under the GSE Act, FHFA has authority to prohibit capital distributions, including
payment of dividends, if we fail to meet applicable capital requirements. However, our capital requirements have been
suspended during conservatorship.
n Restrictions Under our Charter - Without regard to our capital classification, we must obtain prior written approval of
FHFA to make any capital distribution that would decrease total capital to an amount less than the risk-based capital level
or that would decrease core capital to an amount less than the minimum capital level. As noted above, our capital
requirements have been suspended during conservatorship.
n Restrictions Relating to Preferred Stock - Payment of dividends on our common stock is also subject to the prior
payment of dividends on our 24 series of preferred stock and one series of senior preferred stock, representing an
aggregate of 464,170,000 shares and 1,000,000 shares outstanding, respectively, as of December 31, 2024. Payment of
dividends on all outstanding preferred stock, other than the senior preferred stock, is subject to the prior payment of
dividends on the senior preferred stock.
Delisting of Common Stock and Preferred Stock from NYSE
On July 8, 2010, we delisted our common stock and 20 previously listed classes of preferred stock from the NYSE as directed
by our Conservator.
Our common stock and the classes of preferred stock that were previously listed on the NYSE are traded exclusively in the
OTCQB Marketplace. Shares of our common stock trade under the ticker symbol FMCC. We expect that our common stock
and the previously listed classes of preferred stock will continue to trade in the OTCQB Marketplace so long as market makers
demonstrate an interest in trading the common and preferred stock.
Financial Statements
Notes to Consolidated Financial Statements | Note 11
FREDDIE MAC | 2024 Form 10-K
185
NOTE 12
Net Interest Income
The table below presents the components of net interest income per our consolidated statements of income.
Table 12.1 - Components of Net Interest Income
Year Ended December 31,
(In millions)
2024
2023
2022
Interest income
Mortgage loans
$109,117
$96,985
$79,826
Investment securities
2,069
1,571
1,640
Securities purchased under agreements to resell
6,083
6,135
1,718
Other
608
672
274
Total interest income
117,877
105,363
83,458
Interest expense
Debt of consolidated trusts
(88,227)
(76,703)
(61,404)
Debt of Freddie Mac:
Short-term debt
(966)
(789)
(238)
Long-term debt
(8,947)
(9,329)
(3,811)
Total interest expense
(98,140)
(86,821)
(65,453)
Net interest income
19,737
18,542
18,005
(Provision) benefit for credit losses
(476)
872
(1,841)
Net interest income after (provision) benefit for credit losses
$19,261
$19,414
$16,164
Financial Statements
Notes to Consolidated Financial Statements | Note 12
FREDDIE MAC | 2024 Form 10-K
186
NOTE 13
Income Taxes
Income Tax Expense
Total income tax expense includes:
n Current income tax expense, which represents the amount of federal tax paid or payable to (or refundable from) the Internal
Revenue Service, including interest and penalties and amounts accrued for unrecognized tax benefits, if any, and
n Deferred income tax expense, which represents the net change in the deferred tax asset or liability balance during the year,
including any change in the valuation allowance.
The table below presents the components of our federal income tax expense for the past three years. We are exempt from
state and local income taxes.
Table 13.1 - Federal Income Tax Expense
Year Ended December 31,
(In millions)
2024
2023
2022
Current income tax expense
($3,862)
($1,003)
($1,749)
Deferred income tax expense
942
(1,658)
(528)
Total income tax expense
($2,920)
($2,661)
($2,277)
Income tax expense increased from both 2023 to 2024 and 2022 to 2023 primarily due to an increase in pre-tax book income.
The table below presents the reconciliation between our federal statutory income tax rate and our effective tax rate for the past
three years.
Table 13.2 - Reconciliation of Federal Statutory Income Tax Rate to Effective Tax Rate
Year Ended December 31,
2024
2023
2022
(Dollars in millions)
Amount
Percent
Amount
Percent
Amount
Percent
Statutory corporate tax rate
($3,103)
21.0 %
($2,772)
21.0 %
($2,437)
21.0 %
Tax-exempt interest
8
(0.1)
10
(0.1)
7
(0.1)
Tax credits
340
(2.3)
242
(1.8)
190
(1.6)
Valuation allowance
—
—
16
(0.1)
18
(0.2)
Proportional amortization of LIHTC investments
(253)
1.7
(184)
1.4
(143)
1.2
Other
88
(0.5)
27
(0.2)
88
(0.7)
Effective tax rate
($2,920)
19.8 %
($2,661)
20.2 %
($2,277)
19.6 %
Deferred Tax Assets, Net
We use the asset and liability method of accounting for income taxes for financial reporting purposes. Under this method,
deferred tax assets and liabilities are recognized based upon the expected future tax consequences of existing temporary
differences between the financial reporting and the tax reporting basis of assets and liabilities using enacted statutory tax rates
as well as tax net operating loss and tax credit carryforwards, if any. To the extent tax laws change, deferred tax assets and
liabilities are adjusted in the period that the tax change is enacted. The realization of our net deferred tax assets is dependent
upon the generation of sufficient taxable income.
Financial Statements
Notes to Consolidated Financial Statements | Note 13
FREDDIE MAC | 2024 Form 10-K
187
The table below presents the balance of significant deferred tax assets and liabilities at December 31, 2024 and December 31,
2023. The valuation allowance relates to capital loss carryforwards included in Other items, net that we expect to expire
unused.
Table 13.3 - Deferred Tax Assets and Liabilities
(In millions)
December 31, 2024
December 31, 2023
Deferred tax assets:
Deferred fees
$1,699
$1,821
Basis differences related to derivative instruments
437
1,042
Credit related items and allowance for loan losses
1,360
863
Basis differences related to assets held-for-investment and held-for-sale
980
696
Other items, net
606
439
Total deferred tax assets
5,082
4,861
Deferred tax liabilities:
Basis differences related to fair value hedge accounting
(30)
(749)
Other items, net
(17)
(18)
Total deferred tax liabilities
(47)
(767)
Valuation allowance
(17)
(18)
Deferred tax assets, net
$5,018
$4,076
Valuation Allowance
A valuation allowance is recorded to reduce the net deferred tax asset when it is more likely than not that all or part of our tax
benefits will not be realized. On a quarterly basis, we determine whether a valuation allowance is necessary. In doing so, we
consider all evidence available, both positive and negative, in determining whether, based on the weight of the evidence, it is
more likely than not that the net deferred tax asset will be realized.
We are not permitted to consider in our analysis the impacts proposed legislation may have on our business because the timing
and certainty of those actions are unknown and beyond our control.
Based on all positive and negative evidence available at December 31, 2024, we determined that it is more likely than not that
our net deferred tax assets, except for the deferred tax asset related to our capital loss carryforwards, will be realized. A
valuation allowance of $17 million has been recorded against our capital loss carryforward deferred tax asset.
Unrecognized Tax Benefits
We recognize a tax position taken or expected to be taken (and any associated interest and penalties) if it is more likely than
not that it will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the
technical merits of the position. We measure the tax position at the largest amount of benefit that is greater than 50% likely of
being realized upon ultimate settlement. We evaluated all income tax positions and determined that there were no uncertain tax
positions that required reserves as of December 31, 2024.
Financial Statements
Notes to Consolidated Financial Statements | Note 13
FREDDIE MAC | 2024 Form 10-K
188
NOTE 14
Segment Reporting
As shown in the table below, we have two reportable segments, Single-Family and Multifamily.
Segment
Description
Single-Family
Reflects results from our purchase, securitization, and guarantee of single-family loans, our investments in single-family loans and
mortgage-related securities, the management of Single-Family mortgage credit risk and market risk, and any results of our treasury
function that are not allocated to each segment.
Multifamily
Reflects results from our purchase, securitization, and guarantee of multifamily loans, our investments in multifamily loans and
mortgage-related securities, and the management of Multifamily mortgage credit risk and market risk.
Segment Allocations and Results
Our measure of segment profit and loss for each segment is net income and comprehensive income calculated using the same
accounting policies we use to prepare our general purpose financial statements in conformity with GAAP. The results of each
reportable segment include directly attributable revenues and expenses. We allocate interest expense and other funding and
hedging-related costs and returns on certain investments to each reportable segment using a funds transfer pricing process.
We fully allocate to each reportable segment administrative expenses and other centrally-incurred costs that are not directly
attributable to a particular segment using various methodologies depending on the nature of the expense. As a result, the sum
of each income statement line item for the two reportable segments is equal to that same income statement line item for the
consolidated entity. Our CODM, a committee consisting of our CEO, President, and CFO, uses net income and comprehensive
income to assess performance, such as by comparisons to expected results and results of other industry participants, and
allocate resources.
Financial Statements
Notes to Consolidated Financial Statements | Note 14
FREDDIE MAC | 2024 Form 10-K
189
The table below presents the financial results for our Single-Family and Multifamily segments.
Table 14.1 - Segment Financial Results
Year Ended December 31, 2024
Single-Family
Multifamily
Total
(In millions)
Net interest income
Interest income
$113,681
$4,196
$117,877
Interest expense
(95,168)
(2,972)
(98,140)
Net interest income
18,513
1,224
19,737
Non-interest income
Guarantee income
83
1,528
1,611
Investment gains, net
939
1,137
2,076
Other income
284
204
488
Non-interest income
1,306
2,869
4,175
Net revenues
19,819
4,093
23,912
(Provision) benefit for credit losses
(374)
(102)
(476)
Non-interest expense
Administrative expense(1)
(2,225)
(618)
(2,843)
Credit enhancement expense
(2,174)
(171)
(2,345)
Benefit for (decrease in) credit enhancement recoveries
(40)
4
(36)
Legislative and regulatory assessments
(3,178)
(55)
(3,233)
Other expense
(166)
(35)
(201)
Non-interest expense
(7,783)
(875)
(8,658)
Income before income tax expense
11,662
3,116
14,778
Income tax expense
(2,305)
(615)
(2,920)
Net income
9,357
2,501
11,858
Other comprehensive income (loss), net of taxes and reclassification adjustments
(1)
(4)
(5)
Comprehensive income
$9,356
$2,497
$11,853
Financial Statements
Notes to Consolidated Financial Statements | Note 14
FREDDIE MAC | 2024 Form 10-K
190
Year Ended December 31, 2023
Single-Family
Multifamily
Total
(In millions)
Net interest income
Interest income
$102,174
$3,189
$105,363
Interest expense
(84,517)
(2,304)
(86,821)
Net interest income
17,657
885
18,542
Non-interest income
Guarantee income
103
1,512
1,615
Investment gains, net
296
411
707
Other income
211
154
365
Non-interest income
610
2,077
2,687
Net revenues
18,267
2,962
21,229
(Provision) benefit for credit losses
1,172
(300)
872
Non-interest expense
Administrative expense(1)
(2,214)
(581)
(2,795)
Credit enhancement expense
(2,223)
(116)
(2,339)
Benefit for (decrease in) credit enhancement recoveries
(236)
47
(189)
Legislative and regulatory assessments
(3,085)
(46)
(3,131)
Other expense
(360)
(88)
(448)
Non-interest expense
(8,118)
(784)
(8,902)
Income before income tax expense
11,321
1,878
13,199
Income tax expense
(2,282)
(379)
(2,661)
Net income
9,039
1,499
10,538
Other comprehensive income (loss), net of taxes and reclassification adjustments
10
156
166
Comprehensive income
$9,049
$1,655
$10,704
Financial Statements
Notes to Consolidated Financial Statements | Note 14
FREDDIE MAC | 2024 Form 10-K
191
Year Ended December 31, 2022
Single-Family
Multifamily
Total
(In millions)
Net interest income
Interest income
$81,360
$2,098
$83,458
Interest expense
(64,293)
(1,160)
(65,453)
Net interest income
17,067
938
18,005
Non-interest income
Guarantee income
109
674
783
Investment gains, net
1,280
689
1,969
Other income
295
212
507
Non-interest income
1,684
1,575
3,259
Net revenues
18,751
2,513
21,264
(Provision) benefit for credit losses
(1,772)
(69)
(1,841)
Non-interest expense
Administrative expense(1)
(2,052)
(536)
(2,588)
Credit enhancement expense
(2,047)
(71)
(2,118)
Benefit for (decrease in) credit enhancement recoveries
224
12
236
Legislative and regulatory assessments
(3,076)
(55)
(3,131)
Other expense
(197)
(21)
(218)
Non-interest expense
(7,148)
(671)
(7,819)
Income before income tax expense
9,831
1,773
11,604
Income tax expense
(1,929)
(348)
(2,277)
Net income
7,902
1,425
9,327
Other comprehensive income (loss), net of taxes and reclassification adjustments
(24)
(318)
(342)
Comprehensive income
$7,878
$1,107
$8,985
(1)
Includes salaries and employee benefits and professional services, technology, and occupancy.
We measure total assets for our reportable segments based on the mortgage portfolio for each segment. We operate our
business in the U.S. and its territories, and accordingly, we generate no revenue from and have no long-lived assets, other than
financial instruments, in geographic locations other than the U.S. and its territories.
The table below presents total assets for our Single-Family and Multifamily segments.
Table 14.2 - Segment Assets
(In millions)
December 31, 2024
December 31, 2023
Single-Family
$3,104,174
$3,038,910
Multifamily
466,635
440,797
Total segment assets
3,570,809
3,479,707
Reconciling items(1)
(184,117)
(198,731)
Total assets per consolidated balance sheets
$3,386,692
$3,280,976
(1)
Reconciling items include (1) assets in our mortgage portfolio that are not recognized on our consolidated balance sheets and (2) assets recognized on our
consolidated balance sheets that are not allocated to the reportable segments.
Financial Statements
Notes to Consolidated Financial Statements | Note 14
FREDDIE MAC | 2024 Form 10-K
192
NOTE 15
Concentration of Credit and Other Risks
Concentrations of credit risk may arise when we do business with a number of customers or counterparties that engage in
similar activities or have similar economic characteristics that make them vulnerable in similar ways to changes in industry
conditions, which could affect their ability to meet their contractual obligations. Concentrations of credit risk may also arise
when there are a limited number of counterparties in a certain industry. Based on our assessment of business conditions that
could affect our financial results, we have determined that concentrations of credit risk exist among certain borrowers (including
geographic concentrations), loan sellers and servicers, credit enhancement providers, and other investment counterparties. In
the sections below, we discuss our concentration of credit risk for each of the groups to which we are exposed. For a
discussion of our derivative counterparties, as well as related master netting and collateral agreements, see Note 9. For a
discussion of securities purchased under agreements to resell and other collateralized arrangements, see Note 10.
Single-Family Mortgage Portfolio
Single-family borrowers are primarily affected by house prices and interest rates, which are influenced by economic factors.
Geographic concentrations may increase the exposure of our portfolio to credit risk, as regional economic conditions may
affect a borrower's ability to repay and the underlying property value.
The table below summarizes the concentration by geographic area of our Single-Family mortgage portfolio. See Note 3, Note
4, Note 5, and Note 6 for additional information about credit risk associated with single-family loans that we hold or
guarantee.
Table 15.1 - Concentration of Credit Risk of Our Single-Family Mortgage Portfolio
December 31, 2024
(Dollars in millions)
Portfolio UPB(1)
% of Portfolio
SDQ Rate
Region(2):
West
$918,364
30 %
0.44 %
Northeast
716,810
23
0.62
Southeast
548,723
18
0.73
Southwest
466,599
15
0.63
North Central
453,343
14
0.58
Total
$3,103,839
100 %
0.59
State:
California
$514,619
17 %
0.43
Texas
222,952
7
0.72
Florida
207,881
7
0.94
New York
135,095
4
0.88
Illinois
116,005
4
0.72
All other
1,907,287
61
0.55
Total
$3,103,839
100 %
0.59
(1)
Excludes UPB of loans underlying certain securitization products for which data was not available.
(2)
Region designation: West (AK, AS, AZ, CA, GU, HI, ID, MP, MT, NV, OR, UT, WA); Northeast (CT, DE, DC, MA, ME, MD, NH, NJ, NY, PA, RI, VT, VA, WV); Southeast (AL,
FL, GA, KY, MS, NC, PR, SC, TN, U.S. VI); Southwest (AR, CO, KS, LA, MO, NE, NM, OK, TX, WY); North Central (IL, IN, IA, MI, MN, ND, OH, SD, WI).
Multifamily Mortgage Portfolio
Numerous factors affect the credit risk related to multifamily borrowers, including effective rents paid and capitalization rates for
the mortgaged property. Effective rents paid vary among geographic regions of the United States. Geographic concentrations
may increase the exposure of our portfolio to credit risk, as regional economic conditions may affect a multifamily borrower's
ability to repay and the underlying property value. The average UPB for multifamily loans is significantly larger than for single-
family loans and, therefore, individual defaults for multifamily borrowers can result in more significant losses.
Financial Statements
Notes to Consolidated Financial Statements | Note 15
FREDDIE MAC | 2024 Form 10-K
193
The table below summarizes the concentration by geographic area of our Multifamily mortgage portfolio.
Table 15.2 - Concentration of Credit Risk of Our Multifamily Mortgage Portfolio
December 31, 2024
(Dollars in millions)
Portfolio UPB
% of Portfolio
Delinquency Rate(1)
Region(2)(3):
Northeast
$114,639
25 %
0.73 %
West
113,427
24
0.16
Southwest
95,989
21
0.39
Southeast
95,681
20
0.17
North Central
46,899
10
0.67
Total
$466,635
100 %
0.40
State(3):
California
$60,980
13 %
0.23
Texas
60,505
13
0.45
Florida
40,332
9
0.14
New York
36,818
8
1.79
Georgia
19,752
4
0.08
All other
248,248
53
0.29
Total
$466,635
100 %
0.40
(1)
Based on loans two monthly payments or more delinquent or in foreclosure.
(2)
Region designation: Northeast (CT, DE, DC, MA, ME, MD, NH, NJ, NY, PA, RI, VT, VA, WV); West (AK, AS, AZ, CA, GU, HI, ID, MP, MT, NV, OR, UT, WA); Southwest (AR,
CO, KS, LA, MO, NE, NM, OK, TX, WY); Southeast (AL, FL, GA, KY, MS, NC, PR, SC, TN, U.S. VI); North Central (IL, IN, IA, MI, MN, ND, OH, SD, WI).
(3)
Loans collateralized by properties located in multiple regions or states are reported entirely in the region or state with the largest UPB as of origination.
In the Multifamily mortgage portfolio, concentration of credit risk depends on the legal structure of the investments we hold.
Our exposure to credit risk in our senior subordinate securitization products is minimal, as the expected credit risk is generally
absorbed by the subordinate tranches, which are typically sold to third-party investors. As a result, our Multifamily mortgage
credit risk is primarily related to loans that have not been securitized or loans underlying our fully guaranteed securitizations.
See Note 3, Note 4, Note 5, and Note 6 for additional information about credit risk associated with multifamily loans that we
hold or guarantee.
Single-Family Sellers and Servicers
We acquire a significant portion of our Single-Family loan purchase volume from several large sellers. Our top 10 sellers
provided approximately 55% of our Single-Family purchase volume, including one seller that provided 10% or more of our
Single-Family purchase volume during 2024.
We purchase single-family loans from both depository and non-depository sellers. Non-depository institutions may not have the
same financial strength or operational capacity, or be subject to the same level of regulatory oversight, as large depository
institutions. Our top five non-depository sellers provided approximately 42% of our Single-Family purchase volume during
2024.
If we discover that the representations or warranties related to a loan were breached (i.e., that contractual standards were not
followed), we can exercise certain contractual remedies to mitigate our actual or potential credit losses. These contractual
remedies may include, but are not limited to, the ability to require the seller or servicer to repurchase the loan at its current
UPB, reimburse us for losses realized with respect to the loan after consideration of any other recoveries, and/or indemnify us.
Our current remedies framework provides for the categorization of loan origination defects for loans with settlement dates on or
after January 1, 2016. Among other items, the framework provides that "significant defects" may result in a repurchase request
or a repurchase alternative, such as recourse or indemnification. We implemented a pilot program in 2024 that provides
participating sellers with a fee-based alternative to performing loan repurchases. The pilot program continues to maintain the
protections related to delinquent loans outlined in the selling and servicing representation and warranty framework for mortgage
loans.
Under our current selling and servicing representation and warranty framework for our mortgage loans, we relieve sellers of
repurchase obligations for breaches of certain selling representations and warranties for certain types of loans, including:
n Loans that have established an acceptable payment history for 36 months (12 months for relief refinance loans) of
consecutive, on-time payments after purchase, subject to certain exclusions and
Financial Statements
Notes to Consolidated Financial Statements | Note 15
FREDDIE MAC | 2024 Form 10-K
194
n Loans that have satisfactorily completed a quality control review.
Solely for the purpose of determining whether the acceptable payment history requirements are met, payments due during the
COVID-19-related forbearance period are considered to have been made on time, provided that the mortgage was reported by
the servicer as having entered into a COVID-19-related forbearance plan between March 13, 2020 and October 31, 2023 and
met certain other criteria as described in our Guide.
An independent dispute resolution process for alleged breaches of selling or servicing representations and warranties on our
loans allows for a neutral third party to render a decision on demands that remain unresolved after the existing appeal and
escalation processes have been exhausted.
As of December 31, 2024, the UPB of loans subject to our repurchase requests issued to our Single-Family sellers and
servicers was approximately $0.6 billion (this figure includes repurchase requests for which appeals were pending). During
2024, we recovered amounts with respect to $1.1 billion in UPB of loans subject to our repurchase requests.
The ultimate amounts of recovery payments we receive from seller/servicers related to their repurchase obligations may be
significantly less than the amount of our estimates of potential exposure to losses. Our expected credit losses for exposure to
seller/servicers for their repurchase obligations are considered in our allowance for credit losses. See Note 6 for further
information.
We are also exposed to the risk that servicers might fail to service loans in accordance with the contractual requirements,
resulting in increased credit losses. For example, our servicers have an active role in our loss mitigation efforts, and we,
therefore, have exposure to them to the extent a decline in their performance results in a failure to realize the anticipated
benefits of the loss mitigation plans. Since we do not have our own servicing operation, if our servicers lack appropriate
controls, experience a failure in their controls, or experience an operating disruption in their ability to service loans, our business
and financial results could be adversely affected.
Several large servicers hold the rights to service significant portions of our single-family loans. Our top 10 servicers held the
rights to service approximately 55% of our Single-Family mortgage portfolio, including one servicer that held servicing rights for
10% or more of our Single-Family mortgage portfolio as of December 31, 2024. Our servicers may choose to use sub-servicers
to execute servicing on their behalf.
We utilize both depository and non-depository servicers for single-family loans. Some of these non-depository servicers hold
the rights to service a large share of our loans. As of December 31, 2024, approximately 29% of servicing rights for our Single-
Family mortgage portfolio, excluding loans for which we do not exercise control over the associated servicing, was held by our
five largest non-depository servicers, on a combined basis. We routinely monitor the performance of our largest non-depository
servicers.
For our mortgage-related securities, we guarantee the payment of principal and interest, and when the underlying borrowers do
not make their mortgage payments, our Guide generally requires Single-Family servicers to advance the missed mortgage
interest payments for up to 120 days. After this time, Freddie Mac will make the missed mortgage principal and interest
payments until the mortgages are no longer held by the securitization trust.
In addition to principal and interest payments, borrowers are also responsible for other expenses such as property taxes and
homeowner's insurance premiums. When borrowers do not pay these expenses, our Guide generally requires Single-Family
servicers to advance the funds for these expenses in order to protect or preserve our interest in or legal right to the properties.
These advances are ultimately collectible from the borrowers. If the borrowers reperform through loan workout activities, the
missed payments and incurred expenses will be collected from them. We will reimburse the servicers for the advanced
amounts when uncollected from the borrowers at completion of foreclosures or foreclosure alternatives.
On August 17, 2022, FHFA and Ginnie Mae issued a joint announcement of their updated minimum financial eligibility
requirements for Enterprise seller/servicers and Ginnie Mae issuers. Freddie Mac announced the updated changes on
September 21, 2022. The new requirements contain changes related to incorporating enhanced definitions of capital and
liquidity, reducing the procyclicality of the current liquidity requirements, and incorporating lessons learned from the pandemic.
They also require certain Ginnie Mae issuers that may also be Freddie Mac servicers to maintain a minimum risk-based capital
ratio of 6%. They also include higher supplemental requirements applicable only to large non-depositories, defined as non-
depositories having $50 billion or more of total single-family servicing UPB, as well as a new origination liquidity requirement for
sellers that originate greater than $1 billion in single-family first lien mortgages in the most recent calendar year. The majority of
the requirements became effective on September 30, 2023, while the risk-based capital ratio requirement became effective on
December 31, 2024.
Financial Statements
Notes to Consolidated Financial Statements | Note 15
FREDDIE MAC | 2024 Form 10-K
195
Multifamily Sellers and Servicers
We acquire a significant portion of our Multifamily loan purchase and guarantee volume from several large sellers. Our top 10
sellers provided approximately 70% of our Multifamily purchase and guarantee volume, including three sellers that each
provided 10% or more of our Multifamily purchase and guarantee volume during 2024.
Significant portions of our multifamily loans are serviced by several large servicers. Our top 10 servicers serviced approximately
77% of our Multifamily mortgage portfolio, including three servicers that each serviced 10% or more of our Multifamily
mortgage portfolio as of December 31, 2024.
Multifamily loans utilize both primary and master servicers. Primary servicers service unsecuritized mortgage loans and are also
typically engaged by master servicers to service on their behalf the mortgage loans underlying securitizations. For a majority of
our K Certificate securitizations, we utilize one of three large financial depository institutions as master servicer. However, one
of these large depository institutions is in the process of selling their commercial mortgage servicing business (inclusive of the
rights to master service certain K Certificate securitizations) to a non-depository institution with settlement expected in 2025,
subject to customary closing conditions. For our other securitization products and a smaller number of K Certificate
securitizations, we serve as master servicer. Multifamily primary servicers discussed above present potential operational risk
and impact to the borrowers if the servicing needs to be transferred to another servicer. We also rely on master servicers of our
multifamily securitization transactions to advance funds in the event of payment shortfalls, including principal and interest
payments related to loans in forbearance. In instances where payment shortfalls occur, the master servicer is required to make
advances as long as such advances have not been deemed unrecoverable. For multifamily loans purchased and held in our
mortgage-related investments portfolio, the primary servicers are not required to advance funds in the event of payment
shortfalls and, therefore, do not present significant counterparty credit risk from this source.
Credit Enhancement Providers
We have counterparty credit risk relating to the potential insolvency of, or nonperformance by, mortgage insurers that insure
single-family loans we purchase or guarantee. We also have similar exposure to insurers and reinsurers through our ACIS and
other insurance transactions where we purchase insurance policies as part of our CRT activities.
We evaluate the recovery and collectability from mortgage insurers as part of the estimate of our allowance for credit losses.
See Note 6 for additional information. As of December 31, 2024, mortgage insurers provided primary mortgage insurance
coverage with maximum loss limits of $174.4 billion for $658.1 billion of UPB in connection with our Single-Family mortgage
portfolio. These amounts are based on gross coverage without regard to netting of coverage that may exist to the extent an
affected loan is covered under other types of insurance. Changes in our expectations related to recovery and collectability from
our credit enhancement providers may affect our estimates of expected credit losses, perhaps significantly.
The table below summarizes the concentration of mortgage insurer counterparties who provided 10% or more of our overall
primary mortgage insurance coverage.
Table 15.3 - Primary Mortgage Insurer Concentration
Mortgage Insurance Coverage(1)
Mortgage Insurer
December 31, 2024
Mortgage Guaranty Insurance Corporation
18 %
Radian Guaranty Inc.
17
Essent Guaranty, Inc.
17
Arch Mortgage Insurance Company
17
Enact
16
National Mortgage Insurance
15
Total
100 %
(1)
Coverage amounts exclude coverage primarily related to certain loans for which we do not control servicing, and may include coverage provided by affiliates and
subsidiaries of the counterparty.
As part of our ACIS transactions, we regularly obtain insurance coverage from global insurers and reinsurers. These
transactions incorporate several features designed to increase the likelihood that we will recover on the claims we file with the
insurers and reinsurers. In each transaction, we require the individual insurers and reinsurers to post collateral to cover portions
of their exposure, which helps to promote certainty and timeliness of claim payment.
While private mortgage insurance companies are required to be monoline (i.e., to participate solely in the mortgage insurance
business, although the holding company may be a diversified insurer), many of our insurers and reinsurers in these transactions
participate in multiple types of insurance businesses, which helps diversify their risk exposure.
Financial Statements
Notes to Consolidated Financial Statements | Note 15
FREDDIE MAC | 2024 Form 10-K
196
Other Investment Counterparties
We are exposed to the non-performance of counterparties relating to other investments (including non-mortgage-related
securities and cash equivalents) transactions, including those entered into on behalf of our securitization trusts. Our policies
require that the counterparty be evaluated using our internal counterparty rating model prior to our entering such transactions.
We monitor the financial strength of our counterparties to these transactions and may use collateral maintenance requirements
to manage our exposure to individual counterparties. The permitted term and dollar limits for each of these transactions are
also based on the counterparty's financial strength.
Our other investments (including non-mortgage-related securities and cash equivalents) counterparties are primarily major
institutions, including other GSEs, Treasury, the Federal Reserve Bank of New York, GSD/FICC, highly-rated supranational
institutions, depository and non-depository institutions, brokers and dealers, and government money market funds. As of
December 31, 2024, including amounts related to our consolidated VIEs, the balance in our other investments portfolio was
$162.7 billion. The balance consists primarily of cash, securities purchased under agreements to resell, U.S. Treasury
securities, cash deposited with the Federal Reserve Bank of New York, and secured lending activities.
Financial Statements
Notes to Consolidated Financial Statements | Note 15
FREDDIE MAC | 2024 Form 10-K
197
NOTE 16
Fair Value Disclosures
The accounting guidance for fair value measurements and disclosures defines fair value, establishes a framework for measuring
fair value and sets forth disclosure requirements regarding fair value measurements. This guidance applies whenever other
accounting guidance requires or permits assets or liabilities to be measured at fair value. Fair value represents the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. Fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place
either in the principal market for the asset or liability, or, in the absence of a principal market, in the most advantageous market
for the asset or liability.
We use fair value measurements for the initial recording of certain assets and liabilities and periodic remeasurement of certain
assets and liabilities on a recurring or non-recurring basis.
Fair Value Measurements
The accounting guidance for fair value measurements and disclosures establishes a three-level fair value hierarchy that
prioritizes the inputs into the valuation techniques used to measure fair value. The levels of the fair value hierarchy are defined
as follows in priority order:
n Level 1 - Inputs to the valuation techniques are based on quoted prices in active markets for identical assets or liabilities.
n Level 2 - Inputs to the valuation techniques are based on observable inputs other than quoted prices in active markets for
identical assets or liabilities.
n Level 3 - One or more inputs to the valuation technique are unobservable and significant to the fair value measurement.
We use quoted market prices and valuation techniques that seek to maximize the use of observable inputs, where available,
and minimize the use of unobservable inputs. Our inputs are based on the assumptions a market participant would use in
valuing the asset or liability. Assets and liabilities are classified in their entirety within the fair value hierarchy based on the
lowest level input that is significant to the fair value measurement.
Valuation Risk and Controls Over Fair Value Measurements
Valuation risk is the risk that fair values used for financial disclosures, risk metrics, and performance measures do not
reasonably reflect market conditions and prices.
We designed our control processes so that our fair value measurements are appropriate and reliable, that they are based on
observable inputs where possible, and that our valuation approaches are consistently applied and the assumptions and inputs
are reasonable. Our control processes provide a framework for segregation of duties and oversight of our fair value
methodologies, techniques, validation procedures, and results.
Groups within our Finance Division, independent of our business functions, execute and validate the valuation processes and
are responsible for determining the fair values of the majority of our financial assets and liabilities. In determining fair value, we
consider the credit risk of our counterparties in estimating the fair values of our assets and our own credit risk in estimating the
fair values of our liabilities. The fair values determined by our Finance Division are further verified by an independent group
within our ERM Division.
The independent validation procedures performed by the ERM Division are intended to monitor that the prices we receive from
third parties are consistent with our observations of market activity, and that fair value measurements developed using internal
data reflect the assumptions that a market participant would use in pricing our assets and liabilities. These validation
procedures include performing a daily price review and a monthly independent verification of fair value measurements through
independent modeling, analytics, and comparisons to other market source data, if available. If we are unable to validate the
reasonableness of a given price, we ultimately do not use that price for fair value measurements on our consolidated financial
statements. These procedures are risk-based and are executed before we finalize the prices used in preparing our fair value
measurements for our financial statements.
In addition to performing the validation procedures noted above, the ERM Division provides independent risk governance over
all valuation processes by establishing and maintaining a corporate-wide valuation risk policy. The ERM Division also
independently reviews significant judgments, methodologies, and valuation techniques to monitor compliance with established
policies.
Our Valuation Risk Committee, which includes representation from our business lines, the ERM Division, and the Finance
Division, provides senior management's governance over valuation processes, methodologies, controls, and fair value
Financial Statements
Notes to Consolidated Financial Statements | Note 16
FREDDIE MAC | 2024 Form 10-K
198
measurements. Identified exceptions are reviewed and resolved through the verification process and reviewed at the Valuation
Risk Committee.
Where models are employed to assist in the measurement and verification of fair values, changes made to those models during
the period are reviewed and approved according to the corporate model change governance process, with material changes
reviewed at the Valuation Risk Committee. Inputs used by models are regularly updated for changes in the underlying data,
assumptions, valuation inputs, and market conditions and are subject to the valuation controls noted above.
Use of Third-Party Pricing Data in Fair Value Measurement
Many of our valuation techniques use, either directly or indirectly, data provided by third-party pricing services or dealers. The
techniques used by these pricing services and dealers to develop the prices generally are either:
n A comparison to recent transactions involving the instrument or transactions involving instruments with similar collateral
and risk profiles, adjusted as necessary based on specific characteristics of the asset or liability being valued; or
n Industry-standard modeling, such as a discounted cash flow model.
The prices provided by the pricing services and dealers reflect their observations and assumptions related to market activity,
including risk premiums and liquidity adjustments. The models and related assumptions used by the pricing services and
dealers are owned and managed by them and, in many cases, the significant inputs used in the valuation techniques are not
reasonably available to us. However, we have an understanding of the processes and assumptions used to develop the prices
based on our ongoing due diligence, which includes discussions with our pricing services and dealers at least annually and
often more frequently. We believe that the procedures executed by the pricing services and dealers, combined with our internal
verification and analytical procedures, provide assurance that the prices used in our financial statements comply with the
accounting guidance for fair value measurements and disclosures and reflect the assumptions that a market participant would
use in pricing our assets and liabilities. The price quotes we receive are non-binding both to us and to our counterparties.
In many cases, we receive quotes from third-party pricing services or dealers and use those prices without adjustment. For a
large majority of the assets and liabilities we value using pricing services and dealers, we obtain quotes from multiple external
sources and use the median of the prices to measure fair value. The significant inputs used in the fair value measurement of
assets and liabilities that are valued using the external pricing sources technique are the third-party quotes. Significant
increases (decreases) in any of the third-party quotes in isolation may result in a significantly higher (lower) fair value
measurement. In limited circumstances, we may be able to receive pricing information from only a single external source.
Valuation Techniques
The following table contains a description of the valuation techniques we use for fair value measurement and disclosure; the
significant inputs used in those techniques (if applicable); the classification within the fair value hierarchy; and, for those
measurements that we report on our consolidated balance sheets and are classified as Level 3 of the hierarchy, a narrative
description of the uncertainty of the fair value measurement to changes in significant unobservable inputs. Although the
uncertainties of the unobservable inputs are discussed below in isolation, interrelationships exist among the inputs such that a
change in one unobservable input can result in a change to one or more of the other inputs. For example, a common
interrelationship that affects our fair value measurements is between future interest rates, prepayment speeds, and probabilities
of default. Generally, a change in the assumption used for future interest rates results in a directionally opposite change in the
assumption used for prepayment speeds and a directionally similar change in the assumption used for probabilities of default.
Each technique discussed below may not be used in a given reporting period, depending on the composition of our assets and
liabilities measured at fair value and relevant market activity during that period.
Financial Statements
Notes to Consolidated Financial Statements | Note 16
FREDDIE MAC | 2024 Form 10-K
199
Investment Securities
U.S. Treasury Securities
Quoted prices in active markets
Level 1
Mortgage-related
securities
Majority of mortgage-related
securities
External pricing sources
Level 2 or 3
Certain securities with limited
market activity
Discounted cash flows or risk metric pricing.
Significant inputs used in the discounted cash flow technique
include OAS. Significant increases (decreases) in the OAS in
isolation would result in a significantly lower (higher) fair value
measurement.
Significant inputs used in the risk metric pricing technique
include key risk metrics, such as key rate durations.
Significant increases (decreases) in key rate durations in
isolation would result in a significant increase (decrease) in
the magnitude of change of fair value measurement in
response to key rate movements. Under risk metric pricing,
securities are valued by starting with a prior period price and
adjusting that price for market changes in the key risk metric
input used.
Level 3
Mortgage Loans
Single-Family loans
GSE securitization market
Benchmark security pricing for actively traded mortgage-
related securities with similar characteristics, adjusting for the
value of our guarantee fee and our credit obligation related to
performing our guarantee (see Guarantee obligations). The
credit obligation is based on compensation we charge under
current market pricing for loans that qualify under our current
underwriting standards (Level 2) and internal credit models for
loans that do not qualify under our current underwriting
standards (Level 3).
Level 2 or 3
Whole loan market
External pricing sources, referencing market activity for deeply
delinquent and modified loans, where available.
Level 3
Certain held-for-investment
Internal models that estimate the fair value of the underlying
collateral for impaired loans. Significant inputs used by our
internal models include REO disposition, short sale, and third-
party sale values, combined with mortgage loan level
characteristics using the repeat housing sales index to
estimate the current fair value of the mortgage loan.
Significant increases (decreases) in the historical average
sales proceeds per mortgage loan in isolation would result in
significantly higher (lower) fair value measurements.
Level 3
Multifamily loans
Held-for-sale
Discounted cash flows based on observable K Certificate
market spreads.
Level 2
Market prices from a third-party pricing service using
discounted cash flows incorporating credit spreads for similar
loans based on the loan's LTV ratio and DSCR.
Level 3
Held-for-investment
Discounted cash flows based on observable K Certificate
market spreads.
Level 2
Market prices from a third-party pricing service using
discounted cash flows incorporating credit spreads for similar
loans based on the loan's LTV ratio and DSCR.
Level 3
Debt
Debt of consolidated trusts
See Mortgage-related securities
Level 2 or 3
Debt of Freddie Mac
External pricing sources
Level 2
Published yield matrices
Instrument
Valuation Technique
Classification in the
Fair Value Hierarchy
Financial Statements
Notes to Consolidated Financial Statements | Note 16
FREDDIE MAC | 2024 Form 10-K
200
Other Assets / Other Liabilities
Derivatives
Exchange-traded futures
Quoted prices in active markets
Level 1
Interest-rate swaps
Discounted cash flows. Significant inputs include market-
based interest rates.
Level 2
Option-based derivatives
Option-pricing models. Significant inputs include interest-rate
volatility matrices.
Level 2
Purchase and sale commitments
See Mortgage-related securities
Level 2
Loan commitments
Multifamily loan purchase
commitments
See Multifamily loans
Level 2 or 3
Guarantee assets
Single-Family
External pricing sources with adjustments for specific loan
characteristics.
Level 3
Multifamily
Discounted cash flows. Significant inputs include current OAS-
to-benchmark interest rates for new guarantees. Significant
increases (decreases) in the OAS in isolation would result in a
significantly lower (higher) fair value measurement.
Level 3
Guarantee obligations Single-Family
Delivery and guarantee fees that we charge under our current
market pricing.
Level 2
Internal credit models. Significant inputs include loan
characteristics, loan performance, and status information.
Level 3
Multifamily
Discounted cash flows. Significant inputs are similar to those
used in the valuation technique for the Multifamily guarantee
assets.
Level 3
Instrument
Valuation Technique
Classification in the
Fair Value Hierarchy
Financial Statements
Notes to Consolidated Financial Statements | Note 16
FREDDIE MAC | 2024 Form 10-K
201
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The table below presents our assets and liabilities measured on our consolidated balance sheets at fair value on a recurring
basis subsequent to initial recognition, including instruments where we have elected the fair value option.
Table 16.1 - Assets and Liabilities Measured at Fair Value on a Recurring Basis
December 31, 2024
(In millions)
Level 1
Level 2
Level 3
Netting
Adjustment(1)
Total
Assets:
Investment securities:
Available-for-sale
$—
$3,316
$583
$—
$3,899
Trading:
Mortgage-related securities
—
6,131
3,027
—
9,158
Non-mortgage-related securities
42,289
425
—
—
42,714
Total trading securities
42,289
6,556
3,027
—
51,872
Total investment securities
42,289
9,872
3,610
—
55,771
Mortgage loans held-for-sale
—
10,099
1,295
—
11,394
Mortgage loans held-for-investment
—
1,572
841
—
2,413
Other assets:
Guarantee assets
—
—
5,126
—
5,126
Derivative assets, net
9
6,387
94
(5,989)
501
Other assets
—
24
219
—
243
Total other assets
9
6,411
5,439
(5,989)
5,870
Total assets carried at fair value on a recurring basis
$42,298
$27,954
$11,185
($5,989)
$75,448
Liabilities:
Debt:
Debt of consolidated trusts
$—
$1,996
$17
$—
$2,013
Debt of Freddie Mac
—
241
85
—
326
Total debt
—
2,237
102
—
2,339
Other liabilities:
Derivative liabilities, net
—
7,116
120
(6,282)
954
Other liabilities
—
5
19
—
24
Total other liabilities
—
7,121
139
(6,282)
978
Total liabilities carried at fair value on a recurring basis
$—
$9,358
$241
($6,282)
$3,317
Financial Statements
Notes to Consolidated Financial Statements | Note 16
FREDDIE MAC | 2024 Form 10-K
202
December 31, 2023
(In millions)
Level 1
Level 2
Level 3
Netting
Adjustment(1)
Total
Assets:
Investment securities:
Available-for-sale
$—
$4,212
$678
$—
$4,890
Trading:
Mortgage-related securities
—
5,342
2,771
—
8,113
Non-mortgage-related securities
29,854
418
—
—
30,272
Total trading securities
29,854
5,760
2,771
—
38,385
Total investment securities
29,854
9,972
3,449
—
43,275
Mortgage loans held-for-sale
—
6,460
896
—
7,356
Mortgage loans held-for-investment
—
1,333
473
—
1,806
Other assets:
Guarantee assets
—
—
5,351
—
5,351
Derivative assets, net
—
6,209
2
(5,725)
486
Other assets
—
92
166
—
258
Total other assets
—
6,301
5,519
(5,725)
6,095
Total assets carried at fair value on a recurring basis
$29,854
$24,066
$10,337
($5,725)
$58,532
Liabilities:
Debt:
Debt of consolidated trusts
$—
$1,707
$343
$—
$2,050
Debt of Freddie Mac
—
336
90
—
426
Total debt
—
2,043
433
—
2,476
Other liabilities:
Derivative liabilities, net
—
8,608
63
(7,798)
873
Other liabilities
—
—
—
—
—
Total other liabilities
—
8,608
63
(7,798)
873
Total liabilities carried at fair value on a recurring basis
$—
$10,651
$496
($7,798)
$3,349
(1) Represents counterparty netting and cash collateral netting, and includes accrued interest receivable and payable.
Level 3 Fair Value Measurements
The table below presents a reconciliation of all assets and liabilities measured on our consolidated balance sheets at fair value
on a recurring basis using significant unobservable inputs (Level 3), including transfers into and out of Level 3. The table also
presents gains and losses due to changes in fair value, including both realized and unrealized gains and losses, recognized on
our consolidated statements of income for Level 3 assets and liabilities.
