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, 2021

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. ☒

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, 

2021 (the last business day of the registrant's most recently completed second fiscal quarter) was $0.9 billion.

As of January 31, 2022, 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 7

n Forward-Looking Statements 11

MANAGEMENT'S DISCUSSION AND ANALYSIS OF 

FINANCIAL CONDITION AND RESULTS OF OPERATIONS 13

n Market Conditions and Economic Indicators 13

n Consolidated Results of Operations 18

n Consolidated Balance Sheets Analysis 26

n Our Portfolios 26

n Our Business Segments 28

n Risk Management 57

l	Credit Risk 60

l	Market Risk 93

l	Operational Risk 99

n Liquidity and Capital Resources 102

n Conservatorship and Related Matters 111

n Regulation and Supervision 116

n Critical Accounting Estimates 124

RISK FACTORS 125

LEGAL PROCEEDINGS 143

MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER 

MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES 144

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 145

n Report of Independent Registered Public Accounting Firm (PCAOB ID 238) 146

n Consolidated Financial Statements 148

CONTROLS AND PROCEDURES 236

OTHER INFORMATION 238

DIRECTORS, CORPORATE GOVERNANCE, AND EXECUTIVE OFFICERS 239

n Directors 239

n Corporate Governance 245

n Executive Officers 253

EXECUTIVE COMPENSATION 255

n Compensation Discussion and Analysis 255

n Compensation and Risk 271

n CEO Pay Ratio 272

n 2021 Compensation Information for NEOs 273

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND 

MANAGEMENT AND RELATED STOCKHOLDER MATTERS 280

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 282

PRINCIPAL ACCOUNTING FEES AND SERVICES 284

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 286

GLOSSARY 287

EXHIBIT INDEX 296

SIGNATURES 302

FORM 10-K INDEX 304

Table of Contents

FREDDIE MAC | 2021 Form 10-K i
MD&A TABLE INDEX

1 Summary of Consolidated Statements of Comprehensive Income (Loss) 18

2 Components of Net Interest Income 20

3 Analysis of Net Interest Yield 21

4 Net Interest Income Rate / Volume Analysis 22

5 Components of Guarantee Income 23

6 Investment Gains (Losses), Net 24

7 Benefit (Provision) for Credit Losses 24

8 Summarized Consolidated Balance Sheets 26

9 Mortgage Portfolio 27

10 Guarantee Portfolio 28

11 Mortgage-Related Investments Portfolio 28

12 Single-Family Segment Financial Results 46

13 Multifamily Segment Financial Results 56

14 Allowance for Credit Losses Ratios 60

15 Principal Amounts Due for Held-for-Investment Loans 62

16 Single-Family New Business Activity 66

17 Single-Family Mortgage Portfolio CRT Issuance 67

18 Single-Family Mortgage Portfolio Credit Enhancement Coverage Outstanding 68

19 Serious Delinquency Rates for Credit-Enhanced and Non-Credit-Enhanced Loans in Our Single-Family Mortgage 

Portfolio 68

20 Credit Enhancement Coverage by Year of Origination 69

21 Single-Family Mortgage Portfolio Without Credit Enhancement 69

22 Single-Family Credit Enhancement Receivables 70

23 Credit Quality Characteristics of Our Single-Family Mortgage Portfolio 72

24 Characteristics of the Loans in Our Single-Family Mortgage Portfolio 73

25 Single-Family Mortgage Portfolio Attribute Combinations 74

26 Single-Family Loans in Forbearance Plans by Payment Status 76

27 Single-Family Loans that Received Forbearance Plans 77

28 Single-Family Relief Refinance Loans 77

29 Credit Characteristics of Single-Family Modified Loans 77

30 Payment Performance of Single-Family Modified Loans 78

31 Seriously Delinquent Single-Family Loans by Jurisdiction 79

32 Average Length of Foreclosure Process for Single-Family Loans 79

33 Single-Family REO Activity 79

34 Single-Family Collateral Deficiency Ratios 80

35 Percentage of Multifamily New Business Activity with Higher Risk Characteristics 82

36 Multifamily Mortgage Portfolio CRT Issuance 84

37 Credit-Enhanced and Non-Credit-Enhanced Loans Underlying Our Multifamily Mortgage Portfolio 84

38 Level of Subordination Outstanding 85

39 Credit Quality of Our Multifamily Mortgage Portfolio Without Credit Enhancement 85

40 Single-Family Mortgage Purchases from Non-Depository Sellers 87

41 Single-Family Mortgage Portfolio Non-Depository Servicers 88

42 Single-Family Primary Mortgage Insurers 89

43 Single-Family ACIS Counterparties 90

Table Description Page

Table of Contents MD&A Table Index

FREDDIE MAC | 2021 Form 10-K ii
44 Derivative Counterparty Credit Exposure 91

45 PVS-YC and PVS-L Results Assuming Shifts of the Yield Curve 95

46 Duration Gap and PVS Results 95

47 PVS-L Results Before Derivatives and After Derivatives 96

48 Earnings Sensitivity to Changes in Interest Rates 97

49 Liquidity Sources 103

50 Other Investments Portfolio 104

51 Funding Sources 105

52 Debt of Freddie Mac Activity 106

53 Maturity and Redemption Dates 106

54 Activity for Debt Securities of Consolidated Trusts Held by Third Parties 107

55 Freddie Mac Credit Ratings 107 

56 Net Worth Activity 110

57 2020 and 2019 Affordable Housing Goals Results 119

58 2021-2024 Single-Family and 2021-2022 Multifamily Affordable Housing Goal Benchmark Levels 119

59 Forecasted House Price Growth Rates 124

60 Board Compensation Levels 251

61 Director Compensation 251

62 2021 Target TDC 257

63 2021 Deferred Salary 265

64 CEO Pay Ratio 272

65 Compensation Summary 273

66 Grants of Plan-Based Awards 274

67 SERP and SERP II Benefits 275

68 Compensation and Benefits if NEO Terminated Employment as of December 31, 2021 277

69 Stock Ownership by Directors and Executive Officers 280

70 Stock Ownership by Greater Than 5% Holders 280

71 Auditor Fees 284

Table Description Page

Table of Contents MD&A Table Index

FREDDIE MAC | 2021 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 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 and mortgage-related securities. 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.

COVID-19 Pandemic Response Efforts

The outbreak of COVID-19, a novel coronavirus disease detected in late 2019, was declared a pandemic by the World Health 

Organization on March 11, 2020. The COVID-19 pandemic was declared a national emergency in the United States on March 

13, 2020 and continued to evolve throughout 2020 and 2021, both globally and domestically, with significant adverse effects on 

populations and economies. Throughout the COVID-19 pandemic, we have remained focused on serving our mission and the 

crucial role we play in the U.S. housing finance system while supporting the health and safety of our communities, customers, 

and staff. We have taken actions to help homeowners with Freddie Mac-owned mortgages who are directly or indirectly 

affected by the COVID-19 pandemic stay in their homes during this challenging time. We have also provided support to the 

multifamily mortgage market. For additional information on our support of the mortgage markets during the pandemic, see 

MD&A - Our Business Segments - Single-Family, MD&A - Our Business Segments - Multifamily, MD&A - Risk 

Management - Credit Risk - Single-Family Mortgage Credit Risk, and MD&A - Risk Management - Credit Risk - 

Multifamily Mortgage Credit Risk. For more information on risks related to the COVID-19 pandemic, see Risk Factors -

COVID-19 Pandemic.

Introduction About Freddie Mac

FREDDIE MAC | 2021 Form 10-K 1
Business Results

Consolidated Financial Results

Net Revenues, Net Income, and Comprehensive Income 

(In billions)

$14.1

$16.7

$22.0

$7.2 $7.3

$12.1

$7.8 $7.5

$11.6

Net Revenues

Net Income

Comprehensive Income

2019 2020 2021

Net Worth as of December 31, 

(In billions)

$9.1

$16.4

$28.0

2019 2020 2021

Key Drivers:

n	 2021 vs. 2020

l Net income was $12.1 billion, an increase of 65% year-over-year. Comprehensive income was $11.6 billion, an 

increase of 54% year-over-year. The increases in both net income and comprehensive income were primarily driven by 

higher net revenues and a credit reserve release in Single-Family.

l	 Net revenues increased 32% year-over-year to $22.0 billion, primarily driven by higher net interest income and higher 

net investment gains.

l Net worth was $28.0 billion as of December 31, 2021, up from $16.4 billion as of December 31, 2020. 

 

n	 2020 vs. 2019

l Net income was $7.3 billion, an increase of 2% year-over-year. Comprehensive income was $7.5 billion, a decrease of 

3% year-over-year. The changes in net income and comprehensive income were primarily driven by higher net 

revenues, partially offset by higher provision for credit losses.

l	 Net revenues increased 18% year-over-year to $16.7 billion, primarily due to higher net interest income and higher net 

investment gains.

l Net worth was $16.4 billion as of December 31, 2020, up from $9.1 billion as of December 31, 2019.

l We recognized a decrease in retained earnings of $0.2 billion upon our adoption of CECL on January 1, 2020.

Introduction About Freddie Mac

FREDDIE MAC | 2021 Form 10-K 2
Market Liquidity

Market Liquidity

(In thousands)

2,578

4,601

4,891

987

1,131 1,378

782

2,667

2,858

809

803

655

Single-Family purchase borrowers Single-Family refinance borrowers Multifamily rental units

2019 2020 2021

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 $1.3 trillion in liquidity to the mortgage 

market in 2021, which enabled the financing of nearly 4.9 million home purchases, refinancings, and rental units.

Introduction About Freddie Mac

FREDDIE MAC | 2021 Form 10-K 3
Portfolio Balances

Mortgage Portfolio as of December 31,

(UPB in billions)

$2,335

$2,714

$3,207

$1,994

$2,326

$2,792

$341

$388

$415

Single-Family mortgage portfolio Multifamily mortgage portfolio

2019 2020 2021

n	 Our mortgage portfolio increased 18% year-over-year to $3,207 billion at December 31, 2021, driven by a 20% increase in 

our Single-Family mortgage portfolio and a 7% increase in our Multifamily mortgage portfolio. Our mortgage portfolio 

increased 16% year-over-year to $2,714 billion at December 31, 2020, driven by a 17% increase in our Single-Family 

mortgage portfolio and a 14% increase in our Multifamily mortgage portfolio. 

l	 The growth in our Single-Family mortgage portfolio in 2021 and 2020 was primarily driven by higher new business 

activity. Additionally, continued house price appreciation contributed to new business acquisitions having a higher 

average loan size compared to older vintages that continued to run off.

l The growth in our Multifamily mortgage portfolio in 2021 and 2020 was primarily driven by ongoing loan purchase and 

securitization activity attributable to continued high demand for multifamily financing.

Introduction About Freddie Mac

FREDDIE MAC | 2021 Form 10-K 4
Credit Risk Transfer

Single-Family Mortgage Portfolio with Credit Enhancement as of 

December 31,

(UPB in billions)

$1,094 $1,152

$1,491

55%

50%

53%

UPB Percentage

2019 2020 2021

Multifamily Mortgage Portfolio with Credit Enhancement 

as of December 31,

(UPB in billions)

$307

$346

$389

90% 89%

94%

UPB Percentage

2019 2020 2021

In addition to transferring interest-rate and liquidity risk to third-party investors through our securitization activities, we engage 

in various credit enhancement arrangements to reduce our credit risk exposure. We transfer a portion of the credit risk, 

primarily on recently acquired loans, through our CRT programs. We also reduce our credit risk exposure through other credit 

enhancement arrangements, mainly primary mortgage insurance. See MD&A - Our Business Segments and MD&A - Risk 

Management - Credit Risk for additional information on our credit enhancements and CRT programs.

Business Segments

During 2021, our chief operating decision maker began making decisions about allocating resources and assessing segment 

performance based on two reportable segments, Single-Family and Multifamily. Prior to 2021, we managed our business based 

on three reportable segments, Single-Family Guarantee, Multifamily, and Capital Markets.

For additional information on our change in segment reporting presentation, see MD&A - Our Business Segments and 

Note 15.

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. The senior preferred stock and warrant 

were issued as an initial commitment fee in consideration for Treasury's commitment to provide funding to us under the 

Purchase Agreement. Our 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.

Our Purchase Agreement with Treasury significantly affects our business activities, including by limiting: our secondary market 

activities; our single-family and multifamily 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 

Introduction About Freddie Mac

FREDDIE MAC | 2021 Form 10-K 5
liquidation preference of the senior preferred stock, and exit conservatorship. In September 2021, certain limitations on our 

secondary market activities and single-family and multifamily loan acquisitions were suspended.

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. 

We have had a net worth sweep dividend requirement to Treasury on the senior preferred stock since the first quarter of 2013, 

which was implemented pursuant to the August 2012 amendment to the Purchase Agreement. Pursuant to 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 capital to meet the capital requirements and 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. 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.

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 graphs 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)

$28.0

$98.0

$140.2

Net worth

Senior preferred stock liquidation

preference

Remaining Treasury funding commitment

As of December 31, 2021

Draws and Dividend Payments

(In billions)

$71.6

$119.7

Cumulative draws from Treasury

Cumulative dividend payments to Treasury

As of December 31, 2021

n	 Our Net Worth Amount was $28.0 billion as of December 31, 2021, up from $16.4 billion on December 31, 2020. We did 

not have a dividend requirement to Treasury on the senior preferred stock for 4Q 2021.

n	 The liquidation preference of the senior preferred stock increased from $95.0 billion on September 30, 2021 to $98.0 billion

on December 31, 2021 based on the $2.9 billion increase in our Net Worth Amount during 3Q 2021, and will increase to 

$100.7 billion on March 31, 2022 based on the $2.7 billion increase in our Net Worth Amount during 4Q 2021.

n	At December 31, 2021, our assets exceeded our liabilities under GAAP; therefore, no draw is being requested from 

Treasury under the Purchase Agreement. 