Financial Statements
Notes to Consolidated Financial Statements | Note 16
FREDDIE MAC | 2024 Form 10-K
203
Table 16.2 - Fair Value Measurements of Assets and Liabilities Using Significant Unobservable Inputs
Year Ended December 31, 2024
Balance,
January 1,
2024
Total Realized/Unrealized
Gains/Losses(1)
Purchases
Issues
Sales
Settlements,
Net
Transfers
into
Level 3
Transfers
out of
Level 3
Balance,
December
31,
2024
Change in
Unrealized
Gains/Losses(1)
Included in Net
Income
Related to
Assets and
Liabilities Still
Held as of
December 31,
2024(2)
Change in
Unrealized
Gains/Losses(1),
Net of Tax,
Included in OCI
Related to
Assets and
Liabilities Still
Held as of
December 31,
2024
(In millions)
Included
in
Earnings
Included in
Other
Comprehensive
Income
Assets
Investment securities
$3,449
($435)
($3)
$816
$—
$—
($207)
$—
($10)
$3,610
$54
($2)
Mortgage loans held-
for-sale
896
(20)
—
2,156
—
(1,557)
(1)
35
(214)
1,295
(35)
—
Mortgage loans held-
for-investment
473
(42)
—
—
—
—
(241)
688
(37)
841
(43)
—
Other assets
5,519
181
—
(14)
628
(14)
(861)
—
—
5,439
172
—
Total assets
$10,337
($316)
($3) $2,958
$628
($1,571)
($1,310)
$723
($261) $11,185
$148
($2)
Liabilities
Total liabilities
$496
$29
$—
$13
$69
$—
($41)
$—
($325)
$241
($6)
$—
Year Ended December 31, 2023
Balance,
January 1,
2023
Total Realized/Unrealized
Gains/Losses(1)
Purchases
Issues
Sales
Settlements,
Net
Transfers
into
Level 3
Transfers
out of
Level 3
Balance,
December
31,
2023
Change in
Unrealized
Gains/Losses(1)
Included in Net
Income
Related to
Assets and
Liabilities Still
Held as of
December 31,
2023(2)
Change in
Unrealized
Gains/Losses(1),
Net of Tax,
Included in OCI
Related to
Assets and
Liabilities Still
Held as of
December 31,
2023
(In millions)
Included
in
Earnings
Included in
Other
Comprehensive
Income
Assets
Investment securities
$3,625
($538)
($5)
$634
$—
$—
($225)
$—
($42)
$3,449
$112
($4)
Mortgage loans held-
for-sale
310
6
—
2,038
—
(1,152)
(24)
12
(294)
896
32
—
Mortgage loans held-
for-investment
110
(81)
—
—
—
—
(15)
530
(71)
473
(84)
—
Other assets
5,573
138
—
(20)
736
(3)
(905)
—
—
5,519
137
—
Total assets
$9,618
($475)
($5) $2,652
$736
($1,155)
($1,169)
$542
($407) $10,337
$197
($4)
Liabilities
Total liabilities
$485
($27)
$—
($3)
$98
$—
($57)
$—
$—
$496
($51)
$—
Year Ended December 31, 2022
Balance,
January 1,
2022
Total Realized/Unrealized
Gains/Losses(1)
Purchases
Issues
Sales
Settlements,
Net
Transfers
into
Level 3
Transfers
out of
Level 3
Balance,
December
31,
2022
Change in
Unrealized
Gains/Losses(1)
Included in Net
Income
Related to
Assets and
Liabilities Still
Held as of
December 31,
2022(2)
Change in
Unrealized
Gains/Losses(1),
Net of Tax,
Included in OCI
Related to
Assets and
Liabilities Still
Held as of
December 31,
2022
(In millions)
Included
in
Earnings
Included in
Other
Comprehensive
Income
Assets
Investment securities
$4,672
($1,279)
($103)
$894
$—
($86)
($483)
$30
($20)
$3,625
($596)
($41)
Mortgage loans held-
for-sale
—
(54)
—
—
—
(94)
(26)
486
(2)
310
(53)
—
Mortgage loans held-
for-investment
—
(27)
—
—
—
—
(12)
149
—
110
(27)
—
Other assets
6,020
(721)
—
(13)
1,233
(10)
(936)
—
—
5,573
(721)
—
Total assets
$10,692
($2,081)
($103)
$881
$1,233
($190)
($1,457)
$665
($22) $9,618
($1,397)
($41)
Liabilities
Total liabilities
$318
$93
$—
($20)
$163
$—
($69)
$—
$—
$485
$124
$—
(1)
For assets, increase and decrease in earnings and other comprehensive income is shown as gains and (losses), respectively. For liabilities, increase and decrease in
earnings and comprehensive income is shown as (gains) and losses, respectively.
(2)
Represents the amount of total gains or losses for the period, included in earnings, attributable to the change in unrealized gains and losses related to assets and
liabilities classified as Level 3 that were still held at December 31, 2024, December 31, 2023, and December 31, 2022, respectively.
Financial Statements
Notes to Consolidated Financial Statements | Note 16
FREDDIE MAC | 2024 Form 10-K
204
The table below provides valuation techniques, the range, and the weighted average of significant unobservable inputs for Level
3 assets and liabilities measured on our consolidated balance sheets at fair value on a recurring basis.
Table 16.3 - Quantitative Information about Recurring Level 3 Fair Value Measurements
December 31, 2024
Level 3
Fair
Value
Predominant
Valuation
Technique(s)
Unobservable Inputs
(Dollars in millions, except for certain unobservable
inputs as shown)
Type
Range
Weighted
Average(1)
Assets
Investment securities
$2,344
External pricing sources
Price
$0.0 - $3,652.7
$99.1
1,266
Other
Mortgage loans held-for-sale
1,295
External pricing sources
Price
$87.8 - $104.4
$96.4
Mortgage loans held-for-investment
841
External pricing sources
Price
$29.2 - $100.0
$83.1
Other assets
4,816
Discounted cash flows
OAS
17 - 3,500 bps
48 bps
623
Other
Total level 3 assets
$11,185
Liabilities
Total level 3 liabilities
$241
December 31, 2023
Level 3
Fair
Value
Predominant
Valuation
Technique(s)
Unobservable Inputs
(Dollars in millions, except for certain unobservable
inputs as shown)
Type
Range
Weighted
Average(1)
Assets
Investment securities
$2,574
External pricing sources
Price
$0.0 - $4,471.7
$133.8
875
Other
Mortgage loans held-for-sale
896
External pricing sources
Price
$59.3 - $110.4
$100.3
Mortgage loans held-for-investment
473
External pricing sources
Price
$24.7 - $99.2
$74.7
Other assets
5,014
Discounted cash flows
OAS
17 - 233 bps
47 bps
505
Other
Total level 3 assets
$10,337
Liabilities
Total level 3 liabilities
$496
(1) Unobservable inputs were weighted primarily by the relative fair value of the financial instruments.
Assets Measured at Fair Value on a Non-Recurring Basis
We may be required, from time to time, to measure certain assets at fair value on a non-recurring basis. These adjustments
usually result from the application of lower-of-cost-or-fair-value accounting or an allowance for credit losses based on the fair
value of the underlying collateral. Certain of the fair values in the tables below were not obtained as of the period end, but were
obtained during the period.
The table below presents assets measured on our consolidated balance sheets at fair value on a non-recurring basis.
Table 16.4 - Assets Measured at Fair Value on a Non-Recurring Basis
December 31, 2024
December 31, 2023
(In millions)
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Mortgage loans(1)
$—
$303
$1,474
$1,777
$—
$640
$1,578
$2,218
(1)
Includes loans that are classified as held-for-investment and have an allowance for credit losses based on the fair value of the underlying collateral and held-for-sale
loans where the fair value is below cost.
The table below provides valuation techniques, the range, and the weighted average of significant unobservable inputs for Level
3 assets measured on our consolidated balance sheets at fair value on a non-recurring basis.
Financial Statements
Notes to Consolidated Financial Statements | Note 16
FREDDIE MAC | 2024 Form 10-K
205
Table 16.5 - Quantitative Information about Non-Recurring Level 3 Fair Value Measurements
December 31, 2024
Level 3
Fair
Value
Predominant
Valuation
Technique(s)
Unobservable Inputs
(Dollars in millions, except
for certain unobservable
inputs as shown)
Type
Range
Weighted
Average(1)
Mortgage loans
$1,292
External pricing sources
Price
$74.1 - $100.4
$82.3
182
Other
Total
$1,474
December 31, 2023
Level 3
Fair
Value
Predominant
Valuation
Technique(s)
Unobservable Inputs
(Dollars in millions, except
for certain unobservable
inputs as shown)
Type
Range
Weighted
Average(1)
Mortgage loans
$1,394
External pricing sources
Price
$72.9 - $98.8
$82.4
184
Other
Total
$1,578
(1) Unobservable inputs were weighted primarily by the relative fair value of the financial instruments.
Financial Statements
Notes to Consolidated Financial Statements | Note 16
FREDDIE MAC | 2024 Form 10-K
206
Fair Value of Financial Instruments
The table below presents the carrying value and estimated fair value of our financial instruments. For certain types of financial
instruments, such as cash and cash equivalents, securities purchased under agreements to resell, secured lending, and certain
debt, the carrying value on our GAAP balance sheets approximates fair value, as these assets and liabilities are short-term in
nature and have limited fair value volatility.
Table 16.6 - Fair Value of Financial Instruments
December 31, 2024
GAAP
Measurement
Category(1)
Carrying
Amount(2)
Fair Value
(In millions)
Level 1
Level 2
Level 3
Netting
Adjustments(3)
Total
Financial assets
Cash and cash equivalents
Amortized cost
$5,534
$5,534
$—
$—
$—
$5,534
Securities purchased under agreements
to resell
Amortized cost
100,118
—
108,338
—
(8,220)
100,118
Investments securities:
Available-for-sale
FV - OCI
3,899
—
3,316
583
—
3,899
Trading
FV - NI
51,872
42,289
6,556
3,027
—
51,872
Total investments securities
55,771
42,289
9,872
3,610
—
55,771
Mortgage loans:
Mortgage loans held-for-sale
15,560
—
11,943
3,764
—
15,707
Mortgage loans held-for-investment,
net of allowance for credit losses
3,172,329
—
2,469,708
286,371
—
2,756,079
Total mortgage loans
Various(4)
3,187,889
—
2,481,651
290,135
—
2,771,786
Other assets:
Guarantee assets
FV - NI
5,126
—
—
5,128
—
5,128
Derivative assets, net
FV - NI
501
9
6,387
94
(5,989)
501
Other assets(5)
Various
1,801
—
323
1,607
—
1,930
Total other assets
7,428
9
6,710
6,829
(5,989)
7,559
Total financial assets
$3,356,740
$47,832
$2,606,571
$300,574
($14,209) $2,940,768
Financial liabilities
Debt:
Debt of consolidated trusts
$3,122,941
$—
$2,699,412
$380
$—
$2,699,792
Debt of Freddie Mac
182,008
—
187,287
3,283
(8,220)
182,350
Total debt
Various(6)
3,304,949
—
2,886,699
3,663
(8,220) 2,882,142
Other liabilities:
Guarantee obligations
Amortized cost
5,072
—
98
6,362
—
6,460
Derivative liabilities, net
FV - NI
954
—
7,116
120
(6,282)
954
Other liabilities(5)
FV - NI
23
—
701
109
—
810
Total other liabilities
6,049
—
7,915
6,591
(6,282)
8,224
Total financial liabilities
$3,310,998
$—
$2,894,614
$10,254
($14,502) $2,890,366
Financial Statements
Notes to Consolidated Financial Statements | Note 16
FREDDIE MAC | 2024 Form 10-K
207
December 31, 2023
GAAP
Measurement
Category(1)
Carrying
Amount(2)
Fair Value
(In millions)
Level 1
Level 2
Level 3
Netting
Adjustments(3)
Total
Financial assets
Cash and cash equivalents
Amortized cost
$6,019
$6,019
$—
$—
$—
$6,019
Securities purchased under agreements
to resell
Amortized cost
95,148
—
105,393
—
(10,245)
95,148
Investments securities:
Available-for-sale
FV - OCI
4,890
—
4,212
678
—
4,890
Trading
FV - NI
38,385
29,854
5,760
2,771
—
38,385
Total investments securities
43,275
29,854
9,972
3,449
—
43,275
Mortgage loans:
Mortgage loans held-for-sale
12,941
—
9,276
3,868
—
13,144
Mortgage loans held-for-investment,
net of allowance for credit losses
3,083,665
—
2,466,127
254,877
—
2,721,004
Total mortgage loans
Various(4)
3,096,606
—
2,475,403
258,745
—
2,734,148
Other assets:
Guarantee assets
FV - NI
5,351
—
—
5,353
—
5,353
Derivative assets, net
FV - NI
486
—
6,209
2
(5,725)
486
Other assets(5)
Various
2,107
—
946
1,165
—
2,111
Total other assets
7,944
—
7,155
6,520
(5,725)
7,950
Total financial assets
$3,248,992
$35,873
$2,597,923
$268,714
($15,970) $2,886,540
Financial liabilities
Debt:
Debt of consolidated trusts
$3,041,927
$—
$2,673,019
$727
$—
$2,673,746
Debt of Freddie Mac
166,419
—
173,877
3,391
(10,245)
167,023
Total debt
Various(6)
3,208,346
—
2,846,896
4,118
(10,245) 2,840,769
Other liabilities:
Guarantee obligations
Amortized cost
5,451
—
103
6,023
—
6,126
Derivative liabilities, net
FV - NI
873
—
8,608
63
(7,798)
873
Other liabilities(5)
FV - NI
14
—
465
194
—
659
Total other liabilities
6,338
—
9,176
6,280
(7,798)
7,658
Total financial liabilities
$3,214,684
$—
$2,856,072
$10,398
($18,043) $2,848,427
(1)
FV - NI denotes fair value through net income. FV - OCI denotes fair value through other comprehensive income.
(2)
Excludes allowance for credit losses on off-balance sheet credit exposure.
(3)
Represents counterparty netting and cash collateral netting, and includes accrued interest receivable and payable.
(4)
The GAAP carrying amounts measured at amortized cost, lower-of-cost-or-fair-value, and FV - NI were $3.2 trillion, $4.2 billion and $13.8 billion as of
December 31, 2024, respectively, and $3.1 trillion, $5.6 billion and $9.2 billion as of December 31, 2023, respectively.
(5)
For other assets, includes advances to lenders, secured lending, and loan commitments. For other liabilities, includes loan commitments.
(6)
The GAAP carrying amounts measured at amortized cost and FV - NI were $3.3 trillion and $2.3 billion as of December 31, 2024, respectively, and $3.2 trillion and
$2.5 billion as of December 31, 2023, respectively.
Fair Value Option
We elected the fair value option for certain mortgage loans and loan commitments and certain debt issuances.
Mortgage Loans and Loan Commitments
We elected the fair value option for certain fixed-rate multifamily loan purchase commitments and certain multifamily loans that
were acquired for securitization to offset the changes in fair value of the derivatives that we use to economically hedge the
interest rate risk of the loans and commitments. The multifamily loans are classified either as held-for-investment or as held-for-
sale on our consolidated balance sheets based on management's intent and ability and are measured at fair value on a
Financial Statements
Notes to Consolidated Financial Statements | Note 16
FREDDIE MAC | 2024 Form 10-K
208
recurring basis, with subsequent gains or losses related to changes in fair value (net of accrued interest income) reported in
investment gains, net, on our consolidated statements of income. We elected to report separately the portion of the changes in
fair value of the loans related to accrued interest from the remaining changes in fair value. Related interest income continues to
be reported, based on the stated terms of the loans, as interest income on our consolidated statements of income. The
multifamily loan commitments are included in other assets or liabilities on our consolidated balance sheets and are measured at
fair value on a recurring basis, with subsequent gains or losses related to changes in fair value included in investment gains,
net, on our consolidated statements of income.
Debt of Consolidated Trusts and Debt of Freddie Mac
We elected the fair value option on debt that contains embedded derivatives, including certain STACR and SCR debt notes,
and certain other debt issuances. Fair value changes are recorded in investment gains, net, on our consolidated statements of
income. For debt where we have elected the fair value option, upfront costs and fees are recognized in earnings as incurred
and not deferred. Related interest expense continues to be reported as interest expense based on the stated terms of the debt
securities.
The table below presents the fair value and UPB related to items for which we have elected the fair value option.
Table 16.7 - Difference between Fair Value and UPB for Certain Financial Instruments with Fair Value Option Elected(1)
December 31, 2024
December 31, 2023
(In millions)
Fair value
UPB
Difference
Fair value
UPB
Difference
Mortgage loans held-for-sale
$11,394
$11,470
($76)
$7,356
$7,080
$276
Mortgage loans held-for-investment
2,413
2,710
(297)
1,806
2,095
(289)
Debt of Freddie Mac
152
150
2
240
234
6
Debt of consolidated trusts
1,689
1,817
(128)
1,705
1,799
(94)
Other assets (other liabilities)
1
N/A
N/A
95
N/A
N/A
(1) Excludes interest-only securities related to debt of consolidated trusts and debt of Freddie Mac with a fair value of $0.5 billion as of both December 31, 2024 and
December 31, 2023.
Changes in Fair Value Under the Fair Value Option Election
The table below presents the changes in fair value related to items for which we have elected the fair value option. These
amounts are included in investment gains, net, on our consolidated statements of income.
Table 16.8 - Changes in Fair Value under the Fair Value Option Election
December 31, 2024
December 31, 2023
December 31, 2022
(In millions)
Gains (losses)
Mortgage loans held-for-sale
($189)
($59)
($987)
Mortgage loans held-for-investment
(39)
(29)
(154)
Debt of Freddie Mac
14
30
(30)
Debt of consolidated trusts
51
(6)
458
Other assets/other liabilities
516
207
(362)
Changes in fair value attributable to instrument-specific credit risk were not material for the periods presented for assets or
liabilities for which we elected the fair value option.
Financial Statements
Notes to Consolidated Financial Statements | Note 16
FREDDIE MAC | 2024 Form 10-K
209
NOTE 17
Legal Contingencies
We are involved, directly or indirectly, in a variety of legal and regulatory proceedings arising from time to time in the ordinary
course of business (including, among other things, contractual disputes, personal injury claims, employment-related litigation,
and other legal proceedings incidental to our business) and in connection with the conservatorship and Purchase Agreement.
We are frequently involved, directly or indirectly, in litigation involving mortgage foreclosures. From time to time, we are also
involved in proceedings arising from our termination of a seller's or servicer's eligibility to sell loans to, and/or service loans for,
us. In these cases, the former seller or servicer sometimes seeks damages against us for wrongful termination under a variety
of legal theories. In addition, we are sometimes sued in connection with the origination or servicing of loans. These suits
typically involve claims alleging wrongful actions of sellers and servicers. Our contracts with our sellers and servicers generally
provide for indemnification of Freddie Mac against liability arising from sellers' and servicers' wrongful actions with respect to
loans sold to or serviced for Freddie Mac.
Litigation claims and proceedings of all types are subject to many uncertainties (including appeals and procedural filings), and
there can be no assurance as to the ultimate outcome of those actions (including the matters described below). In accordance
with the accounting guidance for contingencies, we reserve for litigation claims and assessments asserted or threatened
against us when a loss is probable (as defined in such guidance) and the amount of the loss can be reasonably estimated. The
actual costs of resolving legal actions may be substantially higher or lower than the amounts accrued for those actions.
It is not possible for us to predict the actions the U.S. government (including Treasury and FHFA) might take in connection with
any of these lawsuits or any future lawsuits. However, it is possible that we could be adversely affected by these actions,
including, for example, by changes to the Purchase Agreement, or any resulting actual or perceived changes in the level of U.S.
government support for our business.
Putative Securities Class Action Lawsuit: Ohio Public Employees
Retirement System vs. Freddie Mac, Syron, Et Al.
This putative securities class action lawsuit was filed against Freddie Mac and certain former officers on January 18, 2008 in the
U.S. District Court for the Northern District of Ohio purportedly on behalf of a class of purchasers of Freddie Mac stock from
August 1, 2006 through November 20, 2007. FHFA later intervened as Conservator, and the plaintiff amended its complaint on
several occasions. The plaintiff alleged, among other things, that the defendants violated federal securities laws by making false
and misleading statements concerning our business, risk management, and the procedures we put into place to protect the
company from problems in the mortgage industry. The plaintiff seeks unspecified damages and interest, and reasonable costs
and expenses, including attorney and expert fees.
In August 2018, the District Court denied the plaintiff's motion for class certification. On April 6, 2023, the Sixth Circuit reversed
the District Court's September 17, 2020 decision to grant the plaintiff's request for summary judgment and enter final judgment
in favor of Freddie Mac and other defendants. The Sixth Circuit remanded the case to the District Court for further proceedings.
On May 3, 2024, defendants filed motions for summary judgment, which remain pending. The trial in the District Court is
scheduled to begin on October 6, 2025.
Litigation Concerning the Purchase Agreement in the U.S. District Court
for the District of Columbia
In re Fannie Mae/Freddie Mac Senior Preferred Stock Purchase Agreement Class Action Litigations. This is a
consolidated class action lawsuit filed by private individual and institutional investors (collectively, "Class Plaintiffs") against
FHFA, Fannie Mae, and Freddie Mac.
Fairholme Funds, Inc., et al. v. FHFA, et al. This is an individual plaintiffs’ lawsuit by certain institutional investors (“Individual
Plaintiffs”) against FHFA, Fannie Mae, and Freddie Mac.
The Class Plaintiffs and Individual Plaintiffs (collectively "Plaintiffs") in the District of Columbia lawsuits filed an amended
complaint on November 1, 2017 alleging claims for breach of contract, breach of the implied covenant of good faith and fair
dealing, breach of fiduciary duties, and violation of Delaware and Virginia corporate law. Additionally, the Class Plaintiffs
brought derivative claims against FHFA for breach of fiduciary duties and the Individual Plaintiffs brought claims under the
Administrative Procedure Act. Both sets of claims are generally based on allegations that the net worth sweep dividend
provisions of the senior preferred stock that were implemented pursuant to the August 2012 amendments nullified certain of the
shareholders’ rights, including the rights to receive dividends and a liquidation preference. On September 28, 2018, the District
Financial Statements
Notes to Consolidated Financial Statements | Note 17
FREDDIE MAC | 2024 Form 10-K
210
Court dismissed all of the claims except those for breach of the implied covenant of good faith and fair dealing. The cases were
consolidated for trial.
Court rulings limited the Plaintiffs’ damages theories to those based on the decline in Freddie Mac’s and Fannie Mae’s share
value immediately after the Third Amendment. The Plaintiffs asserted losses based on the decline in value of Freddie Mac’s
common and junior preferred stock from August 16 to August 17, 2012. During the trial in October and early November 2022,
the Plaintiffs requested that the jury award $832 million plus pre-judgment interest as damages against Freddie Mac. The jury in
that trial was not able to reach a unanimous verdict and on November 7, 2022 the judge declared a mistrial. The retrial started
on July 24, 2023. On August 14, 2023, the jury returned a verdict against FHFA, Fannie Mae, and Freddie Mac awarding
compensatory damages of $282 million to Freddie Mac junior preferred shareholders and $31 million to Freddie Mac common
shareholders. The jury declined to award the Freddie Mac shareholders prejudgment interest. In 2023, we recorded a
$313 million accrual in other expense on our condensed consolidated statements of income for the adverse judgment. On
March 20, 2024, the District Court entered final judgment. On April 17, 2024, the defendants filed a motion requesting entry of
judgment in their favor notwithstanding the jury verdict, which has been fully briefed.
Financial Statements
Notes to Consolidated Financial Statements | Note 17
FREDDIE MAC | 2024 Form 10-K
211
NOTE 18
Regulatory Capital
ERCF
The GSE Act specifies certain capital requirements for us and authorizes FHFA to establish other capital requirements as well
as to increase our minimum capital levels or to establish additional capital and reserve requirements for particular purposes. In
October 2008, FHFA suspended capital classification of us during conservatorship, in light of the Purchase Agreement.
FHFA established the ERCF as a new enterprise regulatory capital framework for Freddie Mac and Fannie Mae in December
2020. Our current capital levels are below the levels that would be required under the ERCF. The ERCF has a transition period
for compliance, and we are not required to comply with the regulatory capital requirements or the buffer requirements while in
conservatorship. In general, the compliance date for the regulatory capital requirements will be the later of the date of
termination of our conservatorship and any later compliance date provided in a transition order, and the compliance date for
buffer requirements in the ERCF will be the date of termination of our conservatorship. With respect to the ERCF's advanced
approaches requirements, the compliance date is January 1, 2028 or any later compliance date specified by FHFA.
The ERCF establishes risk-based and leverage capital requirements and includes capital requirements relating to the amount
and form of the capital we hold, based largely on definitions of capital used in U.S. banking regulators' regulatory capital
framework. The ERCF capital requirements contain both statutory capital elements (total capital and core capital) and
regulatory capital elements (CET1 capital, Tier 1 capital, and adjusted total capital). The ERCF also includes a requirement that
we hold prescribed capital buffers that can be drawn down in periods of financial stress and then rebuilt over time as economic
conditions improve. If we fall below the prescribed buffer amounts, we must restrict capital distributions such as stock
repurchases and dividends, as well as discretionary bonus payments to executives, until the buffer amounts are restored.
Risk-Based Capital Requirements
Under the ERCF risk-based capital requirements, we must maintain our CET1 capital, Tier 1 capital, and adjusted total capital
ratios equal to at least 4.5%, 6.0%, and 8.0%, respectively, of RWA. We must also maintain statutory total capital equivalent to
at least 8.0% of the total RWA. To avoid limitations on capital distributions and discretionary bonus payments tied to executive
compensation, we also must maintain CET1 capital that exceeds the risk-based capital requirements by at least the amount of
the PCCBA. The PCCBA consists of three separate component buffers—a stress capital buffer, a stability capital buffer, and a
countercyclical capital buffer.
n The stress capital buffer must be at least 0.75% of our ATA as of the last day of the previous calendar quarter. FHFA will
periodically re-size the stress capital buffer to the extent that FHFA’s eventual program for supervisory stress tests
determines that our peak capital exhaustion under a severely adverse stress scenario would exceed 0.75% of ATA.
n The stability capital buffer is tailored to the risk that our default or other financial distress could pose to the liquidity,
efficiency, competitiveness, or resiliency of national housing finance markets. The stability capital buffer is based on our
share of residential mortgage debt outstanding. As of December 31, 2024, our stability capital buffer was 0.75% of ATA.
n The countercyclical capital buffer is currently set at 0.0% of our ATA. FHFA has indicated that it will adjust the
countercyclical capital buffer taking into account the macro-financial environment in which we operate, such that the buffer
would be deployed only when excess aggregate credit growth is judged to be associated with a build-up of system-wide
risk.
Leverage Capital Requirements
Under the ERCF leverage capital requirements, we must maintain our Tier 1 capital ratio equal to at least 2.5% of ATA. We
must also maintain our statutory core capital ratio equal to at least 2.5% of ATA. To avoid limitations on capital distributions
and discretionary bonus payments tied to executive compensation, we also must maintain Tier 1 capital that exceeds the
leverage capital requirements by at least the amount of the PLBA. The PLBA is equal to 50% of our stability capital buffer.
Financial Statements
Notes to Consolidated Financial Statements | Note 18
FREDDIE MAC | 2024 Form 10-K
212
Capital Metrics
The table below presents our capital metrics under the ERCF.
Table 18.1 - ERCF Available Capital and Capital Requirements
(In billions)
December 31, 2024
December 31, 2023
Adjusted total assets
$3,817
$3,775
Risk-weighted assets (standardized approach)
1,118
1,009
December 31, 2024
Amounts
Ratios
(Dollars in billions)
Available
Capital (Deficit)
Minimum
Capital
Requirement
Capital
Requirement
(Including Buffer(1))
Available
Capital
(Deficit)
Ratio(2)
Minimum
Capital
Requirement
Ratio(2)
Capital
Requirement
Ratio(2)
(Including
Buffer(1))
Risk-based capital:
Total capital
($6)
$89
$89
(0.5) %
8.0 %
8.0 %
CET1 capital
(32)
50
107
(2.9)
4.5
9.6
Tier 1 capital
(18)
67
124
(1.6)
6.0
11.1
Adjusted total capital
(18)
89
146
(1.6)
8.0
13.1
Leverage capital:
Core capital
(13)
95
95
(0.3)
2.5
2.5
Tier 1 capital
(18)
95
109
(0.5)
2.5
2.9
December 31, 2023
Amounts
Ratios
(Dollars in billions)
Available
Capital (Deficit)
Minimum
Capital
Requirement
Capital
Requirement
(Including Buffer(1))
Available
Capital
(Deficit)
Ratio(2)
Minimum
Capital
Requirement
Ratio(2)
Capital
Requirement
Ratio(2)
(Including
Buffer(1))
Risk-based capital:
Total capital
($18)
$81
$81
(1.8) %
8.0 %
8.0 %
CET1 capital
(43)
45
96
(4.3)
4.5
9.5
Tier 1 capital
(29)
60
111
(2.9)
6.0
11.0
Adjusted total capital
(29)
81
132
(2.9)
8.0
13.0
Leverage capital:
Core capital
(25)
95
95
(0.7)
2.5
2.5
Tier 1 capital
(29)
95
106
(0.8)
2.5
2.8
(1)
PCCBA for risk-based capital and PLBA for leverage capital.
(2)
As a percentage of RWA for risk-based capital and ATA for leverage capital.
Financial Statements
Notes to Consolidated Financial Statements | Note 18
FREDDIE MAC | 2024 Form 10-K
213
Controls and Procedures
MANAGEMENT'S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is
defined in Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process designed by, or under the
supervision of, our CEO and CFO and effected by the Board of Directors, management, and other personnel to provide
reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external
purposes in accordance with GAAP.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. It is a
process that involves human diligence and compliance and is, therefore, subject to lapses in judgment and breakdowns
resulting from human error. It also can be circumvented by collusion or improper management override. Because of its
limitations, there is a risk that internal control over financial reporting may not prevent or detect, on a timely basis, errors that
could cause a material misstatement of the financial statements.
We assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making our
assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or
COSO, in Internal Control — Integrated Framework (2013 Framework). A material weakness is a deficiency, or a combination of
deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement
of the company's annual or interim financial statements will not be prevented or detected on a timely basis by a company's
internal controls. Based on our assessment, we identified a material weakness related to our inability to update our disclosure
controls and procedures in a manner that adequately ensures the accumulation and communication to management of
information known to FHFA that is needed to meet our disclosure obligations under the federal securities laws, including
disclosures affecting our consolidated financial statements.
We have been under conservatorship of FHFA since September 6, 2008. FHFA is an independent agency that currently
functions as both our Conservator and our regulator with respect to our safety, soundness, and mission. Because we are in
conservatorship, some of the information that we may need to meet our disclosure obligations may be solely within the
knowledge of FHFA. As our Conservator, FHFA has the power to take actions without our knowledge that could be material to
investors and could significantly affect our financial performance. Although we and FHFA have attempted to design and
implement disclosure policies and procedures to account for the conservatorship and accomplish the same objectives as
disclosure controls and procedures for a typical reporting company, there are inherent structural limitations on our ability to
design, implement, test, or operate effective disclosure controls and procedures under the circumstances of conservatorship.
As our Conservator and regulator, FHFA is limited in its ability to design and implement a complete set of disclosure controls
and procedures relating to us, particularly with respect to current reporting pursuant to Form 8-K. Similarly, as a regulated
entity, we are limited in our ability to design, implement, operate, and test the controls and procedures for which FHFA is
responsible. For example, FHFA may formulate certain intentions with respect to the conduct of our business that, if known to
management, would require consideration for disclosure or reflection in our financial statements, but that FHFA, for regulatory
reasons, may be constrained from communicating to management. As a result of these considerations, we have concluded that
this control deficiency constitutes a material weakness in our internal control over financial reporting.
Because of this material weakness, we have concluded that our internal control over financial reporting was not effective as of
December 31, 2024 based on the COSO criteria (2013 Framework). PricewaterhouseCoopers LLP, an independent registered
public accounting firm, audited the effectiveness of our internal control over financial reporting as of December 31, 2024 and
also determined that our internal control over financial reporting was not effective. PricewaterhouseCoopers LLP's report
appears in Financial Statements — Report of Independent Registered Public Accounting Firm.
EVALUATION OF DISCLOSURE CONTROLS AND
PROCEDURES
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that the information
we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and
reported within the time periods specified by the SEC's rules and forms and that such information is accumulated and
communicated to management of the company, including the company's CEO and CFO, as appropriate, to allow timely
decisions regarding required disclosure. In designing our disclosure controls and procedures, we recognize that any controls
and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired
control objectives, and we must apply judgment in implementing possible controls and procedures.
Controls and Procedures
FREDDIE MAC | 2024 Form 10-K
214
Management, including the company's CEO and CFO, conducted an evaluation of the effectiveness of our disclosure controls
and procedures as of December 31, 2024. As a result of management's evaluation, our CEO and CFO concluded that our
disclosure controls and procedures were not effective as of December 31, 2024, at a reasonable level of assurance, because
we have not been able to update our disclosure controls and procedures to provide reasonable assurance that information
known by FHFA on an ongoing basis is communicated from FHFA to Freddie Mac's management in a manner that allows for
timely decisions regarding our required disclosure under the federal securities laws. As discussed above, we consider this
situation to be a material weakness in our internal control over financial reporting. Based on discussions with FHFA and the
structural nature of this continuing weakness, we believe it is likely that we will not remediate this material weakness while we
are under conservatorship.
MITIGATING ACTIONS RELATED TO THE MATERIAL
WEAKNESS IN INTERNAL CONTROL OVER FINANCIAL
REPORTING
As described above under Management's Report on Internal Control Over Financial Reporting, we have one material
weakness in internal control over financial reporting as of December 31, 2024 that we have not remediated.
Given the structural nature of this material weakness, we believe it is likely that we will not remediate it while we are under
conservatorship. However, both we and FHFA have continued to engage in activities and employ procedures and practices
intended to permit accumulation and communication to management of information needed to meet our disclosure obligations
under the federal securities laws. These include the following:
n FHFA has established the Division of Conservatorship Oversight and Readiness, which is intended to facilitate operation of
the company with the oversight of the Conservator.
n We provide drafts of our SEC filings to FHFA personnel for their review and comment prior to filing. We also provide drafts
of certain external press releases and statements to FHFA personnel for their review and comment prior to release.
n FHFA personnel, including senior officials, review our SEC filings prior to filing, including this Form 10-K, and engage in
discussions with us regarding issues associated with the information contained in those filings. Prior to filing this Form 10-
K, FHFA provided us with a written acknowledgment that it had reviewed the Form 10-K, was not aware of any material
misstatements or omissions in the Form 10-K, and had no objection to our filing the Form 10-K.
n Our senior management meets regularly with senior leadership at FHFA, including, but not limited to, the Director.
n FHFA representatives attend meetings frequently with various groups within the company to enhance the flow of
information and to provide oversight on a variety of matters, including accounting, credit and capital markets management,
external communications, and legal matters.
n Senior officials within FHFA's accounting group meet frequently with our senior financial executives regarding our
accounting policies, practices, and procedures.
Although we and FHFA have attempted to design and implement disclosure policies and procedures to account for the
conservatorship and accomplish the same objectives as disclosure controls and procedures for a typical reporting company,
there are inherent structural limitations on our ability to design, implement, test, or operate effective disclosure controls and
procedures under the circumstances of conservatorship. Despite our material weakness, we believe that our consolidated
financial statements for the year ended December 31, 2024 have been prepared in conformity with GAAP.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL
REPORTING DURING THE QUARTER ENDED
DECEMBER 31, 2024
We evaluated the changes in our internal control over financial reporting that occurred during the quarter ended December 31,
2024 and concluded that there were no changes that materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
Controls and Procedures
FREDDIE MAC | 2024 Form 10-K
215
Other Information
OTHER INFORMATION
Insider Trading Arrangements
No executive officer or director adopted or terminated any contract, instruction, or written plan for the purchase or sale of, or
any other such trading arrangement for, our securities during 4Q 2024. For additional information on executive officer and
director compensation and security ownership by our executive officers and directors, see Directors, Corporate
Governance, and Executive Officers, Executive Compensation, and Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters.
Other Information
FREDDIE MAC | 2024 Form 10-K
216
Directors, Corporate Governance, and Executive
Officers
DIRECTORS
Election of Directors
As Conservator, FHFA determines the size of the Board of Directors and the scope of its authority. At the start of the
conservatorship, FHFA determined that the Board of Directors is to have a Non-Executive Chair and is to consist of a minimum
of 9 and not more than 13 directors. FHFA determined that the CEO is the only executive officer permitted to serve as a
member of the Board of Directors.
In addition, because FHFA as Conservator has succeeded to the rights of all stockholders of the company, the Conservator
elects the directors each year by written consent in lieu of an annual meeting. Accordingly, we will not solicit proxies, distribute
a proxy statement to stockholders, or hold an annual meeting of stockholders to elect directors during the conservatorship.
Prior to each election by written consent, the Board of Directors identifies director nominees for the Conservator's
consideration. When there is a vacancy, the Board of Directors may exercise the authority provided to it by the Conservator to
fill such vacancy, subject to review by the Conservator.
The Conservator executed a written consent, effective January 14, 2025, electing each of the 12 directors listed below.
n
Mark H. Bloom
n
Aleem Gillani
n
Allan P. Merrill
n
Kathleen L. Casey
n
Luke S. Hayden
n
Jane E. Prokop
n
Kevin G. Chavers
n
Christopher E. Herbert
n
Diana W. Reid
n
Lance F. Drummond
n
Grace A. Huebscher
n
Roy Swan
See Directors, Corporate Governance, and Executive Officers - Directors - Director Biographical Information for
information about each of our current directors. The terms of our directors end on the date the director retires or resigns, the
effective date of the Conservator's next election of directors by written consent, or the date of the next annual meeting of our
stockholders, whichever occurs first.
We did not submit for re-election, and the Conservator did not re-elect, Mark B. Grier, who retired from the Board effective
January 14, 2025, the effective date of the Conservator's written consent, because he reached the age limit set forth in the
Corporate Governance Rule. See our Current Report on Form 8-K filed on January 17, 2025.
Director Criteria, Qualifications, Experience, Tenure, and Diversity
Our Board of Directors seeks candidates for directorship who have achieved a high level of stature, success, and respect in
their principal occupations and exemplify high standards of integrity.
We selected our directors as candidates because of their character, judgment, experience, and expertise. In selecting
candidates, we follow the requirements set forth in our Charter, the Guidelines, and the Corporate Governance Rule. When
identifying director nominees, the Nominating and Governance Committee considers, among other factors, the talents and
skills already represented on the Board of Directors, the continued involvement of incumbent directors in business and
professional activities relevant to us, the skills and experience that should be represented on the Board of Directors, and the
availability of other individuals with desirable skills to join the Board of Directors. Specifically, the Nominating and Governance
Committee seeks candidates that would complement the knowledge the Board of Directors collectively has in the areas of
business, finance, accounting, risk management, technology (including cybersecurity), public policy, mortgage lending, real
estate, low-income housing, homebuilding, regulation of financial institutions, and any other areas that may be relevant to our
safe and sound operation. We also consider whether a candidate's other commitments, including the number of other board
memberships held by the candidate, would permit the candidate to devote sufficient time to the candidate's duties and
responsibilities as a director. In addition, our Charter provides that our Board of Directors has at least one person from each of
the homebuilding, mortgage lending, and real estate industries, and at least one person from an organization representing
community or consumer interests or one person who has demonstrated a career commitment to the provision of housing for
low-income households.
At Freddie Mac, we recognize that diversity among Board members increases diversity of thought on the Board of Directors,
which results in better business decisions that consider the perspectives of all stakeholders. FHFA regulation (12 CFR §
1223.21(b)) requires us to ensure, to the extent possible in balance with financially safe and sound business practices, inclusion
Directors, Corporate Governance, and Executive Officers
Directors
FREDDIE MAC | 2024 Form 10-K
217
of individuals with different racial or ethnic backgrounds, women, and individuals with disabilities in our process of nominating
directors, as we do in all of our activities.
Our Board of Directors is composed of members with a variety of backgrounds and overall experience. Our Board also values
having a balance of longer-serving directors with institutional knowledge and newer directors that bring fresh perspectives and
ideas.
The charts below provide information on the composition of our Board of Directors by demographic background and tenure, as
of February 12, 2025.
Tenure
3
3
6
< 2 Years
2 < 5 Years
> 5 Years
Age
3
8
1
50s
60s
70s
Gender
8
4
Men
Women
Race/Ethnicity
8
3
1
White
African American
Asian
Director Biographical Information
The following summarizes each director's Board service, experience, qualifications, attributes, and/or skills that led to their
selection as a director, and provides other biographical information, as of February 12, 2025.
Mark H. Bloom
Age 60
Director since November 2019
Freddie Mac Committees:
• Compensation and Human Capital
• Executive
• Operations and Technology, Chair
• Risk
Public Company Directorships:
• None
Mr. Bloom is an experienced executive who has held a variety of leadership positions at the intersection of finance, technology,
and risk management. He brings technological expertise to drive efficiency and enhance the customer experience.
Experience and Qualifications
n
Global Chief Information Officer of Arthur J. Gallagher & Co., a global insurance brokerage and risk management services
firm (2022-present)
n
Management Consultant, Operations & Technology (2021-2022)
n
Global Chief Technology Officer and a member of the Management Board of Aegon N.V. (2016-2021)
n
Various positions at Citigroup, Inc., including Managing Director, Head of Global Consumer Digital and Operations
Technology (2007-2016)
n
Various positions at JPMorgan Chase & Company, including SVP, Chase Home Finance Technology (2001-2007)
n
SVP, eBusiness Solutions at CACI International, Inc. (1999-2001)
Directors, Corporate Governance, and Executive Officers
Directors
FREDDIE MAC | 2024 Form 10-K
218
Kathleen L. Casey
Age 58
Director since October 2019
Freddie Mac Committees:
• Audit
• Executive
• Mission and Housing Sustainability
• Nominating and Governance, Chair
Public Company Directorships:
• None
Ms. Casey is an experienced leader with an extensive background in financial regulatory policy and oversight. She brings high-
level regulatory and financial oversight experience as well as a deep understanding of financial markets and governance,
including key issues affecting transit and housing policy, economic and monetary policy, banking, and securities regulation.
Experience and Qualifications
n
Senior Advisor with Patomak Global Partners, a financial services consulting firm (2012-present)
n
Member of the Board of HSBC Holdings Plc (2014-2020), including service during her tenure on the Group Audit, Financial
System Vulnerabilities, Nominations & Corporate Governance, and Group Risk Committees
n
Commissioner of the Securities and Exchange Commission (2006-2011)
n
Various roles with the U.S. Senate, including Staff Director and Counsel of the Senate Banking, Housing, and Urban Affairs
Committee and Staff Director of the Senate Banking Committee's Subcommittee on Financial Institutions and Regulatory
Relief (1993-2006)
n
Member of the Governing Board of the Center for Audit Quality (2024-present)
n
Member of the Advisory Board of Sterman Masser, Inc. (2024-present)
n
Member of the Board of Sepio Systems Inc., a cybersecurity firm focused on hardware access management (2020-present)
n
Member of the Library of Congress Trust Fund Board (2011-present)
n
Member of the Financial Accounting Foundation Board of Trustees (2018-2022); Chair (2020-2022)
n
Member of the International Valuation Standards Council Board of Trustees (2016-2022)
n
Chair of the Alternative Investment Management Association Council (2012-2016)
Kevin G. Chavers
Age 61
Director since February 2022
Freddie Mac Committees:
• Audit
• Compensation and Human Capital, Chair
• Executive
• Mission and Housing Sustainability
Public Company Directorships:
• Chimera Investment Corporation
Mr. Chavers is an experienced executive with an extensive professional background in the real estate and mortgage finance
industry. He brings more than 30 years of experience across a variety of roles in the industry, including mortgage finance,
capital markets, business operations and strategy, and public and private housing finance policy.
Experience and Qualifications
n
Founder of BlackAcre Investment Management (2025-present)
n
Various positions at BlackRock, Inc., including Managing Director, Global Fixed Income Investment Team, Managing
Director, Global Public Policy Group, and Managing Director, BlackRock Solutions, Financial Markets Advisory Group
(2011-2021)
n
Various positions at Morgan Stanley, including Managing Director, Senior Relationship Management and Head, Mortgage
Strategy & Execution (2003-2011)
n
VP, Principal Finance Group, Mortgage Securities Department at Goldman Sachs & Company (1998-2003)
n
Various positions in the U.S. Government (1989-1998), including President of Ginnie Mae (1995-1998)
Directors, Corporate Governance, and Executive Officers
Directors
FREDDIE MAC | 2024 Form 10-K
219
n
Associate at Milbank, Tweed, Hadley & McCloy LLP (1987-1989)
n
Member of the Board, Compensation and Risk Committees of Chimera Investment Corporation, Inc. (2021-present)
n
Member of the Board and Audit Committee of SMBC Americas Holdings, Inc. (2021-present)
n
Member of the Board of Toorak Capital Partners (2021-present)
n
Member of the Advisory Board of Ivory Innovations (2022-present)
n
Independent Trustee of Optimum Funds (2021-present)
Lance F. Drummond
Age 70
Director since July 2015
Non-Executive Chair of the Board since February 2024
Freddie Mac Committees:
• Executive, Chair
Public Company Directorships:
• United Community Banks, Inc.
• AvidXchange Holdings, Inc.
Mr. Drummond is an experienced executive with more than 40 years of experience. He brings extensive experience across a
variety of industries and disciplines, with a specialty in business transforming strategy development and execution, operations,
technology, process re-engineering, and executive compensation oversight. Mr. Drummond has served as Non-Executive Chair
of the Board since February 19, 2024.