Introduction About Freddie Mac

FREDDIE MAC | 2021 Form 10-K 6
OUR BUSINESS

Primary Business Strategies

Freddie Mac's overall strategic direction is established by management and affirmed by the Board of Directors through its 

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. Everything we do must be done 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 permits us to purchase first-lien single-family loans with LTV ratios at the time of our purchase of less than or equal 

to 80%. For the purchase of first-lien single-family loans that do not meet this criterion, 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.

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). 

Additionally, we purchase single-family refinanced loans we currently own or guarantee without obtaining additional credit 

enhancement in excess of that already in place for any such loan, even when the LTV ratio of the new loan is above 80%.

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 $647,200 for 2022, an increase from 

$548,250 for 2021, $510,400 for 2020, and $484,350 for 2019. Higher limits have been established in certain "high-cost" areas 

(for 2022, up to $970,800 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.

Our Strategic Priorities

Our mission is to provide liquidity, stability, and affordability to the housing market. We interpret this mission expansively to 

meet the country's broader housing needs in both good times and challenging times by:

n Enhancing liquidity within the mortgage and capital markets;

n Stabilizing the housing market throughout the economic cycle, including helping families facing hardship remain in their 

homes; 

n Working with an array of housing market participants to promote greater access to and supply of affordable and 

sustainable homes throughout the country; 

n Addressing longstanding issues of inequity in housing; 

n Working with lenders of all sizes to better serve their communities; and

n	 Continuing progress to integrate ESG strategies into our business and operations.

Introduction Our Business

FREDDIE MAC | 2021 Form 10-K 7
Delivering on our mission requires that we maintain safety and soundness, financial strength, and operational resilience. It 

requires us to grow our talent for today and tomorrow. It also requires a commitment to examine our company's business and 

risk environment in search of new and better ways to serve our mission. For these reasons, we have established the following 

three focus areas to support our mission:

Practice Risk Management Excellence

n Improve our operations and risk management to maintain our safety and soundness;

n Seek to timely remediate outstanding significant safety and soundness issues; and

n Enhance operational resiliency with respect to our people, processes, and recovery capabilities.

Grow Talent for Today and Tomorrow

n Develop our current and future leaders and team members;

n Uphold a culture where talented and committed individuals work together to achieve success; and 

n Build strength through DEI, integrating DEI through all dimensions of our business.

Deliver Results

n Generate strong financial results, build capital, and excel with respect to our FHFA and Corporate Scorecards;

n Deliver innovative solutions to advance the mission; and

n Increase efficiency to enhance productivity and bolster our financial results.

Human Capital Management 

Our people are integral to our company’s success. It is our goal to sustain an inclusive and equitable culture with a highly 

engaged diverse workforce focused on delivering on our mission. We are committed to growing our talent for today and 

tomorrow and seek to be an employer of choice that attracts top talent through our commitment to DEI, employee engagement, 

training, and other professional development opportunities. We also seek to implement competitive compensation programs 

and practices within the constraints of our conservatorship status. We evaluate the success of our human capital management 

by measuring and monitoring the performance, development, and retention of our employees.

Employees

At January 31, 2022, we had 7,284 full-time and 34 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 assist the CHC Committee of the Board of Directors and support them in their oversight of compensation and benefits, DEI, 

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 our Conservator and as our regulator. For more 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.

Attracting, Developing, and Retaining Talent

In a marketplace where the competition to attract, develop, and retain talent is ever increasing, we strive to be an employer of 

choice. In doing so, we offer our employees a comprehensive suite of financial, health, and other benefits to support their 

financial, physical, and mental well-being at every stage of their career. We use data, analytics, and insights to inform our 

compensation and talent decisions. We also provide our employees with professional development and training opportunities 

to enhance their workforce competencies and capabilities. 

Throughout the COVID-19 pandemic, we have offered flexible work arrangements and other benefits, such as expanded leave 

and expanded back-up childcare, to support our employees as they adjusted to all of the ways the COVID-19 pandemic 

reshaped their lives. In addition, we have continued to support the health and safety of our employees. We have actively 

monitored the effects of the pandemic and made decisions based on guidance from national, state, and local governments and 

public health authorities, including the CDC. The majority of our employees continued to work remotely as of December 31, 

2021. To prepare for their return to the office, we have developed a hybrid approach where the majority of our employees will 

spend some of their time working in the office and some working remotely. Our approach seeks to create a more flexible 

experience for our employees with a continued focus on fostering culture, community, and career development. 

Our overall voluntary turnover rate in 2021 increased slightly above our historical experience and has been tracking lower than 

financial services benchmarks. Certain areas of the company have experienced larger turnover rates, as market demand for 

certain skills has increased.

Introduction Our Business

FREDDIE MAC | 2021 Form 10-K 8
DEI

We are committed to embedding DEI in our business and culture. At Freddie Mac, we have long been committed to the belief 

that our people should reflect the rich diversity of the communities in which we live. We use various types of inclusive 

engagements to encourage our employees to intentionally cultivate diverse relationships. In doing so, we can continue to build 

an environment that sparks productive dialogue, addresses unconscious bias, ignites innovation, and challenges the status 

quo. In addition, we periodically survey our employees to better understand employee engagement and capture insights into 

their needs and perspectives so that we can consider our workforce strategies accordingly. We believe that the result is a more 

diverse and engaged community delivering on our mission for our customers.

Freddie Mac has a Board-approved DEI strategic plan that organizes our efforts into three areas: employees, suppliers, and 

financial transaction counterparties. FHFA's Office of Minority and Women Inclusion has adopted regulations with respect to 

the promotion of diversity and inclusion and has provided us with guidance on areas of improvement. The CHC Committee is 

focused on our efforts to enhance DEI by incorporating all three areas of diversity focus into a single comprehensive strategy 

with annual goals, enhanced oversight, and regular reporting.

We prioritize attracting and recruiting a pipeline of diverse candidates, with the goal of advancing a culture of inclusion where 

we want everyone at the company to feel valued and like they belong. We reinforce DEI through organizational decisions and 

business activities, which include:

n Working toward building a diverse pipeline of talent;

n Promoting a culture of inclusion and allyship;

n Offering targeted development and learning opportunities;

n Organizing community engagement and volunteer opportunities; and

n Matching eligible charitable contributions.

We have 10 business resource groups as well as division-specific teams that support employee engagement by providing 

learning and networking opportunities that foster an inclusive workplace. In 2021, as part of our focus on inclusion, we added 

Juneteenth as a company-paid holiday and continued offering educational opportunities to provide multiple perspectives on 

social justice and equity issues. We have also expanded diversity through other programs, such as our neurodiversity hiring 

program.

Our DEI efforts are reflected in the composition of our workforce, leadership, and Board of Directors. For example, we are a 

majority-minority company, which means that over 50% of our workforce identifies as racially diverse. Our Single-Family 

business as well as our Human Resources and Internal Audit functions are led by women. For information on the composition 

of our Board of Directors, see Directors, Corporate Governance, and Executive Officers – Directors – Director 

Criteria, Diversity, Qualifications, Experience, and Tenure.

Business Segments

We have two reportable segments: Single-Family and Multifamily. For more information on our segments, see MD&A - Our 

Business Segments and Note 15.

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 our product offerings, pricing, competitive position and 

strategic priorities, relationship with sellers and servicers, capital structure, cash needs and uses, privacy for borrowers and 

others, and cybersecurity. As a result, such laws and regulations have a significant effect on key drivers of our results of 

operations, including, for example, our capital and liquidity, guarantee fees, product offerings, risk management, and costs of 

compliance. Failure to comply with our legal and regulatory requirements could result in enforcement actions, investigations, 

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 activities. For 

example, recent changes to our capital requirements will affect 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 will increase the amount 

Introduction Our Business

FREDDIE MAC | 2021 Form 10-K 9
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. For example, FHFA may require us 

to undertake activities that reduce our profitability, expose us to additional credit, market, funding, operational, 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 for a number of reasons set forth in 

the GSE Act.

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 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, 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 disclosure about our debt securities on our website at www.freddiemac.com/debt. From this address, investors 

can access the offering circular and related supplements for debt securities offerings under Freddie Mac's global debt facility, 

including pricing supplements for individual issuances of debt securities. Similar information about our STACR® transactions 

and SCR debt notes 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 and SB 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. 

We provide information on our ESG efforts on our website freddiemac.com/about/esg.

Introduction Our Business

FREDDIE MAC | 2021 Form 10-K 10
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, our 

market share, the effect of legislative and regulatory developments and new accounting guidance, the credit quality of loans we 

own or guarantee, the costs and benefits of our CRT transactions, the effects of natural disasters, other catastrophic events, 

including the COVID-19 pandemic, and significant climate change effects 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	 Uncertainty regarding the duration and severity of the COVID-19 pandemic and the effects of the pandemic and actions 

taken in response thereto on the U.S. economy and housing market, which could, in turn, adversely affect our business in 

numerous ways, including, for example, by increasing our credit losses, impairing the value of our mortgage-related 

securities, decreasing our liquidity and capital levels, and increasing our credit risk and operational risk;

n	 The actions the U.S. government (including FHFA, Treasury, and Congress) may take, require us to take, or restrict us from 

taking, including actions to support the housing market, such as programs implemented in response to the COVID-19 

pandemic or to implement the recommendations in FHFA's Conservatorship Scorecards, recent requirements and 

guidance related to equitable housing, and other objectives for us;

n	 The effect of the restrictions on our business due to the conservatorship and the Purchase Agreement;

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 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 purchased to support the market during the COVID-19 pandemic;

n	 Changes in tax laws;

n	 Changes in privacy and cybersecurity laws and regulations;

n	 Changes in accounting policies, practices, or guidance;

n	 Changes in economic and market conditions generally, and as a result of the COVID-19 pandemic, including changes in 

employment rates, interest rates, spreads, and house prices;

n	 Changes in the U.S. residential mortgage market, including changes in the supply and type of loan products (e.g., refinance 

vs. purchase and fixed-rate vs. ARM);

n	 The success of our efforts to mitigate our losses on our Single-Family mortgage portfolio;

n	 The success of our strategy to transfer mortgage credit risk through STACR, ACIS®, K Certificate, SB Certificate, and other 

CRT transactions;

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 

cyberattacks or other security incidents;

n	 Our ability to effectively execute our business strategies, implement new initiatives, and improve efficiency;

n	 The adequacy of our risk management framework, including the adequacy of our capital framework for measuring risk;

n	 Our ability to manage mortgage credit risk, including the effect of changes in underwriting and servicing 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 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	 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 | 2021 Form 10-K 11
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 of our and Fannie Mae's respective UMBS;

n	 Changes in the practices of loan originators, servicers, investors, and other participants in the secondary mortgage market; 

n	 The discontinuance of, transition from, or replacement of LIBOR and the adverse consequences it could have on our 

business and operations;

n	 The occurrence of a major natural disaster, other catastrophic event, or significant climate change effects in areas in which 

our offices, significant portions of our total mortgage portfolio, or the offices of our counterparties 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 | 2021 Form 10-K 12
Management's Discussion and Analysis of 

Financial Condition and Results of Operations

MARKET CONDITIONS AND ECONOMIC INDICATORS

The following graphs and related discussions present certain market and macroeconomic indicators that can significantly affect 

our business and financial results. 

Interest Rates(1)

Quarterly Ending Rates

3.99%

4.55%

3.74%

2.67%

3.11%

2.32%

1.55%

0.07% 0.05%

1.67%

2.79%

1.91%

0.24% 0.21%

2.39% 2.72%

1.89% 0.93%

1.57%

30-year PMMS SOFR

3-month LIBOR 10-year LIBOR

4Q17 4Q18 4Q19 4Q20 4Q21

(1) 30-year PMMS interest rates are as of the last week in each quarter. SOFR 

interest rates are 30-day average rates.

n The 30-year Primary Mortgage Market Survey (PMMS) 

interest rate is indicative of what a consumer could 

expect to be offered on a first-lien prime conventional 

conforming home purchase mortgage with an LTV of 

80%. Increases (decreases) in the PMMS rate typically 

result in decreases (increases) in refinancing activity 

and total originations.

n Changes in 10-year benchmark interest rates can 

significantly affect the fair value of our financial 

instruments. We have elected hedge accounting for 

certain assets and liabilities in an effort to reduce 

GAAP earnings variability attributable to changes in 

benchmark interest rates.

n SOFR is a benchmark rate for secured overnight 

dollar-denominated financing, identified by certain 

banking regulators and market participants as a 

replacement for LIBOR. 

n Among other things, changes in SOFR and 3-month 

LIBOR could affect the interest earned on our shortterm investments and/or the interest expense on our 

debt funding.

Unemployment Rate and Monthly Net New Jobs

181,000 193,000 168,000

(785,000)

537,000

4.1% 3.9% 3.6%

6.7%

3.9%

Average monthly net new jobs (non-farm)

National unemployment rate (for the month of December)

2017 2018 2019 2020 2021

Source: U.S. Bureau of Labor Statistics.

n	 Changes in the national unemployment rate can affect 

several market factors, including the demand for 

single-family and multifamily housing and loan 

delinquency rates.

n The unemployment rate fell below 4% as of December 

2021, down nearly three percentage points since 

December 2020. Many workers have exited the labor 

force and the labor force participation rate is well 

below its pre-pandemic peak.

Management's Discussion and Analysis Market Conditions and Economic Indicators 

FREDDIE MAC | 2021 Form 10-K 13
Single-Family Housing and Mortgage Market Conditions

 U.S. Single-Family Home Sales and House Prices

6,123 5,957 6,023

6,462

6,882

5,510 5,340 5,340 5,640 6,120

613

617 683

822

762

6.7% 5.0% 4.1%

11.3%

16.8%

Sales of existing homes (units in thousands)

Sales of new homes (units in thousands)

Single-family house price growth rate

2017 2018 2019 2020 2021

Sources: National Association of Realtors, U.S. Census Bureau, and Freddie Mac 

House Price Index.

U.S. Single-Family Mortgage Originations

(UPB in billions)

$1,810 $1,630

$2,325

$4,100

$4,825

2017 2018 2019 2020 2021

Source: Inside Mortgage Finance.

n	 Despite low levels of inventory, home sales increased 

in 2021. In 2022, we expect home sales to remain 

relatively flat compared to 2021 as higher mortgage 

interest rates and house prices offset the strong 

demand for housing.

n	 Single-family house prices increased 16.8% in 2021, 

compared to an increase of 11.3% during 2020. 

Although supply constraints could continue to exert 

pressure on house prices, we expect house price 

growth to moderate in 2022.

n	 U.S. single-family loan origination volumes increased 

in 2021 compared to 2020 as a result of the low 

average mortgage interest rates, higher home sales, 

and increasing house prices. We expect total 

originations to decrease in 2022 primarily due to a 

decrease in refinance originations driven by higher 

mortgage interest rates.

Management's Discussion and Analysis Market Conditions and Economic Indicators 

FREDDIE MAC | 2021 Form 10-K 14
Multifamily Housing and Mortgage Market Conditions

Apartment Vacancy Rates and Change in Effective Rents

4.7% 4.8% 4.8%

5.3%

4.7%

3.9% 5.0% 3.6%

(2.4)%

12.5%

3.0%

Apartment vacancy rates (as of December 31)

Change in effective rents (for the year

ended December 31)

Long-term effective rent growth

2017 2018 2019 2020 2021

Source: Reis. 

Apartment Completions and Net Absorption

(Units in thousands)

263

304

232

224

146

197

271

305

152

202

Completions Net absorption

2017 2018 2019 2020 2021 Source: Reis.

n	 Vacancy rates returned to pre-pandemic levels during 

2021. The decrease in vacancy rates was driven by 

higher demand for multifamily housing as a result of 

improving economic conditions.

n	 Effective rent growth (i.e., the average rent paid by the 

renter over the term of the lease, adjusted for 

concessions by the property owner and costs borne 

by the renter) was positive at the national level and in 

all of the major geographic markets in 2021.

n	 Multifamily property prices grew 23.6% in 2021, as 

investors continued to believe there was a need for 

additional rental housing in the U.S. and the overall 

investment environment remained attractive given low 

interest rates.

n	 Net absorption rates increased during 2021 driven by 

improving economic conditions, pent-up demand, 

increasing house prices, and rising income levels. Net 

absorptions exceeded completions for full-year 2021. 

Management's Discussion and Analysis Market Conditions and Economic Indicators 

FREDDIE MAC | 2021 Form 10-K 15
Mortgage Debt Outstanding

Single-Family Mortgage Debt Outstanding as of December 31,

(UPB in billions) 

$10,596 $10,897 $11,187 $11,653 $12,271

17.3% 17.4% 17.8% 20.0% 22.8%

U.S. single-family mortgage debt outstanding

Freddie Mac share

2017 2018 2019 2020 2021

Source: Federal Reserve Financial Accounts of the United States of America. For 

2021, the amount is as of September 30, 2021 (latest available information).

Multifamily Mortgage Debt Outstanding as of December 31,

(UPB in billions)

$1,363 $1,488 $1,623 $1,755 $1,838

17.0% 17.6% 17.9%

19.1% 19.1%

U.S. multifamily mortgage debt outstanding

Freddie Mac share

2017 2018 2019 2020 2021 Source: Federal Reserve Financial Accounts of the United States of America. For 

2021, the amount is as of September 30, 2021 (latest available information).

n	 U.S. single-family mortgage debt outstanding is 

expected to increase year-over-year, driven by house 

price appreciation and first-time homebuyers. An 

increase in U.S. single-family mortgage debt 

outstanding typically results in the growth of our 

Single-Family mortgage portfolio. 

n	 While the multifamily mortgage market grew, our share 

of multifamily mortgage debt outstanding remained 

relatively flat in 2021 due to a reduced FHFA 

Multifamily loan purchase cap for 2021.

Management's Discussion and Analysis Market Conditions and Economic Indicators 

FREDDIE MAC | 2021 Form 10-K 16
Delinquency Rates

Single-Family Serious Delinquency Rates 

as of December 31,

2.91%

2.06% 1.81%

5.16%

3.40%

1.08% 0.69% 0.63%

2.64%

1.12%

Total mortgage market

Freddie Mac

2017 2018 2019 2020 2021

Source: National Delinquency Survey from the Mortgage Bankers Association. 

For 2021, the total mortgage market rate is as of September 30, 2021 (latest 

available information).

Multifamily Delinquency Rates as of December 31,

0.02% 0.01%

0.08%

0.16%

0.08%

1.05%

1.16%

0.91%

1.95%

1.41%

0.15% 0.15%

0.11%

0.27% 0.30%

0.03%

0.13%

0.08% 0.10% 0.00%

Freddie Mac

Multifamily CMBS market

FDIC insured institutions

ACLI investment bulletin

2017 2018 2019 2020 2021

Source: Freddie Mac, FDIC Quarterly Banking Profile, Intex Solutions, Inc., and 

Wells Fargo Securities (Multifamily CMBS market, excluding REOs), American 

Council of Life Insurers (ACLI). For 2021, the amounts for FDIC insured 

institutions and ACLI investment bulletin are as of September 30, 2021 (latest 

available information) and the amount for the Multifamily CMBS market is as of 

December 31, 2021.

n	 Our Single-Family serious delinquency rate is based 

on the number of loans in our Single-Family mortgage 

portfolio that are three monthly payments or more past 

due or in the process of foreclosure. We report singlefamily loans in forbearance as delinquent during the 

forbearance period to the extent that payments are 

past due based on the loans' original contractual 

terms, irrespective of the forbearance plan.

n	 Our Single-Family serious delinquency rate declined 

year-over-year, due primarily to an increase in the 

number of borrowers exiting forbearance and 

completing loan workout solutions that return their 

mortgages to current status. 56% of the seriously 

delinquent loans at December 31, 2021 were covered 

by credit enhancements that are designed to partially 

reduce our credit risk exposure from these loans.

n	 While our Single-Family serious delinquency rate has 

declined since the peak in 2020, we expect the rate to 

remain above pre-pandemic levels as a result of the 

COVID-19 pandemic and the forbearance programs 

we are offering in response. Our Single-Family serious 

delinquency rate as of February 29, 2020 was 0.60%.

n	 Our Multifamily delinquency rate is based on the UPB 

of loans in our Multifamily mortgage portfolio that are 

two monthly payments or more past due or in the 

process of foreclosure. We report multifamily loans in 

forbearance as current as long as the borrowers are in 

compliance with their forbearance agreement, 

including the agreed upon repayment plan. 

n	 Our Multifamily delinquency rate returned to prepandemic levels and remains low compared to many 

other market participants. Our credit enhancement 

coverage partially reduces our credit risk exposure 

from current and future delinquencies. For additional 

information on our delinquency and forbearance rates 

and credit enhancement coverage, see MD&A - Risk 

Management - Credit Risk - Multifamily Mortgage 

Credit Risk.

Management's Discussion and Analysis Market Conditions and Economic Indicators 

FREDDIE MAC | 2021 Form 10-K 17
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.

We have three primary sources of revenue:

n	 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 sheet. The difference between the interest income on these loans and the interest 

expense on the related debt represents the guarantee fees we receive as compensation for our guarantee of the principal 

and interest payments of the issued debt securities.

n	 Guarantee income - Primarily consists of guarantee income in Multifamily. We do not consolidate most of our Multifamily 

securitization trusts, and therefore, we do not recognize the loans held by the trust or the debt securities issued by the trust 

on our consolidated balance sheet. Rather, we separately account for our guarantee to the trust and recognize the revenue 

from our guarantee as guarantee income.

n	 Investment gains (losses), net - Primarily consist of gains on sale of mortgage loans, net of interest-rate risk management 

activities, from our purchase and securitization activities in Multifamily. Because we do not consolidate most of our 

Multifamily securitization trusts, we account for most of our Multifamily securitizations as sales of the underlying loans. Net 

investment gains may fluctuate 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.

We have two primary expense items: 

n	 Credit-related expenses - Primarily consist of benefit (provision) for credit losses, credit enhancement expense, benefit 

for credit enhancement recoveries, and REO operations expense. Benefit (provision) for credit losses primarily represents 

changes in expected credit losses on our single-family mortgage loans held-for-investment. Credit enhancement expense 

and benefit for credit enhancement recoveries include the costs we incur to transfer credit risk and the changes in 

expected recoveries, respectively, from certain contracts that are accounted for as freestanding credit enhancements. See 

MD&A - Our Business Segments - Single-Family - Products and Activities, MD&A - Our Business Segments - 

Multifamily - Products and Activities, and Note 6 for additional information on our accounting for credit enhancements. 

REO operations expense represents expenses related to foreclosed properties.

n	 Operating expenses - Primarily consist of administrative expenses, the legislated 10 basis point fee, and other expenses 

we incur to run our business.

Management's Discussion and Analysis Consolidated Results of Operations 

FREDDIE MAC | 2021 Form 10-K 18
The table below compares our consolidated results of operations for the past three years.

Table 1 - Summary of Consolidated Statements of Comprehensive Income (Loss)

Year Over Year Change

Year Ended December 31, 2021 vs. 2020 2020 vs. 2019

(Dollars in millions) 2021 2020 2019 $ % $ %

 Net interest income $17,580 $12,771 $11,848 $4,809 38 % $923 8 %

Guarantee income 1,032 1,442 1,089 (410) (28) 353 32 

Investment gains (losses), net 2,746 1,813 818 933 51 995 122 

 Other income (loss) 593 633 323 (40) (6) 310 96 

Net revenues 21,951 16,659 14,078 5,292 32 2,581 18 

Benefit (provision) for credit losses 1,041 (1,452) 746 2,493 172 (2,198) (295) 

Credit enhancement expense (1,518) (1,058) (749) (460) (43) (309) (41) 

Benefit for (decrease in) credit enhancement 

recoveries (542) 323 41 (865) (268) 282 688 

REO operations income (expense) (12) (149) (229) 137 92 80 35 

Credit-related income (expense) (1,031) (2,336) (191) 1,305 56 (2,145) (1,123) 

Administrative expense (2,651) (2,535) (2,564) (116) (5) 29 1 

Legislated 10 basis point fee expense (2,342) (1,836) (1,617) (506) (28) (219) (14) 

Other expense (728) (723) (657) (5) (1) (66) (10) 

Operating expense (5,721) (5,094) (4,838) (627) (12) (256) (5) 

Income (loss) before income tax (expense) 

benefit 15,199 9,229 9,049 5,970 65 180 2 

Income tax (expense) benefit (3,090) (1,903) (1,835) (1,187) (62) (68) (4) 

Net income (loss) 12,109 7,326 7,214 4,783 65 112 2 

Total other comprehensive income (loss), 

net of taxes and reclassification adjustments (489) 205 573 (694) (339) (368) (64) 

Comprehensive income (loss) $11,620 $7,531 $7,787 $4,089 54 % ($256) (3) %

See 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 consists of guarantee net interest income, investments net interest income, and income (expense) from 

hedge accounting. 

n We refer to the net interest income generated by our consolidated securitization trusts as guarantee net interest income. 

Guarantee net interest income primarily consists of the guarantee fees in Single-Family, as we consolidate most of our 

Single-Family securitization trusts, and consists of three components:

l	 Contractual net interest income, which is equal to the difference between the interest income on loans held by 

consolidated trusts and the interest expense on debt securities issued by consolidated trusts. This amount represents 

the ongoing contractual monthly guarantee fee we receive for managing the credit risk associated with mortgage loans 

held by consolidated trusts. 

l	 The legislated 10 basis point fee on single-family loans that is remitted to Treasury as required by law.

l	 Deferred fee income, which primarily consists of recognition of premiums and discounts on mortgage loans and debt 

securities of consolidated trusts and the fees that we receive or pay when we acquire single-family loans, which 

represent a portion of the guarantee fee compensation we receive for managing the credit risk associated with 

mortgage loans held by consolidated trusts. 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. Increases in actual prepayments 

result in a faster rate of deferred fee income recognition, while decreases in actual prepayments result in a slower rate 

of deferred fee income recognition. In addition, there is a difference in the timing of deferred fee income recognition 

Management's Discussion and Analysis Consolidated Results of Operations 

FREDDIE MAC | 2021 Form 10-K 19
between debt securities of consolidated trusts and the underlying loans due to the payment delay associated with the 

pass-through of principal payments on the underlying loans to the security holders.

n We refer to the net interest income generated by our investments portfolio as investments net interest income. Investments 

net interest income 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.

n Income (expense) from hedge accounting primarily consists of amortization of previously deferred hedge accounting basis 

adjustments and the earnings mismatch on qualifying fair value hedge relationships, which is equal to the difference 

between fair value changes for the hedging instrument, including the accrual of periodic cash settlements, and fair value 

changes for the hedged item attributable to the risk being hedged. See Note 9 for additional information on hedge 

accounting. 