Experience and Qualifications
n
Executive in Residence, Christopher Newport University (2015-2017)
n
EVP of Operations and Technology of TD Canada Trust (2011-2014)
n
EVP of Human Resources and Shared Services of Fiserv Inc. (2009-2011)
n
SVP and Supply Chain Executive, Service and Fulfillment Executive for Global Technology and Operations, and
eCommerce and ATM Executive of Bank of America (2002-2008)
n
Various positions with Eastman Kodak Company, including Chief Operating Officer and Corporate VP of Kodak
Professional Division (1976-2002)
n
Member of the Board and Executive and Risk Committees, Chair of the Nominating and Governance Committee, and
former member of the Talent & Compensation Committee of United Community Banks, Inc. (2018-present)
n
Member of the Board and Human Capital & Compensation Committee and Chair of the Risk Management Committee of
AvidXchange (2020-present)
n
Member of the Board and Compensation and Human Capital Committee and Chair of the Audit Committee of the Financial
Industry Regulatory Authority (FINRA) (2018-2024)
n Member of the Board and Audit Committee of CurAegis Technologies, Inc. (2018-2020)
Aleem Gillani
Age 62
Director since January 2019
Freddie Mac Committees:
• Audit, Chair
• Executive
• Nominating and Governance
Public Company Directorships:
• U.S. Bancorp
Mr. Gillani is an experienced executive with a wealth of experience in sophisticated financial institutions. His blend of industry,
financial, risk management, and executive leadership experience provides valuable contributions to the Board of Directors'
oversight of internal controls over financial reporting and risk management matters and helps guide Freddie Mac in its mission
to support the liquidity and stability of the housing market.
Experience and Qualifications
n
Various positions with SunTrust Banks, Inc., including CFO and Corporate EVP, EVP and Corporate Treasurer, and SVP
and Chief Market Risk Officer (2007-2018)
Directors, Corporate Governance, and Executive Officers
Directors
FREDDIE MAC | 2024 Form 10-K
220
n
SVP and Chief Market Risk Officer of PNC Financial Services Group, Inc. (2004-2007)
n
Chief Market Risk Officer of BankBoston and FleetBoston Corp. (1996-2004)
n Advanced Management Program, Harvard Business School (2003)
n Member of the Board of Managers of S&P Global Ratings, a division of S&P Global, Inc. (2025-present)
n Member of the Board and Audit and Risk Management Committees of U.S Bancorp (2024-present)
n
Member of the Board of SunTrust Robinson Humphrey (2011-2018)
n
Founding Chair of the Market Risk Council for the Risk Management Association (1998)
Luke S. Hayden III
Age 68
Director since February 2022
Freddie Mac Committees:
• Operations and Technology
• Risk
Public Company Directorships:
• None
Mr. Hayden is an experienced executive with extensive professional background in the mortgage and financial services
industries. He brings a depth of experience from across home lending, including in the origination, servicing, and investment of
mortgage products, and deep expertise in residential real estate finance, capital markets, and risk management.
Experience and Qualifications
n
CEO of Hayden Consulting (2012-present)
n
Vice Chairman of Residential Mortgage Services Holdings, Inc. (2013-2021)
n
President of PHH Mortgage Corporation (2010-2012)
n
EVP and Senior Managing Director at GMAC Residential Capital (2007-2008)
n
Various positions including EVP at JPMorgan Chase & Company and its predecessors (1992-2005)
n
Various positions at Security Pacifica National Bank, including SVP, Secondary Marketing, Residential Real Estate Group
(1989-1992)
n
Various positions at First Interest Bank of California, including SVP, Mortgage Division (1980-1989)
n
Loan officer and loan purchaser at Ralph C. Sutro Company (1978-1980)
Christopher E. Herbert
Age 64
Director since March 2018
Freddie Mac Committees:
• Compensation and Human Capital
• Executive
• Mission and Housing Sustainability, Chair
• Risk
Public Company Directorships:
• None
Mr. Herbert is an experienced leader in the governmental and educational sectors. He provides the Board of Directors with in-
depth knowledge of housing policy, including low-income housing, and urban development, including the financial and
demographic dimensions of home ownership.
Experience and Qualifications
n
Managing Director for Harvard University's Joint Center for Housing Studies and Lecturer in Urban Planning and Design at
the Harvard Graduate School of Design (2015-present)
n
Research Director for Harvard University's Joint Center for Housing Studies (2010-2014)
n
Senior Associate at Abt Associates, Inc. (1997-2010)
n Member of the National Association of Realtors Strategic Think Tank (2022-2024)
n
Member of the Advisory Board of Ivory Innovations (2021-present)
Directors, Corporate Governance, and Executive Officers
Directors
FREDDIE MAC | 2024 Form 10-K
221
n Member of the Habitat for Humanity Cost of Home Cabinet and Affordable Housing and Homeownership Research
Advisory Council (2019-2024)
n
Member of the Board of the Homeownership Preservation Foundation (2011-2019)
n
Member of the Research Advisory Council for the Center for Responsible Lending (2006-2019)
n
Member of the Board of GreenPath Financial Wellness (2017-2019)
n
Member of the Federal Reserve Bank of Boston's Community Development Research Advisory Council (2014-2016)
Grace A. Huebscher
Age 65
Director since December 2017
Freddie Mac Committees:
• Compensation and Human Capital
• Executive
• Operations and Technology
• Risk, Chair
Public Company Directorships:
• None
Ms. Huebscher is an experienced executive with extensive experience in capital markets and real estate. She brings deep
multifamily industry knowledge, entrepreneurial experience, and risk oversight and executive management expertise to the
Board of Directors.
Experience and Qualifications
n
Advisor to Capital One Commercial Bank (2017)
n
President of Capital One Multifamily Finance, LLC (2013-2017)
n
Co-Founder and CEO of Beech Street Capital, LLC (2009-2013)
n
Various positions with Fannie Mae, including VP, Capital Markets (1997-2009)
n
Member of the Board of The Kenyon Review (1998-2024)
n
Member of the Commercial Board of Governors of the Mortgage Bankers Association (2014-2017)
Allan P. Merrill
Age 58
Director since September 2020
Freddie Mac Committees:
• Audit
• Mission and Housing Sustainability
• Nominating and Governance
Public Company Directorships:
• Beazer Homes USA, Inc.
Mr. Merrill is an experienced executive in the homebuilding industry. He brings extensive expertise and in-depth knowledge of
the housing market as well as considerable executive leadership, financial experience, and public policy expertise to the Board
of Directors.
Experience and Qualifications
n
Various positions with Beazer Homes USA, Inc., including Chairman of the Board, President, and CEO, and EVP and CFO
(2007-present)
n
Various leadership positions with Move, Inc., including EVP of Corporate Development and Strategy, and President of
Homebuilder.com, a division of Move, Inc. (2000-2007)
n
Various positions with UBS Group AG and its predecessors, including Managing Director and Co-Head of the Global
Resources Group (1987-2000)
n
Member of the Board of Builder Homesite, Inc. (2011-2024)
n
Member of the Board of the Leading Builders of America (2011-present)
n
Member of the Policy Advisory Board of Harvard University's Joint Center for Housing Studies (1992-present)
Directors, Corporate Governance, and Executive Officers
Directors
FREDDIE MAC | 2024 Form 10-K
222
Jane E. Prokop
Age 59
Director since January 2025
Freddie Mac Committees:
• Operations and Technology
• Risk
Public Company Directorships:
• None
Ms. Prokop is an experienced executive in the financial industry. She brings extensive expertise and in-depth knowledge of the
financial market as well as considerable executive leadership, financial experience, and leasing and mortgage expertise to the
Board of Directors.
Experience and Qualifications
n
EVP and Global Head of Small and Medium Enterprises at Mastercard (2021-present)
n
CEO of Principis Capital (2009-2021)
n
Chief Strategy Officer at Northern Leasing Systems (2007-2009)
n
Various positions with MortgageIT, including EVP of Strategy and Planning (2004-2007) and President of the Home Closer
LLC, a division of MortgageIT (2002-2004)
n
EVP of Corporate Development at Digital Convergence Corporation (1999-2002)
n
Investment Officer at AIG-Brunswick Capital Management (1996-1999)
Diana W. Reid
Age 69
Director since September 2024
Freddie Mac Committees:
• Executive
Public Company Directorships:
• None
Ms. Reid is an experienced executive with extensive knowledge of banking, real estate, capital markets, and affordable
housing.
Experience and Qualifications
n
CEO of Freddie Mac (September 2024-present)
n
Various positions with PNC Financial Services Group, Inc., including Executive, PNC Real Estate and Executive Vice
President, PNC Financial Services Group (2007-2019)
n
Founder and Managing Partner at Beekman Advisors LLC (2003-2007)
n
Various positions with Credit Suisse First Boston, including Managing Director Senior Advisor of the Investment Banking
Division – Financial Institutions Group and Managing Director of the Fixed Income Division (1983-2002)
n
Member of the Board and Audit Committee, and Chair of the Nominating / Corporate Governance Committee of Welltower,
Inc. (2020-2024)
n
Member of the Board of DebtX Analytics, Inc. (2023-2024)
n
Member of the Advisory Board of Holland Partner Group (2022-2024)
Directors, Corporate Governance, and Executive Officers
Directors
FREDDIE MAC | 2024 Form 10-K
223
Roy Swan
Age 61
Director since February 2024
Freddie Mac Committees:
• Audit
• Compensation and Human Capital
• Operations and Technology
Public Company Directorships:
• None
Mr. Swan is an experienced executive with extensive experience in capital markets and finance. He brings deep investment
banking knowledge and executive management expertise to the Board of Directors.
Experience and Qualifications
n
Director, Mission Investments of the Ford Foundation (2018-present)
n
Various positions at Morgan Stanley, including President and Chief Operating Officer of Morgan Stanley Trust; Executive
Director, Corporate Treasury; Founder and Managing Member of Morgan Stanley Community Investments LLC; Managing
Director and Co-Head, Global Sustainable Finance; and Founder and Chief Executive Officer of Mortgage Stanley Impact
SBIC (2008-2018)
n
Various positions at Carver Federal Savings Bank, departing as Executive Vice President and Chief Financial Officer
(2005-2008)
n
Various positions at Time Warner Inc. (2003-2005)
n
Various investment banking positions at JPMorgan Chase & Co. (1999-2003)
n
Vice President, Investment Banking, Industrial Sector at Schroders & Co. Inc. (1998-1999)
n
Chief Investment Officer at Upper Manhattan Empowerment Zone (1996-1998)
n
Associate at Salomon Brothers, Inc. (1993-1996)
n
Member of the Advisory Board of AQR Funds (2024-present)
n
Member of the Board of the Global Impact Investing Network (2023-present)
n
Member of the Board of Parnassus Funds (2021-present)
n
Member of the Board of Varo Bank N.A. (2021-2023)
n
Member of the Board of Aequi Acquisition Corp. (2020-2023)
Directors, Corporate Governance, and Executive Officers
Directors
FREDDIE MAC | 2024 Form 10-K
224
CORPORATE GOVERNANCE
Our Corporate Governance Practices
We are committed to best practices in corporate governance. Our Board of Directors has adopted the Guidelines, which
embody many of our long-standing practices, policies, and procedures and are available on our website at
www.freddiemac.com/governance/pdf/gov_guidelines.pdf. Our Board of Directors reviews the Guidelines annually and
regularly assesses them against the regulatory and legislative environment in which we operate as well as evolving best
practices.
The Guidelines are designed to provide for effective collaboration between management and the Board of Directors. We have
instituted the following specific corporate governance practices:
n
Our Board of Directors has an independent Non-Executive Chair, whose responsibilities include presiding over Board
meetings and executive sessions of the non-employee or independent directors.
n
All of our directors are independent, except for the CEO.
n
Each of the Audit, CHC, Nominating and Governance, Mission and Housing Sustainability, Operations and Technology,
and Risk Committees consists entirely of independent directors.
n
Our directors are elected annually.
n
Each committee operates pursuant to a written charter that has been approved by the Board of Directors. The charters are
available at http://www.freddiemac.com/governance/board-committees.html.
n
Independent directors meet regularly without management.
n
The Board of Directors and each of the Audit, CHC, Nominating and Governance, Mission and Housing Sustainability,
Operations and Technology, and Risk Committees conduct an annual self-evaluation.
n
New directors receive a full orientation regarding the company and issues specific to the committees to which they have
been appointed.
n
All directors are provided with access to, and are encouraged to utilize, third-party continuing education.
n
Management provides the Board of Directors and its committees with in-depth technical briefings on substantive issues
affecting the company.
n
The CHC Committee reviews management talent and succession planning quarterly.
Director Independence and Relevant Considerations
The Nominating and Governance Committee has evaluated the independence of each of our non-employee Board members
and has made recommendations to the Board of Directors for determination and approval with respect thereto. For purposes of
these determinations, we use the definition of independence set forth in Sections 4 and 5 of the Guidelines and in Section
303A.02 of the NYSE Listed Company Manual. Although our stock is no longer listed on the NYSE, certain of the corporate
governance requirements of the NYSE Listed Company Manual, including those relating to independence, continue to apply to
us because they are incorporated by reference in the Corporate Governance Rule. Based on the Nominating and Governance
Committee’s evaluation and recommendation, the Board of Directors determined that all current non-employee Board members
are independent. Ms. Reid is not considered to be independent due to her service as our CEO.
Our Board of Directors determined that all members of our Audit, CHC, and Nominating and Governance Committees, and the
Chairs of the Mission and Housing Sustainability, Operations and Technology, and Risk Committees are independent within the
meaning of Sections 4 and 5 of the Guidelines and Section 303A.02 of the NYSE Listed Company Manual. Our Board of
Directors also determined that: (1) all members of our Audit Committee are independent within the meaning of Exchange Act
Rule 10A-3 and Section 303A.06 of the NYSE Listed Company Manual; and (2) all members of our CHC Committee are
independent within the meaning of Exchange Act Rule 10C-1 and Section 303A.02(a)(ii) of the NYSE Listed Company Manual.
In determining the independence of each director, the Board of Directors reviewed the following categories or types of
relationships, in addition to those specifically addressed by the standards contained in Section 5 of the Guidelines, to
determine whether those relationships, either individually or in aggregate, would constitute a material relationship between the
director and us that would impair the director's judgment as a member of the Board of Directors or create the perception or
appearance of such an impairment:
n
Employment Affiliations with Business Partners. Mr. Herbert is employed by an organization that engages or has
engaged in business with Freddie Mac resulting in payments between Freddie Mac and such organization. Under the
Guidelines, no specific independence determination is required with respect to these payments because they do not
exceed the greater of $1 million or 2% of such organization's consolidated gross revenues for each of the last three fiscal
years. After considering the nature and extent of our specific relationship with this organization, our Board of Directors
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concluded that this business relationship does not constitute a material relationship between Mr. Herbert and Freddie Mac
that would impair his independence as our director.
Immediate family members of Messrs. Chavers, Grier, and Hayden and Ms. Huebscher are employed by companies that
engage or have engaged in business with Freddie Mac resulting in payments between Freddie Mac and such companies.
After considering the nature and extent of the specific relationships between the companies and the immediate family
members, and between the companies and Freddie Mac, our Board of Directors concluded that these business
relationships of Messrs. Chavers and Hayden and Ms. Huebscher do not, and of Mr. Grier did not, constitute material
relationships that would impair their independence as our directors.
n
Employment Affiliations with Competitors. An immediate family member of Ms. Huebscher is employed by a company
that is a competitor of Freddie Mac. After considering the nature and extent of the specific relationship between the
competitor and the immediate family member and between the competitor and Freddie Mac, our Board of Directors
concluded that this business relationship does not constitute a material relationship that would impair Ms. Huebscher's
independence as our director.
n
Affiliation with a Charity that Receives Contributions from Freddie Mac. Mr. Herbert is affiliated with an organization
that receives charitable contributions from Freddie Mac. Under the Guidelines, no specific independence determination is
required nor is disclosure required with respect to these payments because they do not exceed the greater of $1 million or
2% of such organization's consolidated gross revenues for each of the last three fiscal years. After considering the nature
and extent of our specific relationship with this organization, our Board of Directors concluded that this relationship does not
constitute a material relationship between Mr. Herbert and Freddie Mac that would impair his independence as our director.
n
Board Memberships with Business Partners. Messrs. Chavers, Drummond, Gillani, Herbert, and Merrill serve as
directors of other organizations that engage in business with Freddie Mac resulting in payments between Freddie Mac and
such organizations. After considering the nature and extent of the specific relationship between each of those
organizations and Freddie Mac, and the fact that these Board members are directors of these other organizations rather
than employees, our Board of Directors concluded that these business relationships do not constitute material
relationships that would impair their independence as our directors.
n
Financial Relationships with Business Partners. Messrs. Bloom, Gillani, Grier, and Hayden each own stock in
companies with which Freddie Mac conducts significant business, and such ownership represents a material portion of
their respective net worth. To eliminate any potential conflict of interest that might arise as a result of their respective stock
ownership, we have established mechanisms pursuant to which they will be recused from discussing and acting upon any
matters considered by the Board of Directors or any of the committees of which they are or were members and that
directly relate to the company in which they have such stock ownership. In situations where matters are frequently
presented to the Board of Directors regarding these companies, we have established formal recusal arrangements. The
Audit Committee Chair, in consultation with the Non-Executive Chair (or the Non-Executive Chair alone in a situation
involving the Audit Committee Chair), addresses any questions regarding whether recusal from a particular discussion or
action is appropriate.
In evaluating the independence of Messrs. Bloom, Gillani, Grier, and Hayden in light of their stock ownership in Freddie
Mac business partners, our Board of Directors considered the nature and extent of Freddie Mac's business relationships
with such business partners and any potential impact that their respective stock ownership may have on their independent
judgment as our directors, taking into account the relevant recusal mechanisms. Our Board of Directors concluded that
these mechanisms addressed any actual or potential conflicts of interest with respect to the stock ownership. Accordingly,
our Board of Directors concluded that the stock ownership in Freddie Mac business partners by Messrs. Bloom, Gillani,
and Hayden do not, and by Mr. Grier did not, constitute material relationships that would impair their independence as our
directors.
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Board of Directors and Board Committee Information
Authority of the Board of Directors and Board Committees
The directors serve on behalf of, and exercise authority as directed by, the Conservator and owe their fiduciary duties of care
and loyalty to the Conservator. Although the Conservator has provided authority for the Board of Directors and its committees
to function in accordance with the duties and authorities set forth in applicable statutes, regulations, guidance, orders, and
directives, and our Bylaws and committee charters, the Conservator has reserved certain powers of approval for itself. The
Conservator provided instructions to the Board of Directors in 2008, 2012, and 2017 for Freddie Mac to consult with and obtain
the Conservator's decision before taking certain actions.
The Conservator's instructions as currently revised require that we obtain the Conservator's decision before taking action on
any matters that require the consent of or consultation with Treasury under the Purchase Agreement. See Note 2 for a list of
matters that require the approval of Treasury under the Purchase Agreement.
The Conservator's revised instructions also require us to obtain the Conservator's decision before taking action in the areas
identified in the table below. For some matters, the Conservator's revised instructions specify that our Board of Directors must
review and approve the matter before we request the Conservator's decision, and for other matters the Board of Directors is
expected to determine the appropriate level of the Board's engagement.
Matters Requiring Prior Board Review and Approval
Other Matters
• Redemptions or repurchases of our subordinated debt, except as may
be necessary to comply with Section 5.7 of the Purchase Agreement;
• Creation of any subsidiary or affiliate, or entering into a substantial
transaction with a subsidiary or affiliate, except for routine, ongoing
transactions with CSS or the creation of, or a transaction with, a
subsidiary or affiliate undertaken in the ordinary course of business;
• Changes to, or removal of, Board risk limits that would result in an
increase in the amount of risk that may be taken by us;
• Retention and termination of external auditors to perform an integrated
audit of our financial statements and internal controls over financial
reporting;
• Termination of law firms serving as consultants to the Board;
• Proposed amendments to our bylaws or Board committee charters;
• Setting or increasing the compensation or benefits payable to
members of the Board; and
• Establishing the annual operating budget.
• Material changes in accounting policy;
• Proposed changes in our business operations, activities, and transactions
that, in the reasonable business judgment of our management, are more
likely than not to result in a significant increase in credit, market,
reputational, operational, or other key risks;
• Matters, including our initiation or substantive response to litigation, that
impact or question the Conservator's powers, our status in
conservatorship, the legal effect of the conservatorship, interpretations of
the Purchase Agreement, or terms and conditions of the Financial Agency
Agreement with Treasury or our performance under the Financial Agency
Agreement;
• Agreements with respect to any securities litigation claim, and agreements
pursuant to which we settle, resolve, or compromise demands, claims,
litigation, lawsuits, prosecutions, regulatory proceedings, or tax matters
when the amount in dispute is more than $50 million, including each
separate agreement with the same counterparty involving the same
dispute or common facts when the aggregate amount in dispute totals
more than $50 million (this provision excludes loan workouts, which are
conducted in the ordinary course of business);
• Mergers, acquisitions, and changes in control of a Key Counterparty where
we have a direct contractual right to cease doing business with such Key
Counterparty or object to the merger or acquisition of such entity;
• Changes to requirements, policies, frameworks, standards, or products
that are aligned with Fannie Mae, pursuant to FHFA's direction;
• Credit risk transfers that are new transaction types, recurring transactions
with any material change in terms, and transactions that involve collateral
types not previously included in a risk transfer transaction;
• Mortgage servicing rights sales and transfers involving:
◦100,000 or more loans to a non-bank transferee; or
◦25,000 or more loans to any transferee servicer when the transfer
would increase the number of the transferee's Freddie Mac- and
Fannie Mae-owned seriously delinquent loans by at least 25 percent
and the servicing transfer has a minimum of 500 seriously delinquent
loans; and
• Changes in employee compensation that could significantly impact our
employees, including, but not limited to, retention awards, special
incentive plans, and merit increase pool funding.
In addition, FHFA requires us to provide it with timely notice of: (1) activities that represent a significant change in current
business practices, operations, policies, or strategies not otherwise addressed in the Conservator decision items referenced
above; (2) exceptions and waivers to aligned requirements, policies, frameworks, standards, or products if not otherwise
submitted to FHFA for Conservator approval as required above; and (3) accounting error corrections to previously issued
financial statements that are not de minimis. FHFA will then determine whether any such items require Conservator approval.
For more information on the conservatorship, see MD&A - Conservatorship and Related Matters.
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Board Committees
The Board of Directors has seven standing committees: Audit, CHC, Executive, Mission and Housing Sustainability, Nominating
and Governance, Operations and Technology, and Risk. All standing committees, other than the Executive Committee, meet
regularly and are chaired by, and consist entirely of, independent directors. The committees perform essential functions on
behalf of the Board of Directors. The committee chairs review and approve agendas for all meetings of their respective
committees. Charters for the standing committees describe each committee's responsibilities and have been adopted by the
Board of Directors and approved by the Conservator. These charters are available on our website at http://
www.freddiemac.com/governance/board-committees.html.
The membership of each committee as of February 12, 2025, except as otherwise noted below, and the number of meetings
held by each committee in 2024, are set forth below, followed by descriptions of each committee's primary responsibilities.
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Committee
Committee Meetings
in 2024
Chair
Members
Audit Committee
9
Aleem Gillani
• Kathleen L. Casey
• Kevin G. Chavers
• Allan P. Merrill
• Roy Swan(1)
Compensation and Human
Capital Committee
7
Kevin G. Chavers(2)
• Mark H. Bloom
• Christopher E. Herbert
• Grace A. Huebscher
• Roy Swan(1)
Executive Committee
1
Lance F. Drummond(3)
• Mark H. Bloom
• Kathleen L. Casey
• Kevin G. Chavers(2)
• Aleem Gillani
• Christopher E. Herbert
• Grace A. Huebscher
• Diana W. Reid
Mission and Housing
Sustainability Committee
4
Christopher E. Herbert
• Kathleen L. Casey
• Kevin G. Chavers
• Allan P. Merrill
Nominating and Governance
Committee
6
Kathleen L. Casey
• Aleem Gillani(4)
• Allan P. Merrill
Operations and Technology
Committee
5
Mark H. Bloom
• Luke S. Hayden
• Grace A. Huebscher
• Jane E. Prokop(5)
• Roy Swan(1)
Risk Committee
5
Grace A. Huebscher
• Mark H. Bloom
• Luke S. Hayden
• Christopher E. Herbert
• Jane E. Prokop(5)
(1)
Mr. Swan was elected to the Board and appointed a member of the Audit, CHC, and Operations and Technology Committees effective February 19, 2024.
(2)
Mr. Chavers left the Nominating and Governance Committee and was appointed Chair of the CHC Committee and a member of the Executive Committee effective
February 19, 2024.
(3)
Mr. Drummond left the Audit, CHC, and Operations and Technology Committees, and was appointed Non-Executive Chair of the Board and Chair of the Executive
Committee, effective February 19, 2024.
(4)
Mr. Gillani left the CHC Committee and was appointed a member of the Nominating and Governance Committee effective February 19, 2024.
(5)
Ms. Prokop was elected to the Board and was appointed a member of the Operations and Technology and Risk Committees effective January 2, 2025.
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Audit Committee
The Audit Committee provides oversight of the company's accounting and financial reporting and disclosure processes, the
adequacy of the systems of disclosure and internal control established by management, and the audit of the company's
financial statements. Among other responsibilities, the Audit Committee: (1) appoints the independent auditor and evaluates its
independence and performance; (2) reviews the audit plans for and results of the independent audit and internal audits; and (3)
reviews compliance with legal and regulatory requirements. The Audit Committee's activities during 2024 with respect to the
oversight of the independent auditor are described in more detail in Principal Accounting Fees and Services - Approval
of Independent Auditor Services and Fees. The Audit Committee also reviews, discusses and, in certain cases approves any
sustainability reporting and disclosures determined by management to be significant.
The Audit Committee periodically reviews the company's guidelines and policies governing the processes for assessing and
managing the company's risks and periodically reviews the company's major financial risk exposures and the steps
management has taken to monitor and control such exposures. The Audit Committee also approves all decisions regarding the
appointment, removal, and compensation of our General Auditor, the head of our Internal Audit Division, who reports
independently to the Audit Committee, as well as the annual incentive funding level for our Internal Audit Division.
The Audit Committee satisfies the definition of "audit committee" in Exchange Act Section 3(a)(58)(A) and the requirements of
Exchange Act Rule 10A-3. Although our stock is no longer listed on the NYSE, certain of the corporate governance
requirements of the NYSE Listed Company Manual, including those relating to audit committees, continue to apply to us
because they are incorporated by reference in the Corporate Governance Rule. The Audit Committee satisfies the "audit
committee" requirements in Sections 303A.06 and 303A.07 of the NYSE Listed Company Manual. The Board of Directors has
determined that all members of our Audit Committee are independent and financially literate and that Mr. Gillani, a member of
the Audit Committee since January 2019 and its current chair, meets the definition of an "audit committee financial expert"
under SEC regulations.
Compensation and Human Capital Committee
The CHC Committee oversees the company's compensation and benefits policies and programs, as well as other human capital
matters, including: (1) a quarterly review of succession planning and supporting talent development programs; (2) our diversity,
equity, and inclusion programs and policies, as well as the results of those programs and policies; and (3) the design and
execution of initiatives to strengthen our culture and employee engagement. The company's processes for consideration and
determination of executive compensation, and the role of the CHC Committee in those processes, are further described in
Executive Compensation - CD&A. The CHC Committee Report is included in Executive Compensation - CD&A -
Compensation and Human Capital Committee Report.
Although the CHC Committee plays a significant role in considering and recommending executive compensation, FHFA is
actively involved in determining such compensation in its role as our Conservator and as our regulator. The CHC Committee's
authority and flexibility is, therefore, subject to certain limitations as discussed in Executive Compensation - CD&A – Other
Executive Compensation Considerations - Legal, Regulatory, and Conservator Restrictions on Executive
Compensation.
For a discussion of the CHC Committee's conclusion that our compensation policies and practices do not create risks that are
reasonably likely to have a material adverse effect on us, see Executive Compensation - Compensation and Risk.
For a discussion of the CHC Committee's role with respect to human capital generally, see Introduction - Our Business -
Primary Business Strategies - Human Capital Management.
The CHC Committee consists entirely of independent directors. None of the members of the CHC Committee during 2024 were
officers or employees of Freddie Mac or had any relationship with us that would be required to be disclosed by us under
Item 407(e)(4) of Regulation S-K.
Executive Committee
The Executive Committee consists of the Non-Executive Chair, the chair of each other standing committee, and our CEO. It
consists of independent directors, with the exception of our CEO, and is authorized to exercise the corporate powers of the
Board of Directors between Board meetings, except for those powers reserved to the Board of Directors by our Charter and
Bylaws or otherwise.
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Mission and Housing Sustainability Committee
The Mission and Housing Sustainability Committee, which consists entirely of independent directors, has responsibility for
overseeing the development, planning, implementation, performance, and execution of our strategies and significant initiatives
related to delivering on our commitment to promote affordability, equity, and sustainability in housing. The Mission and Housing
Sustainability Committee oversees: (1) the development and execution of strategies, initiatives, and activities designed to help
us meet our affordable housing and Duty to Serve goals, increase sustainable access to credit, and implement our housing
sustainability and equitable housing initiatives; (2) compliance with fair lending laws and regulations, including our fair lending
compliance program and fair lending implications of key mission and housing sustainability initiatives; (3) the review of
management reporting relating to the execution of our mission, housing sustainability, and fair lending strategies and initiatives;
and (4) the review of initiatives designed to promote the adaptation of housing to be more resilient in the face of climate change
or improvements to mitigate housing's climate impacts.
Nominating and Governance Committee
The Nominating and Governance Committee, which consists entirely of independent directors, oversees the company's
corporate governance, including reviewing the company's Bylaws and the Guidelines. The Nominating and Governance
Committee also, among other responsibilities: (1) assists the Board of Directors and its committees in conducting annual self-
evaluations and identifying qualified individuals to become directors; (2) reviews Board member independence and
qualifications and recommends membership of the committees of the Board of Directors; and (3) reviews potential conflicts of
interest for members of senior management as well as certain related person transactions.
Operations and Technology Committee
The Operations and Technology Committee, which consists entirely of independent directors, has responsibility for overseeing
the development and execution of our enterprise information, operations, and technology strategies and the information,
operational resiliency, and enterprise third-party governance programs. Specifically, the Operations and Technology Committee:
(1) oversees our information, operations, and technology strategies and planning, and the implementation of technology
initiatives critical to the achievement of our mission, strategy, and business objectives; (2) in conjunction with the Risk
Committee, oversees our management of information (including cybersecurity), technology, operational resiliency, and
enterprise third-party governance risk, including the possibility that these risks will adversely affect the achievement of our
mission and business objectives; (3) oversees our information (including cybersecurity and information security), operational
resiliency, and enterprise third-party governance programs, including risk and controls; (4) receives reports related to our
technology strategy, practices, and management and potential for innovation from both EO&T and the business areas, as
appropriate; and (5) reviews and recommends to the Board for approval the annual EO&T business plan, including relevant
performance indicators, and evaluating EO&T against the plan. The Operations and Technology Committee also reviews
capabilities for and adequacy of resources allocated to operations and technology enterprise-wide and monitors and evaluates
trends in technology that may affect our strategy and business objectives. See MD&A – Risk Management – Operational Risk
– Cybersecurity Risk – Cybersecurity Governance for additional information.
Risk Committee
The Risk Committee, which consists entirely of independent directors, oversees on an enterprise-wide basis the company's risk
management framework, including credit risk, market risk, liquidity risk, operational risk (including cybersecurity), compliance
risk, climate-related risk, and strategic risk. The Risk Committee reviews and recommends the company's enterprise risk policy
and Board-level risk appetite statements, metrics, and limits to the Board of Directors for approval, oversees management’s
adherence to Board risk limits and approves any exceptions thereto with notice to the Board, and, among other responsibilities,
reviews significant: (1) enterprise risk exposures; (2) risk management strategies; (3) results of risk management reviews and
assessments; and (4) emerging risks. The Risk Committee also reviews our exposure to the potential negative impacts of
climate change, oversees the development and implementation of our climate risk framework, and reviews capabilities for and
adequacy of resources allocated to ERM. The Risk Committee also approves all decisions regarding the appointment or
removal of the CRO, and the CRO reports independently to the Risk Committee.
Directors, Corporate Governance, and Executive Officers
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Board Leadership Structure
The leadership structure established by the Conservator requires that the positions of CEO and Chair of the Board of Directors
be held by different individuals. In addition, FHFA's Corporate Governance Rule requires that the position of Chair of the Board
of Directors be filled by an independent director as defined under the rules of the NYSE.
Communications with Directors
Interested parties wishing to communicate any concerns or questions about Freddie Mac to the Board of Directors or its
members may do so by U.S. mail, addressed to the Corporate Secretary, Freddie Mac, 8200 Jones Branch Drive, McLean, VA
22102-3110 or by email at boardofdirectors@freddiemac.com. Communications may be directed to the Non-Executive Chair,
to any other director or directors, or to groups of directors, such as the independent or non-employee directors.
Codes of Conduct
We have separate codes of conduct for our employees and Board members. The employee code of conduct serves as the
code of ethics for senior executives and financial officers. All employees, including senior executives and financial officers, are
required to sign an annual acknowledgment that they have read the employee code of conduct and agree to abide by it and will
report suspected deviations from the employee code of conduct. When joining our Board of Directors, directors acknowledge
that they have reviewed and understand the director code of conduct and agree to be bound by its provisions, and each
director re-executes such confirmation annually.
Copies of our employee and director codes of conduct are available, and any amendments or waivers that would be required to
be disclosed are posted on our website at www.freddiemac.com/governance/code-conduct.html.
Director Compensation
Non-employee Board members receive compensation in the form of cash retainers, paid on a quarterly basis. Non-employee
directors are also reimbursed for reasonable out-of-pocket costs for attending meetings of the Board of Directors or a Board
committee of which they are a member and for other reasonable expenses associated with carrying out their responsibilities as
directors.
Our directors are compensated entirely in cash because the Purchase Agreement prohibits us from issuing any shares of our
equity securities without the prior written consent of Treasury. See Executive Compensation - CD&A - Overview of
Executive Compensation Management Program. There is no provision in the director compensation program for pay that
varies depending on business results, as we believe that such incentive compensation is inconsistent with the oversight role of
the Board.
2024 Non-Employee Director Compensation Levels
Board compensation levels are shown in the table below and have not changed since the beginning of conservatorship.
Table 59 - Board Compensation Levels
Board Service
Cash Compensation
Annual Retainer for Non-Executive Chair
$290,000
Annual Retainer for Non-Employee Directors (other than the Non-Executive Chair)
160,000
Committee Service
Cash Compensation
Annual Retainer for Audit Committee Chair
$25,000
Annual Retainer for Risk Committee Chair
15,000
Annual Retainer for Committee Chairs (other than Audit or Risk)
10,000
Annual Retainer for Audit Committee Members
10,000
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FREDDIE MAC | 2024 Form 10-K
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2024 Director Compensation
The following table summarizes the 2024 compensation earned by all persons who served as a non-employee director during
2024.
Table 60 - Director Compensation
Non-Employee Director
Fees Earned or
Paid in Cash(1)
Total
Mark H. Bloom
$170,000
$170,000
Kathleen L. Casey
180,000
180,000
Kevin G. Chavers(2)
178,654
178,654
Lance F. Drummond(3)
275,192
275,192
Aleem Gillani
185,000
185,000
Mark B. Grier
160,000
160,000
Luke S. Hayden
160,000
160,000
Christopher E. Herbert
170,000
170,000
Grace A. Huebscher
175,000
175,000
Sara Mathew(4)
39,038
39,038
Allan P. Merrill
170,000
170,000
Alberto G. Musalem(5)
21,538
21,538
Roy Swan(6)
147,115
147,115
(1)
We do not have pension or retirement plans for our non-employee directors, and all compensation is paid in cash with no other compensation paid. Therefore, we
have omitted the "Change in Pension Value and Non-qualified Deferred Compensation Earnings" and "All Other Compensation" columns.
(2)
Mr. Chavers became Chair of the CHC Committee effective February 19, 2024.
(3)
Mr. Drummond stepped down as Chair of the CHC Committee and as a member of the Audit Committee and became Non-Executive Chair of the Board effective
February 19, 2024.
(4)
Ms. Mathew left the Board on February 19, 2024, when her term of service on the Board had reached the limit set forth in the Corporate Governance Rule.
(5)
Mr. Musalem tendered his resignation effective February 19, 2024.
(6)
Mr. Swan was elected to the Board and appointed a member of the Audit Committee effective February 19, 2024.
Indemnification
We have made arrangements to indemnify our directors against certain liabilities which are similar to the terms on which our
executive officers are indemnified. For a description of such terms, see Executive Compensation - CD&A - Written
Agreements Relating to NEO Employment - Indemnification Agreements.
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FREDDIE MAC | 2024 Form 10-K
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EXECUTIVE OFFICERS
As of February 12, 2025, our executive officers are as follows:
Diana W. Reid
Age
Year of Affiliation
Position
69
2024
CEO
Ms. Reid has served as our CEO and a member of our Board of Directors since September 2024. See Directors, Corporate
Governance, and Executive Officers - Directors - Director Biographical Information for a biography of Ms. Reid.
Michael T. Hutchins
Age
Year of Affiliation
Position
69
2013
President
Mr. Hutchins has served as our President since December 2020 after serving as our interim President beginning in November
2020. He also served as interim CEO from March 2024 to September 2024. In his role as President, he oversees the company's
Single-Family business and the Multifamily, Investments and Capital Markets, and EO&T Divisions. He previously served as EVP
- Investments and Capital Markets from January 2015 to November 2020 and as SVP - Investments and Capital Markets from
July 2013 to January 2015. From 2007 to 2013, prior to joining Freddie Mac, Mr. Hutchins was Co-Founder and CEO of
PrinceRidge, a financial services firm. Prior to founding PrinceRidge, he was with UBS Group AG from 1996 to 2007, holding a
variety of senior management positions, including the Global Head of the Fixed Income Rates & Currencies Group. Prior to
UBS, Mr. Hutchins worked at Salomon Brothers, Inc. from 1986 to 1996, where he held a number of management positions,
including Co-Head of Fixed Income Capital Markets.
James M. Whitlinger
Age
Year of Affiliation
Position
56
2014
EVP & CFO
Mr. Whitlinger has served as our EVP & CFO since January 2025 and as our SVP - Interim CFO, while also fulfilling
responsibilities as our SVP - Single-Family CFO, from June 2024 to December 2024. In his role as CFO, he is head of the
Finance Division and is responsible for the company's financial controls, accounting, sustainability strategy, investor relations,
financial planning and reporting, tax, capital oversight, and compliance with the requirements of the Sarbanes-Oxley Act of
2022. He previously served as SVP - Single-Family CFO from September 2014 to December 2024. Prior to joining the company,
Mr. Whitlinger held various positions during his 22-year tenure at GMAC ResCap, Inc. and Residential Capital LLC, most
recently as Executive Vice President and Chief Financial Officer for Residential Capital LLC and its subsidiaries. He also served
on the Board of Directors for Residential Capital LLC.
John C. Glessner
Age
Year of Affiliation
Position
52
2010
EVP - Investments and Capital Markets
Mr. Glessner has served as our EVP - Investments and Capital Markets since March 2024 and as our SVP - Investments and
Capital Markets from April 2021 to February 2024. In this role, he is responsible for managing our liquidity, financing, and
derivative activities as well as our portfolio of single-family mortgage securities and loan investments. From March 2018 to April
2021, he served as our SVP of Asset and Liability Management and Treasurer where he was responsible for overseeing our
corporate treasury function, liquidity management, and interest-rate hedging activities. He also oversaw the Investments and
Capital Markets Division's counterparty credit risk activities and secured lending to our investors and customers. He previously
worked in the Securities Sales & Trading Group and on the Collateralized Mortgage Obligation and Cash Window desks, among
other areas. Prior to re-joining Freddie Mac in 2010, he held various trading positions at the Friedman, Billings, Ramsey Group
and GMAC ResCap, Inc.
Directors, Corporate Governance, and Executive Officers
Executive Officers
FREDDIE MAC | 2024 Form 10-K
234
Anil D. Hinduja
Age
Year of Affiliation
Position
61
2015
EVP - CRO
Mr. Hinduja has served as our EVP - CRO and head of ERM since July 2015. In this role, he is responsible for the company's
enterprise-wide risk framework and providing overall direction and leadership for the risk function. He joined Freddie Mac from
Barclays PLC, where he served in increasingly broader risk management roles beginning in 2009, including CRO for Barclays
Africa Group Limited, Group Credit Director for Retail Credit Risk, and CRO for Barclays' retail bank in the U.K. Prior to joining
Barclays, he spent 19 years at Citigroup in diverse roles with increasing responsibility across finance, operations, sales and
distribution, business, and risk management in global consumer businesses. These included Director for Global Consumer
Credit Risk, CRO for the North America Consumer Lending Group, and President and CEO of Citi Home Equity.
Heidi L. Mason
Age
Year of Affiliation
Position
59
2022
EVP & General Counsel
Ms. Mason has served as our EVP and General Counsel since March 2022. In this role, she oversees our legal strategies,
services, and resources. She also manages all corporate governance matters. Ms. Mason brings over 25 years of experience
from across the legal spectrum, including mortgage lending and servicing, corporate law, and financial regulatory matters,
among others. Prior to joining Freddie Mac, Ms. Mason spent 17 years at Wells Fargo, most recently serving as EVP and Senior
Deputy General Counsel. During her tenure at Wells Fargo, Ms. Mason led the legal support for all of its consumer businesses,
including mortgage operations. She previously served as Head of the Wells Fargo corporate legal team, where she oversaw
enterprise-wide legal support of corporate governance, securities, banking regulatory matters, employment law, and a host of
other areas. From October 2020 to February 2022, Ms. Mason served as a Partner at ElevateNext Law, a majority woman-
owned law firm that provided legal, consulting, and regulatory compliance services to financial services companies across the
United States.
Sonu Mittal
Age
Year of Affiliation
Position
42
2023
EVP - Single-Family Acquisitions
Mr. Mittal has served as our EVP and Head of Single-Family Acquisitions since February 2025. Prior to that, he served as SVP
and Head of Single-Family Acquisitions since March 2023. In his role as Head of Single-Family Acquisitions, Mr. Mittal oversees
seller engagement, credit, products, and affordable mission goals, as well as the operations and technology that support these
activities. Mr. Mittal brings extensive experience across sales, operations, capital markets, strategy, analytics, product
management, and technology. Prior to joining Freddie Mac, Mr. Mittal served as President of Home Mortgage, Executive Vice
President of Home Mortgage, and Head of Retail Mortgage at Citizens Bank from March 2018 to March 2023. He served at
Capital One from February 2009 to March 2018 as Production and Digital Transformation Head and National Direct to
Consumer Sales Head. From 2000 to 2009, he held various home lending and sales management positions at Chevy Chase
Bank.
Frank P. Nazzaro
Age
Year of Affiliation
Position
63
2018
EVP - EO&T
Mr. Nazzaro has served as our EVP - EO&T since April 2021 after serving as acting Chief Information Officer from October 2019
to April 2021. He joined Freddie Mac in 2018 as SVP and Chief Technology Officer leading Enterprise Technology Solutions. He
provides corporate-wide leadership for the company’s technology and cybersecurity strategy. Mr. Nazzaro is an accomplished
senior technology executive with more than 20 years of experience in the financial services industry. With an in-depth
knowledge in infrastructure, applications, and cybersecurity, he brings a wealth of experience in transformational technology
activities and strong leadership capabilities essential to EO&T’s strategic initiatives, including Cloud migration, Modern Delivery,
Employee Technology Experience, and Information Security investments. Prior to joining Freddie Mac, from 2016 to 2018, he
was Group VP and Chief Technology Officer (CTO) for Travelport LLC, where he led Cloud Architecture, Infrastructure,
Operations, and Cybersecurity globally. From 2012 to 2016, he was CTO at CIT Group where he was responsible for
Transformation, Architecture, Technology Strategy, IT Infrastructure, and Cybersecurity. Prior to that, he has held several senior
technology and management roles at RBC Capital Markets, Bridgewater, and UBS.
Directors, Corporate Governance, and Executive Officers
Executive Officers
FREDDIE MAC | 2024 Form 10-K
235
Kevin B. Palmer
Age
Year of Affiliation
Position
48
2001
SVP - Multifamily
Mr. Palmer has served as our SVP and Head of Multifamily since May 2022. In this role, he oversees all aspects of the
Multifamily business efforts to provide stability, liquidity, and affordability throughout the rental housing market. This includes
lender engagement, credit, capital markets, portfolio management, servicing and asset management, operations and
technology. Previously, Mr. Palmer led Portfolio Management for our Single-Family Division, including supervision of the
company’s nearly $3 trillion guarantee book of business including servicing, pricing, and analytics, and oversight of our real
estate-owned portfolio, in addition to leading Single-Family CRT.
Craig S. Phillips
Age
Year of Affiliation
Position
69
2025
EVP - Corporate Strategy & External Affairs
Mr. Phillips has served as our EVP and Head of Corporate Strategy & External Affairs since January 2025. In this role, he
oversees the company's external affairs and corporate communications. He also plays a key role in developing and advising on
the company's corporate strategy. Mr. Phillips has extensive experience in financial services and capital markets. Prior to
joining Freddie Mac, Mr. Phillips served as Managing Director - Chief Operating and Growth Officer of Grain Management from
January 2021 to April 2023. Prior to that, Mr. Phillips was Counselor to the Secretary at the U.S. Department of Treasury from
2017 to 2019, and a managing director and a member of the Operating Committee of BlackRock from 2008 to 2017. Between
1994 and 2006, he served as a managing director at Morgan Stanley, where he headed its global Securitized Products Group.