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, 2021 vs. 2020 2020 vs. 2019

(Dollars in millions) 2021 2020 2019 $ % $ %

Guarantee net interest income:

Contractual net interest income $8,736 $5,232 $4,034 $3,504 67% $1,198 30%

Net interest income related to the legislated 10 

basis point fee 2,397 1,884 1,590 513 27 294 18

Deferred fee income 4,874 3,787 2,436 1,087 29 1,351 55

Total guarantee net interest income 16,007 10,903 8,060 5,104 47 2,843 35

Investments net interest income 3,068 4,100 4,040 (1,032) (25) 60 1

Income (expense) from hedge accounting (1,495) (2,232) (252) 737 33 (1,980) (786)

Net interest income $17,580 $12,771 $11,848 $4,809 38% $923 8%

Key Drivers:

n Guarantee net interest income

l	 2021 vs. 2020 - Increased primarily due to continued mortgage portfolio growth, higher average portfolio guarantee 

fee rates, and higher deferred fee income recognition in Single-Family.

l	 2020 vs. 2019 - Increased primarily due to continued mortgage portfolio growth coupled with higher contractual 

guarantee fee rates in Single-Family.

n Investments net interest income

l	 2021 vs. 2020 - Decreased primarily due to a decline in the size of the mortgage-related investments portfolio, partially 

offset by lower funding costs.

l	 2020 vs. 2019 - Increased primarily due to lower funding costs, partially offset by a change in our investment mix as 

the lower-yielding other investments portfolio represented a larger percentage of our total investments portfolio. 

n Income (expense) from hedge accounting

l	 2021 vs. 2020 - Expense decreased primarily due to lower amortization of hedge accounting-related basis 

adjustments driven by a decline in the unamortized balance.

l	 2020 vs. 2019 - Expense increased primarily due to higher amortization of hedge accounting-related basis 

adjustments driven by higher prepayments, partially offset by higher income related to accruals of periodic cash 

settlements on derivatives in hedging relationships.

Management's Discussion and Analysis Consolidated Results of Operations 

FREDDIE MAC | 2021 Form 10-K 20
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,

2021 2020 2019

(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 $62,042 $8 0.01 % $24,428 $30 0.12 % $8,925 $187 2.10 %

Securities purchased under 

agreements to resell 75,425 48 0.06 94,350 354 0.38 56,465 1,284 2.27 

Investment securities 56,211 2,261 4.02 71,842 2,581 3.59 70,104 2,737 3.90 

Mortgage loans(1) 2,622,952 59,130 2.25 2,149,787 59,290 2.76 1,969,775 68,583 3.48 

Other assets 6,049 80 1.32 4,752 85 1.79 2,933 104 3.55 

Total interest-earning assets 2,822,679 61,527 2.18 2,345,159 62,340 2.66 2,108,202 72,895 3.46 

Interest-bearing liabilities:

Debt securities of consolidated 

trusts held by third parties 2,538,757 (42,209) (1.66) 2,020,908 (46,281) (2.29) 1,822,411 (53,980) (2.96) 

Debt of Freddie Mac:

Short-term debt 10,157 — — 75,668 (606) (0.80) 85,492 (1,910) (2.23) 

Long-term debt 227,415 (1,738) (0.76) 218,447 (2,682) (1.23) 192,100 (5,157) (2.68) 

Total debt of Freddie Mac 237,572 (1,738) (0.73) 294,115 (3,288) (1.12) 277,592 (7,067) (2.55) 

Total interest-bearing liabilities 2,776,329 (43,947) (1.58) 2,315,023 (49,569) (2.14) 2,100,003 (61,047) (2.91) 

Impact of net non-interest-bearing 

funding 46,350 — 0.02 30,136 — 0.03 8,199 — 0.01 

Total funding of interestearning assets 2,822,679 (43,947) (1.56) 2,345,159 (49,569) (2.11) 2,108,202 (61,047) (2.90) 

Net interest income/yield $17,580 0.62 % $12,771 0.55 % $11,848 0.56 %

(1) Loan fees included in interest income were $3.1 billion, $4.6 billion, and $3.3 billion during 2021, 2020, and 2019, respectively.

Management's Discussion and Analysis Consolidated Results of Operations 

FREDDIE MAC | 2021 Form 10-K 21
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

2021 vs. 2020 2020 vs. 2019

(Dollars in millions) Rate(1) Volume(1)

Total 

Change Rate(1) Volume(1)

Total 

Change

Interest-earning assets:

Cash and cash equivalents ($43) $21 ($22) ($249) $92 ($157) 

Securities purchased under agreements to resell (252) (54) (306) (1,450) 520 (930) 

Investment securities 826 (1,146) (320) 36 (192) (156) 

Mortgage loans (11,660) 11,500 (160) (15,145) 5,852 (9,293) 

Other assets (16) 11 (5) (66) 47 (19) 

Total interest-earning assets (11,145) 10,332 (813) (16,874) 6,319 (10,555) 

Interest-bearing liabilities:

Debt securities of consolidated trusts held by third parties 15,245 (11,173) 4,072 13,447 (5,748) 7,699 

Debt of Freddie Mac:

Short-term debt 324 282 606 1,105 199 1,304 

Long-term debt 1,050 (106) 944 3,105 (630) 2,475 

Total debt of Freddie Mac 1,374 176 1,550 4,210 (431) 3,779 

Total interest-bearing liabilities 16,619 (10,997) 5,622 17,657 (6,179) 11,478 

Net interest income $5,474 ($665) $4,809 $783 $140 $923 

(1) The total change variances are allocated between rate and volume based on the relative size of each variance.

Guarantee Income 

Guarantee income relates primarily to our Multifamily securitizations, as we do not consolidate most of our Multifamily 

securitization trusts. For additional details on our Multifamily securitizations, see MD&A - Our Business Segments - 

Multifamily - Products and Activities - Loan Purchase, Securitization, and Guarantee Activities.

Guarantee income consists of the following:

n	 Contractual guarantee fees - Consists of the fees earned from guarantees issued to third parties and securitization trusts 

that we do not consolidate.

n	 Guarantee obligation amortization - Represents the amortization of the initial fair value of the guarantee, which is 

typically equal to the compensation we received for issuing the guarantee, over the term of the guarantee as we are 

released from risk.

n	 Guarantee asset fair value changes - Represents the change in fair value of our right to receive contractual guarantee 

fees. Because our Multifamily loans contain prepayment protection, declining interest rates generally result in a higher 

guarantee asset fair value, with the opposite effect occurring when interest rates increase.

Management's Discussion and Analysis Consolidated Results of Operations 

FREDDIE MAC | 2021 Form 10-K 22
The table below presents the components of guarantee income.

Table 5 - Components of Guarantee Income

Year Over Year Change

Year Ended December 31, 2021 vs. 2020 2020 vs. 2019

(Dollars in millions) 2021 2020 2019 $ % $ %

Contractual guarantee fees $1,217 $1,023 $910 $194 19 % $113 12 %

Guarantee obligation amortization 1,148 977 813 171 18 164 20 

Guarantee asset fair value changes (1,333) (558) (634) (775) (139) 76 12 

Guarantee income $1,032 $1,442 $1,089 ($410) (28) % $353 32 %

Key Drivers:

n	 2021 vs. 2020 - Decreased as continued growth in our Multifamily guarantee portfolio was offset by the impacts of higher 

interest rates on the fair values of our guarantee assets. 

n	 2020 vs. 2019 - Increased primarily driven by continued growth in our Multifamily guarantee portfolio, coupled with lower 

fair value losses on our guarantee assets due to lower interest rates.

Investment Gains (Losses), Net

Net investment gains primarily consist of the gains on sale of mortgage loans from our multifamily loan purchase and 

securitization activities. Net investment gains also include revenues from sales of single-family delinquent and reperforming 

loans and gains and losses on investments in mortgage-related and other investments securities. These amounts are shown net 

of gains and losses from the related debt funding and interest-rate risk management activities, as applicable. Net investment 

gains can vary significantly from period-to-period based on a number of factors, such as:

n	 Pricing of new multifamily mortgage loans; 

n	 The nature and volume of our investment, funding, and interest-rate risk management activities, including the volume of 

multifamily loan purchase commitments and mortgage loans for which we have elected the fair value option; the volume of 

held-for-sale multifamily loans measured at lower-of-cost-or-fair value; the volume of held-for-sale single-family mortgage 

loans; the size of our investments portfolios and volume of sales of available-for-sale securities; the volume and type of 

debt selected for repurchase based on our investment and funding strategies, including our efforts to support the liquidity 

and price performance of our mortgage-related securities; and changes in the composition of our derivative portfolio; and

n	 Changes in market conditions, such as interest rates, market spreads, and implied volatility.

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. In addition, we routinely enter into commitments to purchase and sell 

mortgage loans and mortgage-related securities. The majority of these commitments are accounted for as derivative 

instruments. For additional information on derivative instruments, see Note 9. 

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 long-term 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 more 

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.

Management's Discussion and Analysis Consolidated Results of Operations 

FREDDIE MAC | 2021 Form 10-K 23
The table below presents the components of investment gains (losses), net.

Table 6 - Investment Gains (Losses), Net

Year Over Year Change

Year Ended December 31, 2021 vs. 2020 2020 vs. 2019

(Dollars in millions) 2021 2020 2019 $ % $ %

Single-Family $361 ($112) $300 $473 422% ($412) (137%) 

Multifamily 2,385 1,925 518 460 24 1,407 272 

Investment gains (losses), net $2,746 $1,813 $818 $933 51% $995 122% 

Key Drivers:

n	 2021 vs. 2020 - Increased primarily due to higher gains in Multifamily from higher pricing margins for new loan purchases 

and greater spread tightening, partially offset by a smaller volume of new loan purchases as a result of a reduced 

Multifamily loan purchase cap in 2021.

n	 2020 vs. 2019 - Increased primarily due to higher gains in Multifamily from higher pricing margins and greater volume of 

new loan purchases.

Credit-Related Expense

Benefit (Provision) for Credit Losses 

Our benefit (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 actual and forecasted house prices and interest rates, 

borrower prepayments and delinquency rates, events such as 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 benefit (provision) for credit losses.

Table 7 - Benefit (Provision) for Credit Losses

Year Over Year Change

Year Ended December 31, 2021 vs. 2020 2020 vs. 2019

(Dollars in millions) 2021 2020 2019 $ % $ %

Single-Family $919 ($1,320) $749 $2,239 170 % ($2,069) (276) %

Multifamily 122 (132) (3) 254 192 (129) (4,300) 

Benefit (provision) for credit losses $1,041 ($1,452) $746 $2,493 172 % ($2,198) (295) %

Single-Family

n	 2021 vs. 2020 - A benefit for credit losses in 2021 compared to a provision for credit losses in 2020 driven by the following 

factors:

l	 A reserve release due to reduced expected credit losses related to COVID-19 during 2021 as economic conditions 

improved. Our provision for credit losses increased during 2020 due to the increase in expected credit losses related 

to the economic effects of the pandemic.

l	 This was partially offset by an increase in expected losses on new single-family loans due to growth in our SingleFamily mortgage portfolio. We recognize expected credit losses at the time of loan acquisition.

n	 2020 vs. 2019 - A provision for credit losses in 2020 compared to a benefit for credit losses in 2019 primarily driven by the 

following factors:

l	 A provision for credit losses due to: 

– Increased expected credit losses related to COVID-19 - Our provision for credit losses increased due to the 

increase in expected credit losses related to the economic effects of the COVID-19 pandemic.

– Portfolio growth - The expected losses on new single-family loans increased due to growth in our Single-Family 

mortgage portfolio. We recognize expected credit losses at the time of loan acquisition. 

l	 This was partially offset by a decrease in expected losses driven by growth in realized and forecasted house prices 

and declines in forecasted interest rates.

Management's Discussion and Analysis Consolidated Results of Operations 

FREDDIE MAC | 2021 Form 10-K 24
Multifamily

n 2021 vs. 2020 - A benefit for credit losses in 2021 compared to a provision for credit losses in 2020 driven by improved 

actual and forecasted economic factors.

n 2020 vs. 2019 - An increase in provision due to higher expected credit losses as a result of the COVID-19 pandemic.

Credit Enhancement Expense 

Credit enhancement expense primarily relates to certain single-family CRT transactions that are accounted for as freestanding 

credit enhancements and includes the premiums paid to transfer credit risk to third parties and transaction and other costs 

incurred to enter into those transactions. 

Key Drivers:

n 2021 vs. 2020 and 2020 vs. 2019 - Increased $460 million and $309 million, respectively, primarily due to higher 

outstanding cumulative volumes of CRT transactions.

See MD&A - Our Business Segments - Single-Family - Products and Activities and MD&A - Our Business 

Segments - Multifamily - Products and Activities for additional information on our credit enhancements.

Benefit for (Decrease in) Credit Enhancement Recoveries

Benefit for (decrease in) credit enhancement recoveries primarily relates to certain single-family CRT transactions that are 

accounted for as freestanding credit enhancements and 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.

Key Drivers:

n 2021 vs. 2020 - Decreased $865 million as a result of the corresponding decrease in expected credit losses.

n 2020 vs. 2019 - Increased $282 million as a result of the corresponding increase in expected credit losses due to the 

COVID-19 pandemic.

Management's Discussion and Analysis Consolidated Results of Operations 

FREDDIE MAC | 2021 Form 10-K 25
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) 2021 2020 $ % 

Assets:

Cash and cash equivalents $10,150 $23,889 ($13,739) (58) %

Securities purchased under agreements to resell 71,203 105,003 (33,800) (32) 

Subtotal 81,353 128,892 (47,539) (37) 

Investment securities, at fair value 53,015 59,825 (6,810) (11) 

Mortgage loans, net 2,848,109 2,383,888 464,221 19 

Accrued interest receivable, net 7,474 7,754 (280) (4) 

Deferred tax assets, net 6,214 6,557 (343) (5) 

Other assets 29,421 40,499 (11,078) (27) 

Total assets $3,025,586 $2,627,415 $398,171 15 %

Liabilities and Equity:

Liabilities:

Accrued interest payable $6,268 $6,210 $58 1 %

Debt 2,980,185 2,592,546 387,639 15 

Other liabilities 11,100 12,246 (1,146) (9) 

Total liabilities 2,997,553 2,611,002 386,551 15 

Total equity 28,033 16,413 11,620 71 

Total liabilities and equity $3,025,586 $2,627,415 $398,171 15 %

Key Drivers:

As of December 31, 2021 compared to December 31, 2020:

n	 Cash and cash equivalents and securities purchased under agreements to resell decreased on a combined basis 

primarily due to a decrease in trust cash driven by lower loan prepayments and a decline in our operating cash due to a 

lower cash window purchase forecast and continued funding of maturities, calls, and buybacks of debt of Freddie Mac 

without issuing new debt.

n	 Mortgage loans, net and debt increased primarily due to the increase in the size of the Single-Family mortgage portfolio.

n	 Other assets decreased primarily due to lower servicer receivables driven by a decrease in loan prepayments.

Management's Discussion and Analysis Consolidated Balance Sheets Analysis

FREDDIE MAC | 2021 Form 10-K 26
OUR PORTFOLIOS

In connection with the change in our reportable segments, we updated the definitions of our portfolio balances and aligned the 

definitions across our two reportable segments. Prior periods have been revised to conform to the current period presentation.

Mortgage Portfolio

Our mortgage portfolio includes assets held by both business segments and consists of:

n Securitized mortgage loans - Loans held by securitization trusts that issue securities that we guarantee.

n Unsecuritized mortgage loans

l Securitization pipeline and other loans - Single-family and multifamily loans that we have purchased for cash and 

aggregate on our balance sheet prior to securitization and other multifamily loans we intend to hold for the foreseeable 

future.

l Seasoned loans - Delinquent and modified single-family loans that we have purchased from securitization trusts. 

Certain of these loans have re-performed, either on their own or through modification or other loss mitigation activity. 

n Other - Primarily consists of other mortgage-related guarantees.

The table below presents the UPB of our mortgage portfolio by segment.

Table 9 - Mortgage Portfolio

December 31, 2021 December 31, 2020

(In millions) Single-Family Multifamily Total Single-Family Multifamily Total

Securitized mortgage loans:

Held by consolidated trusts $2,706,514 $18,757 $2,725,271 $2,204,936 $12,305 $2,217,241

Held by nonconsolidated trusts 33,340 362,627 395,967 34,932 331,860 366,792

Total securitized mortgage loans 2,739,854 381,384 3,121,238 2,239,868 344,165 2,584,033 

Unsecuritized mortgage loans:

Securitization pipeline and other loans 21,189 22,771 43,960 51,040 33,407 84,447 

Seasoned loans 20,594 — 20,594 26,303 — 26,303 

Total unsecuritized mortgage loans 41,783 22,771 64,554 77,343 33,407 110,750 

Other 10,587 10,508 21,095 9,215 10,775 19,990 

Total mortgage portfolio $2,792,224 $414,663 $3,206,887 $2,326,426 $388,347 $2,714,773 

Guarantee Portfolio

Our guarantee portfolio primarily consists of mortgage-related securities guaranteed by Freddie Mac in exchange for guarantee 

fees. This amount differs from the securitized mortgage loans amount included in the mortgage portfolio because of two 

primary factors: (1) it includes only the UPB of securities guaranteed by Freddie Mac and excludes the UPB of any 

unguaranteed securities issued by securitization trusts and (2) it reflects timing differences between the receipt of mortgage 

payments and the pass-through of those payments to security holders. The other category primarily consists of other 

mortgage-related guarantees.

Management's Discussion and Analysis Our Portfolios

FREDDIE MAC | 2021 Form 10-K 27
The table below presents the guarantee portfolio by segment.

Table 10 - Guarantee Portfolio

December 31, 2021 December 31, 2020

(In millions) Single-Family Multifamily Total Single-Family Multifamily Total

Guaranteed mortgage-related securities:

Issued by consolidated trusts $2,744,899 $18,883 $2,763,782 $2,273,736 $12,305 $2,286,041 

Issued by nonconsolidated trusts 27,538 318,756 346,294 29,300 289,056 318,356 

Total guaranteed mortgage-related securities 2,772,437 337,639 3,110,076 2,303,036 301,361 2,604,397 

Other 10,587 10,508 21,095 9,215 10,775 19,990 

Total guarantee portfolio $2,783,024 $348,147 $3,131,171 $2,312,251 $312,136 $2,624,387 

Our guarantee portfolio excludes guarantees of Fannie Mae securities and other similar transactions in which we do not directly 

guarantee mortgage credit risk in exchange for guarantee fees. See Note 5 for additional information on our guarantee 

activities.

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 $250 billion, 

which will be reduced to $225 billion on December 31, 2022. 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 Conservatorship 

and Related Matters. 

The table below presents the details of our mortgage-related investments portfolio.

Table 11 - Mortgage-Related Investments Portfolio

December 31, 2021 December 31, 2020

(In millions) Single-Family Multifamily Total Single-Family Multifamily Total

Unsecuritized mortgage loans $41,783 $22,771 $64,554 $77,343 $33,407 $110,750

Mortgage-related securities 43,357 3,100 46,457 67,254 4,180 71,434 

Mortgage-related investments portfolio $85,140 $25,871 $111,011 $144,597 $37,587 $182,184 

10% of notional amount of interest-only 

securities $12,517 $6,586

Mortgage-related investments portfolio for 

purposes of Purchase Agreement cap 123,528 188,770

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. See Liquidity and Capital Resources for additional information on our 

other investments portfolio.

Management's Discussion and Analysis Our Portfolios

FREDDIE MAC | 2021 Form 10-K 28
OUR BUSINESS SEGMENTS

As shown in the table below, we have two reportable segments, which are based on the way our chief operating decision 

maker manages our business.

During 2021, our chief operating decision maker began making decisions about allocating resources and assessing segment 

performance based on two reportable segments, Single-Family and Multifamily. In prior periods, we managed our business 

based on three reportable segments, Single-Family Guarantee, Multifamily, and Capital Markets. As our mortgage-related 

investments portfolio has declined over time, our capital markets activities have become increasingly focused on supporting 

our Single-Family and Multifamily businesses. As a result, we determined that, effective in 2021, our Capital Markets segment 

should no longer be considered a separate reportable segment, and our chief operating decision maker no longer reviews 

separate financial results or discrete financial information for our capital markets activities. Substantially all of the revenues and 

expenses that were previously directly attributable to our Capital Markets segment are now included in our Single-Family 

segment, while certain administrative expenses and other centrally-incurred costs previously allocated to the Capital Markets 

segment are now allocated between the Single-Family and Multifamily segments using various methodologies depending on 

the nature of the expense.

In connection with this change, we also changed the measure of segment profit and loss for each segment to be based on net 

income and comprehensive income calculated using the same accounting policies we use to prepare our general purpose 

financial statements in conformity with generally accepted accounting principles. The financial results of each reportable 

segment include directly attributable revenue and expenses. We allocate interest expense and other funding and hedgingrelated costs and returns on certain investments to each reportable segment using a funds transfer pricing process. We fully 

allocate to each reportable segment the 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. We have discontinued the reclassifications of certain activities between various line items that were 

included in our previous measure of segment profit and loss. Prior period information has been revised to conform to the 

current period presentation. See Note 15 for additional information on the change in our segment reporting presentation.

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.

Management's Discussion and Analysis Our Business Segments

FREDDIE MAC | 2021 Form 10-K 29
Segment Net Income (Loss) and Comprehensive Income (Loss)

The graphs below show our net income (loss) and comprehensive income (loss) by segment.

Segment Net Income (Loss)

(In millions)

$7,214 $7,326

$12,109

$5,387

$4,212

$8,820

$1,827

$3,114

$3,289

Single-Family Multifamily

2019 2020 2021

Segment Comprehensive Income (Loss)

(In millions) 

$7,787 $7,531

$11,620

$5,859

$4,316

$8,441

$1,928

$3,215

$3,179

Single-Family Multifamily

2019 2020 2021

 

Management's Discussion and Analysis Our Business Segments

FREDDIE MAC | 2021 Form 10-K 30
Single-Family

Business Overview 

Our Single-Family segment provides liquidity and support to the single-family 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 more 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, and the loan purchase and securitization activity of other financial 

institutions.

Our primary business model is to acquire loans that lenders originate and then pool those loans into guaranteed mortgagerelated 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 the trust and the 

debt securities issued by the trust 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. The returns we generate from these 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.

Loan Purchase, Securitization, and Guarantee Activities

Cash Window Transactions

One of the primary ways we acquire mortgage loans and provide liquidity to our Single-Family lender customers is by 

purchasing loans for aggregation in our securitization pipeline through our cash window. 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.

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We typically economically hedge the market risk exposure of 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. We sell the resulting securities to third-party investors, 

typically through cash auctions, and may also retain certain of the 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 this cash window with nondiscriminatory pricing; and comply with directives, regulations, restrictions, or other requirements prescribed by FHFA related to 

equitable secondary market access by community lenders. In September 2021, the $1.5 billion Purchase Agreement limit on 

cash window volumes that was to begin on January 1, 2022 was suspended. We will continue to manage cash window 

activities in accordance with our risk limits and guidance from FHFA. For additional information about the Purchase Agreement, 

see MD&A - Conservatorship and Related Matters. 

The diagram below shows the process for acquiring and securitizing loans in our cash window transactions.

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Guarantor Swap Transactions

In addition to cash window transactions, another primary way we acquire 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:

Advances to Lenders

We also provide liquidity to certain of our small and medium-sized 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. 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

The securities we issue in cash window securitizations and guarantor swap transactions are Level 1 Securitization Products, 

which are pass-through securities that represent undivided beneficial interests in trusts that hold pools of 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 fixedrate 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-TBAeligible 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). 

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All Level 1 Securitization Products 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. 

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 commensurate with the 

aggregate 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 10 basis point 

fee 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 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 

January 2022, FHFA announced targeted increases to Freddie Mac's and Fannie Mae’s credit fees for certain high balance 

loans and second home loans, effective for deliveries and acquisitions beginning April 1, 2022.

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. 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 by and debt issued 

by those trusts on our consolidated balance sheets. As a result, we recognize guarantee fees for these products as the 

difference between the interest income on the loans held by the trusts and the interest expense on the debt issued by the 

trusts. 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 specified loans, including certain delinquent loans, from the trust 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. We implemented the 24-month policy on 

January 1, 2021. Prior to that time, in accordance with FHFA instruction, we generally purchased loans from trusts if they were 

delinquent for 120 days, subject to certain exceptions.

Resecuritization Products

Resecuritization products represent beneficial interests in pools of Level 1 Securitization Products and certain other types of 

mortgage assets. We 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 administration activities for our 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 

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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 do not currently charge an incremental guarantee fee to commingle Fannie Mae 

collateral in resecuritization transactions, although we may do so in the future. However, we are required to hold incremental 

capital for our guarantees of Fannie Mae securities under the ERCF.

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 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 

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). 

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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 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 

securitization structures 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. We also periodically offer other securitization products backed by other mortgage-related assets, such as 

excess servicing fees and buy-up cash flows.

Other Mortgage-Related Guarantees

We also offer 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, obligate 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.

CRT Activities

To reduce our credit risk exposure, we engage in various types of credit enhancements, including CRT transactions and other 

credit enhancements. We define CRT transactions as those arrangements where we actively transfer the credit risk exposure 

on mortgages that we own or guarantee. We define other credit enhancements as those arrangements, such as traditional 

primary mortgage insurance, where we do not actively take part in the transfer of the credit risk exposure. 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.

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). As CRT has become part of our normal business activities, we have established the following 

programs to regularly transfer portions of credit risk to diversified investors:

STACR and ACIS Offerings

Our two primary CRT programs are STACR and ACIS.

n	STACR - Our primary Single-Family securities-based credit risk sharing vehicle. 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 

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.

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n	ACIS - Our primary insurance-based credit risk sharing vehicle. ACIS transactions are insurance policies we enter into with 

global insurance and reinsurance companies to cover a residual portion of credit risk on the STACR or standalone 

reference pools. We pay monthly premiums to the insurers or reinsurers in exchange for claim coverage on their portion of 

the 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 have established programmatic offerings of STACR and ACIS transactions to regularly transfer credit risk on a targeted 

population of recently acquired mortgage loans (on-the-run transactions). The targeted loan population for on-the-run 

transactions is recently acquired fixed-rate mortgage loans with maturity terms greater than 20 years and LTV ratios between 

60% and 97%, excluding loans acquired under our relief refinance programs, government guaranteed loans, and loans that do 

not meet certain eligibility criteria. Our typical on-the-run transactions are issued on a monthly basis and provide back-end 

coverage for loans that have been recently acquired and/or securitized into Level 1 Securitization Products. In a typical on-therun 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. We also retain all of the senior credit risk position. Currently, on-the-run STACR transactions typically have a 

20-year maturity and on-the-run ACIS transactions typically have a 12.5-year maturity. The diagram below illustrates a typical 

on-the-run STACR and ACIS structure. 

In addition to our regularly issued on-the-run transactions, we also periodically execute “off-the-run” STACR and ACIS 

transactions that provide back-end coverage on certain loans that are not in the on-the-run transaction targeted loan 

population. For example, we offer STACR and ACIS transactions that provide coverage on certain relief refinance loans, STACR 

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and ACIS transactions that provide coverage on unissued portions of the reference pools related to previous STACR and ACIS 

transactions, and ACIS transactions that provide coverage on loans with 15-year maturities not related to any STACR offering. 