From 1984 to 1994, Mr. Phillips served as Managing Director at Credit Suisse First Boston, where he was the co-head of the
U.S. asset-backed and mortgage-backed securities group, and from 1976 to 1984 held a variety of positions at Lehman
Brothers Kuhn Loeb, including Co-Head of the U.S. mortgage-backed securities group.
Ravi Shankar
Age
Year of Affiliation
Position
61
2022
EVP - Single-Family Portfolio & Servicing
Mr. Shankar has served as our EVP and Head of Single-Family Portfolio & Servicing since February 2025. Prior to that, he
served as SVP and Head of Single-Family Portfolio & Servicing since rejoining Freddie Mac in November 2022. In his role as
Head of Single-Family Portfolio & Servicing, Mr. Shankar oversees the Division’s portfolio management, servicing, and the
operations and technology that support these activities. He also plays a significant role in supporting our mission to provide
affordable and equitable housing. In addition, since November 2022, he has served as a member of the Board of Managers of
CSS. Prior to that, Mr. Shankar held senior advisor positions at Boston Consulting Group from August 2021 to October 2022
and United Wholesale Mortgage from 2020 to 2021. Prior to that, and before rejoining Freddie Mac in 2022, Mr. Shankar served
as SVP of Portfolio Management for Freddie Mac’s Single-Family Division from 2013 to 2016, and deputy head of Freddie
Mac’s Investments and Capital Markets Division from 2016 to 2019. He also spent seven years at JP Morgan Chase in a
number of increasingly senior positions, including CFO, Head of Capital Markets, and Portfolio Manager at Chase Home
Finance. Prior to that, he worked in various senior positions with Citigroup for 16 years.
Directors, Corporate Governance, and Executive Officers
Executive Officers
FREDDIE MAC | 2024 Form 10-K
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Executive Compensation
COMPENSATION DISCUSSION AND ANALYSIS
This section contains information regarding our compensation programs (all of which have been approved by FHFA) and the
compensation of the following individuals who we determined to be our Named Executive Officers, or NEOs, for the year ended
December 31, 2024.
Named Executive Officers
Diana W. Reid
CEO(1)
Michael T. Hutchins
President(2)
James M. Whitlinger
EVP & CFO(3)
Anil D. Hinduja
EVP - CRO
Heidi L. Mason
EVP & General Counsel
Sonu Mittal
EVP - Single-Family Acquisitions(4)
Michael J. DeVito
Former CEO(5)
Christian M. Lown
Former EVP & CFO(6)
Jerry Weiss
Former EVP - Chief Administrative Officer(7)
(1)
Ms. Reid became CEO in September 2024.
(2)
While continuing to serve as President, Mr. Hutchins also served as interim CEO from March 2024 to September 2024.
(3)
While continuing to serve as SVP - Single-Family CFO, Mr. Whitlinger also served as SVP - Interim CFO from June 2024 to December 2024. He has served as EVP &
CFO since January 1, 2025.
(4)
Mr. Mittal served as SVP - Single-Family Acquisitions through February 9, 2025. He has served as EVP - Single-Family Acquisitions since February 10, 2025.
(5)
Mr. DeVito retired as CEO in March 2024.
(6)
Mr. Lown resigned from his position as EVP & CFO effective in June 2024.
(7)
Mr. Weiss served as EVP - Chief Administrative Officer until December 2024. He will continue to serve as EVP & Senior Advisor until his retirement in April 2025.
For information on our primary business objectives and the progress we made during 2024 toward accomplishing those
objectives, see Introduction - About Freddie Mac and Introduction - Our Business.
Overview of Executive Management Compensation Program
Compensation in 2024 for each NEO, other than Ms. Reid and Mr. DeVito (our current and former CEOs), whose compensation
is discussed below, was governed by the EMCP. The EMCP balances our need to attract and retain executive talent with
promoting the conservatorship objectives included in FHFA's Conservatorship Scorecard, as well as goals separately
established by management related to the commercial aspects of our business, which are included in our Corporate Scorecard.
All compensation under the EMCP is delivered in cash because the Purchase Agreement does not permit us to provide equity-
based compensation to our employees unless approved by Treasury.
FHFA has advised us that the design of the EMCP was intended to fulfill and balance three primary objectives:
n
Maintain Lower Pay Levels to Conserve Taxpayer Resources. Given our conservatorship status, the EMCP is designed
generally to provide for lower pay levels relative to large financial services firms that are not in conservatorship.
n Attract and Retain Executive Talent. The EMCP is intended to attract and retain executive officers with the specialized skills
and knowledge necessary to effectively manage a large financial services company. Executive officers with these
qualifications are needed for the company to continue to fulfill its important role in providing liquidity, stability, and
affordability to the housing market. We face competition for qualified executives from other companies. The CHC
Committee regularly considers the level of our executive officers’ compensation and whether changes are needed to
attract and retain executive officers. See Risk Factors for a discussion of the risks associated with executive retention
and succession planning.
n Reduce Pay if Goals Are Not Achieved. To support FHFA’s goals for our conservatorship and encourage performance in
furtherance of these goals, 30% of each NEO’s Target TDC (other than the CEO's compensation) consists of At-Risk
Deferred Salary subject to reduction based on corporate and individual performance as reflected in the Conservatorship
and Corporate Scorecards.
Executive Compensation
Compensation Discussion and Analysis
FREDDIE MAC | 2024 Form 10-K
237
FHFA’s objectives for the EMCP and the legal and regulatory restrictions on our executive compensation described in
Executive Compensation - CD&A - Other Executive Compensation Considerations - Legal, Regulatory, and
Conservator Restrictions on Executive Compensation limit our ability to make changes to the EMCP and limit the amount
and type of compensation we may pay our executive officers.
CEO Compensation
Compensation in 2024 for Ms. Reid and Mr. DeVito consisted of an annual Base Salary level of $600,000, in compliance with
the Equity in Government Compensation Act of 2015. Due to statutory limitations on compensation for the CEO, they do not
participate in the EMCP and, therefore, did not receive any compensation subject to either corporate or individual performance
in 2024. Ms. Reid and Mr. DeVito were eligible to participate in all employee benefit plans offered to Freddie Mac's other senior
executives under the terms of those plans. See Executive Compensation - 2024 Compensation Information For
NEOs - Summary Compensation Table for additional information.
Elements of Target TDC
Compensation under the EMCP in 2024 consisted of the following elements:
Base Salary
Deferred Salary
n The amount earned in each quarter, including interest, is paid (1) in the corresponding quarter in the first year
following the performance year for Fixed Deferred Salary and (2) in the corresponding quarter in the second year
following the performance year for At-Risk Deferred Salary
Fixed Deferred Salary
At-Risk Deferred Salary
n To encourage achievement of conservatorship, corporate, and individual
performance goals
Conservatorship Scorecard and
Assessment Criteria
Corporate Scorecard / Individual
n Cannot exceed $600,000
without approval from
FHFA
n To encourage executive
retention
n Subject to reduction based on
Conservatorship Scorecard
performance and the Assessment
Criteria
n Subject to reduction based on
performance against both the
Corporate Scorecard and individual
objectives
n Equal to total Deferred Salary
less the At-Risk portion
As in past years, 30% of Target TDC is At-Risk Deferred Salary, half of which is subject to reduction based on FHFA's
assessment of the company's performance against goals established by FHFA. The other half is subject to reduction based on
a combination of the company's performance against goals established by the Board for the performance year and individual
performance.
The objectives against which 2024 corporate performance was measured, together with the assessment of actual performance
against those objectives and the Assessment Criteria used by FHFA, are described in Executive Compensation - CD&A -
Determination of 2024 At-Risk Deferred Salary - At-Risk Deferred Salary Based on Conservatorship Scorecard
Performance and Executive Compensation - CD&A - Determination of 2024 At-Risk Deferred Salary - At-Risk
Deferred Salary Based on Corporate Scorecard Goals and Individual Performance. These performance measures were
chosen because they reflected our 2024 goals during conservatorship.
See Executive Compensation - CD&A - Other Executive Compensation Considerations - Effect of Termination of
Employment for information on the effect of a termination of employment, including the timing and payment of any unpaid
portion of Deferred Salary and related interest.
Determination of 2024 Target TDC for Eligible NEOs
Role of Compensation Consultant
As part of the annual process to evaluate each eligible NEO's 2024 Target TDC, the CHC Committee received guidance from
Pay Governance LLC, or Pay Governance, its independent compensation consultant. In addition to the annual process to
determine Target TDC, Pay Governance provides guidance to the CHC Committee throughout the year on other executive
compensation matters.
Executive Compensation
Compensation Discussion and Analysis
FREDDIE MAC | 2024 Form 10-K
238
Pay Governance has not provided the CHC Committee with any non-executive compensation services, nor has the firm
provided any consulting or other services to our management. During 2024, the CHC Committee reviewed Pay Governance’s
independence based on the factors outlined in Exchange Act Rule 10C-1(b)(4) and determined that Pay Governance continues
to be independent.
2024 Comparator Group Companies
The CHC Committee annually evaluates each eligible NEO's Target TDC in relation to the compensation of executive officers in
comparable positions at companies that are either in a similar line of business or are otherwise comparable for purposes of
recruiting and retaining individuals with the necessary skills and capabilities. We refer to this group of companies as the
Comparator Group. Finding comparable companies for purposes of benchmarking executive compensation is challenging due
to our unique business, structure, and mission, and the large size of our book of business compared to other financial services
firms. We believe the only directly comparable firm to us is Fannie Mae, but we use a broader group of companies to provide
market benchmark data.
At FHFA's request, Freddie Mac and Fannie Mae use the same Comparator Group for benchmarking executive compensation
to provide consistency in the market data used for compensation decisions for similar positions. Factors relevant to the
selection of companies for our Comparator Group include their status as U.S. public companies, the industry in which they
operate, the complexity of their business, and their size (in terms of assets, revenue, and number of employees) relative to the
size of Freddie Mac.
FHFA, working in collaboration with Freddie Mac and Fannie Mae, made changes to both the companies included in the
Comparator Group and the methodology for benchmarking executive compensation. These changes were effective beginning
with the process for evaluating 2024 Target TDC.
The Comparator Group used for benchmarking executive compensation consists of the following companies:
Primary Peer Group
n American International Group, Inc.
n Discover Financial Services
n PNC Financial Services Group, Inc.
n Ally Financial Inc.
n Fannie Mae
n Principal Financial Group (new)
n American Express Company
n Fifth Third Bancorp
n Prudential Financial, Inc.
n The Bank of New York Mellon Corporation
n The Hartford Financial Services Group, Inc.
n State Street Corporation
n Capital One Financial Corporation
n KeyCorp
n Synchrony Financial
n Chubb (new)
n MetLife, Inc.
n Truist Financial Corporation
n Citizens Financial Group, Inc.
n Northern Trust Corporation
n U.S. Bancorp
Secondary Peer Group
n Bank of America Corporation
n JPMorgan Chase & Co
n Citigroup Inc.
n Wells Fargo & Company
The benchmarking approach for executive compensation includes the following:
n
Establish Target TDC recommendations between the 25th and 50th percentiles of the compensation data reported by
companies in the Comparator Group.
n
For the roles of CFO, Chief Operating Officer (if we have one), and President, a 20% discount is applied to the
compensation data reported by companies in the Comparator Group.
n
The Secondary Peer Group is used in addition to the Primary Peer Group if the Primary Peer Group has insufficient data. In
such cases, only data from mortgage or real estate divisions in the Secondary Peer Group is used unless an exception is
granted.
n If insufficient data is available from the Primary and Secondary Peer Groups, FHFA may grant an exception to include
market data from other similar companies.
Establishing Target TDC
The CHC Committee developed its 2024 Target TDC recommendations for the eligible NEOs by reviewing data from the
Comparator Group using the aforementioned benchmarking approach.
Executive Compensation
Compensation Discussion and Analysis
FREDDIE MAC | 2024 Form 10-K
239
2024 Target TDC
The following table sets forth the components of 2024 Target TDC for each of our eligible NEOs:
Table 61 - 2024 Target TDC
2024 Target TDC
Named Executive
Officer(1)
Base
Salary Rate
Fixed
Deferred
Salary
At-Risk
Deferred
Salary
Target TDC
Michael T. Hutchins(2)
$600,000
$1,920,000
$1,080,000
$3,600,000
James M. Whitlinger(3)
450,000
547,500
427,500
1,425,000
Anil D. Hinduja
600,000
1,290,000
810,000
2,700,000
Heidi L. Mason
600,000
1,220,000
780,000
2,600,000
Sonu Mittal
500,000
900,000
600,000
2,000,000
Christian M. Lown(4)
300,000
507,363
489,560
1,296,923
Jerry Weiss
600,000
1,115,000
735,000
2,450,000
(1)
Ms. Reid and Mr. DeVito did not participate in the EMCP in 2024 and therefore are not included in this table. For a discussion of their compensation, see Executive
Compensation - CD&A - CEO Compensation.
(2)
Although Mr. Hutchins served as interim CEO from March 2024 to September 2024, he remained our President and was therefore eligible to participate in the EMCP.
(3)
While continuing to serve as SVP - Single-Family CFO, Mr. Whitlinger also served as SVP - Interim CFO from June 2024 to December 2024. He did not receive any
additional compensation for serving as SVP - Interim CFO.
(4)
Mr. Lown resigned from his position as EVP & CFO effective June 28, 2024. The amounts in the table are prorated to reflect Mr. Lown's departure and adjusted for
the applicable reduction to Fixed Deferred Salary under the EMCP. Mr. Lown's annualized 2024 Target TDC was $3,300,000 and consisted of a Base Salary of
$600,000 and Deferred Salary of $2,700,000.
2024 Executive Compensation Best Practices
What We Do
What We Don't Do
n
Clawback provisions with a significant portion of compensation
subject to recapture and/or forfeiture
n
No agreements that guarantee a specific amount of compensation for
a specified term of employment
n
Use of an independent compensation consultant by the CHC
Committee
n
No golden parachute payments or other similar change in control
provisions
n
Annual compensation risk review
n
No tax "gross-ups"
n
Evaluation of company performance against multiple measures,
including non-financial measures
n
No hedging or pledging of company securities
n
No executive perquisites for executive officers other than a relocation
program
Determination of 2024 At-Risk Deferred Salary
The CHC Committee and FHFA considered our achievements in pursuing our primary business objectives, as well as other
factors, in determining the funding level for At-Risk Deferred Salary in 2024. FHFA determined the funding level for the portion
of At-Risk Deferred Salary based on Conservatorship Scorecard performance and Assessment Criteria, and the CHC
Committee determined, with FHFA's review and approval, the amounts payable to each eligible NEO for the portion of At-Risk
Deferred Salary based on Corporate Scorecard goals and individual performance.
Executive Compensation
Compensation Discussion and Analysis
FREDDIE MAC | 2024 Form 10-K
240
At-Risk Deferred Salary Based on Conservatorship Scorecard
Performance
Half of each eligible NEO's 2024 At-Risk Deferred Salary, or 15% of Target TDC, was subject to reduction based on FHFA's
assessment of (1) the company's performance against the goals in the 2024 Conservatorship Scorecard and (2) the
Assessment Criteria as defined and described below. FHFA independently assessed our performance against the 2024
Conservatorship Scorecard and the Assessment Criteria and determined that a 93% funding level was justified for the portion
of the eligible NEO's At-Risk Deferred Salary. In assessing our performance against the 2024 Conservatorship Scorecard, the
factors considered by FHFA included our completion of all of the FHFA-established Conservatorship Scorecard objectives and
our performance against FHFA's Assessment Criteria.
In making its assessment, FHFA used the following criteria (collectively, the Assessment Criteria), including how:
n
Our products and programs fostered liquid, competitive, efficient, and resilient housing finance markets that support
affordable, sustainable, and equitable access to homeownership and rental housing.
n We conducted business in a safe and sound manner.
n We met expectations under all FHFA requirements, including those pertaining to capital, liquidity, and credit risk transfer.
n
We continued to manage operations while in conservatorship in a manner that preserves and conserves assets through the
prudent stewardship of resources.
n
We cooperated and collaborated with FHFA to meet the Conservator’s priorities and guidance throughout the course of the
year in alignment with FHFA’s FAIR values (Fairness, Accountability, Integrity, and Respect).
n We delivered work products that are high quality, thorough, creative, effective, and timely, and that consider effects on
homeowners, multifamily property owners, renters, the Enterprises, the industry, and other stakeholders.
n
We ensured that diversity, equity, and inclusion remain top priorities in strategic planning, operations, and business
development.
The table below presents the 2024 Conservatorship Scorecard objectives and FHFA's assessment of our achievement against
those objectives.
I.
Promote Equitable Access to Affordable and Sustainable Housing (50%)
Take significant actions to ensure that all borrowers and renters have equitable
access to sustainable long-term affordable housing opportunities, including
efforts that further energy efficiency, resiliency, and cost savings in the
mortgage process, considering the impact on all geographies, including rural
areas as defined under Duty to Serve. Develop and implement strategies to
support and advance the following:
• Sustainable and affordable homeownership
Goal was achieved.
- Explore the evolving single-family property insurance market, identifying
opportunities to mitigate risk while furthering sustainable homeownership.
Goal was achieved.
- Continue efforts to expand energy efficiency and resiliency that improve long-
term sustainable homeownership.
Goal was achieved.
- Explore opportunities to further sustainable homeownership through measures
that support first-time and mission-oriented homebuyers, and positively
influence affordability, including transaction costs, in a manner that maintains
safety and soundness.
Goal was achieved.
• Multifamily rental housing
Goal was achieved.
- Enhance resident-centered practices, such as tenant protections, at Freddie
Mac-backed multifamily properties.
Goal was achieved.
- Strengthen multifamily asset management capabilities, including identifying
and managing legal risk appropriately.
Goal was achieved.
- Explore and identify innovative ways to address multifamily market needs.
Goal was achieved.
- Manage new multifamily purchases to remain within the multifamily cap
requirements, including an expanded focus on workforce/moderate-income
housing.
Goal was achieved.
• Equitable access to housing
Goal was achieved. We successfully launched our social
bond program and released our 2025-2027 Equitable
Housing Finance Plan.
- Take meaningful actions to achieve the goals and objectives of the Equitable
Housing Finance Plans.
Goal was achieved.
Performance Goals
FHFA's Summary of Performance
Executive Compensation
Compensation Discussion and Analysis
FREDDIE MAC | 2024 Form 10-K
241
- Continue efforts to minimize single-family appraisal bias and improve
valuation equity, including by supporting FHFA’s implementation of the
Property and Valuation Equity (PAVE) action plan.
Goal was achieved. We made impactful policy and
technology changes, which including appraisal waiver
expansion, mandate for Uniform Property Dataset use,
and reconsideration of value.
• Efficiency in the mortgage market
Goal was achieved.
- Continue modernization of single-family property valuation processes and
practices, including traditional appraisals and valuation alternatives.
Goal was achieved.
- Leverage data, technology, and other innovations to promote efficiency and
cost savings in mortgage processes.
Goal was achieved.
- Plan for implementation of the approved credit score models, informed by
stakeholder outreach.
Goal was achieved.
• Climate risks
Goal was achieved.
- Identify and pursue measures to enhance consumer awareness of climate
risks in housing.
Goal was achieved.
- Continue research to monitor climate-related market developments; identify
at-risk borrowers, properties, and communities; inform policy; and improve
climate-resiliency and energy efficiency efforts.
Goal was achieved.
II. Operate the Business in a Safe and Sound Manner (50%)
Ensure that Freddie Mac is resilient to operational, market, credit, counterparty,
economic, legal/litigation, and climate risks.
• Maintain effective risk management systems appropriate for entities that need to
minimize risk to capital as they rebuild their capital buffers.
Goal was achieved.
• Take appropriate action to address risk exposure and enhance Freddie Mac's
counterparty risk controls.
Goal was achieved. We released an updated version of
the private mortgage insurer eligibility requirements with
enhanced definitions and measurements of available
assets.
• Strengthen risk management capabilities in identifying, assessing, controlling,
monitoring, and reporting on climate risk and incorporating these capabilities into
Freddie Mac's overall risk framework.
Goal was achieved.
• Maintain ability to respond to operational events without significant disruption to
the primary or secondary mortgage market.
Goal was achieved.
• Maintain liquidity at levels required by FHFA and sufficient to sustain Freddie
Mac's operations through severe stress events.
Goal was achieved.
• Explore opportunities to harmonize Freddie Mac's processes supporting the
Single-Family Selling Representations and Warranties Framework, including
defect identification, remedies, and repurchase alternatives.
Goal was achieved.
Transfer a meaningful amount of credit risk to private investors in a
commercially reasonable and safe and sound manner, reducing risk to
taxpayers.
Goal was achieved.
Performance Goals
FHFA's Summary of Performance
At-Risk Deferred Salary Based on Corporate Scorecard Goals and
Individual Performance
The other half of each eligible NEO's At-Risk Deferred Salary, also equal to 15% of Target TDC, is first subject to adjustments
based on the company's performance against the Corporate Scorecard goals and other relevant factors, as determined by the
CHC Committee. The Corporate Scorecard goals drive how we manage and improve the commercial aspects of our business
and are intended to complement the FHFA Strategic Plan and Conservatorship Scorecard. Then, an adjustment may be applied
based on the eligible NEO’s individual performance. Any adjustment for individual performance, however, cannot result in an
amount in excess of the eligible NEO’s target for this portion of At-Risk Deferred Salary.
The CHC Committee considered management’s assessment of its performance against the goals and also discussed the
company’s performance with the CEO. As the Corporate Scorecard does not have assigned weightings for the various
Corporate Scorecard goals, it was necessary for the CHC Committee to use its judgment in determining the overall level of
performance. Despite challenging economic and market conditions, the company achieved or exceeded all of its Corporate and
Conservatorship Scorecard goals, enhanced its commitment to its mission, and improved its control environment. As a first
step in the process, the CHC Committee determined that the portion of NEO At-Risk Deferred Salary should reflect 100%, in
light of its assessment of the company's performance against the Corporate Scorecard as well as other factors that it deemed
relevant for consideration. Next, the CHC Committee assessed each eligible NEOs individual performance, described below
under Assessment of 2024 Individual Performance.
Executive Compensation
Compensation Discussion and Analysis
FREDDIE MAC | 2024 Form 10-K
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The table below presents the 2024 Corporate Scorecard goals and the CHC Committee's discussion of our performance
against those goals.
Corporate Scorecard Goal
Performance
Deliver on FHFA Scorecard Objectives
We satisfactorily met all the 2024 Conservatorship Scorecard objectives per FHFA’s assessment.
Deliver on our Affordable Housing
Mission
We achieved or exceeded all 2024 Single-Family and Multifamily affordable housing goals; achieved or
exceeded all feasible 2024 Single-Family and Multifamily equitable, Duty to Serve, and sustainable housing
plan goals; achieved or exceeded all 2024 Multifamily asset management goals; and continued to execute
on our corporate sustainability strategy.
Identify, Assess, and Manage Risk
We exceeded all elements of this goal, including managing risk within established limits, timely
remediation of significant issues, and design and meet milestones to reduce operational risk and achieve
compliance.
Grow, Develop, and Empower Talent for
Today and Tomorrow
We achieved or exceeded all elements of this goal, including those related to diversity, equity, and inclusion
and progress on employee engagement.
Build Financial Strength
We achieved or exceeded all elements of this goal, including those related to corporate expenses and
income.
Executive Compensation
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FREDDIE MAC | 2024 Form 10-K
243
Assessment of 2024 Individual Performance
Half of each eligible NEO’s 2024 At-Risk Deferred Salary was subject to reduction based on individual performance in 2024, as
determined by the CHC Committee with FHFA’s approval. After assessing the company's performance against the 2024
Corporate Scorecard, the CHC Committee assessed individual performance of each eligible NEO, taking into consideration
input from Ms. Reid. Because certain individual performance objectives for eligible NEOs were either Corporate Scorecard
goals or directly supported their achievement, performance against the Corporate Scorecard was one of the factors the CHC
Committee used to determine the individual performance of the NEOs. FHFA reviewed and approved the compensation
associated with these determinations.
Each eligible NEO's individual performance assessment and the funding level for the individual performance-based at-risk
deferred salary for 2024 is discussed below.
Michael T. Hutchins, President
Performance Highlights
n Provided outstanding service as interim CEO for half of the year while also fulfilling responsibilities as President, leading Freddie Mac’s four major
divisions: Single-Family, Multifamily, Investments & Capital Markets, and EO&T. Ensured effective transition of CEO responsibilities to new CEO.
n Provided strong leadership in all aspects of the company during challenging market conditions, including: making progress on key commitments of
our affordable housing goals; advancing the company’s priorities on the company's housing plans; strengthening the focus on modernizing the
company’s technology assets; and exploring opportunities to responsibly adopt generative artificial intelligence.
n Partnered with other leaders to advance focus on risk management, continuously improve operations, increase efficiency and enhance productivity,
and drive innovation to meet evolving business needs.
n Reorganized resources to improve focus in key areas and provided opportunities for top / high potential talent to grow with new or additional
responsibilities.
At-Risk Deferred Salary (Corporate Scorecard/Individual) Funding Decision
The CHC Committee determined that Mr. Hutchins should receive 100% of his At-Risk Deferred Salary that was subject to adjustment based on his
individual performance after taking into account the company’s performance against the Corporate Scorecard.
James M. Whitlinger, EVP & CFO
Performance Highlights
n Served as Interim CFO and member of the Senior Operating Committee of the company for the second half of the year while also fulfilling
responsibilities as SVP - Single-Family CFO.
n Provided strong leadership to the Finance Division and reorganized resources to improve efficiency and collaboration with a continued focus on the
successful development of management and staff.
n Led the advancement of several large financial projects, including further development of financial forecasting and reporting capabilities,
enhancements to the capital investment and planning processes, and modernizing the company’s enterprise resource planning tool suite.
n Continued focus on enhancing analytical and reporting capabilities that provide deeper insights into financial performance and strategic positioning.
At-Risk Deferred Salary (Corporate Scorecard/Individual) Funding Decision
The CHC Committee determined that Mr. Whitlinger should receive 100% of his At-Risk Deferred Salary that was subject to adjustment based on his
individual performance after taking into account the company’s performance against the Corporate Scorecard.
Anil D. Hinduja, EVP - CRO
Performance Highlights
n Partnered with divisions to advance firm-wide strategic and operating matters to deliver on our mission and safety and soundness objectives.
Aligned priorities with senior management and led effort to address risk and supervisory concerns.
n Worked with FHFA to further develop the risk appetite framework to operate in conjunction with the regulatory stress tests and the capital plan.
Integrated execution of forecasting processes to improve efficiency and control.
n Led a firm-wide effort on risk and control assessment, advancing methodology and practices to strengthen the control environment for operational
and compliance risks.
n Advanced the operating model to integrate climate risk identification and assessment within business processes.
n Expanded programs in firm-wide risk learning and focused on advancing skills and capabilities needed for future organizational success.
Commenced review of the enterprise risk operating model and advanced succession planning development across the risk organizations.
At-Risk Deferred Salary (Corporate Scorecard/Individual) Funding Decision
The CHC Committee determined that Mr. Hinduja should receive 100% of his At-Risk Deferred Salary that was subject to adjustment based on his
individual performance after taking into account the company’s performance against the Corporate Scorecard.
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Heidi L. Mason, EVP & General Counsel
Performance Highlights
n Supported the successful achievement of numerous business objectives, including important mission-related initiatives, by effectively navigating
legal and regulatory matters with thought leadership, coordinated legal advice, and collaborative partnership.
n Advised the Board and senior management on a wide variety of complex business, legal, and governance issues.
n Supervised the successful resolution of a variety of significant legal matters, helped navigate a number of new regulatory initiatives, and provided
guidance on risk management strategies.
n Continued strong leadership of the Legal Division staff, including ongoing enhancement of capabilities and collaboration in providing advice and
services.
At-Risk Deferred Salary (Corporate Scorecard/Individual) Funding Decision
The CHC Committee determined that Ms. Mason should receive 100% of her At-Risk Deferred Salary that was subject to adjustment based on her
individual performance after taking into account the company’s performance against the Corporate Scorecard.
Sonu Mittal, EVP - Single-Family Acquisitions
Performance Highlights
n Continued to advance initiatives to serve the company’s mission to Make Home Possible, including those related to affordable housing goals, Duty to
Serve objectives, and the Single-Family housing plans.
n Led the continued strong performance of the Single-Family Acquisitions business, with a focus on diversifying the seller base, driving innovation,
improving financial discipline, managing risks, and elevating operational capabilities.
n Continued personal industry leadership to increase affordable housing finance options, including expanding the Developer Academy and increasing
credit access for members of federally recognized Native American tribes to support homeownership on tribal lands.
n Provided strong leadership in the development of staff in the Single-Family Acquisitions business and enhanced focus on organizational realignment
of resources to provide a more efficient experience for our customers.
At-Risk Deferred Salary (Corporate Scorecard/Individual) Funding Decision
The CHC Committee determined that Mr. Mittal should receive 100% of his At-Risk Deferred Salary that was subject to adjustment based on his
individual performance after taking into account the company’s performance against the Corporate Scorecard.
Christian M. Lown, Former EVP & CFO
Performance Highlights
n Partnered with other leaders to identify opportunities for operational and financial efficiency.
n Continued focus on enhanced analytical and forecasting capabilities for both internal management reporting and external disclosures.
n Led efforts to implement several operational improvements, included improving accountability, alignment and efficiency with respect to managing
budgets and long-term projects.
n Continued the successful development of management and staff in the Finance Division to expand skill sets needed for future organizational
success.
At-Risk Deferred Salary (Corporate Scorecard/Individual) Funding Decision
The CHC Committee determined that Mr. Lown should receive 100% of his At-Risk Deferred Salary that was subject to adjustment based on his
individual performance after taking into account the company’s performance against the Corporate Scorecard.
Jerry Weiss, Former EVP - Chief Administrative Officer
Performance Highlights
n Provided strong leadership to the Chief Administrative Officer Division and partnered with other leaders to meet the evolving needs of the company,
including: addressing FHFA’s regulatory and conservatorship initiatives; reporting and engagement of supervisory matters; management of regulatory
and stakeholder feedback on new initiatives; advancing internal and external communications; and improving employees’ on-site experience.
n Played a key role in partnering with the President and the Board in developing the company’s strategic plan, corporate priorities and objectives, and
related Corporate Scorecard.
n Collaborated with other leaders to enhance Board governance and the Board reporting and presentation process.
n As a CSS Board member, oversaw successful operations of this joint venture, which Freddie Mac relies on for the operation of a significant portion of
our single-family securitization.
At-Risk Deferred Salary (Corporate Scorecard/Individual) Funding Decision
The CHC Committee determined that Mr. Weiss should receive 100% of his At-Risk Deferred Salary that was subject to adjustment based on his
individual performance after taking into account the company’s performance against the Corporate Scorecard.
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FREDDIE MAC | 2024 Form 10-K
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2024 Deferred Salary
The following chart reports the actual amounts of 2024 Deferred Salary for each NEO, other than Ms. Reid and Mr. DeVito who
were not eligible for 2024 Deferred Salary. See Executive Compensation - CD&A - Overview of EMCP for additional
information.
Table 62 - 2024 Deferred Salary
2024 Actual Deferred Salary
Fixed
At-Risk
Named Executive
Officer
Conservatorship
Scorecard
Corporate Scorecard /
Individual
Michael T. Hutchins
$1,920,000
$502,200
$540,000
James M. Whitlinger
547,500
198,788
213,750
Anil D. Hinduja
1,290,000
376,650
405,000
Heidi L. Mason
1,220,000
362,700
390,000
Sonu Mittal
900,000
279,000
300,000
Christian M. Lown
507,363
227,646
244,780
Jerry Weiss
1,115,000
341,775
367,500
Written Agreements Relating to NEO Employment
We entered into agreements with each of our NEOs in connection with their hiring, which set forth the specific initial levels of
compensation, including, as applicable, Base Salary and Target TDC. The compensation of each NEO is subject to change by
FHFA and the terms of the EMCP. See Executive Compensation - CD&A - Determination of 2024 Target TDC for
Eligible NEOs - 2024 Target TDC for 2024 Target TDC amounts for our eligible NEOs. Other than the agreements described
below, there are no material provisions of any of the agreements we entered into with our NEOs in connection with their hiring
as they have either been superseded by the EMCP, as described above, or the provisions are no longer effective, such as sign-
on bonuses that have been paid and are no longer subject to repayment.
In connection with Ms. Reid's appointment as our CEO, she was offered relocation benefits to reimburse her for her costs
associated with relocating to the Washington, D.C., area. These relocation benefits are subject to repayment if, within 24
months of signing the repayment agreement, Ms. Reid terminates her employment with Freddie Mac for any reason or Freddie
Mac terminates her employment due to the occurrence of forfeiture events relating to materially inaccurate information,
termination for felony conviction or willful misconduct, gross neglect or gross misconduct, or violation of a post-termination
non-competition covenant.
In connection with Ms. Mason’s appointment as EVP & General Counsel, she was offered relocation benefits to reimburse her
for costs associated with relocating to the Washington, D.C., area. These relocation benefits are subject to repayment if, within
two years of receiving them, Ms. Mason terminates her employment with Freddie Mac for any reason or Freddie Mac
terminates her employment due to the occurrence of any of the Forfeiture Events described in the Recapture and Forfeiture
Agreement.
In connection with Mr. Mittal's employment as SVP - Single-Family Acquisitions, he was offered a cash sign-on award of
$1,042,000 in recognition of forfeited compensation at his previous employer, payable in four installments: $409,000 paid on his
start date in 2023, $455,000 paid on the first anniversary of his start date, $110,000 paid on the second anniversary of his start
date, and $68,000 payable on the third anniversary of his start date. Any unpaid portion of the cash sign-on award will not be
paid, and any portion paid within the last year will be subject to repayment, in the event Mr. Mittal terminates his employment
with us for any reason or Freddie Mac terminates his employment due to (1) the occurrence of any of the Forfeiture Events
described in the Recapture and Forfeiture Agreement, (2) significant misconduct, chronic unexcused absenteeism, disruptive
behavior, refusal to perform assigned duties, or other lack of good faith effort to perform assigned duties, (3) him being
substantially responsible for Freddie Mac's insolvency or troubled condition, or (4) failure to meet a condition of employment.
We have also entered into restrictive covenant and confidentiality agreements with each of our NEOs. The non-competition and
non-solicitation provisions included in the restrictive covenant and confidentiality agreements are described in Executive
Compensation - CD&A - Written Agreements Relating to NEO Employment - Restrictive Covenant and Confidentiality
Agreements.
The NEOs are not currently entitled to severance benefits upon any type of termination event. For additional information on
compensation and benefits payable in the event of a termination of employment, see Executive Compensation - 2024
Compensation Information for NEOs - Potential Payments Upon Termination of Employment.
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Restrictive Covenant and Confidentiality Agreements
Each of our NEOs is subject to a restrictive covenant and confidentiality agreement with us. Each agreement provides that the
NEO will not seek or accept employment with designated competitors that involves performing similar duties for twelve months
immediately following termination of employment, regardless of whether the NEO's employment is terminated by the NEO, by
us, or by mutual agreement. During this period, each NEO agrees not to solicit or recruit any of our managerial employees with
whom the NEO worked, or any employee the NEO directly or indirectly supervised. The agreements also provide for the
confidentiality of information that constitutes trade secrets or proprietary or other confidential information. In addition, the
restrictive covenant and confidentiality agreement provides in some circumstances for a six-month “cooling off” period after a
separation from employment, during which the NEO will be prohibited from participating directly or indirectly in a transaction
involving Freddie Mac.
Recapture and Forfeiture Agreement
To participate in the EMCP, each of our eligible NEOs has entered into a Recapture and Forfeiture Agreement. Ms. Reid and
Mr. DeVito were not eligible to participate in the EMCP due to their service as our CEO during 2024 and, as such, neither has
entered into a Recapture and Forfeiture Agreement.
The Recapture and Forfeiture Agreement provides for the recapture and/or forfeiture of Deferred Salary (including related
interest) earned, paid, or to be paid pursuant to the terms of the EMCP if, after providing the required notice, our Board of
Directors, in the good faith exercise of its sole discretion, determines that a Forfeiture Event has occurred. The Forfeiture Events
and compensation subject to recapture and/or forfeiture are described below.
Because the company is not currently listed on the NYSE or any other national securities exchange, we are not required to
comply with the requirements of Rule 10D-1 of the Exchange Act and Section 303A.14 of the NYSE Listed Company Manual or
other similar rule (the "Clawback Rules") and the terms of the Recapture and Forfeiture Agreement differ in certain respects
from the requirements of the Clawback Rules.
Materially Inaccurate Information
n
Forfeiture Event - The NEO has earned or obtained the legally binding right to a payment of Deferred Salary based on
materially inaccurate financial statements or any other materially inaccurate performance measure.
n
Compensation Subject to Recapture and/or Forfeiture - Any Deferred Salary earned up to two years prior to the
Forfeiture Event in excess of the amount that the Board of Directors determines Freddie Mac would have paid if the
Forfeiture Event had been considered at the time of the earlier compensation decisions (amounts may vary depending on
the specific Forfeiture Event).
Termination for Felony Conviction or Willful Misconduct
n
Forfeiture Event - The NEO's employment is terminated in any of the following circumstances:
l
Termination of employment because the NEO is convicted of, or pleads guilty or nolo contendere to, a felony;
l
Subsequent to termination of employment, the NEO is convicted of, or pleads guilty or nolo contendere to, a felony,
based on conduct occurring prior to termination, and within one year of such conviction or plea, the Board of Directors
determines that such conduct is materially harmful to Freddie Mac; or
l
Termination of employment because, or, within two years of termination, the Board of Directors determines that, the
NEO engaged in willful misconduct in the performance of their duties that was materially harmful to Freddie Mac.
n
Compensation Subject to Recapture and/or Forfeiture - Any Deferred Salary earned during the two years prior to the
date that the NEO is terminated, any Deferred Salary scheduled to be paid within two years after termination, and any cash
payment made or to be made as consideration for any release of claims agreement.
Gross Neglect or Gross Misconduct
n
Forfeiture Event - The NEO's employment is terminated because, in carrying out their duties, the NEO engages in conduct
that constitutes gross neglect or gross misconduct that is materially harmful to Freddie Mac, or, within two years after the
NEO's termination of employment, the Board of Directors determines that the NEO, prior to their termination, engaged in
such conduct.
n
Compensation Subject to Recapture and/or Forfeiture - Any Deferred Salary paid at the time of termination or
subsequent to the date of termination, including any cash payment made as consideration for any release of claims
agreement.
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Violation of a Post-Termination Non-Competition Covenant
n
Forfeiture Event - The NEO violates a post-termination non-competition covenant set forth in the restrictive covenant and
confidentiality agreement in effect when a payment of Deferred Salary is scheduled to be made.
n
Compensation Subject to Recapture and/or Forfeiture - 50% of the Deferred Salary paid during the twelve months
immediately preceding the violation and 100% of any unpaid Deferred Salary.
Under the Recapture and Forfeiture Agreement, the Board of Directors has discretion to determine the appropriate dollar
amount, if any, to be recaptured from and/or forfeited by the NEO, which is intended to be the gross amount of compensation
in excess of what Freddie Mac would have paid the NEO had Freddie Mac taken the Forfeiture Event into consideration at the
time such compensation decision was made.
Indemnification Agreements
We have entered into an indemnification agreement with each of our directors and executive officers (including each of our
NEOs). The form of agreement for executive officers provides that indemnification rights under the agreement would terminate if
and when the executive officer remained employed by Freddie Mac after ceasing to report directly to the CEO or President with
respect to any claims arising from matters occurring after the officer no longer reported directly to the CEO or President. In that
event, similar indemnification rights would continue to be available to such executive officer under our Bylaws going forward.
The indemnification agreement provides that we will indemnify the indemnitee to the fullest extent permitted by our Bylaws and
Virginia law. This obligation includes, subject to certain terms and conditions, indemnification against all liabilities and
reasonable expenses (including attorneys' fees) actually incurred by the indemnitee in connection with any threatened or
pending action, suit, or proceeding, except such liabilities and expenses as are incurred because of the indemnitee's willful
misconduct or knowing violation of criminal law. The indemnification agreements provide that if requested by the indemnitee,
we will advance expenses, subject to repayment by the indemnitee of any funds advanced if it is ultimately determined that the
indemnitee is not entitled to indemnification. The rights to indemnification under the indemnification agreements are not
exclusive of any other right the indemnitee may have under any statute, agreement, or otherwise. Our obligations under the
indemnification agreements will continue after the indemnitee is no longer a director or officer of the company with respect to
any possible claims based on the fact that the indemnitee was a director or officer, and the indemnification agreements will
remain in effect in the event the conservatorship is terminated. The indemnification agreements also provide that
indemnification for actions instituted by FHFA will be governed by the standards set forth in FHFA’s Rule on Golden Parachute
and Indemnification Payments.
Other Executive Compensation Considerations
Accounting Restatement Resulting from Misconduct
If, as a result of misconduct, we are required to prepare an accounting restatement due to material non-compliance with
financial reporting requirements, the CEO and CFO are required to reimburse us for amounts determined in accordance with
Section 304 of the Sarbanes-Oxley Act of 2002.
Effect of Termination of Employment
The timing and payment of any unpaid portion of Deferred Salary and related interest is based upon the reason for termination,
as discussed in Potential Payments Upon Termination of Employment.
Perquisites
We believe that perquisites should be a minimal part of the compensation package for our NEOs. Total annual perquisites for
any NEO cannot exceed $25,000 without FHFA approval, and we do not provide a gross-up to cover any taxes due on the
perquisite itself. The company offered no executive perquisites to executive officers in 2024 other than a relocation program.
SERP and SERP II
After our NEOs have satisfied the one-year service requirement, they are eligible to participate in our SERP. The SERP is
designed to provide participants with the full amount of benefits to which they would have been entitled under our Thrift/401(k)
Plan if that plan was not subject to certain dollar limits under the Internal Revenue Code. This is referred to as the "SERP
Benefit." For participants in the EMCP, no SERP Benefit is accrued with respect to annual pay in excess of two times a
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participant's Base Salary.
The SERP II was available to employees who were participants in the company’s Pension Plan as of the date the Pension Plan
was terminated. It was intended to provide participants with the full amount of the benefits to which they would have been
entitled under the tax-qualified Transitional Plan (see our Annual Report on Form 10-K filed on February 19, 2015, for additional
information) if that plan was not subject to certain dollar limits under the Internal Revenue Code. This was referred to as the
"SERP II Benefit." Mr. Weiss was the only NEO who was eligible for the SERP II Benefit related to the Pension Plan termination.
The SERP II also provides participants with the flexibility to make Roth contributions to the Thrift/401(k) Plan and still receive
employer matching contributions in the SERP.
For additional information regarding these benefits, see Executive Compensation - 2024 Compensation Information
for NEOs - Nonqualified Deferred Compensation.
Stock Ownership, Hedging, and Pledging Policies
Our stock ownership guidelines were suspended when conservatorship began because we ceased paying our executive
officers stock-based compensation. The Purchase Agreement prohibits us from issuing any shares of our equity securities
without the prior written consent of Treasury. The suspension of stock ownership requirements is expected to continue through
conservatorship and until such time that we resume granting stock-based compensation.
Pursuant to our company policy, all employees, including our NEOs, and our directors are prohibited from:
n
Engaging in all transactions (including purchasing and selling equity and non-equity securities) involving our securities
(except selling company securities owned prior to the implementation of the policy and then only with pre-clearance);
n
Purchasing or selling derivative securities related to our equity securities or dealing in any derivative securities related to
our equity securities;
n
Transacting in options (other than options granted by us, and then only with pre-clearance) or other hedging instruments
related to our securities; and
n
Holding our securities in a margin account or pledging our securities as collateral for a loan.
For additional information on our policy regarding the purchase, sale, or other disposition of Freddie Mac securities by
employees and directors, see Executive Compensation - CD&A - Other Executive Compensation Considerations - Insider
Trading Policy.
Insider Trading Policy
The Purchase Agreement prohibits us from issuing any shares of equity securities without the prior written consent of Treasury;
and all Freddie Mac employees and directors are prohibited from entering into transactions to purchase or sell Freddie Mac
securities as well as hedging Freddie Mac securities and pledging Freddie Mac securities in margin account or as collateral for
a loan. For additional information on stock ownership, see Executive Compensation - CD&A - Other Executive
Compensation Considerations - Stock Ownership, Hedging, and Pledging Policies. Employees and directors who
acquired Freddie Mac securities prior to their employment or appointment; by gift, inheritance, or merger; or in violation of
Freddie Mac policies may divest provided:
(i)
The security holder submitted the transaction for pre-clearance by the Compliance department;
(ii)
The transaction occurs during the window period, a period of five-weeks after releasing the previous quarter’s
earnings as determined by the Legal division; and
(iii)
The security holder is not in possession of any related material non-public information.