Prior to 2018, the majority of our STACR transactions were structured as unsecured debt issued directly by us (STACR debt 

notes) rather than as debt issued by a trust. These transactions operate similarly to STACR Trust notes, except that we make 

payments of principal and interest on the issued STACR debt notes. Similar to STACR Trust notes, in a STACR debt 

transaction, we are not required to repay principal to the extent that the notional credit risk position is reduced as a result of a 

specified credit event on a loan in the reference pool. For certain STACR debt notes issued in prior years (generally STACR 

debt notes issued prior to 2015), losses are allocated to the notional amounts of the credit risk positions based on calculated 

losses using a predefined formula when the loans experience a credit event, which predominantly occurs when a loan becomes 

180 days delinquent. As a result, in these transactions, we receive reimbursement of losses based on these calculated loss 

amounts rather than based on actual losses. While we may issue STACR debt notes in the future, we expect to predominantly 

issue STACR Trust notes. See Note 8 for additional information on these debt issuances.

We monitor the costs and benefits provided by the CRT coverage we have obtained on a regular basis. 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 subordinated securitization structures backed by seasoned loans, 

additional types of insurance 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 - SingleFamily Mortgage Credit Risk - Transferring Credit Risk to Third-Party Investors. 

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.

We offer a variety of borrower assistance programs, including refinance programs for certain eligible loans and loan workout 

activities for struggling borrowers. Our loan workouts include both home retention options and foreclosure alternatives. 

Relief Refinance Program 

Our relief refinance initiative allows eligible homeowners whose loans we already own or guarantee 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. 

The relief refinance initiative provides liquidity for borrowers who are current on their mortgages but are unable to refinance 

because their LTV ratios exceed our standard refinance limits. The Enhanced Relief RefinanceSM program has been suspended 

until further notice for mortgages with applications dated on or after July 1, 2021 and all mortgages with settlement dates after 

August 31, 2021.

Loan Workout Activities

Home Retention Options 

When refinancing is not practicable, 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. 

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 

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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, adding outstanding 

indebtedness, such as delinquent interest, to the UPB of the loan, or a combination of both, including principal 

forbearance. 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, 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 

targets a 20% payment reduction through interest rate reduction, term extension, and principal forbearance. Under the 

Freddie Mac Flex Modification program, borrowers must complete a 90-day trial period plan prior to permanent 

modification.

Pursuant to FHFA guidance and the CARES Act, we have offered mortgage payment relief options to borrowers affected by the 

COVID-19 pandemic. Among other things, we are offering forbearance of up to 18 months to single-family borrowers 

experiencing a financial hardship and a payment deferral plan that allows a borrower to defer up to 18 months of payments for 

eligible homeowners who have the financial capacity to resume making their monthly payments, but who are unable to afford 

the additional monthly contributions required by a repayment plan. The types of loss mitigation options available to borrowers 

impacted by the COVID-19 pandemic may be revised by further FHFA guidance or federal government regulation.

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 to 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 - Our Business Segments 

- Single-Family - Business Results and MD&A - Risk Management - Credit Risk - Single-Family Mortgage Credit 

Risk.

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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 appropriate risk and capital management decisions to effectively execute our 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 more 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 certain investment opportunities for a variety of reasons, including the limit on the size of our mortgagerelated 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 use a funds transfer pricing process to 

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.

Customers 

Our Single-Family customers are investors in our mortgage-related securities, CRT offerings, and other debt, including banks 

and other depository institutions, insurance companies, money managers, central banks, pension funds, state and local 

governments, REITs, and brokers and dealers. We also maintain relationships with dealers in our guaranteed mortgage-related 

securities and other debt securities. Our unsecured other debt securities and structured mortgage-related securities are initially 

purchased by dealers and redistributed to their customers. Our Single-Family customers also include financial 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 nondepository financial 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 2021 Single-Family purchase volume by our largest sellers and our Single-Family loan servicing by our 

largest servicers as of December 31, 2021. None of our Single-Family sellers or servicers had a 10% or greater share during 

2021.

Management's Discussion and Analysis Our Business Segments | Single-Family

FREDDIE MAC | 2021 Form 10-K 40
Percentage of Single-Family Purchase Volume 

(Based on UPB of $1,220 billion)

50% 50%

Top 10 sellers All other sellers

 Percentage of Single-Family Servicing Volume(1)

(Based on UPB of $2,792 billion)

47%

53%

Top 10 servicers All other servicers

(1) Percentage of servicing volume is based on the total Single-Family mortgage 

portfolio, which includes loans where we do not exercise servicing control. 

However, loans where 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 - Sellers and Servicers and Note 16.

Competition 

We operate in a competitive market by varying our pricing for different customers, loan products, and underwriting 

characteristics. We seek to maintain a broad-ranging 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.

Our principal competitors in Single-Family are Fannie Mae, FHA/VA (with Ginnie Mae securitization), and other financial 

institutions that retain or securitize loans, such as commercial and investment banks, dealers, and savings institutions. Our 

competitors in Single-Family also include firms that invest in loans and mortgage-related assets and issue corporate debt, 

including Fannie Mae, REITs, supranationals (international institutions that provide development financing for member 

countries), commercial and investment banks, dealers, savings institutions, insurance companies, the Federal Farm Credit 

Banks, the FHLBs, and non-bank loan aggregators, who are both our customers and competitors. 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 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 | 2021 Form 10-K 41
Business Results

The graphs, 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 Guarantee Fee Rate(1) Charged on New 

Acquisitions

(UPB in billions, guarantee fee rate in bps)

$453

$1,090

$1,220

$250 $325 $430

$203

$765

$790

45

47

49

Home purchase

Refinance

Average guarantee fee rate charged

on new acquisitions

2019 2020 2021

(1) Guarantee fee rate calculation excludes the legislated 10 basis point fee 

and includes deferred fees recognized over the estimated life of the 

related loans. We enhanced our estimation methodology related to 

recognition of buy-up fees in 2019.

 

Number of Families Helped to Own a Home and Average Loan UPB 

of New Acquisitions

(Loan count in thousands)

1,769

3,798

4,236

987 1,131 1,378

782

2,667

2,858

$256,000

$287,000 $288,000

Home purchase borrowers

Refinance borrowers

Average loan UPB of new acquisitions

2019 2020 2021

n	 As a key player in the secondary mortgage market, we maintain a consistent market presence by providing lenders with a 

constant source of liquidity for conforming loan products. Our loan purchase and guarantee activity increased in 2021 

compared to 2020 primarily due to an increase in home purchase volume, higher house price appreciation, and an increase 

in our share of the GSE volume.

n	 The average guarantee fee rate charged 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 using our expectations of prepayments and other liquidations. The average guarantee fee rate charged on 

new acquisitions increased in 2021 compared to 2020 primarily due to the adverse market refinance fee we began to 

charge in December 2020. In July 2021, FHFA instructed us to eliminate this fee for loan deliveries effective August 1, 

2021.

n	 In September 2021, certain requirements in the Purchase Agreement related to our cash window activities, acquisitions of 

single-family loans with certain LTV, DTI, and credit score characteristics at origination, and acquisitions of single-family 

loans secured by second homes or investment properties were suspended. We will continue to manage these activities in 

accordance with our risk limits and guidance from FHFA. For additional information, see MD&A – Regulation and 

Supervision – Legislative and Regulatory Developments – September 2021 Letter Agreement with Treasury.

Management's Discussion and Analysis Our Business Segments | Single-Family

FREDDIE MAC | 2021 Form 10-K 42
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 186,000 loans under these initiatives in 2021. 

Our Refi Possible® initiative provides more flexibilities to help low- and moderate-income borrowers take advantage of the 

current low interest rate environment by refinancing their mortgages and lowering their monthly mortgage payments. We 

also continue to implement programs that support responsibly broadening access to affordable housing by:

l	 Improving the effectiveness of pre-purchase and early delinquency counseling for borrowers; 

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; 

l	 Increasing support for first-time home buyers; and

l	 Introducing securitization products focused on addressing affordable and energy efficiency challenges.

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. Expanding access to affordable housing 

will continue to be a top priority in 2022. See MD&A - Regulation and Supervision - Federal Housing Finance Agency - 

Duty to Serve Underserved Markets Plan for more information. 

Single-Family Mortgage Portfolio

 Single-Family Mortgage Portfolio and Average Guarantee Fee 

Rate(1) Charged on Mortgage Portfolio as of December 31,

(UPB in billions, guarantee fee rate in bps)

$1,994

$2,326

$2,792 41

44

46

Single-Family mortgage portfolio

Average guarantee fee rate

charged on mortgage portfolio

2019 2020 2021

(1) Guarantee fee rate calculation excludes the legislated 10 basis point fee. 

As of December 31,2021, excludes $47 billion in UPB primarily related to 

loans that we do not consolidate.

Single-Family Loans as of December 31,

(Loan count in millions)

11.2 12.0

13.1

$178,000

$194,000

$213,000

Single-Family mortgage portfolio

Average loan UPB

2019 2020 2021

n	 The Single-Family mortgage portfolio grew $466 billion, or 20%, year-over-year driven by higher new business activity. 

Additionally, continued house price appreciation contributed to new business acquisitions having a higher average loan 

size compared to older vintages that continued to run off. 

n	 2021 vs. 2020 - The average guarantee fee rate charged on the Single-Family mortgage portfolio increased as older 

vintages with lower charged guarantee fee rates were replaced by acquisitions of new loans with higher charged guarantee 

fee rates, including the adverse market refinance fee we began to charge in December 2020. In July 2021, FHFA instructed 

us to eliminate this fee for loan deliveries effective August 1, 2021.

Management's Discussion and Analysis Our Business Segments | Single-Family

FREDDIE MAC | 2021 Form 10-K 43
CRT Activities 

We transfer credit risk on a portion of our Single-Family mortgage portfolio to the private market, reducing the risk of future 

losses to us when borrowers default. The graphs below show the issuance amounts associated with CRT transactions for loans 

in our Single-Family mortgage portfolio. 

UPB Covered by New CRT Issuance 

(In billions) 

$255

$477

$828

2019 2020 2021

 

New CRT Issuance Maximum Coverage 

(In billions)

$12

$17

$20

2019 2020 2021

n	 During 2021, 2020, and 2019, 63%, 62%, and 71%, respectively, of our Single-Family acquisitions were loans in the 

targeted population for our CRT transactions (primarily 30-year fixed-rate loans with LTV ratios between 60% and 97%).

n	 The UPB of mortgage loans covered by CRT transactions issued in 2021 increased significantly compared to 2020 due to 

the recovery of the CRT markets from the impact of the COVID-19 pandemic and the increase in loan acquisition activity. 

The related maximum coverage also increased but was proportionally lower than the increase in UPB of mortgage loans 

covered by CRT transactions due to the improved credit quality of the covered loans, which reduced the amount of credit 

coverage we required on those loans.

n	 We evaluate and update our CRT strategy as needed depending on our business strategy, market conditions, and 

regulatory requirements. We expect the issuance amounts of our CRT transactions to increase in 2022. 

See MD&A – Risk Management - Single-Family Mortgage Credit Risk - Transferring Credit Risk to Third-Party 

Investors for additional information on our CRT activities and other credit enhancements.

Management's Discussion and Analysis Our Business Segments | Single-Family 

FREDDIE MAC | 2021 Form 10-K 44
Loss Mitigation Activities

The following graph provides details about our completed single-family loan workout activities. The forbearance data included 

below is limited to loans in forbearance that are past due based on the loans' original contractual terms and excludes both 

loans for which we do not control servicing and 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.

Completed Loan Workout Activity

(UPB in billions, number of loan workouts in thousands)

7

228

102

4

169

189

36 29 26

$8

$90

$69

Forbearance plans Payment deferral plans Other(1) Total UPB in billions

2019 2020 2021

(1) Other includes repayment plans, loan modifications, and foreclosure alternatives. 

n	 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 67,000 loans in active 

forbearance plans and 22,000 loans in other active loss mitigation activity as of December 31, 2021. 

n	 We continue to help struggling families retain their homes or otherwise avoid foreclosure through loan workouts. Our loan 

workout activity decreased in 2021 compared to 2020 primarily driven by the decrease in completed forbearance plans 

related to the COVID-19 pandemic, partially offset by the increase of payment deferral plans related to the COVID-19 

pandemic. 

n	 Pursuant to FHFA guidance and the CARES Act, we have offered mortgage relief options for certain borrowers affected by 

the COVID-19 pandemic. Among other things, we have offered forbearance of up to 18 months to single-family borrowers

experiencing a financial hardship, either directly or indirectly, related to the COVID-19 pandemic. We have also offered a 

payment deferral plan that allows a borrower to defer up to 18 months of payments for eligible homeowners who have the 

financial capacity to resume making their monthly payments, but who are unable to afford the additional monthly 

contributions required by a repayment plan. The length of available forbearance or payment deferral plans may be 

extended or the terms of forbearance or payment deferral plans revised by further FHFA guidance or government 

regulation.

See MD&A - Risk Management for additional information on our loan workout activities. 

Management's Discussion and Analysis Our Business Segments | Single-Family 

FREDDIE MAC | 2021 Form 10-K 45
Financial Results

The table below presents the components of net income and comprehensive income for our Single-Family segment.