For additional information on our insider trading arrangements and policies, see our Codes of Conduct for employees and
directors, filed as Exhibits 14.1 and 14.2 to this Form 10-K.
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Legal, Regulatory, and Conservator Restrictions on Executive
Compensation
The amount of compensation we may pay our NEOs is subject to a number of legal, regulatory, and conservator restrictions,
particularly while we are in conservatorship. Conservatorship also significantly affects the process by which the CHC
Committee determines our executive officers’ compensation. We describe below legal and regulatory requirements that
significantly affect our executive compensation program and policies.
Requirements Applicable During Conservatorship
While we are in conservatorship, we are subject to additional legal and regulatory requirements relating to our executive
compensation, including the following:
n Equity in Government Compensation Act. The Equity in Government Compensation Act of 2015 limits the compensation
and benefits for our CEO to the same level in effect as of January 1, 2015, while we are in conservatorship or receivership.
This law also provides that compensation and benefits for our CEO may not be increased while we are in conservatorship
or receivership. Accordingly, annual direct compensation for our CEO is limited to Base Salary at an annual rate of
$600,000. See Executive Compensation - CD&A - CEO Compensation for additional information.
n STOCK Act. Pursuant to the STOCK Act and related FHFA regulations, our senior officers, including our NEOs, are
prohibited from receiving bonuses during conservatorship. FHFA defines a bonus as a payment that rewards an employee
for work performed, where details of the award (such as the decision to grant it or its amounts) are determined after the
performance period using discretion or inherently subjective measures.
n FHFA Instructions – Executive Compensation. The powers of FHFA as our Conservator include the authority to set
executive compensation. FHFA, as Conservator, has retained the authority to approve the terms and amounts of our
executive compensation. In its instructions to us, FHFA directed that management obtain FHFA’s decision before entering
into new compensation arrangements or increasing amounts or benefits payable under existing compensation
arrangements of NEOs or other executive officers as defined in SEC rules.
n FHFA Instructions – Other Compensation. Pursuant to FHFA instructions, FHFA’s decision as Conservator is required with
regard to any changes in employee compensation that could significantly impact our employees, including but not limited
to retention awards for senior officers, special incentive plans, and merit increase pool funding.
n FHFA Directives. As Conservator, from time to time FHFA issues or updates directives that relate to compensation of our
executives and other employees. Pursuant to its currently applicable directives, FHFA has directed us to:
l Limit base salaries for all executive officers to no more than $600,000;
l Adjust the mandatory deferral period for At-Risk Deferred Salary as described under Executive Compensation -
CD&A - Overview of EMCP - Elements of Target TDC;
l Include in our policies and procedures penalties for executive officers and certain other covered employees who are
found to have engaged in specified activities, including the recapture and/or forfeiture of Deferred Salary in
appropriate circumstances to the extent permitted by law. See Executive Compensation - CD&A - Written
Agreements Related to NEO Employment - Recapture and Forfeiture Agreement for a description of the
compensation forfeiture and recoupment provisions we have implemented pursuant to this FHFA directive;
l Target between the 25th and 50th percentiles of the market compensation when recommending compensation to be
provided to any senior officers, unless FHFA has granted an exception; and
l Effective for 2024 compensation, utilize a new Comparator Group and benchmarking approach as described in
Comparator Group Companies.
n Shareholder Powers. FHFA, as Conservator, has all powers of our shareholders. Accordingly, we have not held
shareholders’ meetings since entering into conservatorship, nor have we held any shareholder advisory votes on executive
compensation.
n Golden Parachute Regulation. A golden parachute payment generally refers to a compensatory payment that is contingent
on or provided in connection with termination of employment. FHFA regulation pursuant to the GSE Act generally prohibits
us from making golden parachute payments to any current or former director, officer, or employee of the company during
any period in which we are in conservatorship, receivership, or other troubled condition, unless either a specific exemption
applies or the Director of FHFA approves the payments. Specific exemptions include qualified pension or retirement plans,
nondiscriminatory employee plans or programs that meet specified requirements, and bona fide deferred compensation
plans or arrangements that meet specified requirements.
Other Applicable Requirements
We are also subject to legal and regulatory requirements relating to our executive compensation that apply whether or not we
are in conservatorship, including the following:
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n Purchase Agreement. Under the terms of the Purchase Agreement, until the senior preferred stock is repaid or redeemed in
full:
l We may not enter into any new compensation arrangements with, or increase amounts or benefits payable under
existing compensation arrangements of, any NEOs or other executive officers as defined in SEC rules without the
consent of the Director of FHFA, in consultation with the Secretary of the Treasury.
l We may not sell or issue any equity securities without the prior written consent of Treasury except under limited
circumstances, which effectively eliminates our ability to offer stock-based compensation.
n Our Charter. Under our Charter and related FHFA regulations, FHFA as our regulator must approve any termination benefits
we offer to our NEOs and certain other officers identified by FHFA.
n GSE Act. Pursuant to the GSE Act and related FHFA regulations, FHFA as our regulator has specified oversight authority
over our executive compensation. The GSE Act directs FHFA to prohibit us from providing compensation to our NEOs and
certain other officers identified by FHFA that is not reasonable or comparable with compensation for employment in other
similar businesses involving similar duties and responsibilities. FHFA may at any time review the reasonableness and
comparability of an executive officer’s compensation and may require us to withhold any payment to the executive officer
during such review. The GSE Act also provides that, if we are classified as significantly undercapitalized, FHFA’s prior
written approval is required to pay any bonus to an executive officer or to provide certain increases in compensation to an
executive officer.
Section 162(m) Limits on the Tax Deductibility of Compensation
Section 162(m) of the Internal Revenue Code imposes a $1 million limit on the amount that we may annually deduct for
compensation (including performance-based compensation) to: (1) anyone serving as CEO or CFO at any time during the year,
(2) the three highest paid NEOs (other than the CEO and CFO) employed by us at any time during the year, and (3) any
individual who was a CEO, CFO, or one of the top three highest paid NEOs after 2016 and who is receiving Freddie Mac
compensation.
Compensation and Human Capital Committee Report
The CHC Committee has reviewed and discussed the CD&A with management and, based on such review and discussion, has
recommended to the Board of Directors that the CD&A be included in this Form 10-K.
This report is respectfully submitted by the members of the CHC Committee.
Kevin G. Chavers, Chair
Mark H. Bloom
Christopher E. Herbert
Grace A. Huebscher
Roy Swan
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COMPENSATION AND RISK
Our management conducted an assessment of our compensation policies and practices that apply to employees at all levels,
including those participating in the EMCP. The assessment took into account:
n
The types of compensation offered (including fixed, variable/incentive, and deferred);
n
Eligibility for participation in compensation programs;
n
Compensation program design and governance;
n
The process for establishing performance objectives;
n
Processes and program approvals for our compensation programs; and
n A risk assessment provided by the CHC Committee’s independent compensation consultant.
The assessment and risk performance was discussed with the CHC Committee in January 2025. Management's conclusion,
with which the CHC Committee concurred, is that the company's compensation programs and practices do not encourage
unnecessary or excessive risk behaviors in pursuit of Corporate or Conservatorship Scorecard objectives or otherwise, and that
nothing in the executive pay program is likely to create material risk for the company.
Executive Compensation
Compensation and Risk
FREDDIE MAC | 2024 Form 10-K
252
CEO PAY RATIO
SEC rules require annual disclosure of the ratio of a company's CEO's total annual compensation to that of its median
employee. For 2024, we used the 2024 median employee who we identified as of December 31, 2024, using payroll data as
reported on Form W-2, Box 5. Except as noted below, we calculated that employee's total annual compensation for 2024 using
the same method required for calculating total annual compensation for our CEO (and other NEOs) for purposes of Table 64 -
Summary Compensation Table.
The table below sets forth the total annual compensation for our CEO and median employee and the ratio between the two.
Table 63 - CEO Pay Ratio
CEO Pay Ratio
Employee
Total Compensation
Ratio
Diana W. Reid (CEO)
$622,950(1)
3.64
Median Employee
$171,293(2)
(1)
Ms. Reid has served as our CEO since September 2024. The amount reported in this table reflects Ms. Reid’s annualized total compensation for 2024, which
consists of (1) an annual base salary level of $600,000 and (2) $22,950 in relocation benefits Ms. Reid received in 2024.
(2)
Reflects actual 2024 total compensation for the median employee except for estimated incentive compensation payment because, as of the filing of this Form 10-K,
we have not concluded our performance year 2024 compensation planning process for employees other than our NEOs. This estimate includes the projected
incentive payout for individuals with similar performance ratings.
Given the different methodologies that companies may use to determine their CEO pay ratio, the ratio reported above should
not be used as a basis for comparison between companies.
Executive Compensation
CEO Pay Ratio
FREDDIE MAC | 2024 Form 10-K
253
2024 COMPENSATION INFORMATION FOR NEOs
The following sections set forth compensation information for our NEOs: Ms. Reid (who has served as our CEO since
September 10, 2024); Mr. Hutchins (who served as interim CEO from March 15, 2024, to September 9, 2024, while continuing
to serve as our President); Mr. Whitlinger (who served as SVP – Interim CFO from June 29, 2024, to December 31, 2024); Mr.
DeVito (who served as our CEO until March 15, 2024); Mr. Lown (who served as EVP & CFO until June 28, 2024); Mr. Weiss
(who would have been one of our three most highly compensated executive officers but for the fact that he was not serving as
an executive officer as of December 31, 2024); and the three other most highly compensated executive officers who were
serving as executive officers as of December 31, 2024.
Summary Compensation Table
Table 64 - Summary Compensation Table
Salary
Bonus(3)
Non-Equity
Incentive Plan
Compensation(4)
All Other
Compensation(5)
Total
Named Executive Officer
Year
Earned During
Year(1)
Deferred(2)
Diana W. Reid(6)
2024
$182,308
—
—
—
$22,950
$205,258
CEO
Michael T. Hutchins
2024
600,000
1,920,000
—
1,092,121
147,984 3,760,105
President
2023
600,000
1,920,000
—
1,068,874
147,408 3,736,282
2022
600,000
1,920,000
—
1,053,372
105,744 3,679,116
James M. Whitlinger(7)
2024
450,000
547,500
—
432,298
89,613 1,519,411
EVP & CFO
Anil D. Hinduja
2024
600,000
1,290,000
—
819,091
132,896 2,841,987
EVP - CRO
2023
600,000
1,290,000
—
801,656
132,509 2,824,165
2022
600,000
1,220,000
—
760,769
104,379 2,685,148
Heidi L. Mason(8)
2024
600,000
1,220,000
—
788,754
131,219 2,739,973
EVP & General Counsel
2023
600,000
1,150,000
—
742,274
136,105 2,628,379
Sonu Mittal(9)
2024
500,000
900,000 455,000
606,734
90,209 2,551,943
EVP - Single-Family
Acquisitions
Michael J. DeVito
2024
126,923
—
—
—
31,272
158,195
Former CEO
2023
600,000
—
—
—
51,000
651,000
2022
600,000
—
—
—
31,385
631,385
Christian M. Lown
2024
300,000
507,363
—
495,054
85,080 1,387,497
Former EVP & CFO
2023
600,000
1,605,000 325,000
935,265
139,958 3,605,223
2022
600,000
1,500,000 475,000
889,957
104,925 3,569,882
Jerry Weiss(10)
2024
600,000
1,115,000
—
743,249
128,704 2,586,953
Former EVP - Chief
Administrative Officer
2023
600,000
1,045,000
—
697,737
126,714 2,469,451
2022
600,000
975,000
—
658,358
103,901 2,337,259
(1)
Amounts shown in this sub-column consist of base salary paid during the year on a bi-weekly basis.
(2)
Amounts shown reflect Fixed Deferred Salary earned during the year. The interest rate for Fixed Deferred Salary earned during 2024, 2023, and 2022 was 2.395%,
2.365%, and 0.195%, respectively, which is equal to 50% of the one-year Treasury Bill rate as of December 31 of the applicable prior year. Fixed Deferred Salary
earned during each quarter is paid in cash on the last pay date of the corresponding quarter in the following year, along with accrued interest. Interest on Fixed
Deferred Salary earned during 2024, 2023, and 2022 is included in All Other Compensation.
(3)
Amounts shown reflect cash sign-on payments made to Mr. Lown in connection with his hiring in 2020 and Mr. Mittal in connection with his hiring in 2023.
Although we classified the payment in the “Bonus” column for purposes of the Summary Compensation Table, it is not considered a “bonus” under the STOCK Act.
Please see Executive Compensation - CD&A - Written Agreements Relating to NEO Employment and Executive Compensation - CD&A - Other
Executive Compensation Considerations - Legal, Regulatory, and Conservator Restrictions on Executive Compensation for additional details.
(4)
Amounts shown reflect At-Risk Deferred Salary earned during each year, as well as interest on that At-Risk Deferred Salary. The interest rate for At-Risk Deferred
Salary earned during 2024, 2023, and 2022 was the same as noted for the interest rate for the Fixed Deferred Salary. Except in the case of Mr. Lown, for At-Risk
Deferred Salary earned during each quarter of 2022, one-half was paid in cash on the last pay date of the corresponding quarter in 2023, and the remaining one-
half was paid on the last pay date of the corresponding quarter in 2024. For Mr. Lown, At-Risk Deferred Salary earned during each quarter of 2022 was paid on the
Executive Compensation
2024 Compensation Information for NEOs
FREDDIE MAC | 2024 Form 10-K
254
last pay date of the corresponding quarter in 2024. At-Risk Deferred Salary earned during each quarter of 2023 and thereafter will be paid in cash on the last pay
date of the corresponding quarter in the second calendar year following the quarter in which the amount was earned. See Executive Compensation - CD&A -
Determination of 2023 At-Risk Deferred Salary and Executive Compensation - CD&A - EMCP Overview.
(5)
Amounts for 2024 reflect: (1) contributions made under our tax-qualified Thrift/401(k) Plan for plan year 2024; (2) accruals earned pursuant to the SERP Benefit for
plan year 2024; (3) interest on Fixed Deferred Salary earned during 2024; (4) amounts relating to accrued vacation time; and (5) reimbursement of certain relocation
expenses incurred by Ms. Reid, as described below. The amounts for 2024 are as follows:
Named Executive Officer
Thrift/401(k) Plan
Contributions
SERP Benefit
Accruals
Interest on Fixed
Deferred Salary
Other
Diana W. Reid
$—
$—
—
$22,950
Michael T. Hutchins
29,325
72,675
45,984
James M. Whitlinger
29,325
47,175
13,113
Anil D. Hinduja
29,325
72,675
30,896
Heidi L. Mason
29,325
72,675
29,219
Sonu Mittal
23,556
45,098
21,555
Michael J. DeVito
7,615
—
—
23,657
Christian M. Lown
20,700
15,300
12,151
36,929
Jerry Weiss
29,325
72,675
26,704
Employer contributions to the Thrift/401(k) Plan are generally available on the same terms to all our employees. After the first year of employment, we match up to
6% of eligible compensation at 100% of the employee's contributions. Also, after their first year of employment, employees receive an additional employer
contribution to our Thrift/401(k) Plan equal to 2.5% of compensation earned in the prior year. Employee contributions, our matching contributions, and the 2.5%
employer contribution are invested in accordance with the employee's investment elections and are immediately vested. For additional information regarding the
SERP Benefit, see Executive Compensation - 2024 Compensation Information for NEOs - Nonqualified Deferred Compensation.
Perquisites are valued at their aggregate incremental cost to us. During the years reported, the aggregate value of perquisites received by any NEO was less than
$10,000, except for Ms. Reid, who, in 2024, was reimbursed $22,950 for relocation expenses. Therefore, in accordance with SEC rules, amounts shown under "All
Other Compensation" do not include perquisites, other than for Ms. Reid.
For Messrs. Lown and DeVito, the amount reported in "Other" reflects the payment of accrued unused vacation hours payable upon termination of employment
pursuant to the terms of the company's vacation policy.
(6)
Pursuant to SEC reporting requirements, because Ms. Reid first became an NEO in 2024, information for 2023 and 2022 is not required to be disclosed.
(7)
Pursuant to SEC reporting requirements, because Mr. Whitlinger first became an NEO in 2024, information for 2023 and 2022 is not required to be disclosed.
Amounts shown reflect compensation earned while serving as SVP – Single-Family CFO (all of 2024) as well as SVP - Interim CFO (from June 29, 2024, to
December 31, 2024).
(8)
Pursuant to SEC reporting requirements, because Ms. Mason first became an NEO in 2023, information for 2022 is not required to be disclosed.
(9)
Pursuant to SEC reporting requirements, because Mr. Mittal first became an NEO in 2024, information for 2023 and 2022 is not required to be disclosed. Amounts
shown reflect compensation earned while serving as SVP - Single-Family Acquisitions (all of 2024).
(10)
Amounts shown reflect compensation earned while serving as EVP – Chief Administrative Officer (from January 1, 2024, to December 1, 2024) and EVP & Senior
Advisor (from December 2, 2024, to December 31, 2024).
Grants of Plan-Based Awards
The following table contains information concerning grants of plan-based awards to each of the NEOs during 2024. The
Purchase Agreement prohibits us from issuing equity securities without Treasury's prior written consent. No stock awards were
granted during 2024. For a description of the performance and other measures used to determine payouts, see Executive
Compensation - CD&A - Elements of Target Total Direct Compensation - Determination of 2024 Target TDC for NEOs
- Determination of 2024 At-Risk Deferred Salary - 2024 Deferred Salary.
Executive Compensation
2024 Compensation Information for NEOs
FREDDIE MAC | 2024 Form 10-K
255
Table 65 - Grants of Plan-Based Awards
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(2)
Named Executive Officer(1)
At-Risk Deferred Salary Award
Threshold
Target/Maximum
Michael T. Hutchins
Conservatorship Scorecard
—
$540,000
Corporate Scorecard/Individual
—
540,000
Total
—
1,080,000
James M. Whitlinger
Conservatorship Scorecard
—
213,750
Corporate Scorecard/Individual
—
213,750
Total
—
427,500
Anil D. Hinduja
Conservatorship Scorecard
—
405,000
Corporate Scorecard/Individual
—
405,000
Total
—
810,000
Heidi L. Mason
Conservatorship Scorecard
—
390,000
Corporate Scorecard/Individual
—
390,000
Total
—
780,000
Sonu Mittal
Conservatorship Scorecard
—
300,000
Corporate Scorecard/Individual
—
300,000
Total
—
600,000
Christian M. Lown
Conservatorship Scorecard
—
244,780
Corporate Scorecard/Individual
—
244,780
Total
—
489,560
Jerry Weiss
Conservatorship Scorecard
—
367,500
Corporate Scorecard/Individual
—
367,500
Total
—
735,000
(1)
Ms. Reid and Mr. DeVito were not eligible to receive Deferred Salary in 2024, and therefore are not included in this table.
(2)
The amounts reported reflect At-Risk Deferred Salary granted in 2024 which is subject to reduction based on: (1) corporate performance against the
Conservatorship Scorecard; and (2) the company's performance against the Corporate Scorecard goals and an officer's individual performance. The amount of At-
Risk Deferred Salary actually earned can range from 0% of target (reported in the Threshold column) to a maximum of 100% of target (reported in the Target/
Maximum column). Actual At-Risk Deferred Salary amounts earned during 2024 are reported in the Non-Equity Incentive Plan Compensation column of Table 64 -
Summary Compensation Table.
Outstanding Equity Awards at Fiscal Year-End
None of the NEOs had unexercised options or unvested RSUs as of December 31, 2024.
Option Exercises and Stock Vested
None of the NEOs exercised options or had RSUs vest during 2024.
Pension Benefits
No Pension Benefits table is presented here as the Pension Plan termination was completed in 2015. For additional information,
see Executive Compensation - CD&A - Other Executive Compensation Considerations.
Executive Compensation
2024 Compensation Information for NEOs
FREDDIE MAC | 2024 Form 10-K
256
Nonqualified Deferred Compensation
Nonqualified deferred compensation for the NEOs consists of the SERP Benefit, and, for those NEOs who were eligible for the
Transitional Plan (or those NEOs who may have deferred Roth contributions into their Thrift/401(k) Plan account), the SERP II
Benefit. The SERP and SERP II are unfunded, nonqualified defined contribution plans designed to provide participants with the
full amount of benefits to which they would have been entitled under the Thrift/401(k) Plan and Transitional Plan (for those
NEOs eligible) if the plan was not subject to certain dollar limits under the Internal Revenue Code.
The SERP Benefit equals the amount of the employer matching and 2.5% contributions for each NEO that would have been
made to the Thrift/401(k) Plan during the year, based upon the participant's eligible compensation, without application of those
limits, less the amount of the matching contributions and 2.5% contributions made to the Thrift/401(k) Plan during the year, but
does not take into account pay that exceeds two times the NEO's Base Salary. We believe the SERP Benefit is an appropriate
benefit because offering such a benefit helps us remain competitive with the companies in our Comparator Group.
To be eligible for the SERP Benefit, the NEO must be eligible for matching contributions and the 2.5% contribution under the
Thrift/401(k) Plan for part of the year, as discussed in Footnote 5 to Table 64 - Summary Compensation Table. In addition, to
be eligible for the portion of the SERP Benefit attributable to employer matching contributions, the NEO must contribute the
maximum amount permitted under the terms of the Thrift/401(k) Plan on either a pre- or post-tax basis.
The SERP II Benefit provided an accrual for each year an NEO participated in the Transitional Plan equal to the amount of the
employer contribution that would have been made to the Transitional Plan for the year, without application of the Internal
Revenue Code limits, less the amount of the contribution actually made to the Transitional Plan, but does not take into account
pay that exceeds two times the NEO's Base Salary. The SERP II also provides participants with the flexibility to make Roth
contributions to the Thrift/401(k) Plan and still receive employer matching contributions as noted above.
Participants are credited with earnings or losses in their SERP and SERP II Benefit accounts based upon each participant's
individual direction of the investment of such notional amounts among the virtual investment funds available under the SERP
and SERP II, which are the same as the investment options available under the Thrift/401(k) Plan. The SERP and SERP II
Benefits are generally distributed in a lump sum 90 days after the end of the calendar year in which a separation from service
occurs. A six-month delay in the commencement of distributions on account of a separation from service applies to key
employees, in accordance with Internal Revenue Code Section 409A. If the NEO dies, the vested SERP Benefit is paid in the
form of a lump sum within 90 days of death, and the SERP II Benefit is paid by March 31st following the year the NEO dies.
The following table shows the allocations, earnings, distributions, and accumulated balances under the SERP Benefit and SERP
II Benefit for each NEO:
Executive Compensation
2024 Compensation Information for NEOs
FREDDIE MAC | 2024 Form 10-K
257
Table 66 - SERP Benefit and SERP II Benefit
Named Executive Officer
Executive
Contribution in
2024(1)
Freddie Mac
Accruals in
2024(2)
Aggregate
Earnings in
2024(3)
Aggregate
Distributions
Balance at
December 31,
2024(4)
Diana W. Reid
SERP Benefit
$—
$—
$—
$—
$—
Michael T. Hutchins
SERP Benefit
—
72,675
157,477
—
1,140,912
James M. Whitlinger
SERP Benefit
—
47,175
24,752
—
536,498
Anil D. Hinduja
SERP Benefit
—
72,675
162,634
—
1,017,532
Heidi L. Mason
SERP Benefit
—
72,675
4,463
—
141,765
Sonu Mittal
SERP Benefit
—
45,098
1,371
—
46,469
Michael J. DeVito
SERP Benefit
—
—
2,204
—
45,741
Christian M. Lown
SERP Benefit
—
15,300
49,881
—
296,347
Jerry Weiss
SERP Benefit
—
72,675
407,631
—
2,704,273
SERP II Benefit
—
—
135,090
—
640,351
(1)
The SERP and SERP II do not allow for employee contributions.
(2)
Amounts reported reflect accruals under the SERP during 2024, including the 2.5% contribution accruals which will be allocated to NEO accounts in 2025. These
amounts are also reported in the "All Other Compensation" column in Table 64 - Summary Compensation Table.
(3)
Amounts reported represent the total interest and other earnings credited to each NEO under the SERP and SERP II Benefits in 2024.
(4)
Amounts reported reflect the accumulated balance under the SERP and SERP II Benefits for each NEO and include the plan year 2024 accruals noted in footnote 2
above. All NEOs are fully vested in their SERP, and for Mr. Weiss, his SERP II Benefit account balance. The following 2023 SERP Benefit accrual amounts were
reported in the "All Other Compensation" column in the 2023 Summary Compensation Table as compensation for each NEO for whom accruals were made during
2023: Mr. DeVito: $22,950, Mr. Hutchins: $73,950, Mr. Hinduja: $73,950, Mr. Lown: $73,950. See our Annual Report on Form 10-K filed on February 14, 2024.
Potential Payments Upon Termination of Employment
The EMCP addresses the treatment of Base Salary and Deferred Salary upon various termination events. Base Salary ceases
upon an NEO's termination of employment, regardless of the termination reason. An NEO generally does not need to be
employed by us on the payment date to receive payments of Deferred Salary (including related interest) that are unpaid at the
time of termination of employment. The following table describes the effect of various termination events upon unpaid Deferred
Salary. The actual payment of any level of termination benefits that is not otherwise provided for in the EMCP is subject to
FHFA review and approval.
n
Forfeiture Event - All earned but unpaid Fixed and At-Risk Deferred Salary (including related interest) is subject to
forfeiture upon the occurrence of a Forfeiture Event, as described above under Executive Compensation - CD&A -
Written Agreements Relating to NEO Employment - Recapture and Forfeiture Agreement.
n
Death - All earned but unpaid Fixed and At-Risk Deferred Salary (including related interest) is paid in full as soon as
administratively possible, but not later than 90 calendar days after the date of death. Any earned but unpaid At-Risk
Deferred Salary is not subject to reduction based on corporate and individual performance if the reduction has not been
determined as of the date of death.
Executive Compensation
2024 Compensation Information for NEOs
FREDDIE MAC | 2024 Form 10-K
258
n
Long-Term Disability - All earned but unpaid Fixed and At-Risk Deferred Salary (including related interest) is paid in full in
accordance with the Approved Payment Schedule. Any earned but unpaid At-Risk Deferred Salary is not subject to
reduction based on corporate and individual performance if the reduction has not been determined as of the termination
date.
n
Any Other Reason (including, but not limited to, voluntary termination, retirement, and involuntary termination for
any reason other than a Forfeiture Event) - All earned but unpaid Deferred Salary (including related interest) is paid in
accordance with the Approved Payment Schedule, and earned but unpaid At-Risk Deferred Salary remains subject to the
performance assessment and reduction process. Except in the case of retirement, the amount of earned but unpaid Fixed
Deferred Salary will be reduced by 2% for each full or partial month by which the NEO's termination precedes January 31
of the second calendar year following the calendar year in which the Fixed Deferred Salary is earned. No such reduction is
applicable if an NEO retires, which is deemed to have occurred upon a voluntary termination of employment after attaining
or exceeding 62 years of age, without regard to length of service, or attaining or exceeding 55 years of age with 10 or more
years of service.
The table below describes the compensation and benefits that would have been payable to each NEO had the officer
terminated their employment under various circumstances as of December 31, 2024.
The table below does not address changes in control, as we are not obligated to provide any additional compensation to our
NEOs in connection with a change in control. The table also does not address potential payments upon a termination for cause,
which is a termination resulting from the occurrence of an event or conduct described in the Recapture and Forfeiture
Agreement. All earned but unpaid Deferred Salary is subject to forfeiture upon the occurrence of such a termination. However,
the amount of compensation, if any, to be recaptured and/or forfeited is determined by the Board of Directors, which can only
occur following the occurrence of a for cause termination. See Executive Compensation - CD&A - Written Agreements
Relating to NEO Employment - Recapture and Forfeiture Agreement.
The table below does not include vested balances in the SERP and SERP II. All NEOs are fully vested in their account balances.
Amounts shown in the table also do not include certain items available to all employees generally upon a termination event.
The table below also does not include stock options or RSUs, as there were no outstanding stock options or RSUs held by
NEOs as of December 31, 2024.
Table 67 - Compensation and Benefits if NEO Terminated Employment as of December 31, 2024
Michael T. Hutchins
Pay Component
2024 Fixed Deferred Salary
1,920,000
1,920,000
1,920,000
2024 At-Risk Deferred Salary(4)
1,080,000
1,080,000
1,042,200
2024 Interest on Deferred Salary(6)
44,906
97,716
95,905
2023 At-Risk Deferred Salary(5)
1,020,600
1,020,600
1,020,600
2023 Interest on Deferred Salary(6)
39,223
48,274
48,274
Total
$4,104,729
$4,166,590
$4,126,979
$—
James M. Whitlinger
Pay Component
2024 Fixed Deferred Salary
547,500
547,500
547,500
2024 At-Risk Deferred Salary(4)
427,500
427,500
412,538
2024 Interest on Deferred Salary(6)
14,595
33,590
32,873
2023 At-Risk Deferred Salary(5)
403,988
403,988
403,988
2023 Interest on Deferred Salary(6)
15,526
19,109
19,109
Total
$1,409,109
$1,431,687
$1,416,008
Anil D. Hinduja
Pay Component
2024 Fixed Deferred Salary
1,290,000
1,290,000
954,600
2024 At-Risk Deferred Salary(4)
810,000
810,000
781,650
Named Executive Officer(1)
Death
Disability
Retirement(2)
All Other Not
For Cause
Terminations(3)
Executive Compensation
2024 Compensation Information for NEOs
FREDDIE MAC | 2024 Form 10-K
259
2024 Interest on Deferred Salary(6)
31,434
69,695
60,304
2023 At-Risk Deferred Salary(5)
765,450
765,450
765,450
2023 Interest on Deferred Salary(6)
29,417
36,206
36,206
Total
$2,926,301
$2,971,351
$—
$2,598,210
Heidi L. Mason
Pay Component
2024 Fixed Deferred Salary
1,220,000
1,220,000
902,800
2024 At-Risk Deferred Salary(4)
780,000
780,000
752,700
2024 Interest on Deferred Salary(6)
29,938
66,581
57,676
2023 At-Risk Deferred Salary(5)
708,750
708,750
708,750
2023 Interest on Deferred Salary(6)
27,238
33,524
33,524
Total
$2,765,926
$2,808,855
$—
$2,455,450
Sonu Mittal
Pay Component
2024 Fixed Deferred Salary
900,000
900,000
666,000
2024 At-Risk Deferred Salary(4)
600,000
600,000
579,000
2024 Interest on Deferred Salary(6)
22,453
50,295
43,685
2023 At-Risk Deferred Salary(5)
444,150
444,150
444,150
2023 Interest on Deferred Salary(6)
15,980
21,008
21,008
Sign-on Award(7)
178,000
178,000
178,000
Total
$2,160,583
$2,193,453
$—
$1,931,843
Chris Lown(8)
Pay Component
2024 Fixed Deferred Salary
507,363
2024 At-Risk Deferred Salary(4)
472,426
2024 Interest on Deferred Salary(6)
34,781
2023 At-Risk Deferred Salary(5)
893,025
2023 Interest on Deferred Salary(6)
42,240
Total
$—
$—
$—
$1,949,835
Jerry Weiss
Pay Component
2024 Fixed Deferred Salary
1,115,000
1,115,000
1,115,000
2024 At-Risk Deferred Salary(4)
735,000
735,000
709,275
2024 Interest on Deferred Salary(6)
27,692
61,911
60,679
2023 At-Risk Deferred Salary(5)
666,225
666,225
666,225
2023 Interest on Deferred Salary
25,604
31,512
$31,512
Total
$2,569,521
$2,609,648
$2,582,691
$—
Named Executive Officer(1)
Death
Disability
Retirement(2)
All Other Not
For Cause
Terminations(3)
(1) Ms. Reid and Mr. DeVito are excluded from this table because they are not eligible for any additional compensation in connection with a termination of employment.
(2) Messrs. Hutchins, Whitlinger, and Weiss are the only retirement-eligible NEOs under the EMCP.
Executive Compensation
2024 Compensation Information for NEOs
FREDDIE MAC | 2024 Form 10-K
260
(3) All Other Not For Cause Terminations refer to (1) voluntary terminations other than for retirement; or (2) involuntary terminations other than for cause. No amount is
shown for Mr. Hutchins because he is retirement eligible. In accordance with early termination provisions in the EMCP, the amounts disclosed for Fixed Deferred Salary
for all other NEOs have been reduced by 26% to reflect a December 31, 2024 termination event.
(4) The amounts reported for 2024 At-Risk Deferred Salary in the Retirement and All Other Not For Cause Terminations columns reflect both the funding level determined
by FHFA with respect to performance against the 2024 Conservatorship Scorecard and the assessment of 2024 corporate performance approved by the CHC
Committee and FHFA. In cases of death or disability, the process for determining funding level is waived if the funding level has not been determined at the date of
termination.
(5) The amounts reported for 2023 At-Risk Deferred Salary for all termination scenarios reflect both the funding level determined by FHFA with respect to performance
against the 2023 Conservatorship Scorecard and the assessment of 2023 corporate performance approved by the CHC Committee and FHFA. These amounts reflect
amounts earned in 2023 that, pursuant to the EMCP, will be paid in 2025.
(6) Interest on Deferred Salary is accrued and paid in accordance with the terms of the EMCP. The amount of interest in the Death column assumes that payment occurs
on the 90th day following the date of death, which is assumed to be December 31, 2024. The interest on At-Risk Deferred Salary in the case of disability and all other
not for cause terminations is calculated for two years based on the two-year deferral period in accordance with the EMCP (refer to the Elements of Target TDC section).
(7) In the event Mr. Mittal's employment is terminated due to death, disability, or involuntary termination other than for cause, he will be entitled to receive any unpaid
installments of his sign-on award. Mr. Mittal would not be eligible for this amount in the event of an involuntary termination for cause or a voluntary separation. For a
description of the sign-on award, see Executive Compensation - CD&A - Written Agreements Relating to NEO Employment.
(8) Mr. Lown resigned from his position as EVP & CFO effective June 28, 2024. The information in the table reflects what he was actually paid.
Executive Compensation
2024 Compensation Information for NEOs
FREDDIE MAC | 2024 Form 10-K
261
Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder
Matters
SECURITY OWNERSHIP
Our only class of voting stock is our common stock. Upon its appointment as Conservator, FHFA immediately succeeded to the
voting rights of holders of our common stock. The following tables show the beneficial ownership of our common stock as of
February 12, 2025, by our directors, our NEOs, all of our directors and executive officers as a group, and holders of more than
5% of our common stock. Beneficial ownership is determined in accordance with SEC rules for computing the number of
shares of common stock beneficially owned by a person and the ownership percentage of that person. As of February 12,
2025, each director and NEO, and all of our directors and executive officers as a group, owned less than 1% of our outstanding
common stock. We ceased paying our executive officers and directors stock-based compensation when we entered
conservatorship. In addition, the Purchase Agreement prohibits us from issuing any of our equity securities, including as
compensation to our directors and executive officers, without the prior written consent of Treasury, and no equity securities,
other than the senior preferred stock issued to Treasury, have been issued since we entered conservatorship. In addition,
company policy prohibits directors and executive officers from engaging in transactions involving our equity securities, except
selling company securities owned prior to the implementation of the policy. See Executive Compensation - CD&A - Other
Executive Compensation Considerations - Stock Ownership, Hedging, and Pledging Policies for additional information.
Unless otherwise noted, the information presented below is based on information provided to us by the individuals or entities
specified in the table.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
FREDDIE MAC | 2024 Form 10-K
262
Stock Ownership By Directors and Executive Officers
Table 68 - Stock Ownership by Directors and Executive Officers
Directors and Named
Executive Officers
Position
Common Stock
Beneficially Owned
Excluding
Stock Options(1)
Stock Options
Exercisable
Within 60 Days of
Feb. 12, 2025
Total Common Stock
Beneficially Owned
Mark H. Bloom
Director
—
—
—
Kathleen L. Casey
Director
—
—
—
Kevin G. Chavers
Director
—
—
—
Lance F. Drummond
Director
—
—
—
Aleem Gillani
Director
—
—
—
Luke S. Hayden
Director
—
—
—
Christopher E. Herbert
Director
—
—
—
Grace A. Huebscher
Director
—
—
—
Allan P. Merrill
Director
—
—
—
Jane E. Prokop
Director
—
—
—
Roy Swan
Director
—
—
—
Diana W. Reid
CEO & Director
—
—
—
Michael T. Hutchins
President
—
—
—
James M. Whitlinger
EVP & CFO
2,189(2)
—
2,189(2)
Anil D. Hinduja
EVP - CRO
—
—
—
Heidi L. Mason
EVP & General Counsel
—
—
—
Sonu Mittal
EVP - Single-Family Acquisitions
—
—
—
Michael J. DeVito
Former CEO
—
—
—
Christian M. Lown
Former EVP & CFO
—
—
—
Jerry Weiss
Former EVP - Chief Administrative Officer
—
—
—
All directors and executive officers as a group (25 persons)
3,093
0
3,093(3)
(1)
Includes shares of stock beneficially owned as of February 12, 2025.
(2)
Represents shares of stock owned by Mr. Whitlinger's spouse.
(3)
Represents shares of stock beneficially owned prior to the company's entry into conservatorship.
Stock Ownership by Greater-Than 5% Holders
Table 69 - Stock Ownership by Greater-Than 5% Holders
5% Holders(1)
Common Stock
Beneficially Owned
Percent of Class
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220
Variable(2)
79.9%
(1)
Pershing Square Capital Management, L.P., PS Management GP, LLC, and William A. Ackman ("Pershing") have filed certain reports on Schedule 13D, the latest of
which was filed on March 31, 2014. In that report, Pershing reported a beneficial ownership percentage calculation of 9.78%, based solely on the 650,039,533
shares of our common stock outstanding as reported in our Annual Report on Form 10-K filed on February 27, 2014, and excluding the shares issuable to Treasury
pursuant to the Warrant. The Schedule 13D indicated that Pershing also had additional economic exposure to approximately 8,434,958 notional shares of common
stock, bringing the total aggregate economic exposure on the date of that filing to 72,010,523 shares of common stock (approximately 11.08% of the outstanding
common stock). In that filing, Pershing indicated that because it believes our common stock is not a voting security, it had determined not to file future reports on
Schedule 13D. We do not know Pershing's current beneficial ownership of our common stock.
(2)
In September 2008, we issued Treasury the Warrant to purchase, for one one-thousandth of a cent ($0.00001) per share, shares of our common stock equal to
79.9% of the total number of shares of our common stock outstanding on a fully diluted basis at the time the Warrant is exercised. The Warrant may be exercised in
whole or in part at any time until September 7, 2028. As of the date of this filing, Treasury has not exercised the Warrant. The information above assumes Treasury
beneficially owns no other shares of our common stock.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
FREDDIE MAC | 2024 Form 10-K
263
SECURITIES AUTHORIZED FOR ISSUANCE UNDER
EQUITY COMPENSATION PLANS
We have no shares of common stock available for issuance upon the exercise of options, warrants, and rights under our
existing equity compensation plans as of December 31, 2024. Prior to conservatorship, stockholders approved the Employee
Stock Purchase Plan, the 2004 Stock Compensation Plan, the 1995 Stock Compensation Plan (together, the "Employee
Plans"), and the 1995 Directors' Stock Compensation Plan (the "Directors' Plan"). The authorizations to issue shares of
common stock under the Employee Plans and Directors' Plan have expired pursuant to their respective terms. Therefore, we
are not providing an Equity Compensation Table.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
FREDDIE MAC | 2024 Form 10-K
264
Certain Relationships And Related Transactions
POLICY GOVERNING RELATED PERSON
TRANSACTIONS
The Board of Directors has adopted a written policy governing the approval of related person transactions. This policy sets
forth procedures for the review and approval or ratification of transactions involving related persons. Under the policy, "related
person" means any person who is, or was at any time since the beginning of our last completed fiscal year, a director, a
director nominee, an executive officer, or an immediate family member of any of the foregoing persons.
Under authority delegated by the Board of Directors, the Nominating and Governance Committee, or its Chair or other
designated member under certain circumstances, each an Authorized Approver, is responsible for applying the Related Person
Transactions Policy. Transactions covered by the Related Person Transactions Policy consist of any transaction, arrangement,
or relationship or series of similar transactions, arrangements, or relationships, in which:
n
The aggregate amount involved exceeded or is expected to exceed $120,000;
n
We were or are expected to be a participant; and
n
Any related person had or will have a direct or indirect material interest.
The Related Person Transactions Policy includes a list of categories of transactions identified by the Board of Directors as
having no significant potential for an actual conflict of interest or the appearance of a conflict or benefit to a related person, and
thus such transactions are not considered potential related person transactions subject to review.
Our Legal Division (or our Compliance department in certain limited circumstances) assesses whether any proposed transaction
involving a related person is covered by the Related Person Transactions Policy. If so, the transaction is reviewed by the
appropriate Authorized Approver.
In determining whether to approve or ratify a related person transaction covered by the Related Person Transactions Policy, the
Authorized Approver reviews and considers all relevant information, which may include:
n
The nature of the related person's interest in the transaction;
n
The approximate total dollar value of, and extent of the related person's interest in, the transaction;
n
Whether the transaction was or would be undertaken in the ordinary course of business;
n
Whether the transaction is proposed to be, or was, entered into on terms no less favorable to us than terms that could
have been reached with an unrelated third party; and
n
The purpose, and potential benefits to us, of the transaction.
TRANSACTIONS WITH 5% SHAREHOLDERS
In connection with our entry into conservatorship, we issued the Warrant to Treasury to purchase shares of our common stock
equal to 79.9% of the total number of shares of our common stock outstanding, on a fully diluted basis. There have been a
number of transactions between us and Treasury since the beginning of 2023, as discussed in MD&A - Consolidated
Results of Operations, MD&A - Liquidity and Capital Resources, MD&A - Conservatorship and Related
Matters, MD&A - Regulation and Supervision, Note 2, Note 8, and Note 11. FHFA, as Conservator, approved the
Purchase Agreement. The remaining transactions described in those sections did not require review and approval under any of
our policies and procedures relating to transactions with related persons.
TRANSACTIONS WITH INSTITUTIONS RELATED TO
EXECUTIVE OFFICERS
Mr. Lown’s brother, Jeffrey Lown, serves as the CEO and President of Cherry Hill Mortgage Investment Corporation (“Cherry
Hill”) and serves as the President and a director of one of Cherry Hill’s subsidiaries, Aurora Financial Group Inc. (“Aurora”).
Aurora is a single-family servicer servicing approximately 27,061 loans with a UPB of $6.4 billion as of December 31, 2024.
These transactions were conducted in the ordinary course of business and on an arm's-length basis.
Until November 15, 2024, Mr. Whitlinger’s spouse was an executive officer with NewPoint Real Estate Capital (“NewPoint”), a
multifamily loan originator and servicer. We regularly acquire loans originated by NewPoint and we understand that these
transactions represent a significant portion of NewPoint’s business. In 2024, we acquired loans from NewPoint totaling
approximately $1.3 billion. These transactions were conducted in the ordinary course of business and on an arm's-length basis.
Certain Relationships and Related Transactions
FREDDIE MAC | 2024 Form 10-K
265
CONSERVATORSHIP AGREEMENTS
Treasury, FHFA, and the Federal Reserve have taken a number of actions to support us during conservatorship, including
entering into the Purchase Agreement, described in this Form 10-K. See MD&A - Conservatorship and Related Matters
and Note 2.
Certain Relationships and Related Transactions
FREDDIE MAC | 2024 Form 10-K
266
Principal Accounting Fees and Services
DESCRIPTION OF FEES
PricewaterhouseCoopers LLP has served as our independent public accountants since 2002. The following is a description of
fees billed to us by PricewaterhouseCoopers LLP during 2024 and 2023.
Auditor Fees(1)
Table 70 - Auditor Fees
(In thousands)
2024
2023
Audit Fees(2)
$23,268
$22,699
Audit-Related Fees(3)
6,325
5,524
Tax Fees(4)
1,370
1,473
All Other Fees(5)
2
1
Total
$30,965
$29,697
(1)
These fees represent amounts billed (including reimbursable expenses within the designated year).
(2)
Audit fees include fees in connection with quarterly reviews of our interim financial information and the audit of our annual consolidated financial statements.
(3)
Audit-related fees include: (1) fees for the performance of certain agreed-upon procedures regarding aspects of compliance with the Purchase Agreement
covenants; (2) attestation-related services on debt offerings; (3) compliance evaluation of the minimum servicing standards as set forth in the Uniform Single
Attestation Program for Mortgage Bankers; (4) fees related to accounting policy consultations; (5) fees for the performance of certain agreed-upon procedures
related to our risk transfer and structured transactions, pursuant to engagement letters with the company, including where the fees are billed to and paid by
unconsolidated trusts created in connection with such transactions; (6) fees related to sustainability reporting attestations; and (7) fees for assessing management’s
Capital Investment framework and risk assessment methodology.
(4)
The tax fees related to non-audit tax compliance and consulting services arising from certain tax credits and advice and recommendations related to tax planning
and reporting matters.
(5)
All other fees include: (1) our subscription to a web-based suite of human resources benchmark data; and (2) our subscription to accounting research and disclosure
software.
APPROVAL OF INDEPENDENT AUDITOR SERVICES
AND FEES
Under its charter, the Audit Committee is responsible for the following:
n
Appointing our independent public accounting firm (subject to FHFA approval as required);
n
Approving all audit and non-audit services permitted under applicable law to be performed by the independent public
accounting firm (subject to FHFA approval as required);
n
Approving our independent public accounting firm's proposed integrated audit scope and approach with respect to the
annual audit; and
n
Overseeing the performance of, and relationship with, our independent public accounting firm.
The Sarbanes-Oxley Act of 2002 and related SEC rules require that all services provided to companies subject to the reporting
requirements of the Exchange Act by their independent auditors be pre-approved by their audit committee or by authorized
members of the committee, with certain exceptions. The Audit Committee's charter requires that the Audit Committee pre-
approve any audit services, and any non-audit services permitted under applicable law, to be performed by our independent
auditors (or to designate one or more members of the Audit Committee to pre-approve such services and report such pre-
approval to the Audit Committee).
Audit services that are within the scope of an auditor's engagement approved by the Audit Committee prior to the performance
of those services are deemed pre-approved and do not require separate pre-approval. Audit services not within the scope of an
Audit Committee-approved engagement, as well as permissible non-audit services, must be separately pre-approved by the
Audit Committee.
When the Audit Committee pre-approves a service, it sets a dollar limit for such service. Management obtains pre-approval of
the Audit Committee, or of the Chair of the Audit Committee (when the Chair of the Audit Committee has been delegated such
authority), before it incurs fees exceeding the dollar limit. If the Chair of the Audit Committee approves the increase, the Chair
will report such approval at the Audit Committee's next scheduled meeting. The Audit Committee has delegated to the Chair
the authority to address requests to pre-approve certain additional audit and non-audit services to be performed by the
Principal Accounting Fees and Services
FREDDIE MAC | 2024 Form 10-K
267
company's independent auditor with fees totaling up to a maximum of $250,000 per quarter, with reporting of any such
approval decisions to the Audit Committee at its next scheduled meeting. The pre-approval procedure is administered by our
senior financial management, which reports throughout the year to the Audit Committee. The Audit Committee pre-approved all
audit, audit-related, tax, and other services performed by our independent public accounting firm in 2024 and 2023.
The Audit Committee appoints the independent public accounting firm on an annual basis. In connection with applicable
partner rotation requirements, the Audit Committee and its Chair are involved in considering the selection of the independent
registered public accounting firm’s new lead partner. In evaluating the performance of the independent public accounting firm,
the Audit Committee considers a number of factors, including the following:
n
The firm's status as a registered public accounting firm with the Public Company Accounting Oversight Board (United
States), or PCAOB, as required by the Sarbanes-Oxley Act of 2002 and the Rules of the PCAOB;
n
Its independence and processes for maintaining its independence;
n
Its approach to resolving significant accounting and auditing matters;
n
Its capability and expertise in handling the complexity of the company's business, including the capability and expertise of
the lead audit partner and of the key members of the engagement team;
n
Historical and recent performance, including the extent and quality of the independent public accounting firm's
communications with the Audit Committee, and the results of a management survey of the independent public accounting
firm's overall performance;
n
Data related to audit quality and performance, including recent PCAOB inspection reports on the firm; and
n
The appropriateness of its fees, both on an absolute basis and as compared with peers.
The Audit Committee has determined that the non-audit services rendered by PricewaterhouseCoopers during its most recent
fiscal year are compatible with maintaining PricewaterhouseCoopers' independence.
Principal Accounting Fees and Services
FREDDIE MAC | 2024 Form 10-K
268
Exhibits and Financial Statement Schedules
(a) Documents filed as part of this report:
(1) Consolidated Financial Statements
The consolidated financial statements required to be filed in this Form 10-K are included in
Financial Statements and Supplementary Data.
(2) Financial Statement Schedules
None.
(3) Exhibits
An Exhibit Index has been filed as part of this Form 10-K beginning on page 278.
Exhibits and Financial Statement Schedules
FREDDIE MAC | 2024 Form 10-K
269
Glossary
This Glossary includes acronyms and defined terms that are used throughout this report.
n ACIS - Agency Credit Insurance Structure - Transactions in which we purchase insurance policies that provide credit
enhancement for certain specified credit events on the mortgage loans in the related reference pools, or provide front-end
credit risk transfer as loans come into the portfolio. Under each of these insurance policies, we pay monthly premiums that
are determined based on the outstanding balance of the reference pool. When specific credit events occur, we generally
receive compensation from the insurance policy up to an aggregate limit based on actual losses.
n
Administration - Executive branch of the U.S. government and its agencies, including but not limited to FHFA and
Treasury.
n Agency securities - Generally refers to mortgage-related securities issued or guaranteed by the GSEs or government
agencies.
n AMI - Area Median Income.
n Annual Business Plan - Consolidated business plan and divisional business plans.
n AOCI - Accumulated other comprehensive income (loss), net of taxes.
n ARM - Adjustable-rate mortgage - A mortgage loan with an interest rate that adjusts periodically over the life of the loan
based on changes in a benchmark index.
n ASU - Accounting Standards Update.
n ASU 2022-02 - Accounting Standards Update 2022-02, Financial Instruments — Credit Losses (Topic 326): Troubled Debt
Restructurings and Vintage Disclosures. The amendments in this Update eliminate the recognition and measurement
guidance related to TDRs in ASC Subtopic 310-40. The amendments in this Update also require disclosure of current
period gross write-offs by year of origination for financing receivables within the scope of ASC Subtopic 326-20.
n ATA - Adjusted total assets.
n AVM - Automated Valuation Model.
n Back-end coverage type - Applies to transactions in which the credit risk transfer occurs after our purchase of the loan or
guarantee of a security.
n Bps - Basis points - One one-hundredth of 1%. This term is commonly used to quote the yields of debt instruments or
movements in interest rates.
n Capital Reserve Amount - See Net worth sweep dividend, Net Worth Amount, Capital Reserve Amount, and Capital
Reserve End Date for additional information.
n Capital Reserve End Date - See Net worth sweep dividend, Net Worth Amount, Capital Reserve Amount, and
Capital Reserve End Date for additional information.
n CARES Act - Coronavirus Aid, Relief, and Economic Security Act - An economic stimulus bill signed into law on March 27,
2020, designed to mitigate the negative economic effects of the COVID-19 pandemic in the United States.
n CD&A - Compensation Discussion and Analysis.
n CEO - Chief Executive Officer.
n CET1 - Common Equity Tier 1.
n CFO - Chief Financial Officer.
n CFPB - Consumer Financial Protection Bureau.
n Charge-offs - Represent the amount of a financial asset that is removed from our consolidated balance sheets when
deemed uncollectible, regardless of when the impact of the credit loss was recorded on our consolidated statements of
comprehensive income. For mortgage loans, generally the amount of a charge-off is the recorded investment in excess of
the fair value of the loan's collateral.
n Charter - The Federal Home Loan Mortgage Corporation Act, as amended, 12 U.S.C. § 1451 et seq.
n CHC Committee - The Compensation and Human Capital Committee of the Board of Directors.
n CMBS - Commercial mortgage-backed security - A security backed by loans on commercial property (often including
multifamily rental properties) as opposed to one-to-four family residential real estate.
n CMOs - Collateralized Mortgage Obligations.
n CODM - Chief Operating Decision Maker.
n Comprehensive income - Consists of net income plus other comprehensive income (loss).
Glossary
FREDDIE MAC | 2024 Form 10-K
270
n Conforming loan/Conforming loan limit - A conventional single-family loan with an original principal balance that is equal
to or less than the applicable statutory conforming loan limit, which is a dollar amount cap on the original principal balance
of single-family loans we are permitted by law to purchase or securitize. The conforming loan limit is determined annually
based on changes in FHFA's house price index.
n Conservator - FHFA, acting in its capacity as Conservator of Freddie Mac.
n Conservatorship Scorecard - FHFA's mechanism for outlining specific conservatorship priorities for Freddie Mac, Fannie
Mae, and their joint venture, Common Securitization Solutions, LLCSM.
n Convexity - A measure of how much a financial instrument's duration changes as interest rates change.
n Corporate Governance Rule - FHFA's rule regarding the Responsibilities of Board of Directors, Corporate Practices and
Corporate Governance Matters.
n Credit enhancement - A financial arrangement that is designed to reduce credit risk by partially or fully compensating an
investor in a mortgage or security (e.g., Freddie Mac) in the event of specified losses. Examples of credit enhancements
include insurance, CRT transactions, overcollateralization, indemnification agreements, and government guarantees.
n Credit fee - A fee charged to sellers above base contractual guarantee fees to compensate us for higher levels of risk in
some loan products.
n Credit risk transfer (CRT) transactions - Arrangements where we actively transfer the credit risk exposure on mortgages
that we own or guarantee.
n Credit score - Statistically-derived number that may indicate a borrower's likelihood to repay debt. Reported credit scores
are based on FICO credit scoring models developed by Fair Isaac Corporation. FICO scores are ranked on a scale of
approximately 300 to 850 points with a higher value indicating a lower likelihood of credit default.
l Original credit score - The credit score of the borrower at the time of loan origination or our purchase.
l Current credit score - The credit score of the borrower as of the first month of the most recent quarter.
n CRO - Chief Risk Officer.
n CSS - Common Securitization Solutions, LLC.
n CSS Board - Board of Managers of CSS.
n CSP - Common Securitization Platform.
n December 2017 Letter Agreement - An agreement that we through the Conservator, acting on our behalf, entered into
with Treasury on December 21, 2017 to amend the Amended and Restated Certificate of Creation, Designation, Powers,
Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms, and Conditions of Variable Liquidation
Preference Senior Preferred Stock (Par Value $1.00 Per Share) dated September 27, 2012.
n Deed in lieu of foreclosure - An alternative to foreclosure in which the borrower voluntarily conveys title to the property to
the lender and the lender accepts such title (sometimes together with an additional payment by the borrower) in full
satisfaction of the mortgage indebtedness.
n Delinquency - A failure to make timely payments of principal and/or interest on a loan. For single-family loans, we
generally report delinquency rate information based on the number of loans that are seriously delinquent. We report single-
family loans in forbearance as delinquent during the forbearance period to the extent that payments are past due based on
the loan's original contractual terms, irrespective of the forbearance plan. For multifamily loans, we report delinquency rate
information based on the UPB of loans that are two monthly payments or more past due or in the process of foreclosure.
Loans that have been modified or received forbearance are not counted as delinquent as long as the borrower is
performing pursuant to the terms of the modified loan or forbearance agreement. Unless stated otherwise, multifamily
delinquency rates presented in this Form 10-K refer to gross delinquency rates before consideration of risk transfers.
n Derivative - A financial instrument whose value depends upon the characteristics and value of an underlying such as a
financial asset or index. Examples of underlyings include security or commodity prices, interest or currency rates, and
other financial indices.
n Director - Director or Acting Director.
n Dodd-Frank Act - Dodd-Frank Wall Street Reform and Consumer Protection Act.
n DSCR - Debt Service Coverage Ratio - An indicator of future credit performance for multifamily loans. The DSCR estimates
a multifamily borrower's ability to service its mortgage obligation using the secured property's cash flow, after deducting
non-mortgage expenses from income. The higher the DSCR, the more likely a multifamily borrower will be able to continue
servicing its loan obligation. The original DSCR is used for loan underwriting and assumes monthly payments that reflect
amortization of principal. The current DSCR is calculated using the actual debt service payments for the loan.
n DTI ratio - Debt-to-income ratio. The ratio of borrowers' total monthly debt payments to gross monthly income. DTI ratio is
an indicator of the creditworthiness of borrowers, as it measures borrowers' ability to manage monthly payments and repay
debts.
n Duration - A measure of a financial instrument's price sensitivity to changes in interest rates.
Glossary
FREDDIE MAC | 2024 Form 10-K
271
n Duration gap - One of our primary interest-rate risk measures. Duration gap is a measure of the difference between the
estimated durations of our interest rate sensitive assets and liabilities. We present the duration gap of our financial
instruments in units expressed as months. A duration gap of zero implies that the change in value of our interest rate
sensitive assets from an instantaneous change in interest rates would be expected to be accompanied by an equal and
offsetting change in the value of our interest rate sensitive liabilities, thus leaving economic value unchanged.
n EMCP - Executive Management Compensation Program.
n Enterprises - Freddie Mac and Fannie Mae.
n EO&T - Enterprise Operations & Technology Division.
n ERCF - Enterprise Regulatory Capital Framework - Final rule adopted by FHFA in 2020 that establishes a new regulatory
capital framework for Freddie Mac and Fannie Mae as amended from time to time.
n ERM - Enterprise Risk Management.
n ERM Program - Freddie Mac's enterprise risk management program.
n EVP - Executive Vice President.
n Exchange Act - Securities Exchange Act of 1934, as amended.
n Fannie Mae - Federal National Mortgage Association.
n FDIC - Federal Deposit Insurance Corporation.
n Federal Reserve - Board of Governors of the Federal Reserve System.
n
FHA - Federal Housing Administration.
n FHFA - Federal Housing Finance Agency - An independent agency of the U.S. government with responsibility for regulating
Freddie Mac, Fannie Mae, and the FHLBs.
n FHLB - Federal Home Loan Bank.
n 55-day MBS - A single-class pass-through security with a 55-day payment delay for non-TBA-eligible fixed-rate mortgage
loans. Freddie Mac began issuing 55-day MBS on and after June 3, 2019.
n Fitch - Fitch Ratings Limited.
n Fixed-rate loan - Refers to a loan originated at a specific rate of interest that remains constant over the life of the loan. For
purposes of presentation in this report, we have categorized certain modified loans as fixed-rate loans, even though the
modified loans have rate adjustment provisions. In these cases, while the terms of the modified loans provide for the
interest rate to adjust in the future, such future rates are determined at the time of the modification rather than at a
subsequent date.
n Foreclosure alternative - A workout option pursued when a home retention action is not successful or not possible. A
foreclosure alternative is either a short sale or deed in lieu of foreclosure.
n Foreclosure or foreclosure sale - Refers to our completion of a transaction provided for by the foreclosure laws of the
applicable state, in which a delinquent borrower's ownership interest in a mortgaged property is terminated and title to the
property is transferred to us or to a third party. When we, as loan holder, acquire a property in this manner, we pay for it by
extinguishing some or all of the mortgage debt.
n Front-end coverage - Applies to transactions in which the credit risk transfer occurs prior to, or simultaneously with, our
purchase or guarantee of the loan.
n GAAP - Generally accepted accounting principles in the United States of America.
n Giant MBS - Resecuritizations of newly issued 55-day MBS (and/or Giant MBS), and/or 55-day MBS (and/or Giant MBS)
that Freddie Mac has issued in exchange for non-TBA-eligible PCs and non-TBA-eligible Giant PCs that have been
delivered to Freddie Mac in response to the exchange offer. Giant MBS are single-class securities that involve the direct
pass-through of all cash flows of the underlying collateral to holders of the beneficial interests.
n Giant PCs - Resecuritizations of previously issued PCs or Giant PCs. Giant PCs are single-class securities that involve the
direct pass through of all cash flows of the underlying collateral to holders of the beneficial interests.
n Ginnie Mae - Government National Mortgage Association, which guarantees the timely payment of principal and interest
on mortgage-related securities backed by federally insured or guaranteed loans, primarily those insured by FHA or
guaranteed by the VA.
n Green Advantage loan - A multifamily loan that we offer under our Green Advantage initiative, whereby borrowers finance
the installation of green technologies that reduce energy and water consumption.
n
GSD/FICC - Government Securities Division of the Fixed Income Clearing Corporation.
n GSE Act - The Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended by the Reform Act.
n GSEs - Government-sponsored enterprises - Refers to certain legal entities created by the U.S. government, including
Freddie Mac, Fannie Mae, and the FHLBs.
n Guarantee fee - The fee that we receive for guaranteeing the payment of principal and interest to mortgage security
investors, which consists primarily of a combination of a monthly guarantee fee paid as a percentage of the UPB of the
Glossary
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underlying loans, and initial upfront payments, such as credit fees.
n Guide - The Single-Family Seller/Servicer Guide consists of Freddie Mac's requirements relating to the purchase, sale, and
servicing of single-family mortgages.
n Guidelines - Corporate Governance Guidelines, as revised.
n HFA - State or local Housing Finance Agency.
n HQLA - High quality liquid asset.
n HUD - U.S. Department of Housing and Urban Development.
n Initial margin - The collateral that we post with a derivatives clearinghouse or to a counterparty in order to do business
with such clearinghouse or trade with such counterparty. The amount of initial margin varies over time.
n January 2021 Letter Agreement - An agreement that we through the Conservator, acting on our behalf, entered into with
Treasury on January 14, 2021 to further amend (1) the Amended and Restated Certificate of Creation, Designation, Powers,
Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms, and Conditions of Variable Liquidation
Preference Senior Preferred Stock (Par Value $1.00 Per Share) dated September 30, 2019 and (2) the Purchase Agreement.
n January 2025 Letter Agreement - An agreement that we through the Conservator, acting on our behalf, entered into with
Treasury on January 2, 2025 to further amend (1) the Amended and Restated Certificate of Creation, Designation, Powers,
Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions of Variable Liquidation
Preference Senior Preferred Stock (Par Value $1.00 Per Share) dated April 13, 2021, (2) the Purchase Agreement, and (3)
the Warrant.
n K Certificates - Structured pass-through certificates generally backed by recently originated multifamily loans purchased
by Freddie Mac.
n Legislated guarantee fees - The 10 basis point increase in guarantee fees we implemented for all single-family residential
mortgages delivered to us on or after April 1, 2012, at the direction of FHFA pursuant to the Temporary Payroll Tax Cut
Continuation Act of 2011 as extended by the Infrastructure Investment and Jobs Act. We are required to charge and remit
to Treasury this 10 basis point fee for all single-family residential mortgage loans delivered to us through October 1, 2032.
n Level 1 Securitization Products - Single-class pass-through securities that represent undivided beneficial interests in
trusts that hold pools of loans. These products include UMBS, 55-day MBS, and PCs.
n LIBOR - London Interbank Offered Rate.
n LIHTC partnerships - Low-income housing tax credit partnerships - These LIHTC partnerships invest directly in limited
partnerships that own and operate affordable multifamily rental properties that generate federal income tax credits and
deductible operating losses.
n Liquidation preference - Generally refers to an amount that holders of preferred securities are entitled to receive out of
available assets upon liquidation of a company. The initial liquidation preference of our senior preferred stock was
$1.0 billion. The aggregate liquidation preference of our senior preferred stock includes the initial liquidation preference
plus amounts funded by Treasury under the Purchase Agreement, as well as $3.0 billion added pursuant to the December
2017 Letter Agreement. In addition, pursuant to the September 2019 Letter Agreement and January 2021 Letter
Agreement, increases in the Net Worth, if any, during the immediately prior fiscal quarter have been, or will be, added to
the liquidation of the senior preferred stock at the end of each fiscal quarter, from September 30, 2019 through the Capital
Reserve End Date. We may make payments to reduce the liquidation preference of the senior preferred stock only in
limited circumstances.
n Liquidity and Contingency Operating Portfolio - Subset of our other investments portfolio. Consists of cash and cash
equivalents, certain securities purchased under agreements to resell, and certain non-mortgage-related securities.
n LLC - Limited liability company.
n LLRE - Limited life regulated entity.
n Long-term debt - Debt due after one year based on the original contractual maturity of the debt instrument. Our long-term
debt issuances include medium-term notes, Reference Notes securities, STACR debt notes, and SCR debt notes.
n LTV ratio - Loan-to-value ratio - The ratio of the unpaid principal amount of a loan to the value of the property that serves
as collateral for the loan, expressed as a percentage. We report LTV ratios based solely on the amount of the loan
purchased or guaranteed by us.
l Original LTV - The LTV ratio at the time of origination. The original LTV is calculated as the UPB of the loan divided by
the value of the property at the time of loan origination.
l Current LTV or CLTV - The current LTV ratio is a management estimate, which is updated on a monthly basis. Current
market values are estimated by adjusting the value of the property at origination based on changes in the market value
of homes in the same geographic area since that time irrespective of the type of features of the specific property
relative to other properties in that same geographic area. Changes in market value of single-family properties are
derived from our internal index, which measures price changes for repeat sales and refinancing activity on the same
properties using Freddie Mac and Fannie Mae single-family loan acquisitions. Estimates of the current LTV ratio
exclude any secondary financing by third parties.
Glossary
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n
Market spread - The difference between the yields of two debt securities, or the difference between the yield of a debt
security and a benchmark yield, such as SOFR or U.S. Treasury securities. We measure market spreads primarily using our
models.
n
MBS - Mortgage-backed security.
n MBSD/FICC - Mortgage-Backed Securities Division of the Fixed Income Clearing Corporation.
n MCIP - Multifamily Credit Insurance Pool.
n MD&A - Management's Discussion and Analysis of Financial Condition and Results of Operations.
n Moody's - Moody's Investor Service.
n Mortgage assets - Refers to both loans and mortgage-related securities we hold in our mortgage-related investments
portfolio.
n MSA - Metropolitan Statistical Area.
n MSCR note - Multifamily Structured Credit Risk note - A debt security issued by a nonconsolidated trust where the
principal balance is linked to the credit performance of a reference pool of multifamily loans owned or guaranteed by
Freddie Mac. We make payments to the trust to support payment of the interest due on the notes, and we receive
payments from the trust as a result of defined credit events on the reference pool.
n Multifamily loan - A loan secured by a property with five or more residential rental units or by a manufactured housing
community.
n Multifamily PC - A fully guaranteed securitization product in which Freddie Mac retains the credit risk of the underlying
mortgage loan.
n Multifamily new business activity - Represents loan purchases, issuances of other mortgage-related guarantees, and
issuances of other securitization products for which we have not previously purchased the underlying loans.
n NCUSIF - National Credit Union Share Insurance Fund.
n Net Worth Amount - See Net worth sweep dividend, Net Worth Amount, Capital Reserve Amount, and Capital
Reserve End Date for additional information.
n Net worth - The amount by which our total assets exceed our total liabilities as reflected on our consolidated balance
sheets prepared in conformity with GAAP.
n Net worth sweep dividend, Net Worth Amount, Capital Reserve Amount, and Capital Reserve End Date - For each
quarter from January 1, 2013 through the Capital Reserve End Date, the dividend requirement on the senior preferred stock
will be the amount, if any, by which our Net Worth Amount at the end of the immediately preceding fiscal quarter, less the
applicable Capital Reserve Amount, exceeds zero. The term Net Worth Amount is defined as the total assets of Freddie
Mac (excluding Treasury's commitment and any unfunded amounts thereof), less our total liabilities (excluding any
obligation in respect of capital stock), in each case as reflected on our consolidated balance sheets prepared in conformity
with GAAP. If the calculation of the dividend payment for a quarter does not exceed zero, then no dividend shall accrue or
be payable for that quarter. The applicable Capital Reserve Amount was $3.0 billion for 2018, increased to $20.0 billion in
3Q 2019 pursuant to the September 2019 Letter Agreement, and later increased further to the amount of adjusted total
capital necessary to meet capital requirements and buffers set forth in the ERCF. If we were not to pay our dividend
requirement on the senior preferred stock in full in any future period until the Capital Reserve End Date, the applicable
Capital Reserve Amount would thereafter be zero. The Capital Reserve End Date is the last day of the second consecutive
fiscal quarter during which Freddie Mac has had and maintained capital equal to or in excess of all of the capital
requirements and buffers under the ERCF.
n NM - Not meaningful.
n NOI - Net operating income.
n Non-accrual loan - A loan for which we are not accruing interest income. We place loans on non-accrual status when we
believe collectability of principal and interest in full is not reasonably assured, which generally occurs when a loan is three
monthly payments past due, unless the loan is well secured and in the process of collection based upon an individual loan
assessment.
n NYSE - New York Stock Exchange.
n OAS - Option-adjusted spread - An estimate of the incremental yield spread between a particular financial instrument (e.g.,
a security, loan, or derivative contract) and a benchmark yield curve (e.g., SOFR, agency, or U.S. Treasury securities). This
includes consideration of potential variability in the instrument's cash flows resulting from any options embedded in the
instrument, such as prepayment options. When the OAS on a given asset widens, the fair value of that asset will typically
decline, all other market factors being equal. The opposite is true when the OAS on a given asset tightens.
n Optigo® - Freddie Mac's Multifamily lender network and loan offerings.
n OTC - Over-the-counter.
n OTCQB - A marketplace, operated by the OTC Markets Group Inc., for OTC-traded U.S. companies that are registered and
current in their reporting with the SEC or a U.S. banking or insurance regulator.
Glossary
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n PCs - Participation Certificates - Single-class pass-through securities that we issue and guarantee as part of a
securitization transaction.
l
Gold PCs - Single-class pass-through securities with a 45-day payment delay that Freddie Mac issued for fixed-rate
mortgage loans prior to June 3, 2019. Freddie Mac no longer issues Gold PCs. Existing Gold PCs are eligible for
exchange into UMBS (for TBA-eligible securities) or 55-day MBS (for non-TBA-eligible securities).
l
ARM PCs - Single-class pass-through securities with a 75-day payment delay for ARM products.
n PCCBA - Prescribed capital conservation buffer amount.
n Pension Plan - The Federal Home Loan Mortgage Corporation Employees' Pension Plan.
n PLBA - Prescribed leverage buffer amount.
n PMIERS - Private Mortgage Insurer Eligibility Requirements - Financial and operational standards that private mortgage
insurance companies must meet to be an approved insurer and provide mortgage guaranty insurance on mortgage loans
acquired by Freddie Mac.
n PMMS - Primary Mortgage Market Survey.
n Primary mortgage market - The market where lenders originate loans by lending funds to borrowers. We do not lend
money directly to homeowners and do not participate in this market.
n Purchase Agreement / Senior Preferred Stock Purchase Agreement - An agreement that we through the Conservator,
acting on our behalf, entered into with Treasury on September 7, 2008, relating to Treasury's purchase of senior preferred
stock and warrant, which was subsequently amended and restated on September 26, 2008 and further amended on
May 6, 2009, December 24, 2009, August 17, 2012, December 21, 2017, September 27, 2019, January 14, 2021,
September 14, 2021, and January 2, 2025.
n PVS - Portfolio Value Sensitivity - One of our primary interest-rate risk measures. PVS measures are estimates of the
amount of average potential pre-tax loss in the value of our financial assets and liabilities due to parallel (PVS-L) and non-
parallel (PVS-YC) changes in SOFR.
n Reform Act - The Federal Housing Finance Regulatory Reform Act of 2008, which, among other things, amended the GSE
Act by establishing a single regulator, FHFA, for Freddie Mac, Fannie Mae, and the FHLBs.
n REIT - Real estate investment trust.
n Relief refinance loan - A single-family loan delivered to us for purchase or guarantee that meets the criteria of one of our
relief refinance programs which include Enhanced Relief Refinance and other legacy programs.
n REMIC - Real Estate Mortgage Investment Conduit - A type of multiclass mortgage-related security that divides the cash
flows (principal and interest) of the underlying mortgage-related assets into two or more classes that meet the investment
criteria and portfolio needs of different investors. This structure allows commingling of TBA-eligible Freddie Mac and
Fannie Mae collateral.
n REO - Real estate owned - Real estate which we have acquired through a foreclosure sale or through a deed in lieu of
foreclosure.
n Reperforming loan - A single-family unsecuritized loan that was previously three months or more past due based on the
loan’s original contractual terms or in the process of foreclosure, but the borrower subsequently made payments or
entered into payment deferral plans such that the loan returns to less than three months past due, or a performing modified
loan, which is a loan that was modified and is less than three months past due and is not in the process of foreclosure.
n Reputation risk - The risk of damage to the Freddie Mac brand and reputation from any action, inaction, or association
that is perceived to be inappropriate, unethical, or inconsistent with our mission.
n Risk Framework - Enterprise Risk Framework.
n RSU - Restricted stock unit.
n RWA - Risk-weighted assets.
n S&P - Standard & Poor's.
n SCR debt note - Structured Credit Risk debt note - A debt security where the principal balance is subject to the
performance of a reference pool of multifamily loans guaranteed by Freddie Mac.
n SEC - U.S. Securities and Exchange Commission.
n Secondary mortgage market - A market consisting of institutions engaged in buying and selling loans in the form of
whole loans (i.e., loans that have not been securitized) and mortgage-related securities. We participate in the secondary
mortgage market by issuing guaranteed mortgage-related securities and by purchasing loans and mortgage-related
securities for investment.
n Senior preferred stock - The shares of Variable Liquidation Preference Senior Preferred Stock issued to Treasury under
the Purchase Agreement.
n September 2019 Letter Agreement - An agreement that we through the Conservator, acting on our behalf, entered into
with Treasury on September 27, 2019 to amend the Amended and Restated Certificate of Creation, Designation, Powers,
Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms, and Conditions of Variable Liquidation
Glossary
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Preference Senior Preferred Stock (Par Value $1.00 Per Share) dated September 27, 2012.
n Seriously delinquent or SDQ - Single-family loans that are three monthly payments or more past due or in the process of
foreclosure as reported to us by our servicers. Unless stated otherwise, SDQ rates presented in this Form 10-K refer to
gross SDQ rates before consideration of credit enhancements.
n SERP - The Federal Home Loan Mortgage Corporation Supplemental Executive Retirement Plan.
n SFHAs - Special Flood Hazard Areas designated by the Federal Emergency Management Agency.
n Short sale - An alternative to foreclosure consisting of a sale of a mortgaged property in which the homeowner sells the
home at market value and the lender accepts proceeds (sometimes together with an additional payment or promissory
note from the borrower) that are less than the outstanding loan indebtedness in full satisfaction of the loan.
n Short-term debt - Debt due within one year based on the original contractual maturity of the debt instrument. Our short-
term debt issuances primarily include discount notes and Reference Bills securities.
n SIFMA - Securities Industry and Financial Markets Association.
n Single-family loan - A loan secured by a property containing one to four residential dwelling units.
n Single-family new business activity - Single-family loans we purchased or guaranteed.
n SOFR - Secured Overnight Financing Rate.
n STACR debt note - Structured Agency Credit Risk debt note - A Freddie Mac issued debt security where the principal
balance is linked to the credit performance of a reference pool of single-family loans owned or guaranteed by Freddie Mac.
n STACR Trust note - Structured Agency Credit Risk Trust note - A debt security issued by a nonconsolidated trust where
the principal balance is linked to the credit performance of a reference pool of single-family loans owned or guaranteed by
Freddie Mac. We make payments to the trust to support payment of the interest due on the notes, and we receive
payments from the trust as a result of defined credit events on the reference pool.
n Strategic risk - The risk to earnings, capital, profitability, mission, or reputation arising from adverse business decisions, or
the improper implementation of those decisions, that may negatively affect the company's strategy.
n Strips - Multiclass securities that are formed by resecuritizing previously issued Level 1 Securitization Products or single-
class resecuritization products and issuing stripped securities, including principal-only and interest-only securities or
floating rate and inverse floating rate securities, backed by the cash flows from the underlying collateral. This structure
allows commingling of TBA-eligible Freddie Mac and Fannie Mae collateral.
n Supers - Resecuritizations of UMBS and certain other mortgage securities. Supers are single-class securities that involve
the direct pass-through of all cash flows of the underlying collateral to holders of the beneficial interests. This structure
allows commingling of TBA-eligible Freddie Mac and Fannie Mae collateral.
n SVP - Senior Vice President.
n Swaption - An option contract to enter into an interest-rate swap. In exchange for an option premium, a buyer obtains the
right but not the obligation to enter into a specified swap agreement with the issuer on a specified future date.
n Target TDC - Target total direct compensation.
n TBA - To be announced.
n TDR - Troubled debt restructuring - A restructuring of a debt constitutes a TDR if the creditor, for economic or legal
reasons related to the debtor's financial difficulties, grants a concession to the debtor that it would not otherwise consider.
n Thrift/401(k) Plan - The Federal Home Loan Mortgage Corporation Thrift/401(k) Savings Plan.
n Treasury - U.S. Department of the Treasury.
n UAD - Uniform Appraisal Dataset.
n UMBS - Uniform mortgage-backed security - A single (common) mortgage-related security with a 55-day payment delay
for TBA-eligible fixed-rate mortgage loans. Freddie Mac and Fannie Mae began issuing UMBS on and after June 3, 2019.
The UMBS represents undivided beneficial ownership interest in, and the right to receive payments from, pools of one- to
four- family residential mortgages that are held in trust for investors.
n UPB - Unpaid principal balance - Loan UPB amounts in this report have not been reduced by charge-offs recognized prior
to the loan being subject to a foreclosure sale, deed in lieu of foreclosure, or short sale transaction.
n Upfront fee - A fee charged to sellers that primarily includes credit fees that are calculated based on credit risk factors
such as the loan product type, loan purpose, LTV ratio, and credit score.
n USDA - U.S. Department of Agriculture.
n VA - U.S. Department of Veterans Affairs.
n Variation margin - Payments we make to or receive from a derivatives clearinghouse or counterparty based on the change
in fair value of a derivative instrument. Variation margin is typically transferred within one business day.
n VIE - Variable Interest Entity - A VIE is an entity that has a total equity investment at risk that is not sufficient to finance its
activities without additional subordinated financial support provided by another party, or where the group of equity holders
does not have: (1) the ability to make significant decisions about the entity's activities; (2) the obligation to absorb the
Glossary
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entity's expected losses; or (3) the right to receive the entity's expected residual returns.
n VP - Vice President.
n Warrant - Refers to the warrant we issued to Treasury on September 7, 2008 pursuant to the Purchase Agreement. The
warrant provides Treasury the ability to purchase, for a nominal price, shares of our common stock equal to 79.9% of the
total number of shares of Freddie Mac common stock outstanding on a fully diluted basis on the date of exercise.
n When-Issued K-Deal (WI K-Deal) Certificates - Guaranteed certificates initially backed by cash until a future K Certificate
is delivered.
n Workforce housing - Multifamily housing that is affordable to the majority of low to middle income households.
n Workout, or loan workout - A workout is either a home retention action, which is either a loan modification, repayment
plan, payment deferral plan, or forbearance plan, or a foreclosure alternative, which is either a short sale or a deed in lieu of
foreclosure.
n XBRL - eXtensible Business Reporting Language.
n Yield curve - A graphical display of the relationship between yields and maturity dates for bonds of the same credit quality.
The slope of the yield curve is an important factor in determining the level of net interest yield on a new mortgage asset,
both initially and over time. For example, if a mortgage asset is purchased when the yield curve is inverted (i.e., short-term
interest rates higher than long-term interest rates), our net interest yield on the asset will tend to be lower initially and then
increase over time. Likewise, if a mortgage asset is purchased when the yield curve is steep (i.e., short-term interest rates
lower than long-term interest rates), our net interest yield on the asset will tend to be higher initially and then decrease over
time.
Glossary
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Exhibit Index
Exhibit
Description*
3.1
Federal Home Loan Mortgage Corporation Act (12 U.S.C. §1451 et seq.), as amended by the Economic Growth, Regulatory Relief, and
Consumer Protection Act (incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q filed on July 31, 2018)
3.2
Bylaws of the Federal Home Loan Mortgage Corporation, as amended and restated July 11, 2023 (incorporated by reference to Exhibit 3.1
to the Registrant’s Quarterly Report on Form 10-Q filed on August 2, 2023)
4.1
Eighth Amended and Restated Certificate of Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions,
Terms and Conditions of Voting Common Stock (no par value per share) dated September 10, 2008 (incorporated by reference to Exhibit
4.1 to the Registrant’s Current Report on Form 8-K filed on September 11, 2008)
4.2
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of Variable Rate, Non-Cumulative Preferred Stock (par value $1.00 per share), dated April 23, 1996 (incorporated by reference to Exhibit
4.2 to the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.3
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of 5.81% Non-Cumulative Preferred Stock (par value $1.00 per share), dated October 27, 1997 (incorporated by reference to Exhibit 4.3 to
the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.4
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of 5% Non-Cumulative Preferred Stock (par value $1.00 per share), dated March 23, 1998 (incorporated by reference to Exhibit 4.4 to the
Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.5
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of 5.1% Non-Cumulative Preferred Stock (par value $1.00 per share), dated September 23, 1998 (incorporated by reference to Exhibit 4.5
to the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.6
Amended and Restated Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations,
Restrictions, Terms and Conditions of Variable Rate, Non-Cumulative Preferred Stock (par value $1.00 per share), dated September 29,
1998 (incorporated by reference to Exhibit 4.6 to the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.7
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of 5.3% Non-Cumulative Preferred Stock (par value $1.00 per share), dated October 28, 1998 (incorporated by reference to Exhibit 4.7 to
the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.8
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of 5.1% Non-Cumulative Preferred Stock (par value $1.00 per share), dated March 19, 1999 (incorporated by reference to Exhibit 4.8 to
the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.9
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of 5.79% Non-Cumulative Preferred Stock (par value $1.00 per share), dated July 21, 1999 (incorporated by reference to Exhibit 4.9 to the
Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.10
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of Variable Rate, Non-Cumulative Preferred Stock (par value $1.00 per share), dated November 5, 1999 (incorporated by reference to
Exhibit 4.10 to the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
* The SEC file number for the Registrant's Registration Statement on Form 10, Annual Reports on Form 10-K, Quarterly Reports on Form 10-
Q, and Current Reports on Form 8-K is 001-34139.
Exhibit Index
FREDDIE MAC | 2024 Form 10-K
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Exhibit
Description*
4.11
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of Variable Rate, Non-Cumulative Preferred Stock (par value $1.00 per share), dated January 26, 2001 (incorporated by reference to Exhibit
4.11 to the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.12
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of Variable Rate, Non-Cumulative Preferred Stock (par value $1.00 per share), dated March 23, 2001 (incorporated by reference to Exhibit
4.12 to the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.13
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of 5.81% Non-Cumulative Preferred Stock (par value $1.00 per share), dated March 23, 2001 (incorporated by reference to Exhibit 4.13 to
the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.14
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of Variable Rate, Non-Cumulative Preferred Stock (par value $1.00 per share), dated May 30, 2001 (incorporated by reference to Exhibit
4.14 to the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.15
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of 6% Non-Cumulative Preferred Stock (par value $1.00 per share), dated May 30, 2001 (incorporated by reference to Exhibit 4.15 to the
Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.16
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of 5.7% Non-Cumulative Preferred Stock (par value $1.00 per share), dated October 30, 2001 (incorporated by reference to Exhibit 4.16 to
the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.17
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of 5.81% Non-Cumulative Preferred Stock (par value $1.00 per share), dated January 29, 2002 (incorporated by reference to Exhibit 4.17
to the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.18
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of Variable Rate, Non-Cumulative Perpetual Preferred Stock (par value $1.00 per share), dated July 17, 2006 (incorporated by reference to
Exhibit 4.18 to the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.19
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of 6.42% Non-Cumulative Perpetual Preferred Stock (par value $1.00 per share), dated July 17, 2006 (incorporated by reference to Exhibit
4.19 to the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.20
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of 5.9% Non-Cumulative Perpetual Preferred Stock (par value $1.00 per share), dated October 16, 2006 (incorporated by reference to
Exhibit 4.20 to the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.21
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of 5.57% Non-Cumulative Perpetual Preferred Stock (par value $1.00 per share), dated January 16, 2007 (incorporated by reference to
Exhibit 4.21 to the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.22
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of 5.66% Non-Cumulative Perpetual Preferred Stock (par value $1.00 per share), dated April 16, 2007 (incorporated by reference to Exhibit
4.22 to the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.23
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of 6.02% Non-Cumulative Perpetual Preferred Stock (par value $1.00 per share), dated July 24, 2007 (incorporated by reference to Exhibit
4.23 to the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
* The SEC file number for the Registrant's Registration Statement on Form 10, Annual Reports on Form 10-K, Quarterly Reports on Form 10-
Q, and Current Reports on Form 8-K is 001-34139.
Exhibit Index
FREDDIE MAC | 2024 Form 10-K
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Exhibit
Description*
4.24
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of 6.55% Non-Cumulative Perpetual Preferred Stock (par value $1.00 per share), dated September 28, 2007 (incorporated by reference to
Exhibit 4.24 to the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.25
Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions
of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock (par value $1.00 per share), dated December 4, 2007 (incorporated by
reference to Exhibit 4.25 to the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)
4.26
Amended and Restated Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations,
Restrictions, Terms and Conditions of Variable Liquidation Preference Senior Preferred Stock (par value $1.00 per share), dated
September 27, 2012 (incorporated by reference to Exhibit 4.26 to the Registrant's Annual Report on Form 10-K filed on February 28, 2013)
4.27
Second Amended and Restated Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations,
Restrictions, Terms and Conditions of Variable Liquidation Preference Senior Preferred Stock (par value $1.00 per share), dated January 1,
2018 (incorporated by reference to Exhibit 4.27 to the Registrant's Annual Report on Form 10-K filed on February 15, 2018)
4.28
Third Amended and Restated Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations,
Restrictions, Terms and Conditions of Variable Liquidation Preference Senior Preferred Stock (par value $1.00 per share), dated September
30, 2019 (incorporated by reference to Exhibit 4.1 to the Registrant's Quarterly Report on Form 10-Q filed on October 30, 2019)
4.29
Fourth Amended and Restated Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations,
Restrictions, Terms and Conditions of Variable Liquidation Preference Senior Preferred Stock (par value $1.00 per share), dated April 13,
2021 (incorporated by reference to Exhibit 4.1 to the Registrant’s Quarterly Report on Form 10-Q filed on April 29, 2021)
4.30
Description of Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference
to Exhibit 4.30 to the Registrant's Annual Report on Form 10-K filed on February 14, 2024)
4.31
Federal Home Loan Mortgage Corporation Global Debt Facility Agreement, dated February 14, 2024 (incorporated by reference to Exhibit
4.1 to the Registrant’s Quarterly Report on Form 10-Q filed on May 1, 2024)
10.1
Federal Home Loan Mortgage Corporation Supplemental Executive Retirement Plan (as amended and restated effective January 1, 2008)
(incorporated by reference to Exhibit 10.33 to the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)†
10.2
First Amendment to the Federal Home Loan Mortgage Corporation Supplemental Executive Retirement Plan (as amended and restated
January 1, 2008) (incorporated by reference to Exhibit 10.38 to the Registrant’s Annual Report on Form 10-K filed on February 24, 2010)†
10.3
Second Amendment to the Federal Home Loan Mortgage Corporation Supplemental Executive Retirement Plan (as amended and restated
January 1, 2008) (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on June 28, 2011)†
10.4
Third Amendment to the Federal Home Loan Mortgage Corporation Supplemental Executive Retirement Plan (as amended and restated
January 1, 2008) (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on November 6, 2012)†
10.5
Fourth Amendment to the Federal Home Loan Mortgage Corporation Supplemental Executive Retirement Plan (as amended and restated
January 1, 2008) (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August 7, 2013)†
10.6
Fifth Amendment to the Federal Home Loan Mortgage Corporation Supplemental Executive Retirement Plan (as amended and restated
January 1, 2008) (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 25, 2013)†
* The SEC file number for the Registrant's Registration Statement on Form 10, Annual Reports on Form 10-K, Quarterly Reports on Form 10-
Q, and Current Reports on Form 8-K is 001-34139.
† This exhibit is a management contract or compensatory plan, contract, or arrangement.