Table 12 - Single-Family Segment Financial Results

Year Over Year Change

Year Ended December 31, 2021 vs. 2020 2020 vs. 2019

(Dollars in millions) 2021 2020 2019 $ % $ %

 Guarantee net interest income $15,745 $10,762 $7,999 $4,983 46 % $2,763 35 %

 Investments net interest income 2,023 3,062 2,917 (1,039) (34) 145 5 

 Income (expense) from hedge accounting (1,495) (2,232) (252) 737 33 (1,980) (786) 

 Net interest income 16,273 11,592 10,664 4,681 40 928 9 

 Non-interest income 954 457 560 497 109 (103) (18) 

Net revenues 17,227 12,049 11,224 5,178 43 825 7 

 Benefit (provision) for credit losses 919 (1,320) 749 2,239 170 (2,069) (276) 

 Credit enhancement expense (1,470) (1,036) (734) (434) (42) (302) (41) 

 Benefit for (decrease in) credit enhancement recoveries (523) 305 41 (828) (271) 264 644 

 REO operations income (expense) (12) (149) (229) 137 92 80 35 

Credit-related income (expense) (1,086) (2,200) (173) 1,114 51 (2,027) (1,172) 

Operating expense (5,070) (4,543) (4,294) (527) (12) (249) (6) 

Income (loss) before income tax (expense) benefit 11,071 5,306 6,757 5,765 109 (1,451) (21) 

Income tax (expense) benefit (2,251) (1,094) (1,370) (1,157) (106) 276 20 

Net income (loss) 8,820 4,212 5,387 4,608 109 (1,175) (22) 

Total other comprehensive income (loss), net of taxes and 

reclassification adjustments (379) 104 472 (483) (464) (368) (78) 

Comprehensive income (loss) $8,441 $4,316 $5,859 $4,125 96 % ($1,543) (26) %

Key Business Drivers:

n	 2021 vs. 2020 

l Higher net interest income primarily due to the continued growth in the Single-Family mortgage portfolio, higher 

average guarantee fee rates on this portfolio, and higher deferred fee income recognition.

l	 Lower credit-related expense primarily driven by a shift to benefit for credit losses as a result of a credit reserve 

release due to improving economic conditions, partially offset by a decrease in credit enhancement recoveries. Creditrelated expense in 2020 was primarily driven by the negative economic effects of the COVID-19 pandemic.

n	 2020 vs. 2019

l Higher net interest income primarily due to the continued growth in the Single-Family mortgage portfolio, higher 

average guarantee fee rates on this portfolio, and higher deferred fee income recognition.

l	 Higher credit-related expense primarily due to benefit (provision) for credit losses shifting to a provision driven by 

higher expected credit losses as a result of the COVID-19 pandemic and portfolio growth, partially offset by growth in 

realized and forecasted house prices and declines in forecasted interest rates during 2020.

Management's Discussion and Analysis Our Business Segments | Single-Family 

FREDDIE MAC | 2021 Form 10-K 46
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.

Through our support of the multifamily mortgage market, borrowers can obtain lower financing costs, which can benefit renters 

through lower rental rates and/or improved services or amenities. 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 pool those loans into mortgage-related 

securities that transfers all of the interest-rate and liquidity risk and a portion of the credit risk to third-party investors and that 

can be sold in the capital markets. In our typical multifamily securitization, we guarantee the senior securities but do not 

guarantee the subordinate securities, thereby transferring a portion of the credit risk on the underlying loans to third party 

investors as part of the securitization process. We do not consolidate most of our Multifamily securitization trusts. As a result, 

we account for most of our Multifamily securitizations as sales of the underlying loans and recognize the guarantee fees we 

receive in exchange for our guarantee of the senior securities as guarantee income. For multifamily loans where we do not 

transfer credit risk through the securitization process, we may pursue other strategies designed to transfer all or a portion of the 

loan's credit risk to third parties, including the execution of other CRT products. The returns we generate from our business 

activities are primarily derived from (1) the net interest income we earn on the loans prior to their securitization, (2) the gains on 

sale of mortgage loans, net of interest-rate risk management activities, from our purchase and securitization activities and (3) 

the ongoing guarantee fees we receive in exchange for providing our guarantee on the senior securities. We evaluate these 

factors collectively to assess the profitability of any given transaction and to maximize our returns.

Products and Activities

Our Multifamily business consists of activities related to purchasing and securitizing mortgage loans and issuing mortgagerelated securities, transferring credit risk, and investing in mortgage-related and other investments.

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 and 

performing cash flow analysis. This helps us maintain credit discipline throughout the process.

Certain of our products have been designed to support increased access to affordable housing, including in underserved 

markets. 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 provided to borrowers 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.

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. 

Management's Discussion and Analysis Our Business Segments | Multifamily

FREDDIE MAC | 2021 Form 10-K 47
The amount and type of multifamily loans that we purchase is significantly influenced by the Multifamily loan purchase cap that 

is established by FHFA. In October 2021, FHFA announced that the 2022 Multifamily loan purchase cap for the Multifamily 

business will be $78 billion, up from $70 billion in 2021. FHFA will continue to require at least 50% of the Multifamily new 

business activity to be mission-driven, affordable housing and, in 2022, such definitions will include loans on affordable units in 

cost-burdened renter markets and loans to finance energy and water efficiency improvements with units affordable to renters at 

or below 60% of AMI. In 2022, FHFA also will require at least 25% of the Multifamily new business activity to be affordable to 

renters at or below 60% of AMI, up from 20% in 2021. 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.

In September 2021, certain requirements that were added to the Purchase Agreement pursuant to the January 2021 Letter 

Agreement related to our multifamily loan purchase activity were suspended. For additional information, see MD&A - 

Conservatorship and Related Matters - Limits on Our Multifamily Loan Purchase Activity.

We continue to support the multifamily mortgage market's LIBOR transition efforts. Since September 2020, we have 

successfully quoted, purchased, and securitized new floating rate loans indexed to SOFR. The loans indexed to SOFR have 

been used as collateral in our SOFR-based bond offerings, thereby adding liquidity to the market and facilitating the transition 

to SOFR.

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 the specific economic terms and conditions of our commitment, 

including the loan's purchase price, index, and mortgage spread. We price our loans to achieve an initial pricing margin that we 

generally expect to realize at securitization. Decisions related to the commitment price and/or mortgage spread will affect our 

initial pricing margin and are generally influenced by our current business strategy, 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 also offer lenders 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 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 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 (i.e., held-for-investment commitments), including loans that we intend to securitize using trusts that we 

consolidate, and therefore these commitments are not recognized in our consolidated financial statements. As a result, we 

recognize the initial pricing margin, which is 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 any changes in 

fair value or gains 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 K 

Certificate benchmark spreads, which are market-quoted spreads over a referenced benchmark rate. We economically hedge 

our interest-rate exposure from multifamily commitments and loans, including index lock agreements, primarily by entering into 

pay-fixed interest-rate swaps. As a result, we typically have minimal exposure to earnings variability from changes in interest 

rates, as the changes in fair value of the loans and commitments attributable to changes in interest rates generally have 

offsetting effects from the changes in fair value of the associated interest-rate risk management derivatives. However, index 

lock agreements temporarily create 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 temporary exposure is 

typically fully offset when we enter into the associated loan purchase commitment, 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 typically have significant exposure to earnings variability due 

to changes in K Certificate benchmark spreads. We enter into certain transactions to manage this exposure, including the 

following:

n	 When-Issued K-Deal (WI K-Deal) Certificates - In a WI K-Deal Certificate transaction, we forward sell a K Certificate 

security that will be issued in the future to a WI K-Deal trust at a fixed price, thereby reducing our exposure to future 

changes in interest rates and K Certificate benchmark 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 adverse movements in K Certificate benchmark spreads. 

Management's Discussion and Analysis Our Business Segments | Multifamily

FREDDIE MAC | 2021 Form 10-K 48
Securitization Products

We securitize substantially all of the loans we purchase after a short holding period, which generally ranges between two and 

four months, as we aggregate sufficient loans with similar terms and risk characteristics. For the period of time between loan 

purchase and securitization, we refer to the loan as being in our securitization pipeline. We enter into various types of 

securitizations that generally result in the transfer of all of the underlying collateral's interest-rate and liquidity risk, and a portion 

of the credit risk to third parties. Our securitization products provide liquidity to the multifamily mortgage market, with certain 

bond issuances being focused on addressing affordable housing challenges and supporting broader environmental, social, and 

sustainability goals.

In our typical securitizations, we guarantee the issued senior securities. In exchange for providing this guarantee, we receive an 

ongoing guarantee fee that is commensurate with the risks assumed and that will, over the long-term, provide us with 

guarantee income that is expected to exceed the credit-related and administrative expenses of the underlying loans. Structural 

deal features, such as term, type of underlying loan product, and subordination levels, generally influence the deal's risk profile, 

which ultimately affects the guarantee fee rate we set at the time of securitization. We do not consolidate most of our 

Multifamily securitization trusts. As a result, we account for most of our Multifamily securitizations as sales of the underlying 

loans and recognize the guarantee fees we receive as guarantee income.

For guarantees to nonconsolidated entities or other third parties, we generally recognize a guarantee asset at inception. This 

asset, which represents the right to collect contractual guarantee fees, 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. See Note 5 for additional information on our accounting for guarantees.

Our typical securitization structure and level of subordination are designed to achieve appropriate economic returns when we 

sell loans for securitization. Depending on the securitization product and subordination levels selected, we may realize a higher 

(lower) gain on sale, but recognize lower (higher) ongoing guarantee income.

K Certificates and SB Certificates

Our primary securitization products are K Certificate and SB Certificate transactions, which transfer all of the interest-rate and 

liquidity risk and a portion of the credit risk of the underlying collateral. The structures of these transactions typically involve the 

issuance of senior, mezzanine, and subordinated securities that represent undivided beneficial interests in trusts that hold pools 

of multifamily loans that we previously purchased. In a typical K Certificate transaction, we sell multifamily loans to a nonFreddie Mac securitization trust that issues senior, mezzanine, and subordinated securities, and simultaneously purchase and 

place the senior securities into a Freddie Mac securitization trust that issues guaranteed K Certificates. In these transactions, 

we guarantee the senior securities, but do not issue or guarantee the mezzanine or subordinated securities. 

n	 K Certificates - Regularly issued structured pass-through securities backed by recently originated multifamily loans. This 

product offers investors a wide range of structural and collateral options that provide for stable cash flows and a structured 

credit enhancement. While the amount of guarantee fee we receive may vary by collateral type, it is generally fixed for 

those K Certificate series that we issue with regular frequency (e.g., 7- and 10-year fixed-rate K Certificates and floating 

rate K Certificates). The guarantee fees received on recently issued standard K Certificates range between 40 basis points 

and 45 basis points.

The guarantee fee on K Certificates that we do not issue on a regular basis, such as our single-sponsor K Certificates, is 

determined based on the specific risks associated with the underlying collateral and the structure of the securitization, 

including tranche sizes and risk distribution.

n	 SB Certificates - Regularly issued securities typically backed by multifamily small balance loans that we underwrite at loan 

origination and purchase prior to securitization. Similar to our K Certificate transactions, a non-Freddie Mac trust will issue 

the senior classes of securities, which we guarantee, as well as the unguaranteed subordinated securities. However, unlike 

our K Certificate transactions, while we may purchase a portion of the senior securities, we generally do not place those 

securities into a Freddie Mac trust. The guarantee fee we receive in these transactions is generally 35 basis points.

The volume of our K Certificate and SB Certificate securitizations is generally influenced by the product mix and size of our 

securitization pipeline, along with market demand for multifamily securities. We do not typically consolidate the securitization 

trusts used in these transactions and therefore account for these securitizations as sales of the underlying loans. 

Management's Discussion and Analysis Our Business Segments | Multifamily

FREDDIE MAC | 2021 Form 10-K 49
The diagram below shows a typical K Certificate transaction.

Other Securitization Products

Our other securitization products involve the issuance of pass-through 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. 

Our largest other securitization product is PCs, which are fully guaranteed securities. In these transactions, we securitize 

multifamily loans into pass-through securities that are similar in structure to Single-Family Level 1 Securitization Products. 

Since we guarantee the timely payment of scheduled principal and interest and direct loss mitigation activities, we consolidate 

the securitization trusts used in these PC transactions and therefore do not account for PC securitizations as sales of the 

underlying loans. Certain other securitization products are not consolidated as we do not direct loss mitigation activities and 

therefore account for those securitizations as sales of the underlying loans.

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 secured by low- and 

moderate-income multifamily loans.

CRT Activities

We primarily 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 all or a 

portion of the credit risk of certain loans that are not covered by subordination.

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 other CRT products include the following:

n	 MCIP - insurance coverage underwritten by a group of insurers and/or reinsurers that generally provide first loss and/or 

mezzanine loss credit protection. These transactions are similar in structure to ACIS contracts purchased in Single-Family, 

except the reference pool, in addition to loans, may include bonds 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.

Management's Discussion and Analysis Our Business Segments | Multifamily

FREDDIE MAC | 2021 Form 10-K 50
n	 SCR Trust notes - a securities-based credit risk sharing vehicle similar to STACR Trust notes in Single-Family. In a SCR 

Trust 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.

We previously issued SCR debt notes that are generally similar in structure to Single-Family STACR debt notes. 

In addition to our other CRT products, we 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 mortgagerelated securities as investments. Depending on market conditions and our business strategy, we may purchase or sell 

guaranteed K Certificates or SB Certificates at issuance or in the secondary market, including interest-only securities. Through 

our ownership of the interest-only 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.

From time to time, we may undertake certain activities to support the liquidity of K Certificates and SB Certificates. For more 

information, see Risk Factors - Market Risk - The profitability of our multifamily business could be adversely affected 

by a significant decrease in demand for our K Certificates and SB Certificates. Also, we may undertake certain actions to 

support the overall multifamily mortgage market, including the market's LIBOR transition efforts. 