Exhibit Index
FREDDIE MAC | 2024 Form 10-K
280
Exhibit
Description*
10.7
Federal Home Loan Mortgage Corporation Supplemental Executive Retirement Plan II (effective January 1, 2014) (incorporated by reference
to Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K filed on February 19, 2015)†
10.8
First Amendment to the Federal Home Loan Mortgage Corporation Supplemental Executive Retirement Plan II (effective January 1, 2014)
(incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on August 4, 2015)†
10.9
Federal Home Loan Mortgage Corporation Long-Term Disability Plan (incorporated by reference to Exhibit 10.34 to the Registrant’s
Registration Statement on Form 10 filed on July 18, 2008)†
10.10
First Amendment to the Federal Home Loan Mortgage Corporation Long-Term Disability Plan (incorporated by reference to Exhibit 10.35 to
the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)†
10.11
Second Amendment to the Federal Home Loan Mortgage Corporation Long-Term Disability Plan (incorporated by reference to Exhibit 10.36
to the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)†
10.12
Third Amendment to the Federal Home Loan Mortgage Corporation Long-Term Disability Plan (incorporated by reference to Exhibit 10.21 to
the Registrant's Annual Report on Form 10-K filed on February 18, 2016)†
10.13
Fourth Amendment to the Federal Home Loan Mortgage Corporation Long-Term Disability Plan (incorporated by reference to Exhibit 10.17
to the Registrant's Annual Report on Form 10-K filed on February 16, 2017)†
10.14
2022 Executive Management Compensation Program (incorporated by reference to Exhibit 10.3 to the Registrant's Quarterly Report on
Form 10-Q filed on November 8, 2022)†
10.15
Executive Management Compensation Program Recapture and Forfeiture Agreement (incorporated by reference to Exhibit 10.18 to the
Registrant's Annual Report on Form 10-K filed on February 16, 2017)†
10.16
Form of Restrictive Covenant and Confidentiality Agreement between the Federal Home Loan Mortgage Corporation and Executive Officers
(incorporated by reference to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q filed on July 29, 2021)†
10.17
Form of Indemnification Agreement between the Federal Home Loan Mortgage Corporation and Executive Officers (incorporated by
reference to Exhibit 10.27 to the Registrant's Annual Report on Form 10-K filed on February 10, 2022)†
10.18
Restrictive Covenant and Confidentiality Agreement, dated June 4, 2021, between Freddie Mac and Michael DeVito (incorporated by
reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q filed on July 29, 2021)†
10.19
Memorandum Agreement, dated May 4, 2021, between Freddie Mac and Michael J. DeVito (incorporated by reference to Exhibit 10.1 to
the Registrant’s Quarterly Report on Form 10-Q filed on July 29, 2021)†
10.20
Memorandum Agreement, dated May 22, 2020, between Freddie Mac and Christian M. Lown (incorporated by reference to Exhibit 10.1 to
the Registrant's Current Report on Form 8-K filed on June 2, 2020)†
10.21
Description of Non-Employee Director Compensation (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
8-K filed on December 23, 2008)†
* The SEC file number for the Registrant's Registration Statement on Form 10, Annual Reports on Form 10-K, Quarterly Reports on Form 10-
Q, and Current Reports on Form 8-K is 001-34139.
† This exhibit is a management contract or compensatory plan, contract, or arrangement.
Exhibit Index
FREDDIE MAC | 2024 Form 10-K
281
Exhibit
Description*
10.22
Form of Indemnification Agreement between the Federal Home Loan Mortgage Corporation and Outside Directors (incorporated by
reference to Exhibit 10.28 to the Registrant's Annual Report on Form 10-K filed on February 10, 2022)†
10.23
Memorandum Agreement, dated February 3, 2022, between Freddie Mac and Heidi L. Mason (incorporated by reference to Exhibit 10.36 to
the Registrant's Annual Report on Form 10-K filed on February 14, 2024)†
10.24
Form of Senior executive Relocation Repayment Agreement (incorporated by reference to Exhibit 10.37 to the Registrant's Annual Report
on Form 10-K filed on February 14, 2024)†
10.25
Memorandum Agreement, dated August 7, 2024, between Freddie Mac and Diana Reid (incorporated as Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q filed on October 30, 2024)†
10.26
Restrictive Covenant and Confidentiality Agreement, dated August 24, 2024, between Freddie Mac and Diana Reid (incorporated as Exhibit
10.2 to the Registrant's Quarterly Report on Form 10-Q filed on October 30, 2024)†
10.27
Memorandum Agreement, dated December 30, 2024, between Freddie Mac and James Whitlinger†
10.28
Memorandum Agreement, dated January 27, 2023, between Freddie Mac and Sonu Mittal†
10.29
PC Master Trust Agreement, dated July 30, 2022 (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form
10-Q filed November 8, 2022)
10.30
UMBS and MBS Master Trust Agreement, dated July 30, 2022 (incorporated by reference to Exhibit 10.2 to the Registrant's Quarterly
Report on Form 10-Q filed on November 8, 2022)
10.31
Amended and Restated Senior Preferred Stock Purchase Agreement dated as of September 26, 2008, between the United States
Department of the Treasury and Federal Home Loan Mortgage Corporation, acting through the Federal Housing Finance Agency as its duly
appointed Conservator (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on November 14,
2008)
10.32
Amendment to Amended and Restated Senior Preferred Stock Purchase Agreement, dated as of May 6, 2009, between the United States
Department of the Treasury and Federal Home Loan Mortgage Corporation, acting through the Federal Housing Finance Agency as its duly
appointed Conservator (incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q filed on May 12, 2009)
10.33
Second Amendment dated as of December 24, 2009, to the Amended and Restated Senior Preferred Stock Purchase Agreement dated as
of September 26, 2008, between the United States Department of the Treasury and Federal Home Loan Mortgage Corporation, acting
through the Federal Housing Finance Agency as its duly appointed Conservator (incorporated by reference to Exhibit 10.1 to the
Registrant’s Current Report on Form 8-K filed on December 29, 2009)
10.34
Third Amendment dated as of August 17, 2012, to the Amended and Restated Senior Preferred Stock Purchase Agreement dated as of
September 26, 2008, between the United States Department of the Treasury and Federal Home Loan Mortgage Corporation, acting through
the Federal Housing Finance Agency as its duly appointed Conservator (incorporated by reference to Exhibit 10.1 to the Registrant’s
Current Report on Form 8-K filed on August 17, 2012)
10.35
Letter Agreement dated December 21, 2017 between the United States Department of the Treasury and the Federal Home Loan Mortgage
Corporation, acting through the Federal Housing Finance Agency as its Conservator (incorporated by reference to Exhibit 10.1 to the
Registrant's Current Report on Form 8-K filed on December 21, 2017)
10.36
Letter Agreement dated September 27, 2019 between the United States Department of the Treasury and the Federal Home Loan Mortgage
Corporation, acting through the Federal Housing Finance Agency as its Conservator (incorporated by reference to Exhibit 10.1 to the
Registrant's Current Report on Form 8-K filed on October 1, 2019)
* The SEC file number for the Registrant's Registration Statement on Form 10, Annual Reports on Form 10-K, Quarterly Reports on Form 10-
Q, and Current Reports on Form 8-K is 001-34139.
† This exhibit is a management contract or compensatory plan, contract, or arrangement.
Exhibit Index
FREDDIE MAC | 2024 Form 10-K
282
Exhibit
Description*
10.37
Letter Agreement dated January 14, 2021 between the United States Department of the Treasury and the Federal Home Loan Mortgage
Corporation, acting through the Federal Housing Finance Agency as its Conservator (incorporated by reference to Exhibit 10.1 to the
Registrant's Current Report on Form 8-K filed on January 19, 2021)
10.38
Letter Agreement dated September 14, 2021 between the United States Department of the Treasury and the Federal Home Loan Mortgage
Corporation, acting through the Federal Housing Finance Agency as its Conservator (incorporated by reference to Exhibit 10.1 to the
Registrant's Current Report on Form 8-K filed on September 20, 2021)
10.39
Letter Agreement dated January 2, 2025 between the United States Department of the Treasury and the Federal Home Loan Mortgage
Corporation, acting through the Federal Housing Finance Agency as its Conservator (incorporated by reference to Exhibit 10.1 to the
Registrant’s Current Report on Form 8-K filed on January 8, 2025)
10.40
Warrant to Purchase Common Stock, dated September 7, 2008 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current
Report on Form 8-K filed on September 11, 2008)
10.41
Fourth Amended and Restated Limited Liability Company Agreement to Common Securitization Solutions, LLC, dated as of January 21,
2021 (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q filed on April 28, 2022)
10.42
First Amendment to the Fourth Amended and Restated Limited Liability Company Agreement of Common Securitization Solutions, LLC
(incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q filed on May 1, 2024)
14.1
Federal Home Loan Mortgage Corporation Code of Conduct for Employees
14.2
Federal Home Loan Mortgage Corporation Code of Conduct for Non-Employee Directors
24.1
Powers of Attorney
31.1
Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)
31.2
Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350
101.INS
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101.SCH
XBRL Taxonomy Extension Schema
101.CAL
XBRL Taxonomy Extension Calculation
101.DEF
XBRL Taxonomy Extension Definition
101.LAB
XBRL Taxonomy Extension Label
101.PRE
XBRL Taxonomy Extension Presentation
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* The SEC file number for the Registrant's Registration Statement on Form 10, Annual Reports on Form 10-K, Quarterly Reports on Form 10-
Q, and Current Reports on Form 8-K is 001-34139.
† This exhibit is a management contract or compensatory plan, contract, or arrangement.
Exhibit Index
FREDDIE MAC | 2024 Form 10-K
283
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.
Federal Home Loan Mortgage Corporation
By:
/s/ Diana W. Reid
Diana W. Reid
Chief Executive Officer
Date: February 13, 2025
Signatures
FREDDIE MAC | 2024 Form 10-K
284
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Capacity
Date
/s/ Launcelot F. Drummond*
Non-Executive Chair of the Board
February 13, 2025
Launcelot F. Drummond
/s/ Diana W. Reid
Chief Executive Officer and Director
February 13, 2025
Diana W. Reid
(Principal Executive Officer)
/s/ James Whitlinger
Executive Vice President and Chief Financial Officer
February 13, 2025
James Whitlinger
(Principal Financial Officer)
/s/ Donald F. Kish
Senior Vice President — Corporate Controller and
February 13, 2025
Donald F. Kish
Principal Accounting Officer (Principal Accounting Officer)
/s/ Mark H. Bloom*
Director
February 13, 2025
Mark H. Bloom
/s/ Kathleen L. Casey*
Director
February 13, 2025
Kathleen L. Casey
/s/ Kevin G. Chavers*
Director
February 13, 2025
Kevin G. Chavers
/s/ Aleem Gillani*
Director
February 13, 2025
Aleem Gillani
/s/ Luke S. Hayden*
Director
February 13, 2025
Luke S. Hayden
/s/ Christopher E. Herbert*
Director
February 13, 2025
Christopher E. Herbert
/s/ Grace A. Huebscher*
Director
February 13, 2025
Grace A. Huebscher
/s/ Allan P. Merrill*
Director
February 13, 2025
Allan P. Merrill
/s/ Jane E. Prokop*
Director
February 13, 2025
Jane E. Prokop
/s/ Roy Swan*
Director
February 13, 2025
Roy Swan
*By:
/s/ Alicia S. Myara
Alicia S. Myara
Attorney-in-Fact
Signatures
FREDDIE MAC | 2024 Form 10-K
285
Form 10-K Index
Item Number
Page(s)
PART I
Item 1
Business
1, 4-9, 24-34, 38-43,
95-105
Item 1A
Risk Factors
107-126
Item 1B
Unresolved Staff Comments
Not Applicable
Item 1C
Cybersecurity
81-82
Item 2
Properties
8
Item 3
Legal Proceedings
127
Item 4
Mine Safety Disclosures
Not Applicable
PART II
Item 5
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
128
Item 6
Reserved
Not Applicable
Item 7
Management's Discussion and Analysis of Financial Condition and Results of
Operations
1-5, 12-23, 35-37,
44-94, 106
Item 7A
Quantitative and Qualitative Disclosures About Market Risk
75-80
Item 8
Financial Statements and Supplementary Data
129-213
Item 9
Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure
Not Applicable
Item 9A
Controls and Procedures
83, 130-131, 214-215
Item 9B
Other Information
216
Item 9C
Disclosure Regarding Foreign Jurisdiction that Prevent Inspection
Not Applicable
PART III
Item 10
Directors, Executive Officers and Corporate Governance
47-48, 217-236
Item 11
Executive Compensation
237-238, 240-261
Item 12
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
262-263
Item 13
Certain Relationships and Related Transactions, and Director Independence
225-226, 265-266
Item 14
Principal Accounting Fees and Services
267-268
PART IV
Item 15
Exhibits and Financial Statement Schedules
269, 278-283
Item 16
Form 10-K Summary
Not Applicable
Signatures
284-285
Index
FREDDIE MAC | 2024 Form 10-K
286
December 30, 2024
Jim Whitlinger
*address redacted*
Dear Jim,
On behalf of the hiring team, congratulations on your selection as Executive Vice President & Chief
Financial Officer reporting to Chief Executive Officer, Diana Reid, effective January 1, 2025.
We value your experience, skills, and contributions in service to our mission of making home possible.
As we continue our efforts to build a better Freddie Mac and a better housing finance system, you’re the
right person, right now to help us succeed. We look forward to seeing you build upon your many talents
and diversifying your experiences on this next step of your career journey.
Below is an outline of the terms and conditions of your employment with us, including your
compensation, which was approved by the Compensation and Human Capital Committee of the Board
of Directors and by the Federal Housing Finance Agency (the “FHFA”).
Compensation:
Your target total direct compensation (“Target TDC”) will be $2,400,000. Your Target TDC will consist of
two components – Base Salary and Deferred Salary – that are both paid in cash and are summarized
below.
Base Salary – The annualized amount of your Base Salary will be $600,000.
Deferred Salary – The annualized amount of your Deferred Salary will be $1,800,000 and is comprised
of two components noted below.
◦
At-Risk Deferred Salary – This portion of your Deferred Salary is equal to thirty percent (30%) of
your Target TDC, or $720,000, up to half of which may be reduced based on the company’s
performance against objectives established by FHFA and up to half of which may be reduced
based on both the company’s performance against corporate objectives and your performance
against individual objectives. At-Risk Deferred Salary earned in each quarter will be paid on the
last regular pay date in the corresponding quarter of the second calendar year following the
quarter in which it was earned.
◦
Fixed Deferred Salary – This portion of your Deferred Salary is equal to your Target TDC less
your Base Salary and At-Risk Deferred Salary and is equal to $1,080,000. Fixed Deferred
Salary earned in each quarter will be paid on the last regular pay date in the corresponding
quarter of the following calendar year.
Exhibit 10.27
General Terms and Conditions:
Executive Management Compensation Program
Your compensation continues to be governed by the Executive Management Compensation Program.
Restrictive Covenant and Confidentiality Agreement
You continued to be bound by the terms of the Restrictive Covenant and Confidentiality Agreement,
which describes post-employment, non-competition and non-recruitment restrictions as well as
restrictions concerning treatment of confidential information.
Recapture and Forfeiture Agreement
You continued to be bound by the terms of the Recapture and Forfeiture Agreement, which describes
the circumstances under which certain compensation is subject to repayment and/or forfeiture.
FHFA’s Review and Approval Authority
Notwithstanding FHFA’s approval of your compensation and any provision of this letter, any
compensation paid or to be paid during or after your employment remains subject to any withholding,
escrow or prohibition consistent with FHFA’s authority pursuant to the Federal Home Loan Corporation
Act, as amended, or the Federal Housing Enterprise Financial Safety and Soundness Act of 1992, as
amended.
Outside Activities and Family Member Activities
During your employment with us, you agree to devote substantially all your time, attention, energies to
our business, and to not be engaged in any other business activity unless permitted under our Outside
Activities and Family Member Activities policy. This restriction will not prevent you from devoting a
reasonable amount of time to charitable or public interest activities or from making passive investments
of your assets in such form or manner as you desire, consistent with Freddie Mac’s Employee Trading
policy, and except as provided herein.
Employment At-Will
Your employment continues to be "at-will" and not for a fixed term. No statement, whether written or
verbal, by Freddie Mac or any of its officers, employees or representatives may in any way modify, alter,
or change the "at-will" nature of your employment. You and Freddie Mac each retain the right to
terminate your employment at any time, for any reason or no reason.
Please confirm that the terms and conditions in this letter conform to your understanding by returning a
signed copy of this letter.
Again, congratulations Jim!
Sincerely,
Michele Espada
VP, Talent
Signature: /s/ James Whitlinger
Date: 1/2/2025
Jim Whitlinger
December 30, 2024
2
01/27/2023
Sonu Mittal
*address redacted*
Dear Sonu,
Congratulations!
On behalf of the hiring team at Freddie Mac, I am pleased to extend this offer of employment to
you for the position of Senior Vice President - Single Family Acquisitions, effective on a mutually agreed
upon start date, reporting to Michael Hutchins, our President.
Since 1970, we’ve made home ownership and rental housing more accessible and affordable for more
people across the nation. Our promise to seller/servicers, homeowners, renters, investors, and the
American taxpayer is simple: we will build a better Freddie Mac and a better housing finance system.
It’s a big promise, but one we’ve repeatedly delivered on.
As we look to the future, we need leaders who can continue positioning Freddie Mac as a competitive,
innovative force in the industry. With your skills and experiences, you are the right leader, right now, to
help us execute on our mission for our customers and win in the commercial marketplace.
Below is an outline of the terms and conditions of your employment with us, including your
compensation and benefits, which have been approved by the Compensation & Human Capital
Committee of the Board of Directors and The Federal Housing Finance Agency (the “FHFA”). In
addition, the Nominating and Governance Committee of the Board of Directors has reviewed potential
conflicts of interest and has approved your employment pending your execution of a conflicts of interest
mitigation plan to be provided by the Ethics Office. Finally, we have completed to our satisfaction a
review of potential Related Party Transactions and your background check.
Compensation:
Your target total direct compensation (“Target TDC”) will be $2,000,000, which will be pro-rated in the
first calendar year of employment based on your date of hire. Your Target TDC will consist of two
components – Base Salary and Deferred Salary – that are both paid in cash and are summarized
below.
Base Salary – The annualized amount of your Base Salary will be $500,000.
Deferred Salary – The annualized amount of your Deferred Salary will be $1,500,000 and is comprised
of two components noted below.
Exhibit 10.28
◦
At-Risk Deferred Salary – This portion of your Deferred Salary is equal to thirty percent (30%) of
your Target TDC, or $600,000, up to half of which may be reduced based on the company’s
performance against objectives established by FHFA and up to half of which may be reduced based
on both the company’s performance against corporate objectives and your performance against
individual objectives. At-Risk Deferred Salary earned in each quarter will be paid on the last regular
pay date in the corresponding quarter of the second calendar year following the quarter in which it
was earned.
◦
Fixed Deferred Salary – This portion of your Deferred Salary is equal to your Target TDC less your
Base Salary and At-Risk Deferred Salary and is equal to $900,000. Fixed Deferred Salary earned in
each quarter will be paid on the last regular pay date in the corresponding quarter of the following
calendar year.
Your compensation is governed by the Executive Management Compensation Program (“ECMP”). To
participate in the ECMP you must agree to the terms of the ECMP Document, which outlines the terms
and conditions of the compensation program for senior officers.
Cash Award:
In consideration of your acceptance of this offer and beginning employment with Freddie Mac, you will
receive a cash award that will be paid in multiple installments, as detailed below. The cash award is not
considered “compensation” for purposes of our tax qualified Thrift/401(k) Savings Plan or our non-
qualified Supplemental Executive Retirement Plan (“SERP”).
If your last day of employment at your current employer is prior to the payout/grant of the 2022
variable compensation under your current employer’s Annual Incentive Program, which is
anticipated to occur in February 2023, the aggregate Freddie Mac cash award will be $1,200,000
and will be paid on the following schedule:
1.
$567,000 will be paid within thirty (30) days of your start date
2.
$455,000 will be paid within thirty (30) days of your 1st year anniversary
3.
$110,000 will be paid within thirty (30) days of your 2nd year anniversary
4.
$68,000 will be paid within thirty (30) days of your 3rd year anniversary
If your last day of employment at your current employer is after the payout of the cash portion of the
2022 variable compensation under your current employer’s Annual Incentive Program, Freddie
Mac’s First Payment of the cash award will be reduced by the actual amount of the cash paid for the
2022 variable compensation under your current employer’s Annual Incentive Program, up to a
maximum reduction of $409,000.
If your last day of employment at your current employer is after the vesting/distribution date for your
outstanding equity grants that were granted in 2020, 2021, and 2022 and are scheduled to vest/
distribute in March 2023, the aggregate Freddie Mac’s First Payment of the cash award will further
be reduced by $158,000.
Sonu Mittal
01/27/2023
2
Prior to Freddie Mac making the cash award payment, you agree to provide Freddie Mac with
documentation requested to evidence: (i) if you received or did not receive a payout of your 2022
variable compensation under your current employer’s Annual Incentive Program; (ii) if you vested/
were distributed or did not vest/were not distributed outstanding equity grants; and (iii) any other
documentation that Freddie Mac requests as additional evidence to support the amounts to be paid
for your Cash Award.
In the event your employment with Freddie Mac terminates, any unpaid installment of the above
indicated Cash Award will be paid unless your employment terminates due to a “Termination Event”, in
which case, any unpaid installment(s) will be forfeited. A “Termination Event” is when any of the
following occur:
•
You voluntarily resign from your employment;
•
Freddie Mac terminates your employment due to:
◦
The occurrence of any of the Forfeiture Events described in the Recapture and
Forfeiture Agreement;
◦
Significant misconduct, chronic unexcused absenteeism, disruptive behavior, refusal to
perform assigned duties, or other lack of good faith efforts to perform assigned duties to
the best of your ability;
◦
You being substantially responsible for the insolvency or troubled condition of Freddie
Mac; or
◦
Your failure to meet a condition of employment
If your employment terminates due to a Termination Event, any Cash Award installment paid within one
year of the Termination Event shall be subject to repayment.
In the event any installment of the Cash Award is subject to repayment, you agree to repay to Freddie
Mac the gross amount within 30 calendar days following your termination date. You further agree and
authorize Freddie Mac to withhold any unpaid repayment amount from any outstanding Deferred
Salary. You understand and agree that you will pay any and all of Freddie Mac’s reasonable expenses,
including attorney’s fees and other costs, incurred in its obtaining repayment and collection of any
unpaid repayment amount.
Benefits:
Our stage-in-life benefits and wellness offerings are some of the best in the industry and are
customizable for you to meet the unique needs of you and your family—whether at work or at home, on
the job or off. The medical, dental and vision benefits you elect will become effective on the first day of
the month after your first day of employment.
During your new hire orientation, we will provide an overview of our comprehensive offerings that you
can take advantage of during your career with us.
Sonu Mittal
01/27/2023
3
Administration:
As discussed, our background check partners, Mintz Group and Sterling Talent Solutions, have
completed the following series of verifications:
•
Verified the information you provided on your application
•
Completed a formal background check, including drug screening.
•
Korn Ferry has conducted professional references.
General Terms and Conditions:
Expected Work Schedule
Freddie Mac expects that you will be in the McLean, VA Headquarters on a weekly basis during the first
three (3) to six (6) months of your employment to facilitate a learning immersion, foster relationship
building, and team development. We anticipate that you will travel to the McLean, VA Headquarters
monthly and/or as needed beyond the initial six (6) months and will otherwise report to the Dallas, TX
Office. Freddie Mac expects that you will be highly visible in the market, engaging with lenders/seller
community.
Restrictive Covenant and Confidentiality Agreement
The terms of your compensation provided in this letter are contingent upon your agreement to be bound
by the terms of the Restrictive Covenant and Confidentiality Agreement, which describes post-
employment, non-competition and non-recruitment restrictions as well as restrictions concerning
treatment of confidential information.
Recapture and Forfeiture Agreement
The terms of your compensation provided in this letter are also contingent upon your agreement to be
bound by the terms of the enclosed Recapture and Forfeiture Agreement, which describes the
circumstances under which certain compensation is subject to repayment and/or forfeiture.
FHFA’s Review and Approval Authority
The terms and conditions of your compensation remain subject to approval by FHFA. Notwithstanding
such approval and any provision of this letter, you acknowledge and understand that any compensation
paid or to be paid during or after your employment remains subject to any withholding, escrow or
prohibition consistent with FHFA’s authority pursuant to the Federal Home Loan Corporation Act, as
amended, or the Federal Housing Enterprise Financial Safety and Soundness Act of 1992, as
amended.
Outside Activities and Family Member Activities
During your employment with us, you agree to devote substantially all your time, attention, energies to
our business, and to not be engaged in any other business activity unless permitted under our Outside
Activities and Family Member Activities policy. This restriction will not prevent you from devoting a
reasonable amount of time to charitable or public interest activities or from making passive investments
of your assets in such form or manner as you desire, consistent with Freddie Mac’s Personal
Investments Policy, and except as provided herein.
Sonu Mittal
01/27/2023
4
Employment At-Will
Executive’s employment with the Company shall be "at-will" and not for a fixed term. Executive
understands and acknowledges that no statement, whether written or verbal, by the Company or any of
its officers, employees or representatives may in any way modify, alter, or change the "at-will" nature of
Executive's employment by the Company. Executive and the Company each retains the right to
terminate Executive’s employment at any time, for any reason or no reason.
=======================================
During your review of this letter, Freddie Mac expects that you have had the opportunity to consult and
receive assistance from appropriate advisors, including legal, tax, and financial advisors.
This letter shall be construed, and the rights and obligations herein determined, exclusively in
accordance with the substantive law of the Commonwealth of Virginia, excluding provisions of Virginia
law concerning choice-of-law that would result in the law of any state other than Virginia being applied.
Please confirm that the terms and conditions in this letter conform to your understanding by returning a
signed copy of this letter as well as copies of the EMCP, the Recapture and Forfeiture Agreement and
the Restrictive Covenant and Confidentiality Agreement.
Sonu, I look forward to having you join the team during this exciting time as we continue making home
possible for our customers.
Sincerely,
Michele Espada
VP, Talent
Full Name:
Sonu Mittal
Sign Here:
/s/ Sonu Mittal
Date Signed:
1/30/2023
Sonu Mittal
01/27/2023
5
1
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How We Make
Home Possible
Effective Date: January 1, 2023 | Revised Date: January 1, 2025
The Freddie Mac Code of Conduct
Exhibit 14.1
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Freddie Mac’s
VALUES
We are mission driven
We put the health of the housing finance market at the forefront
of our business decisions
And Mission drives everything we do
We do the right thing
We lead the company and our industry with integrity
And we take responsibility for our actions
We perform with excellence
We thoughtfully approach challenges
And we reliably deliver on our commitments
We are inclusive
We embrace our differences
And we engage with respect and positive intent
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Freddie Mac’s mission to make home possible is an important one that makes a difference in the lives of millions
of families in America. As a trusted financial institution, we must focus not only on our mission and business goals,
but also on how we reach those goals.
Our company’s Code of Conduct helps guide us in doing the right things in the right way. It outlines our values
and expectations for operating ethically and engaging with our stakeholders and with each other respectfully.
Each of us should be familiar with this important document and use it as a tool to help with daily decisions, big
and small. When in doubt, the Code of Conduct can help clarify and validate the best course of action, including
when to seek help for concerns and when to escalate issues. Rest assured that concerns will always be addressed
without retaliation.
The Code of Conduct helps ensure we always fulfill our mission reliably and with integrity. Thank you for your
commitment to following its principles and to Freddie Mac.
Diana Reid
CEO
A Message from
THE CEO
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INTRODUCTION ............................. 1
• Our Code is a Foundation for Ethical Conduct
• Using the Code
• Our Managers and Executives Play a Key Role
SECTION 1 ......................................4
We create a safe, respectful, and inclusive
work environment.
• Respect and Diversity
• Discrimination and Harassment
• Workplace Safety
SECTION 2 ..................................... 7
We safeguard our company’s and our
partners’ information and resources.
• Use of Company Assets
• Information Protection
• Intellectual Property
• Records Management
• Information Security and Privacy
SECTION 3 ................................... 10
We put the company’s interests before our
own and disclose conflicts of interest.
• Business Courtesies
• Personal Investments and Insider Trading
• Personal Political and Community Activities
• Outside Activities & Family Member Employment
• Other Conflicts of Interest
SECTION 4 ................................... 13
We communicate truthfully and responsibly.
• Responsible Communication
• Social Media
• Truthful Reporting
SECTION 5 .................................... 15
We conduct our business lawfully
and in good conscience.
• ESG Strategies
• Artificial Intelligence (AI) & Machine Learning (ML)
• Fair Competition
• Fair Lending
• Anti-Fraud
• Anti-Corruption
• Business Opportunities, Innovations, and Fair Dealing
SECTION 6 .................................... 19
We ask for guidance and report concerns.
• Seeking Advice and Reporting Misconduct
• No Tolerance for Retaliation
• Additional Resources
INDEX OF POLICIES . .................... 22
Table of CONTENTS
Navigating This Document
To go directly to a specific topic, click on the section in the Table of Contents below.
Gray highlighted copy within this document provides additional details about certain terms.
The Blue hyperlinks are available only if you are connected to Freddie Mac’s secure network.
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Our Code is a Foundation for Ethical Conduct
Through our work at Freddie Mac, we make home possible for millions of Americans. To best fulfill our Mission, we must
conduct business ethically and in compliance with both the letter and the spirit of the law, our policies, and our Values.
We recognize that good ethics is good for business.
Our Code of Conduct sets critical expectations for the actions we take and competencies we demonstrate.
It outlines the responsibilities that we have to each other, our business partners, our competitors, and our customers.
What is right, fair, or compliant isn’t always obvious, especially in the face of conflicting priorities or business
pressures. The Code also provides us with ethical decision-making guidelines to help in those “gray areas”.
Does the Code apply to me?
The Code applies to all full- and part-time employees, including senior management and executives.
We also expect that those who work with Freddie Mac, including contingent workers, independent contractors, and
consultants, will embrace the spirit of the Code and adhere to its standards.
Any waiver of the Code for executive officers must be approved by the Board or a Board committee and
promptly disclosed to the public on our website. This prevents waivers of the Code from being hidden from the public
and complies with New York Stock Exchange (NYSE) requirements and similar rules under the Securities and Exchange
Commission and the Sarbanes-Oxley Act of 2002.
Using the Code
Read the Code and take time to understand our Company’s expectations and how they apply to your role at Freddie
Mac. Come back to the Code in situations where you’re not sure of the right answer — especially if there are likely legal
or ethical risks to you or to the business.
What if I can’t find an answer in the Code?
While the Code strives to be comprehensive, it can’t anticipate every situation that you may encounter. For additional
information, review the relevant policies or consult the Compliance & Ethics Helpline for guidance.
INTRODUCTION
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Where can I find our policies?
Company policies, and their associated standards, are available on HomeFront. Our policies and standards support the
Code by presenting additional details and cover other topics not found in the Code. Relevant policies and standards are
indexed at the end of the Code, to make it easy to find a specific resource when you need more detailed information.
Each employee is responsible for understanding and following all of Freddie Mac’s policies and standards.
What happens if someone violates the standards in our Code or the law?
Complying with the Code of Conduct and applicable laws is a condition of employment. Failure to comply will result
in corrective action, up to and including termination.
Who can I talk to if I have questions or concerns?
When facing a challenging situation, there are resources to help guide you. You can contact the Ethics Office or the
Compliance & Ethics Helpline, Human Resources, the Legal Division, or a manager in your division.
Our Managers and Executives Play a Key Role
We are all responsible for our culture, but those who manage people — all people managers, including senior
management and executives — have a special responsibility to lead the way.
We expect all people managers to:
• Act as role models
• Champion a culture of integrity and compliance
• Promote high ethical standards
• Recognize and reward behavior that exemplifies our Values and our Code
• Make sure employees are appropriately trained and competent
• Assist in enforcing the Code
• Report any violations or potential violations of the Code in a timely manner
Additionally, senior management is responsible for making sure the company has the resources to effectively
execute our mission.
Certain members of leadership, including the CEO, President, CFO and Principal Accounting Officer/Controller, must
also promote full, fair, accurate and understandable disclosures in filings with the Securities and Exchange Commission
(SEC) and in other public communications regarding our financial condition. Their ethical actions in this area set the tone
for how our company, and every individual who works on its behalf, are perceived by the outside world.
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The Freddie Mac Code of Conduct | I N T R O D U C T I O N
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Bringing Our Values Home
Our Code requires that each of us demonstrate good judgment in our decisions and actions at work
— not just occasionally, but consistently.
To do this, we must be able to accurately evaluate situations and make good choices.
If you’re facing a situation where the right choice is not clear, take a moment to assess your
options in terms of our Values. And if you see something that may violate the Code, report it.
We are mission driven
Am I making a decision that is in the best interest of Freddie Mac and its stakeholders and
appropriately managing the related risks?
We do the right thing
Am I acting with integrity and accountability?
We perform with excellence
Am I meeting my obligations by exhibiting Freddie Mac’s expected behavioral competencies?
We are inclusive
Am I creating space for those with different perspectives to be engaged?
For additional insight, consider the ethical issues at stake. Ask:
Right versus wrong: Am I being asked to do something that might be inappropriate? Are
there legal or ethical concerns?
Potential consequences: Could someone or something be harmed by my decision?
Reputational effect: Would others understand my decision? Could I explain it to my manager, a
friend or someone I admired? Could the decision reflect poorly on me or Freddie Mac?
Due diligence: Have I verified important facts and assumptions? If I’m not sure after trying to
verify, have I asked others who may know?
Throughout the Code you will find scenarios where we demonstrate how to apply our Values
and use these additional questions.
The Freddie Mac Code of Conduct | I N T R O D U C T I O N
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At Freddie Mac, diversity, equity, and inclusion (DEI) is more than a business imperative, it
is a mindset. We are committed to promoting equity, igniting innovation through diverse
perspectives, and instilling a culture where people feel comfortable to be their authentic
selves in the workplace. We are also committed to the safety and security of our employees.
Respect and Diversity
• Treat people fairly — with respect and dignity.
• Act professionally in all interactions — including conversations, meetings, email communications and
online exchanges.
• Create an inclusive, equal opportunity work environment that values the differences and opinions of others.
• Engage others positively, without belittling or bullying behaviors.
• Support officers, directors, and managers in their efforts to foster a positive work environment.
• Consider diverse suppliers for your product and service needs in partnership with Enterprise Supply Chain.
Discrimination and Harassment
• Never discriminate based on race, color, religion, ethnicity, sex, pregnancy, age, national origin, disability, sexual
orientation, gender identity/expression, parental status, marital status, military service or veteran status, genetic
information, or any other status protected by applicable law.
• Base employment decisions on the individual’s qualifications, skills, and performance — not on personal
characteristics or protected status.
• Promote non-discrimination within sourcing and procurement practices.
• Do not use sexually explicit discussions, jokes, and material while at work or using company resources.
• Be careful not to harass others, even without intending to — joking, teasing, and commenting about sensitive and/or
controversial subjects can offend others and create uncomfortable working conditions.
• Speak up if you witness or experience harassing, discriminatory or unfair behavior; HR Connect, the Employment
Law & Employee Relations team and the Compliance & Ethics Helpline are all available to help ensure that you and
others work in a safe and secure environment.
We create a safe
and respectful
work environment.
S E C T I O N 1
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Workplace Safety
• Ensure your actions are not intimidating or threatening — and speak up about such behavior by others.
• Do not come to work or conduct any Freddie Mac business when under the influence of alcohol or illegal drugs,
or when impaired by prescription medications.
• Do not use, purchase, sell, manufacture, or distribute illegal drugs or related material in the workplace or using
Freddie Mac resources.
• Never carry or use weapons, even if licensed, on Freddie Mac premises.
• Exercise sound judgment when alcohol is served at business-related functions. Remember, you are
representing Freddie Mac.
Bringing Our Values Home
“I was in a meeting led by the senior leader of my division to develop our succession plan, a
plan at least two-deep for manager-level positions and above. This initiative is in response
to several sudden departures, and I agreed to be on the task force. Unfortunately, this comes
during our busiest time of the year. Some on the task force are anxious to get it done. They are
advocating to simply name the two employees next in line to each position. This tactic would
result in very little diversity among leadership. I don’t want to hold everyone up, but I think a
more inclusive approach is necessary.”
Consider Our Values
We are Inclusive: Diversity in leadership, and at all levels, is crucial to our organization’s
success, from performance and culture to employee recruitment and retention.
Consider the Ethical Issues at Stake
Potential Consequences: We have a duty to report to the Federal Housing Finance Agency
(FHFA) on our DEI efforts in hiring and workplace practices. Fast tracking the succession
planning process and overlooking the requirement to identify qualified diverse candidates
can undermine our efforts to promote DEI and is counter to our stated goals.
Due Diligence: Our policies contain guidance to help us make sure existing internal diverse talent
is given opportunities while meeting our hiring standards and succession planning needs.
The Freddie Mac Code of Conduct | S E C T I O N 1
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Bringing Our Values Home
“I work closely with another leader who can come off as condescending and rude. She often
belittles her direct reports in front of their peers and has sometimes resorted to shouting
in meetings to get her point across. This behavior has created a very uncomfortable work
environment for her team, colleagues, and me. I made some subtle comments to her after
I witnessed a particularly tense exchange between her and a member of her team, but she
brushed me off. Now our teams are working closely together on a project, and I’m worried my
team members will be impacted by her behavior.”
Consider Our Values
We are Inclusive: We are each expected to engage respectfully with others, and people
leaders have the extra responsibility to set the right tone for their teams.
Consider the Ethical Issues at Stake
Right Versus Wrong: Raising concerns directly to your colleagues when you witness negative
behavior from them is the right first step. We ask for help if our first attempt doesn’t work.
Reputational Effect: Rude and condescending behavior can create a negative work
environment that impacts employee productivity and can cause good employees to leave
the company.
The Freddie Mac Code of Conduct | S E C T I O N 1
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At Freddie Mac, we are good stewards of our assets — including employee data, financial
assets, intellectual property, data and information, and buildings and facilities — and those of
third parties and FHFA. We protect all assets (for which we have responsibility) from theft, loss,
unauthorized access, and misuse. We keep accurate and reliable records and avoid even the
appearance of fraud or misconduct.
Use of Company Assets
• Treat company assets with care and use them only for business-related purposes.
• Leave conference rooms and public spaces the way you’d like to find them.
• All employee expenses must be reasonable and prudent and further a legitimate business purpose.
• Follow all Information Technology safeguards when using company systems whether accessing on-site or from
another location.
• Managers must ensure that their people have appropriate access to systems and employees must notify their
manager of any inappropriate access they have received.
• Reasonable and infrequent personal use of company technology assets is permissible, subject to compliance with
company policies.
Information Protection
• Follow all applicable policies, standards, and procedures to keep Corporate Information, including
Non-public FHFA information, safe. Freddie Mac classifies “Corporate Information” as Restricted, Confidential,
Non-Public, or Public.
• For Restricted, Confidential, and Non-Public information:
• Access, use, and store appropriately and only when authorized.
• Share only with those who are authorized to receive it, using confidentiality agreements as appropriate when
disclosing to third parties (this sharing rule does not prohibit employees from reporting wrongdoing to a
government agency).
• Protect it while working remotely and even after your employment with Freddie Mac ends.
We safeguard
our company’s
and our partners’
information
and resources.
S E C T I O N 2
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Intellectual Property
• Our brand, trademarks, patents, and proprietary information about our business are among our most valuable
assets — protect them from unauthorized use or disclosure, and never use them for personal gain.
• Inventions and ideas that you develop that are related to our business or created during your employment belong to
Freddie Mac.
• Protect all intellectual property in your care, including intellectual property of our business partners.
• Speak up if you are aware of a possible misuse or unauthorized disclosure of any intellectual property.
Records Management
• Write clearly, professionally, and accurately in all documents (e.g., emails, texts, memos, reports and financial statements).
• Take responsibility for the integrity of records you create and manage.
• Retain and dispose of records in compliance with the Records Retention Schedule and our Document Lifecycle &
Legal Hold policy.
• Do not destroy or alter any documents that are covered by a “Legal Hold” initiated by the Legal Division.
Information Security and Privacy
• Be wary and report phishing — don’t click links or download attachments in suspicious emails.
• Recording conversations or meetings is prohibited (except management approved recordings within Microsoft Teams).
• Corporate Information, and Protected Personal Information in particular, must only be used for authorized business
purposes and viewed by Freddie Mac personnel with a business need to know.
• Report occurrences of loss, unauthorized access, disclosure, or theft of Corporate Information — including
Protected Personal Information (PPI) — involving personnel, suppliers, seller/servicers or others in possession of
Corporate Information, or loss or theft of Freddie Mac assets (e.g., laptops) to:
• Privacy: privacy_incident_management@freddiemac.com
• information_security@freddiemac.com (or 703-450-3200)
• Division Privacy Liaison
The Freddie Mac Code of Conduct | S E C T I O N 2
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Bringing Our Values Home
“My co-worker and I had a tight deadline on a project. We finished work on a key document
right at the end of the day. Trying to make our deadline, my co-worker sent the document to
his personal Gmail account to print from home and do his review from there. I didn’t think
anything about it at the time, but later that night I remembered the document was marked
“Confidential”. I also remembered it was against policy to email such documents to a personal
account. The next day my co-worker and I let our manager know what happened, and she
informed Information Security right away.”
Consider Our Values
We do the right thing: We all have a responsibility to speak up when we see a possible
violation, or behavior that is concerning.
Consider the Ethical Issues at Stake
Potential Consequences: Sending and storing Freddie Mac Restricted, Confidential,
or Non-Public information to a non-Freddie Mac computer leaves it vulnerable to a data
breach. Additionally, ignoring such behavior from others weakens our ethical culture and
hurts Freddie Mac.
Reputational Effect: When we don’t appropriately handle information, we risk losing the
confidence of our stakeholders to be a trusted partner.
The Freddie Mac Code of Conduct | S E C T I O N 2
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To uphold our reputation as a trusted business partner, we must avoid conflicts of interest,
and disclose any situation that could create even the appearance of a conflict. We are open
and transparent when we hire. We offer and accept only appropriate business courtesies.
We disclose outside activities such as second jobs and personal investments that may
conflict with our responsibilities to Freddie Mac. We do not use our Freddie Mac positions for
inappropriate gain. Additionally, Freddie Mac does not permit dual employment.
Business Courtesies
• Business courtesies – gifts, meals, entertainment, or hospitality – should neither prevent you from making fair
and impartial business decisions nor create an impression of impropriety.
• When offering business courtesies, make sure they are modest in value and given infrequently, without any
expectation of reciprocity.
• Never offer or accept cash or cash equivalents, like gift cards.
• Do not offer or accept anything that could reflect poorly on the company.
• Strict rules govern courtesies to government employees – contact the Ethics Office before giving anything
of value to a government employee, including an employee of FHFA.
Personal Investments and Insider Trading
• If you have material, non-public information (MNPI) about a company, do not purchase or sell securities in
that company, and do not “tip” anyone else to trade.
• We prohibit employees and their Related Individuals from engaging in certain transactions, including
purchasing Freddie Mac and Fannie Mae securities.
• If you already own Freddie Mac securities, only sell them after obtaining pre-clearance, and during an
approved window period.
• Obtain pre-clearance for certain other transactions, including private placements.
• Follow all Information Wall restrictions to prevent the flow of MNPI (including material non-public FHFA information)
to your colleagues identified as Restricted Persons.
We put the
company’s interests
before our own and
disclose conflicts
of interest.
S E C T I O N 3
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Personal Political and Community Activities
• Disclose any existing or planned political office or government-related positions.
• Conduct personal political and community activities on your own time, without using company resources, and be
clear that you do not represent Freddie Mac.
• Never pressure or coerce others within Freddie Mac to support your personal political activity or charitable causes.
• Do not solicit political contributions during work hours or on Freddie Mac premises; managers are prohibited
from soliciting within their reporting chain.
• Soliciting contributions for charitable causes from others on Freddie Mac premises is allowed when not coercive
or disruptive to Freddie Mac business operations.
Outside Activities & Family Member Employment
• Disclose any personal relationships that could pose a conflict at work, including, but not limited to:
• Family members or romantic partners with whom you share the same first or second-level supervisor
• Being in a position to hire, terminate, promote or help advance family members, romantic partners, or close
friends; or
• If a family member or romantic partner is offered or takes a job with one of our suppliers, business partners,
or another Third Party.
• Disclose outside activities that could pose a conflict at work, such as:
• Second jobs or board memberships with Third Parties,
• Real estate agent or broker activity, or
• Other activities that might divide your loyalties or interfere with your obligations to Freddie Mac.
Other Conflicts of Interest
• Freddie Mac business opportunities should benefit Freddie Mac.
• Don’t take personal advantage of corporate opportunities and don’t try to persuade Freddie Mac to do business
with a company because it might benefit you or a family member, romantic partner, or close friend.
• Don’t purchase Freddie Mac Real Estate Owned (REO) properties. You should inform your Immediate Family
Members that this prohibition extends to them as well.
• Avoid situations where actual or perceived conflicts of interest may arise when exchanging gifts, issuing internal
recognition, and other solicitations between employees up or down your reporting line.
• Don’t provide personal loans to your management, executive officers, or members of the Board of Directors.
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The Freddie Mac Code of Conduct | S E C T I O N 3
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Bringing Our Values Home
“Since the pandemic, my teammates and I have worked full-time remote. We depend on
everyone working collaboratively to complete our projects. Many of us started noticing that
our project manager rescheduled meetings at the last minute, was never on camera, and he
didn’t engage in the discussion. Rumors started that he was working another full-time job or
“daylighting” on Freddie Mac’s time. The project manager’s behavior affected our team’s
morale, and, eventually, we missed a key deadline for a big project. I shared my concerns with
our boss who hadn’t realized the extent of the problem.”
Consider Our Values
We perform with excellence: While employees are generally allowed to engage in
outside activities, including second jobs, we must prioritize our Freddie Mac job duties
and responsibilities.
Consider the Ethical Issues at Stake
Right Versus Wrong: We owe it to our teammates to be accountable for our time and work
output. If you notice a team member is not meeting their responsibilities, speaking-up to your
manager is the right course of action.
Due Diligence: Before engaging in any outside activity, check the policy so you know how to
avoid a conflict and when you are required to disclose to management and Ethics.
“During a conversation over lunch with a co-worker, he showed me a new investment app his
spouse is now using. He explained the app is like other stock trading apps where you self-
manage your investment portfolio, but this app is focused solely on real estate investments.
I asked if he had received approval to use the app, and he replied approval wasn’t needed
since his spouse owns the account not him. I shared that before my kid opened a stock trading
account as part of a college course, I reached out to Ethics for guidance. I suggested he do the
same before his spouse goes much further with the app.”
Consider Our Values
We are mission driven: Employees are responsible for pre-clearing personal investment activities,
including those of Related Individuals such as your spouse, to avoid potential conflicts of interest.
This allows us to support our mission without the appearance of impropriety.
Consider the Ethical Issues at Stake
Right Versus Wrong: At Freddie Mac we speak up and inform our colleagues of potential
actions that may violate our policies and Code of Conduct.
Due Diligence: We are all expected to understand the Code of Conduct and its underlying
policies. The expectations around the personal investment policy can be complex. Consult
with Ethics for clarity on policy requirements.
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The Freddie Mac Code of Conduct | S E C T I O N 3
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Truthful and responsible reporting is critical to the integrity of the markets in which we do
business and to Freddie Mac’s reputation. We communicate responsibly — whether we are
working with regulators and government agencies, auditors, the media, the investment
community, or anyone else outside our company’s walls. And we ensure that our disclosures
are truthful and clear.
Responsible Communication
Working with Regulators, Other Government Bodies, and External Auditors
• Employees are prohibited from lobbying.
• Only authorized employees may communicate on behalf of Freddie Mac to regulators, Congress, state officials, other
government officials, and/or external auditors in compliance with FHFA’s External Communications Standards.
• Direct any requests for information from Congress or any state legislative body to Government & Industry
Relations, and from government agencies to Legal.
• Respond to requests for data and information in an accurate and timely manner.
• Be professional and respectful; escalate issues for resolution when appropriate.
• Keep the Regulatory Affairs Team informed of requests from FHFA-Examinations and FHFA-OIG.
• Never obstruct an audit or conceal or misrepresent relevant information.
Interacting with the Media, the Investment Community and Others Outside Freddie Mac
• Only authorized employees may communicate on behalf of Freddie Mac to the public, the media, and other
external parties in compliance with FHFA’s External Communications Standards.
• All external, business-related speeches, papers, postings and publication opportunities must be pre-cleared by
Public Relations.
• Direct any requests for information from the investment community to Investor Relations. Direct all media
inquiries to Public Relations.
We communicate
truthfully and
responsibly.
S E C T I O N 4
Have questions or concerns? | Call the Compliance & Ethics Helpline at 877-301-CODE (2633) or FreddieMacEthicsHelpline.com
Have questions or concerns? | Call the Compliance & Ethics Helpline at 877-301-CODE (2633) or FreddieMacEthicsHelpline.com
Bringing Our Values Home
“My teammate told me a reporter emailed her wanting information for a story about a key
issue to our industry. My teammate knows how important this issue is to our company, so she
wanted my help because she had never handled a request like this before. She wasn’t even
sure how the reporter had found her email address, but she was ready to send any information
she could. I told her she should not reply to the reporter but should send any requests from the
reporter to Public Relations. She was disappointed but understood why we limit contact with
the media to only authorized employees.”
Consider Our Values
We perform with excellence: We speak up when our colleagues might be going down the
wrong path.
Consider the Ethical Issues at Stake
Right Versus Wrong: We have policies and procedures about external communications to
protect Freddie Mac; violating those policies and procedures, or letting others do so, is
not appropriate.
Potential Consequences: Only authorized employees may communicate on behalf of
Freddie Mac to the media, regulators, Congress, state officials, other government officials,
and external auditors. This helps ensure that we provide complete, accurate, relevant, and
up-to-date information.
Social Media
• Take care when posting as your online conduct outside of work may reflect on the company.
• Ensure your comments on social media are attributed to you personally, and not as a representative of Freddie
Mac. You should not engage in discussions about sensitive topics to the company, even with a disclaimer.
• Never share Freddie Mac Restricted, Confidential, or Non-Public information on social media.
• Obtain authorization from Public Relations before using social media for business purposes and before
posting on Freddie Mac’s behalf. All social media published by Freddie Mac is subject to FHFA’s External
Communications Standards.
Truthful Reporting
• Be complete and accurate when reporting assets, liabilities, revenues, and expenses.
• Never intentionally falsify a financial record or misrepresent the facts of a transaction.
• Use good judgment when creating or approving expense reports.
• Report issues, and actions to address them, transparently and accurately and in accordance with applicable
Company policies and standards.
14
Have questions or concerns? | Call the Compliance & Ethics Helpline at 877-301-CODE (2633) or FreddieMacEthicsHelpline.com
The Freddie Mac Code of Conduct | S E C T I O N 4
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Have questions or concerns? | Call the Compliance & Ethics Helpline at 877-301-CODE (2633) or FreddieMacEthicsHelpline.com
We all benefit from fair competition and fair play. Being an ethical company means doing
business transparently and honestly and seeking competitive advantage only through
legal and ethical business practices. We endeavor to be aware of and comply with all laws
and regulations that apply to Freddie Mac. We also integrate environmental, social and
governance (ESG) strategies into our business and operations. Freddie Mac is not just a
leader in the industry; we are also good stewards of the resources entrusted to us.
Sustainability Strategies
• In a changing world, our sustainability efforts help ensure we can continue to Make Home Possible
equitably and responsibly for families across the nation.
• We work to reduce carbon emissions from our operations while promoting environmentally sustainable
and resilient single-family and multifamily housing to reduce climate-related risks and increase affordability.
Artificial Intelligence (AI) & Machine Learning (ML)
• Our use of AI/ML is guided by our Values and the AI/ML Ethical Principles to include fairness, accountability
and transparency.
• We implement processes that drive fair and equitable AI/ML outcomes across all demographic groups.
Fair Competition
• Consistent with the antitrust laws, we compete lawfully based on the merits of our products and services.
• Never enter into agreements with our competitors to fix prices or elements of pricing (such as credit terms),
to divide up customers or markets, or to boycott a business.
• Do not limit the availability of products or services, or refuse to deal with specific business partners, unless we
have a reasonable business justification for doing so.
We conduct our
business lawfully
and in good
conscience.
S E C T I O N 5
16
Have questions or concerns? | Call the Compliance & Ethics Helpline at 877-301-CODE (2633) or FreddieMacEthicsHelpline.com
Fair Lending
• We monitor, assess, and mitigate fair lending risk in our business and operations.
• Do not discriminate in any manner in the purchase or servicing of any mortgage or the marketing or sale of
REO properties.
• Ensure that Freddie Mac Third Parties comply with fair lending laws and regulations at every stage of the mortgage
life cycle.
• Promote fair lending compliance and further the purposes of fair lending laws in the mortgage markets among our
business counterparties.
• Cooperate with FHFA and the U.S. Department of Housing and Urban Development by sharing information from
monitoring activities.
Anti-Fraud
• Never misstate the truth or conceal information, whether on behalf of the company or for personal gain.
• Understand how to identify and report suspicious activity, including internal and external activities that are
conducted or attempted by, at, or through Freddie Mac.
• Refer instances of actual or possible suspicious activity to:
• Internal Fraud: Contact the Compliance and Ethics Helpline
• External Suspicious Activity:
• Call the Fraud Hotline 1-800-4FRAUD8 (1-800-437-2838)
• Report to Single Family Division Risk Officer (for SF mortgage related fraud) using Freddie Mac’s Tip
Referral Tool (HomeFront/External)
• Email Multifamily Division Risk Officer (for MF mortgage related fraud)
MF_mortgage_fraud_reporting@freddiemac.com
• Email I&CM Division Risk Officer (for ICM related fraud) ICMCCRM@freddiemac.com
• Email Financial Crimes Risk Management (all other) FCSC_fraud_reporting@freddiemac.com
Anti-Corruption
• Never offer or accept bribes, kickbacks, or illegal payments.
• Immediately report any offers of improper payments to the Ethics Office.
• Carefully supervise all third parties who act on Freddie Mac’s behalf and verify that they play fairly.
The Freddie Mac Code of Conduct | S E C T I O N 5
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Have questions or concerns? | Call the Compliance & Ethics Helpline at 877-301-CODE (2633) or FreddieMacEthicsHelpline.com
Business Opportunities, Innovations & Fair Dealings
• Do not circumvent or take “short-cuts” around the procedures and controls designed to mitigate the risks
inherent in your business processes.
• Ensure new business opportunities are aligned with the Freddie Mac Mission.
• Innovations must demonstrably support our Mission, not just disrupt our competitors.
• Conduct all Freddie Mac transactions and dealings fairly, consistently, transparently, and without prejudice or bias.
• Never take unfair advantage of another employee or other stakeholder through manipulation, concealment,
abuse of privileged information, misrepresentation of material facts or other intentional unfair-dealing practices.
• When miscommunications and misunderstandings occur, assume good intent on the part of the other party and
correct the situation quickly.
Bringing Our Values Home
“During a team meeting of asset managers for Freddie Mac’s REO properties, one of my
employees raised an idea she believed would increase minority homeownership. Her idea
focused on the allocation of Freddie Mac funding for repairs of REO properties. The whole
team was eager to put her idea into action, so I gave my approval for them to start right away.
In a separate meeting later in the day I shared the good news. Another leader reminded me
that before we put her plan into action we would likely have to go through other reviews and
approvals related to our fair lending program.”
Consider Our Values
We are mission driven: Appropriately managing the risks associated with our key
obligations, such as fair lending laws and regulations, helps us focus on the health of the
housing finance market.
Consider the Ethical Issues at Stake
Right versus wrong: Even ideas with good intent can have legal consequences; leaders must
be mindful of both our ethical and legal obligations when approving new initiatives.
Due Diligence: Freddie Mac is committed to complying with applicable fair lending laws and
regulations and as such all new ideas and initiatives must be reviewed by the appropriate
management committees.
The Freddie Mac Code of Conduct | S E C T I O N 5
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Have questions or concerns? | Call the Compliance & Ethics Helpline at 877-301-CODE (2633) or FreddieMacEthicsHelpline.com
Bringing Our Values Home
“Just before a long holiday weekend, I unexpectedly received email instructions from a supplier
I work closely with requesting a change in their payment method. The email asked if I could
help the supplier get the payment processed before the holiday weekend and hinted at a cash
flow issue. I wanted to support this supplier as they have always been good partners. I spoke
with Supplier Administration, and they helped me spot a few “red flags” – i.e., the timing of
the request, the email address was different from the one normally used, and our required
documentation was missing from the request.”
Consider Our Values
We perform with excellence: While we want to be responsive to our supplier, we must follow
documented procedures, many of which are designed to uncover “red flags” of suspicious
activity and prevent fraud.
Consider the Ethical Issues at Stake
Potential Consequences: This email could be from a malicious party attempting to defraud
Freddie Mac and/or the supplier.
Due Diligence: Our policies, procedures, and other internal controls are there to help us
effectively and efficiently do our work – in this situation, paying the party that actually provided
the goods and/or services. They also are designed to help us avoid inadvertently violating
laws, regulations, and other obligations.
The Freddie Mac Code of Conduct | S E C T I O N 5
19
Have questions or concerns? | Call the Compliance & Ethics Helpline at 877-301-CODE (2633) or FreddieMacEthicsHelpline.com
At Freddie Mac, each of us is accountable for strong individual and team performance.
We want real results and not just the appearance of results. All companies — even those with
strong cultures and good intentions — may experience episodes of misconduct.
Our Values define who we are as a company and expectations for our business conduct. It is
important that we speak up – even when uncomfortable — if there are questions or concerns.
Seeking Advice and Reporting Misconduct
If you suspect that something isn’t right, use our resources to help make sound decisions, ask questions, and seek
guidance. Additionally, you must self-disclose certain criminal convictions. We’re counting on you to let us know of
actual or potential concerns.
How do I ask for guidance or report misconduct?
Contact one of these resources:
• Your manager or another manager in your division
• The Ethics Office
• The Compliance & Ethics Helpline
• Phone: (877) 301-CODE (2633)
• Internet: FreddieMacEthicsHelpline.com
• HR Connect or Employee Relations
• The Chair of the Audit Committee of the Board of Directors
Remember, the sooner you raise questions or concerns, the sooner we can resolve them, thereby minimizing any
potential harm which may arise.
We ask for
guidance and
report concerns.
S E C T I O N 6
Have questions or concerns? | Call the Compliance & Ethics Helpline at 877-301-CODE (2633) or FreddieMacEthicsHelpline.com
How does the Helpline work?
You can seek advice or report suspected wrongdoing confidentially or anonymously by contacting the Helpline,
24 hours a day, 365 days a year.
When you call the Helpline, a third-party service center operator will answer the call. This helps you to remain
anonymous, if you so choose. You will be assigned an access code which you can use to log back in and check on
the status of your report, to view any update posted, and respond to any follow-up questions from the Ethics Office.
Whether or not you choose to remain anonymous, Freddie Mac endeavors to keep your information confidential,
consistent with the law and good business practices.
If I report misconduct, what happens next?
All reports are taken seriously. We will investigate and review the facts promptly and fairly, using an established and
objective process.
If we determine that misconduct occurred, we will take appropriate action – up to and including discipline or
termination of employment for the individuals responsible.
You may be asked to provide information as part of the investigation. As Freddie Mac employees, it is our duty to
cooperate fully, and to be truthful and forthcoming. It is against our Values and the Code to act in bad faith or to
intentionally make a false complaint or statement as part of an investigation.
If you make a report, you may not always be notified about how a situation is resolved or what action the company has
taken. But by bringing the matter to our attention, you will have taken an important step in preserving our company’s
values and ethical culture.
No Tolerance for Retaliation
Freddie Mac is committed to maintaining a work environment where employees can ask questions, voice concerns,
and make appropriate suggestions without fear of retaliation.
Freddie Mac will not tolerate retaliation against any company or individual who reports a concern about potential
illegal or unethical conduct or a violation of Freddie Mac policies or who assists in the resolution of an investigation
or proceeding.
Additional Resources
• Mortgage Concerns: Contact Freddie Mac’s Customer Support Department at (800) FREDDIE (373-3343)
• REO Property Questions: Contact HomeSteps’ Customer Support Department at (800) 972-7555
20
The Freddie Mac Code of Conduct | S E C T I O N 6
21
Have questions or concerns? | Call the Compliance & Ethics Helpline at 877-301-CODE (2633) or FreddieMacEthicsHelpline.com
Bringing Our Values Home
“I had an issue that I wasn’t sure would be serious enough for an investigation. I decided to
call the Compliance & Ethics Helpline to figure out what to do. The independent operators took
down my question; I was even able to remain anonymous if I wanted. Less than a day later,
someone from the Ethics Office responded to my question and provided clear guidance on the
ways I could address my concern. My issue was stressful, but knowing my choices made me feel
a bit more in control of the situation.”
Consider Our Values
We do the right thing: Dealing with concerns and conflicts at work can be hard and
maintaining Freddie Mac’s culture relies on each of us leading with integrity.
Consider the Ethical Issues at Stake
Potential Consequences: Whether you identify yourself or remain anonymous, Freddie Mac
treats inquiries and reports of wrongdoing confidentially. Seeking help allows the problem to
be fixed, hopefully before it becomes a much bigger problem.
Reputational Effect: Speaking up, seeking guidance, and reporting actual or potential
violations maintains Freddie Mac’s high standards for ethical conduct.
The Freddie Mac Code of Conduct | S E C T I O N 6
22
Have questions or concerns? | Call the Compliance & Ethics Helpline at 877-301-CODE (2633) or FreddieMacEthicsHelpline.com
Pol/Std No.
TITLE
Page in Code
1-144
Business Courtesies and Sponsorships
10, 11 and 16
1-145
Outside Activities and Family Member Activities
11
1-146
Personal Investments Policy
10 and 11
1-147
Post-Employment Corporate Information Protection
7
1-152
Investigations Policy for Complaints
19 and 20
1-166
Policy on Policies
1
2-306
Media Relations, Publications, Internet Postings and Speeches
7, 13 and 14
3-201
Equal Employment Opportunity, Anti-Harassment, and Reasonable Accommodation Policy
4
3-210
Workplace Violence Prevention Policy
4 and 5
3-214
Corrective Action
2
3-219
Alcohol and Drug Abuse Policy
5
3-225
Relationships in the Workplace Policy
11
3-227
Background Checks
19
3-282
Prohibition of REO Purchases
11
4-101
Financial Reporting Risk Policy
2
6-300
Acceptable Use and Management of End User Technology
7
7-105
Compliance with Antitrust Laws
10 and 17
7-115
Information Wall Policy
10
7-204
Fair Lending Policy
16
7-301
Diversity, Equity and Inclusion Policy
4
7-501
Regulatory Reporting
10
7-502
Responding to FHFA Examination and FHFA OIG Requests
13
7-600
Disbursements to Tax-Exempt Organizations and Prohibition of Corporate Political Activity
11
7-602
Personal Political Activities of Freddie Mac Employees
11
7-605
Contacts with Government Officials
11 and 13
7-710
Policy on Document Lifecycle and Legal Holds
8
8-300
Intellectual Assets
8 and 14
9-112
Travel and Business Expenses Policy
7
9-200
Procurement of Products and Services
4, 10, 11 and 16
9-400
Contractor Workforce Management
1 and 11
11-101
Enterprise Risk Policy
2
11-113
Information Risk Policy
7, 8, 13 and 14
S11-113.D
Cybersecurity Standard
8
S11-113.E
Information Privacy Standard
7 and 8
11-127
Financial Crimes Compliance Risk Policy
16
Related Policy/Standard Index
Have questions or concerns? | Call the Compliance & Ethics Helpline at 877-301-CODE (2633) or FreddieMacEthicsHelpline.com
This Code of Conduct, Freddie Mac Corporate Policy #1-140, has been approved by the Audit Committee of the
Freddie Mac Board of Directors. It has an effective date of January 1, 2023. It contains information pertaining to
certain Freddie Mac policies and practices. Every Freddie Mac employee is expected to read this Code carefully as
it describes the standards of conduct that govern our business dealings. If you have any questions or concerns about
this Code of Conduct, please consult your manager or the Ethics Office.
This Code and all Freddie Mac policies do not alter the at-will employment relationship between Freddie Mac and
any employee. Nothing contained in this Code of Conduct or Freddie Mac policies constitutes a contract or creates
any contractual or equitable obligations on the part of the company; nor does anything in this Code or Freddie Mac
policies expand or increase any employee or third party’s legal rights or the company’s legal obligations.
Freddie Mac may elect to amend this Code at any time. A current version of the Code can be found on Freddie Mac’s
internal and external websites.
Matters relating to the interpretation of this Code and your agreement to this Code, or to the interpretation of any
other company policy, will be governed by the laws of the Commonwealth of Virginia, without regard to its conflict
of law provisions.
This Code is the property of Freddie Mac and all rights are reserved.
Code of
Conduct for
Members of
Freddie Mac’s
Board of
Directors
Effective Date: September 7, 2023
Public
Exhibit 14.2
Board Code of Conduct (Policy 1-141) | Public
2
Contents
Opening Message ......................................................................................................................................... 3
Conduct Relating to Freddie Mac ................................................................................................................. 3
1.
Compliance with Legal and Ethical Requirements............................................................................ 3
2.
Conflicts of Interest ........................................................................................................................... 3
3.
Business Courtesies ......................................................................................................................... 4
4.
Loans ................................................................................................................................................. 4
5.
Freddie Mac Property and Information ............................................................................................. 4
Freddie Mac Property ............................................................................................................................ 4
Confidential Information ......................................................................................................................... 4
Responding to Requests for Information ............................................................................................... 5
6.
Record Keeping and Reports ............................................................................................................ 5
Conduct Relating to Third Parties ................................................................................................................. 5
1.
Improper Influence on Conduct of Audits .......................................................................................... 5
2.
Corporate Opportunities .................................................................................................................... 5
3.
Business Courtesies ......................................................................................................................... 5
4.
Fair Dealing ....................................................................................................................................... 5
5.
Political Activities ............................................................................................................................... 5
Investments ................................................................................................................................................... 6
1.
Freddie Mac and Fannie Mae Securities and Prohibited Transactions ............................................ 6
2.
Personal Securities Investments ....................................................................................................... 6
General Rules ........................................................................................................................................ 7
Exceptions ............................................................................................................................................. 7
Enforcement .................................................................................................................................................. 8
1.
Reporting Actual or Potential Violations of Law, this Code, or Company Policy .............................. 8
2.
Anti-Retaliation .................................................................................................................................. 8
3.
Amendments, Waivers, and Interpretation ........................................................................................ 8
4.
Applicable Law .................................................................................................................................. 8
Board Code of Conduct (Policy 1-141) | Public
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Opening Message
The principles set forth in this Code of Conduct, this “Code,” are based on the company’s values and
provide a guide for fulfilling your responsibilities as a Director. You set the ethical tone at the top by
communicating and supporting Freddie Mac's commitment to act with integrity and conduct our business
with the highest ethical standards. You must act in good faith and exercise due care in all your actions as
a Director. Adhering to this Code will demonstrate your commitment to our company and further an
ethical culture. This Code does not address every situation that may be encountered and is not a
substitute for a Director’s exercise of good judgment and common sense. This Code applies to all
members of Freddie Mac’s Board of Directors, referred to as “you”. Directors who are employees of
Freddie Mac are also bound by the employee Code of Conduct to the extent that it is more specific. If
you have questions about how to apply the provisions of this Code in a specific situation, contact the
Chief Compliance Officer “CCO” or the General Counsel “GC”.
Conduct Relating to Freddie Mac
1.
Compliance with Legal and Ethical Requirements
The company complies with all applicable laws and conducts its business with integrity and you must do
the same in carrying out your responsibilities as a Director. Supporting our culture of compliance includes
notifying the Non-Executive Chair of the Board, or “Chair”, if you detect or suspect fraud, dishonesty,
discrimination, harassment, or the possible use of bribes, kickbacks or other unusual payments in
connection with the conduct of your duties or any Freddie Mac business.
When performing your Freddie Mac duties, do not engage in conduct you believe could create the
appearance of impropriety, even if you believe that such conduct is not improper. You should not avoid
the provisions of this Code by asking a relative, a friend, or any other person to do something that this
Code prohibits you from doing personally.
2.
Conflicts of Interest
You should avoid any direct or indirect conflict of interest, or potential or apparent conflict of interest,
between yourself and Freddie Mac.
A conflict of interest can occur if a Director takes an action or has interests that make it difficult – or
appear to make it difficult – for the Director to perform his or her duties objectively or effectively for
Freddie Mac or could cause the Director to act other than in the best interests of Freddie Mac. This can
be the case, for example, if a director has a private interest in a transaction or contract to which Freddie
Mac is or will be a party, if a director enters into a transaction which involves Freddie Mac’s assets or if a
director competes with Freddie Mac. Conflicts of interest also arise when a director or a member of his or
her immediate family receives improper personal benefits as a result of his or her status as a director of
Freddie Mac.
If you face a possible conflict of interest situation, including one that is not clearly addressed by this Code,
consult with the Chair and/or the Chair of the Nominating and Governance Committee to determine
whether a conflict exists and, if so, the appropriate steps to be taken (e.g., recusal from approving matters
brought to the Board of Directors to mitigate the risk arising from the conflict of interest).
Board Code of Conduct (Policy 1-141) | Public
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Potential conflicts of interest that involve transactions between Freddie Mac and its Directors and their
related persons or entities may also be subject to and, if applicable, in compliance with Freddie Mac’s
Corporate Policy on Related Person Transactions.
3.
Business Courtesies
You should not give gifts to or receive gifts from employees. However, a voluntary gift or donation of a
reasonable value in honor of a one-time special occasion, such as retirement of an employee with whom
you work closely, is permissible. You should not solicit donations or contributions from employees.
Freddie Mac funds may not be used for a gift unless approved by the Chair.
4.
Loans
Freddie Mac is restricted from making, or arranging for, loans and other extensions of credit to members
of the Board of Directors. You should not seek or involve yourself with any such activity.
5.
Freddie Mac Property and Information
Freddie Mac Property
You are responsible for safeguarding and maintaining any Freddie Mac property that is within your
control. Freddie Mac’s property consists of both tangible and intangible property, including intellectual
assets. This obligation continues after your service as a Director ends.
Confidential Information
Unless it is publicly available, information you gain access to or create in your capacity as a Director must
be considered confidential and you may use it only for Freddie Mac business purposes, except when
disclosure or other use is authorized by Freddie Mac or legally required. Nothing in this Code precludes
Directors from reporting information about alleged wrongdoing (such as accounting irregularities) to
government agencies such as the Securities & Exchange Commission or the Equal Employment
Opportunity Commission. Directors may report this information to government agencies without notifying
Freddie Mac or obtaining its consent.
With respect to information related to the Making Home Affordable program (“MHA”), unless you have
prior authorization from the General Counsel & Corporate Secretary, you should not discuss MHA-related
matters outside of Board or Committee meetings with employees other than the Chief Executive Officer,
Chief Administrative Officer, the CCO, the General Counsel & Corporate Secretary, the General Auditor,
the Program Executive-MHA-C, the employee who provided you with the information to be discussed,
and those employees who were present at Board or Committee meetings when the matters were
discussed. These obligations continue after your service as a Director ends.
Please contact the General Counsel & Corporate Secretary, or the Senior Vice President (“SVP”) –
Principal Deputy General Counsel if you have any questions regarding the disclosure or use of
information you gain or create in your capacity as a Director.
Board Code of Conduct (Policy 1-141) | Public
5
Responding to Requests for Information
Refer any media or congressional inquiry you receive regarding Freddie Mac to the VP-Corporate
Communications & Marketing. Refer to the CCO any inquiry you receive from the Federal Housing
Finance Agency (“FHFA”), the FHFA Office of Inspector General or other government agency.
6.
Record Keeping and Reports
It is Freddie Mac’s policy that any report, document, or other information that Freddie Mac, directly or
indirectly, files with or submits to a government agency or discloses to the public must be fair, timely, and
understandable given the circumstances under which it is used, filed, submitted, or disclosed. Directors
should maintain corporate records consistent with direction provided by management and minimum legal
requirements.
Conduct Relating to Third Parties
1.
Improper Influence on Conduct of Audits
You may not, directly or indirectly, take any action to coerce, manipulate, mislead, or fraudulently
influence any independent or certified public accountant engaged in the performance of an audit or review
of Freddie Mac’s financial statements. You also must cooperate fully in any such audit or review.
2.
Corporate Opportunities
You must not use, directly or indirectly, for your personal benefit or the benefit of any other individual or
entity: (1) company property or information; or (2) opportunities you learn of through your position as a
Director or through the use of company property or information.
3.
Business Courtesies
You should refuse gifts, favors, travel, entertainment, loans, discounts, or other preferential treatment if
they could appear to represent an attempt by the donor to obtain favorable treatment in its business
dealings with Freddie Mac or if they are lavish or would not be considered a generally accepted business
practice.
4.
Fair Dealing
When fulfilling your responsibilities as a Director, you should deal fairly with Freddie Mac’s competitors,
business partners, customers, and vendors.
5.
Political Activities
You may fully engage in the political process consistent with your personal views and interests, and
without regard to Freddie Mac’s business interests. However, you must be careful to distinguish your
personal political views from those of Freddie Mac. You may not use any Freddie Mac resources or
facilities (including office supplies and administrative personnel) in connection with your political activities.
Board Code of Conduct (Policy 1-141) | Public
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Investments1
1.
Freddie Mac and Fannie Mae Securities and Prohibited
Transactions
Neither you nor your Related Persons2 may directly or indirectly purchase Freddie Mac or Fannie Mae
securities, including equity, debt, mortgage-related securities and derivatives, nor may you or your
Related Persons purchase Freddie Mac or Fannie Mae securities in managed accounts.3 You and your
Related Persons are also prohibited from (i) holding Freddie Mac or Fannie Mae securities in a margin
account or pledging Freddie Mac or Fannie Mae securities as collateral for a loan, and (ii) short selling or
otherwise hedging Freddie Mac or Fannie Mae securities.
You must pre-clear all trades in Freddie Mac or Fannie Mae securities that you or your Related Persons
already own, and all pre-cleared transactions must take place during a company-designated window
period. In addition, you must make all publicly filed form filings as requested or required by Freddie Mac
in connection with trades in Freddie Mac securities. Contact the GC for preclearance and form filings
instructions.
You may not use material non-public information in connection with the purchase or sale of Freddie Mac’s
or any other company’s securities. You may not provide material non-public information to others that
may lead them to purchase or sell Freddie Mac’s or any other company’s securities.
2.
Personal Securities Investments
If you or your Related Persons hold any investments that may create a conflict of interest, or the
appearance of a conflict of interest with Freddie Mac, you must notify the Chair and/or the Chair of the
Audit Committee as noted below.
If your professional activities involve the management of investment funds or assets of others, this Code
does not restrict your investment decisions for such funds or clients. However, you are prohibited from
trading on their behalf on the basis of material non-public information.
1 The term “investments” as used in this Code includes equity and non-equity securities and derivatives.
2 “Related Persons” are your spouse or domestic partner, whether or not sharing the same residence with
you; your children (and the children of your spouse or domestic partner) under the age of 18 whether or
not they share the same residence with you; any adult relative residing in your home; and any other
individual residing in your home for whom you (or your spouse or domestic partner) are financially
responsible. Live-in domestic employees (e.g., nannies or health-care aides) are excluded from this
definition.
3 Other non-discretionary investments (i.e., investments through an intermediary such as a fund
investment over which you or your Related Persons do not exercise any investment discretion) in Freddie
Mac or Fannie Mae are permitted.
Board Code of Conduct (Policy 1-141) | Public
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General Rules
Subject to the Exceptions below, you must:
•
disclose on the Outside Director Questionnaire any investments held by you or your Related
Persons that may cause an actual or apparent conflict of interest;
•
disclose to the Chair of the Audit Committee any equity compensation awarded to you or your
Related Persons from your or your Related Persons’ employer that may cause an actual or
apparent conflict of interest promptly after it is awarded; and
•
discuss with the Chair of the Audit Committee, in advance, any potential new investment that you
or your Related Persons anticipate could result in an actual or apparent conflict of interest.
The Chair of the Audit Committee, in consultation with the Chair, will determine: (1) taking into account
your responsibilities as a Director and the nature and size of your and your Related Persons’ actual or
potential investment, whether any such existing or potential investment presents, or could present, an
actual or apparent conflict of interest; (2) if so, how best to address the conflict; and (3) whether it is
appropriate to notify other members of the Board of any mechanism(s) established to address any such
conflict.
Exceptions
You are permitted to hold or acquire, and need not report under the General Rules above:
•
Non-discretionary investments (i.e., investments in any public or private company acquired
through an investment intermediary such as a managed account or fund investment, over which
neither you nor your Related Persons exercise any investment discretion).
•
Any investments in non-equity securities of a company if the total holdings of you and your
Related Persons in such securities of that company do not, or would not, constitute more than
five percent of the Simplified Net Worth4 of you and your Related Persons. This provision does
not apply to direct investments in Freddie Mac and Fannie Mae as these investments are
prohibited.
4 “Simplified Net Worth” is defined as the current estimated total market value of all major possessions
(such as (a) real estate, (b) equity and non-equity securities (including those held in retirement plans such
as 401(k) or IRA accounts), (c) cash and (d) any other items of personal property, each with an estimated
value greater than $10,000), minus the current total of all major debts (such as (1) mortgages, (2) home
equity lines of credit and (3) credit card balances and other indebtedness in excess of $10,000).
Board Code of Conduct (Policy 1-141) | Public
8
Enforcement
1.
Reporting Actual or Potential Violations of Law, this Code, or
Company Policy
As a Director of the company, you must share with the Chair any knowledge you may have of an actual or
potential violation of this Code, applicable law or corporate policies. You also must cooperate fully in any
investigation of any such matters.
2.
Anti-Retaliation
You may not retaliate against any individual or entity who, based on a reasonable, good faith belief: (i)
reports a concern about potential illegal or unethical conduct, or a violation of applicable law, this Code, or
corporate policy or (ii) assists or otherwise participates in the investigation or resolution of such a report.
3.
Amendments, Waivers, and Interpretation
Only the Board may amend this Code or grant a waiver of any requirement of this Code. Waivers will be
publicly disclosed as required by applicable law.
The Board has final authority to determine whether any Director’s conduct or action violates this Code or
any applicable corporate policy and any appropriate discipline for any such violations, including, but not
limited to, removal as a Director.
4.
Applicable Law
Matters relating to this Code and the interpretation of this Code will be governed in accordance with the
laws of the United States. Insofar as there may be no applicable precedent, and insofar as to do so would
not frustrate any provisions of this Code, the laws of the Commonwealth of Virginia will be deemed
reflective of the laws of the United States.
Board Code of Conduct (Policy 1-141) | Public
9
ACKNOWLEDGMENT AND AGREEMENT TO COMPLY
By signing this form, I acknowledge that I have reviewed and understand the Code
of Conduct for Members of Freddie Mac’s Board of Directors and agree to be bound
by its provisions, as they may be revised from time to time during my service on
the Board of Directors of Freddie Mac. In addition, I agree to comply with all the
provisions of this Code which continue to apply after my service on the Board of
Directors of Freddie Mac terminates, as they are in effect at the time my service
ends.
________________________________
Signature
________________________________
______________________
Printed Name
Date
Exhibit 24.1
Power of Attorney
Annual Report on Form 10-K
Freddie Mac
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a director of Freddie Mac (formally known as
the Federal Home Loan Mortgage Corporation), a federally chartered corporation, hereby constitute and appoint Diana W. Reid,
James Whitlinger, Heidi L. Mason, and Alicia S. Myara, and each of them severally, my true and lawful attorney-in-fact with
power of substitution and resubstitution to sign in my name, place and stead, in any and all capacities, to do any and all things
and execute any and all instruments that such attorney may deem necessary or advisable under the Securities Exchange Act of
1934 and any rules, regulations and requirements of the U.S. Securities and Exchange Commission in connection with the
Annual Report on Form 10-K for the year ended December 31, 2024 and any and all amendments thereto, as fully for all intents
and purposes as I might or could do in person, and hereby ratify and confirm all said attorneys-in-fact, each acting alone, and
his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have executed this Power of Attorney as of December 3, 2024.
/s/ Mark H. Bloom
Mark H. Bloom
Power of Attorney
Annual Report on Form 10-K
Freddie Mac
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a director of Freddie Mac (formally known as
the Federal Home Loan Mortgage Corporation), a federally chartered corporation, hereby constitute and appoint Diana W. Reid,
James Whitlinger, Heidi L. Mason, and Alicia S. Myara, and each of them severally, my true and lawful attorney-in-fact with
power of substitution and resubstitution to sign in my name, place and stead, in any and all capacities, to do any and all things
and execute any and all instruments that such attorney may deem necessary or advisable under the Securities Exchange Act of
1934 and any rules, regulations and requirements of the U.S. Securities and Exchange Commission in connection with the
Annual Report on Form 10-K for the year ended December 31, 2024 and any and all amendments thereto, as fully for all intents
and purposes as I might or could do in person, and hereby ratify and confirm all said attorneys-in-fact, each acting alone, and
his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have executed this Power of Attorney as of December 5, 2024.
/s/ Kathleen L. Casey
Kathleen L. Casey
Power of Attorney
Annual Report on Form 10-K
Freddie Mac
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a director of Freddie Mac (formally known as
the Federal Home Loan Mortgage Corporation), a federally chartered corporation, hereby constitute and appoint Diana W. Reid,
James Whitlinger, Heidi L. Mason, and Alicia S. Myara, and each of them severally, my true and lawful attorney-in-fact with
power of substitution and resubstitution to sign in my name, place and stead, in any and all capacities, to do any and all things
and execute any and all instruments that such attorney may deem necessary or advisable under the Securities Exchange Act of
1934 and any rules, regulations and requirements of the U.S. Securities and Exchange Commission in connection with the
Annual Report on Form 10-K for the year ended December 31, 2024 and any and all amendments thereto, as fully for all intents
and purposes as I might or could do in person, and hereby ratify and confirm all said attorneys-in-fact, each acting alone, and
his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have executed this Power of Attorney as of December 5, 2024.
/s/ Kevin G. Chavers
Kevin G. Chavers
Power of Attorney
Annual Report on Form 10-K
Freddie Mac
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a director of Freddie Mac (formally known as
the Federal Home Loan Mortgage Corporation), a federally chartered corporation, hereby constitute and appoint Diana W. Reid,
James Whitlinger, Heidi L. Mason, and Alicia S. Myara, and each of them severally, my true and lawful attorney-in-fact with
power of substitution and resubstitution to sign in my name, place and stead, in any and all capacities, to do any and all things
and execute any and all instruments that such attorney may deem necessary or advisable under the Securities Exchange Act of
1934 and any rules, regulations and requirements of the U.S. Securities and Exchange Commission in connection with the
Annual Report on Form 10-K for the year ended December 31, 2024 and any and all amendments thereto, as fully for all intents
and purposes as I might or could do in person, and hereby ratify and confirm all said attorneys-in-fact, each acting alone, and
his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have executed this Power of Attorney as of December 3, 2024.
/s/ Launcelot F. Drummond
Launcelot F. Drummond
Power of Attorney
Annual Report on Form 10-K
Freddie Mac
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a director of Freddie Mac (formally known as
the Federal Home Loan Mortgage Corporation), a federally chartered corporation, hereby constitute and appoint Diana W. Reid,
James Whitlinger, Heidi L. Mason, and Alicia S. Myara, and each of them severally, my true and lawful attorney-in-fact with
power of substitution and resubstitution to sign in my name, place and stead, in any and all capacities, to do any and all things
and execute any and all instruments that such attorney may deem necessary or advisable under the Securities Exchange Act of
1934 and any rules, regulations and requirements of the U.S. Securities and Exchange Commission in connection with the
Annual Report on Form 10-K for the year ended December 31, 2024 and any and all amendments thereto, as fully for all intents
and purposes as I might or could do in person, and hereby ratify and confirm all said attorneys-in-fact, each acting alone, and
his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have executed this Power of Attorney as of December 3, 2024.
/s/ Aleem Gillani
Aleem Gillani
Power of Attorney
Annual Report on Form 10-K
Freddie Mac
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a director of Freddie Mac (formally known as
the Federal Home Loan Mortgage Corporation), a federally chartered corporation, hereby constitute and appoint Diana W. Reid,
James Whitlinger, Heidi L. Mason, and Alicia S. Myara, and each of them severally, my true and lawful attorney-in-fact with
power of substitution and resubstitution to sign in my name, place and stead, in any and all capacities, to do any and all things
and execute any and all instruments that such attorney may deem necessary or advisable under the Securities Exchange Act of
1934 and any rules, regulations and requirements of the U.S. Securities and Exchange Commission in connection with the
Annual Report on Form 10-K for the year ended December 31, 2024 and any and all amendments thereto, as fully for all intents
and purposes as I might or could do in person, and hereby ratify and confirm all said attorneys-in-fact, each acting alone, and
his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have executed this Power of Attorney as of December 5, 2024.
/s/ Luke S. Hayden
Luke S. Hayden
Power of Attorney
Annual Report on Form 10-K
Freddie Mac
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a director of Freddie Mac (formally known as
the Federal Home Loan Mortgage Corporation), a federally chartered corporation, hereby constitute and appoint Diana W. Reid,
James Whitlinger, Heidi L. Mason, and Alicia S. Myara, and each of them severally, my true and lawful attorney-in-fact with
power of substitution and resubstitution to sign in my name, place and stead, in any and all capacities, to do any and all things
and execute any and all instruments that such attorney may deem necessary or advisable under the Securities Exchange Act of
1934 and any rules, regulations and requirements of the U.S. Securities and Exchange Commission in connection with the
Annual Report on Form 10-K for the year ended December 31, 2024 and any and all amendments thereto, as fully for all intents
and purposes as I might or could do in person, and hereby ratify and confirm all said attorneys-in-fact, each acting alone, and
his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have executed this Power of Attorney as of December 5, 2024.
/s/ Christopher E. Herbert
Christopher E. Herbert
Power of Attorney
Annual Report on Form 10-K
Freddie Mac
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a director of Freddie Mac (formally known as
the Federal Home Loan Mortgage Corporation), a federally chartered corporation, hereby constitute and appoint Diana W. Reid,
James Whitlinger, Heidi L. Mason, and Alicia S. Myara, and each of them severally, my true and lawful attorney-in-fact with
power of substitution and resubstitution to sign in my name, place and stead, in any and all capacities, to do any and all things
and execute any and all instruments that such attorney may deem necessary or advisable under the Securities Exchange Act of
1934 and any rules, regulations and requirements of the U.S. Securities and Exchange Commission in connection with the
Annual Report on Form 10-K for the year ended December 31, 2024 and any and all amendments thereto, as fully for all intents
and purposes as I might or could do in person, and hereby ratify and confirm all said attorneys-in-fact, each acting alone, and
his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have executed this Power of Attorney as of December 3, 2024.
/s/ Grace A. Huebscher
Grace A. Huebscher
Power of Attorney
Annual Report on Form 10-K
Freddie Mac
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a director of Freddie Mac (formally known as
the Federal Home Loan Mortgage Corporation), a federally chartered corporation, hereby constitute and appoint Diana W. Reid,
James Whitlinger, Heidi L. Mason, and Alicia S. Myara, and each of them severally, my true and lawful attorney-in-fact with
power of substitution and resubstitution to sign in my name, place and stead, in any and all capacities, to do any and all things
and execute any and all instruments that such attorney may deem necessary or advisable under the Securities Exchange Act of
1934 and any rules, regulations and requirements of the U.S. Securities and Exchange Commission in connection with the
Annual Report on Form 10-K for the year ended December 31, 2024 and any and all amendments thereto, as fully for all intents
and purposes as I might or could do in person, and hereby ratify and confirm all said attorneys-in-fact, each acting alone, and
his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have executed this Power of Attorney as of December 5, 2024.
/s/ Allan P. Merrill
Allan P. Merrill
Power of Attorney
Annual Report on Form 10-K
Freddie Mac
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a director of Freddie Mac (formally known as
the Federal Home Loan Mortgage Corporation), a federally chartered corporation, hereby constitute and appoint Diana W. Reid,
James Whitlinger, Heidi L. Mason, and Alicia S. Myara, and each of them severally, my true and lawful attorney-in-fact with
power of substitution and resubstitution to sign in my name, place and stead, in any and all capacities, to do any and all things
and execute any and all instruments that such attorney may deem necessary or advisable under the Securities Exchange Act of
1934 and any rules, regulations and requirements of the U.S. Securities and Exchange Commission in connection with the
Annual Report on Form 10-K for the year ended December 31, 2024 and any and all amendments thereto, as fully for all intents
and purposes as I might or could do in person, and hereby ratify and confirm all said attorneys-in-fact, each acting alone, and
his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have executed this Power of Attorney as of January 14, 2025.
/s/ Jane E. Prokop
Jane E. Prokop
Power of Attorney
Annual Report on Form 10-K
Freddie Mac
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a director of Freddie Mac (formally known as
the Federal Home Loan Mortgage Corporation), a federally chartered corporation, hereby constitute and appoint Diana W. Reid,
James Whitlinger, Heidi L. Mason, and Alicia S. Myara, and each of them severally, my true and lawful attorney-in-fact with
power of substitution and resubstitution to sign in my name, place and stead, in any and all capacities, to do any and all things
and execute any and all instruments that such attorney may deem necessary or advisable under the Securities Exchange Act of
1934 and any rules, regulations and requirements of the U.S. Securities and Exchange Commission in connection with the
Annual Report on Form 10-K for the year ended December 31, 2024 and any and all amendments thereto, as fully for all intents
and purposes as I might or could do in person, and hereby ratify and confirm all said attorneys-in-fact, each acting alone, and
his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have executed this Power of Attorney as of December 5, 2024.
/s/ Roy Swan_______
Roy Swan
Exhibit 31.1
CERTIFICATION
PURSUANT TO SECURITIES EXCHANGE ACT RULE 13a-14(a)
I, Diana W. Reid, certify that:
1.
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2024 of the Federal Home Loan Mortgage Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered
by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: February 13, 2025
/s/ Diana W. Reid
Diana W. Reid
Chief Executive Officer
Exhibit 31.2
CERTIFICATION
PURSUANT TO SECURITIES EXCHANGE ACT RULE 13a-14(a)
I, James Whitlinger, certify that:
1.
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2024 of the Federal Home Loan Mortgage Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered
by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: February 13, 2025
/s/ James Whitlinger
James Whitlinger
Executive Vice President and Chief Financial Officer
Exhibit 32.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ENACTED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K for the year ended December 31, 2024 of the Federal Home Loan Mortgage
Corporation (the "Company"), as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Diana
W. Reid, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Date: February 13, 2025
/s/ Diana W. Reid
Diana W. Reid
Chief Executive Officer
Exhibit 32.2
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ENACTED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K for the year ended December 31, 2024 of the Federal Home Loan Mortgage
Corporation (the "Company"), as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James
Whitlinger, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Date: February 13, 2025
/s/ James Whitlinger
James Whitlinger
Executive Vice President and Chief Financial Officer