Customers

Our Multifamily customers include both investors in our securitization products and other CRT products, as well as financial 

institutions that originate and sell multifamily mortgage loans to us for aggregation and securitization. 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, who 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 2021 Multifamily new business activity by our largest sellers and loan 

servicing by our largest servicers as of December 31, 2021. Any seller or servicer with a 10% or greater share is listed 

separately.

Management's Discussion and Analysis Our Business Segments | Multifamily

FREDDIE MAC | 2021 Form 10-K 51
Percentage of New Business Activity

(Based on UPB of $70.0 billion)

15%

13%

10%

41%

21%

Berkadia Commercial Mortgage LLC

CBRE Capital Markets, Inc.

JLL Real Estate Capital, LLC

Other top 10 sellers

All other sellers

Percentage of Servicing Volume(1)

(Based on UPB of $414.7 billion)

16%

14%

11%

39%

20%

CBRE Capital Markets, Inc.

Berkadia Commercial Mortgage LLC

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. Our principal 

competitors in the multifamily mortgage market are Fannie Mae, FHA, commercial and investment banks, CMBS conduits, 

savings institutions, and life insurance companies.

Management's Discussion and Analysis Our Business Segments | Multifamily

FREDDIE MAC | 2021 Form 10-K 52
Business Results

The graphs, tables, and related discussion below present the business results of our Multifamily segment.

New Business Activity

 New Business Activity

 (In billions)

Total Number of Units Financed

(In thousands)

 

$78

$83

$70

2019 2020 2021

809 803

655

2019 2020 2021

n	 As of December 31, 2021, the total Multifamily new business activity was equal to the FHFA 2021 loan purchase cap of 

$70.0 billion. Approximately 57% of this activity, based on UPB, was mission-driven, affordable housing, with 

approximately 26% being affordable to renters at or below 60% of AMI, exceeding FHFA's minimum requirements (50% 

and 20%, respectively). 

n	 While broader economic activity and demographic trends have contributed to higher demand for multifamily mortgage 

financing, our new business activity was lower in 2021 compared to 2020 due to a reduced FHFA loan purchase cap. 

n	 Outstanding commitments, including index lock agreements and commitments to purchase or guarantee multifamily 

assets, were $19.5 billion and $18.7 billion as of December 31, 2021 and December 31, 2020, respectively. The 

outstanding commitments as of December 31, 2021 indicate a strong pipeline for 2022.

Management's Discussion and Analysis Our Business Segments | Multifamily

FREDDIE MAC | 2021 Form 10-K 53
Multifamily Mortgage Portfolio and Guarantee Portfolio

 

Mortgage Portfolio 

 (In billions) 

$341

$388

$415

4,305

4,598 4,652

UPB of mortgage portfolio

Total units financed (In thousands)

2019 2020 2021

 

Guarantee Portfolio 

 (In billions) 

$270

$312

$348

37

39

42

UPB of guarantee portfolio

Average guarantee fee rate charged (bps)

2019 2020 2021

 

n	 Our Multifamily mortgage and guarantee portfolios increased as of December 31, 2021 compared to December 31, 2020 

primarily due to ongoing loan purchase and securitization activities. We expect continued growth in these portfolios as our 

purchase and securitization activities should outpace loan payoffs.

n	 The average guarantee fee rate on our guarantee portfolio increased as of December 31, 2021 and December 31, 2020, 

respectively, and the average remaining guarantee term was eight years as of December 31, 2021 and December 31, 2020. 

While we expect to earn future guarantee fees at the average guarantee fee rate over the average remaining guarantee 

term, the actual amount earned will depend on the performance of the underlying collateral subject to our financial 

guarantee.

n	In addition to our Multifamily mortgage portfolio, we own equity interests in LIHTC fund partnerships with carrying values 

totaling $2.0 billion and $1.4 billion as of December 31, 2021 and December 31, 2020, respectively. In September 2021, 

FHFA announced that Freddie Mac may invest up to $850 million annually in the LIHTC market, an increase from the 

previous limit of $500 million.

Management's Discussion and Analysis Our Business Segments | Multifamily

FREDDIE MAC | 2021 Form 10-K 54
CRT Activities

 UPB Covered by New CRT Issuance New CRT Issuance Maximum Coverage 

 (In billions) (In billions)

$71 $70

$84

2019 2020 2021

$8.2

$6.0 $6.0

2019 2020 2021

n	 As of December 31, 2021, we had cumulatively transferred a substantial amount of the expected and stressed credit risk 

on the Multifamily mortgage portfolio primarily through subordination in our securitizations. In addition, all of our 

securitization activities shifted the interest rate and liquidity risk associated with the underlying collateral away from Freddie 

Mac to third-party investors.

n	 The UPB of CRT transactions issued during 2021 increased compared to 2020 as we securitized the large securitization 

pipeline from December 31, 2020, along with a significant portion of the 2021 new loan purchase activity. Our CRT 

issuance activity also included several SCR Trust note transactions linked to reference pools of assets acquired prior to 

2021. Despite the increased CRT UPB, our maximum coverage amount remained flat due to lower average subordination 

levels on our K Certificate transactions issued during 2021. The lower subordination levels are still expected to absorb a 

substantial amount of expected and stressed credit losses. 

n	 As part of our securitization-related CRT activities, we generally guarantee the issued senior securities, thereby retaining 

the most senior-level credit risk. In exchange for retaining this credit risk exposure we receive an ongoing guarantee fee.

We evaluate and update our risk transfer strategy as needed depending on our business strategy, market conditions, and 

regulatory requirements. See MD&A - Risk Management - Multifamily Mortgage Credit Risk - Transferring Credit Risk 

to Third-Party Investors for more information on risk transfer transactions and credit enhancements on our Multifamily 

mortgage portfolio.

Management's Discussion and Analysis Our Business Segments | Multifamily

FREDDIE MAC | 2021 Form 10-K 55
Financial Results

The table below presents the components of net income and comprehensive income for our Multifamily segment.

Table 13 - Multifamily Segment Financial Results

Year Over Year Change

Year Ended December 31, 2021 vs. 2020 2020 vs. 2019

(Dollars in millions) 2021 2020 2019 $ % $ %

 Net interest income $1,307 $1,179 $1,184 $128 11 % ($5) — %

 Guarantee income 918 1,330 1,045 (412) (31) 285 27 

 Investment gains (losses), net 2,385 1,925 518 460 24 1,407 272 

 Other income (loss) 114 176 107 (62) (35) 69 64 

Net revenues 4,724 4,610 2,854 114 2 1,756 62 

Credit-related income (expense) 55 (136) (18) 191 140 (118) (656) 

Operating expense (651) (551) (544) (100) (18) (7) (1) 

Income (loss) before income tax (expense) benefit 4,128 3,923 2,292 205 5 1,631 71 

Income tax (expense) benefit (839) (809) (465) (30) (4) (344) (74) 

Net income (loss) 3,289 3,114 1,827 175 6 1,287 70 

Total other comprehensive income (loss), net of taxes 

and reclassification adjustments (110) 101 101 (211) (209) — — 

Comprehensive income (loss) $3,179 $3,215 $1,928 ($36) (1) % $1,287 67 %

Key Drivers: 

n	 2021 vs. 2020

l Lower guarantee income as continued growth in our guarantee portfolio was offset by the impacts of higher interest 

rates on the fair values of our guarantee assets.

l Increase in net investment gains primarily due to higher pricing margins for new loan purchases and greater spread 

tightening, partially offset by a smaller volume of new loan purchases as a result of a reduced Multifamily loan 

purchase cap in 2021. 

n	 2020 vs. 2019

l Increase in guarantee income driven by continued growth in our guarantee portfolio, coupled with lower fair value 

losses on our guarantee assets due to lower interest rates.

l Increase in net investment gains primarily due to higher pricing margins and greater volume of new loan purchases.

l Increase in credit-related expense due to higher expected credit losses as a result of the negative economic effects of 

the COVID-19 pandemic.

Management's Discussion and Analysis Our Business Segments | Multifamily

FREDDIE MAC | 2021 Form 10-K 56
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 affect our financial strength, 

operational resiliency, and the achievement of 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 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	 Strategic Risk; 

n	 Reputation Risk; and

n	 Legal Risk.

These risks are factored into our business decisions, as appropriate, with strategic, reputation, and legal risks managed outside 

of the three lines of defense (which is referenced below). For more discussion of these and other risks facing our business, see 

Risk Factors. See Liquidity and Capital Resources for a discussion of liquidity risk. 

Enterprise Risk Framework

The enterprise risk framework is a key component for how we manage risk to achieve our mission, strategic, and business 

objectives. The enterprise risk framework: 

n Defines risk roles and responsibilities across the three lines of defense and

n	 Promotes accountability and transparency in risk management decisions and execution. 

The framework includes the following components: 

n	 Risk Governance - Risk governance defines the way in which we manage risk across the company by articulating specific 

roles and responsibilities across the three lines of defense, including escalation and reporting. It is formalized through the 

delegations of authority, corporate risk policies and standards, and the risk governance structure at the division, enterprise, 

and Board levels. 

l Delegations of Authority - The Board of Directors delegates authority to the CEO, who then delegates to members of 

executive management.

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 Culture - An effective risk culture promotes an environment where employees who take and manage risks for the 

company are risk aware, collaborative, and transparent. Freddie Mac employees are held accountable for their decisions, 

and must conduct business in a legal, ethical, and effective manner. Our risk culture is supported by performance 

objectives and compensation programs that appropriately balance risk and return and motivate employees to conduct 

business in compliance with our established risk appetite and corporate risk policies and standards.

n	 Risk Appetite - Risk appetite is the level of risk, both in aggregate and by risk type, within the company's risk capacity 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 strategic plans for the company and each business division. The risk appetite is 

approved by the Board of Directors and then by FHFA as Conservator, which may change our risk appetite, including risk 

limits.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 57
n	 Risk Identification, Assessment, Control, and Monitoring - We use a risk taxonomy to define, classify, and report risks 

that are associated with our business model and that we face in our day-to-day operations. Our risk management program 

is supported through enterprise-wide practices and processes designed to identify, assess, control, monitor, and report on 

all risks, including emerging risks and top risks. Our risk assessment process considers the inherent and residual risk levels 

that inform our risk profile and allows us to identify and monitor risks. We have issue management processes established 

in order to manage the remediation of identified process deficiencies and/or control weaknesses.

n	 Risk Reporting - Our risk management framework requires accurate and timely reporting needed for managing 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, its adherence to established Board limits 

and management thresholds, emerging and top risks and an assessment of the control environment, risk drivers, stress 

testing and scenario analysis, and issues and their remediation status. 

FHFA has increased supervisory expectations related to how risk is managed and overseen by management and the Board of 

Directors, and specifically the role of ERM to provide 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-of-defense risk management model and governance structure that includes enterprise-wide 

oversight by the Board of Directors and its committees, the CRO, and the CCO.

The information and diagram below present the responsibilities associated with our three-lines-of-defense risk management 

model and our risk governance structure. The risk governance structure also includes division risk committees to actively 

discuss and monitor division-specific risk profiles, risk decisions, and risk appetite metrics, limits and thresholds, and risk type 

committees to oversee specific risk types that are present in and span across business lines.

For more information on the role of the Board of Directors and its committees, 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 | 2021 Form 10-K 58
Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 59
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 risk, and for counterparty credit risk.

Allowance for Credit Losses

Upon the adoption of CECL on January 1, 2020, we recognized an increase to the opening balance of the allowance for credit 

losses. Under CECL, we recognize an allowance for credit losses before a loss event has been incurred, which results in earlier 

recognition of credit losses compared to the previous incurred loss impairment methodology. 

For Single-Family credit exposures under CECL, 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 

TDRs we reasonably expect will occur, and using our historical experience, adjusted for current and future economic forecasts. 

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 under CECL, 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 and current and forecasted 

economic conditions. Loan characteristics considered by our model include vintage, loan term, current DSCR, current LTV 

ratio, occupancy rate, and interest rate hedges. We generally forecast economic conditions over a reasonable and supportable 

two-year period prior to reverting to historical averages at the model input level over a five-year period, using a linear reversion 

method. We also consider as model inputs expected prepayments, contractually specified extensions, modifications we 

reasonably expect will occur, expected recoveries from collateral posting requirements, and expected recoveries from attached 

credit enhancements. Management adjustments may be necessary to our model output to take into consideration current 

economic events and other external factors. 

Under CECL, 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 a 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.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 60
The table below presents a summary of key allowance for credit losses ratios and the changes in our allowance for credit 

losses. 

Table 14 - Allowance for Credit Losses Ratios

December 31, 2021 December 31, 2020 December 31, 2019

 (Dollars in millions) 

SingleFamily Multifamily TotalSingleFamily Multifamily TotalSingleFamily Multifamily Total

Allowance for credit losses:

Beginning balance $6,353 $200 $6,553 $5,233 $68 $5,301 $6,176 $15 $6,191 

Provision (benefit) for credit 

losses (919) (122) (1,041) 1,320 132 1,452 (749) 3 (746) 

 Charge-offs(1) (1,107) — (1,107) (592) — (592) (1,737) — (1,737) 

 Recoveries collected 197 — 197 210 — 210 452 — 452 

Net charge-offs (910) — (910) (382) — (382) (1,285) — (1,285) 

Other(2) 916 — 916 182 — 182 126 — 126 

Ending balance $5,440 $78 $5,518 $6,353 $200 $6,553 $4,268 $18 $4,286 

Components of ending balance of allowance for credit losses:

Mortgage loans held-forinvestment $4,913 $34 $4,947 $5,628 $104 $5,732 $4,222 $12 $4,234 

Advances of pre-foreclosure 

costs 450 — 450 536 — 536 — — — 

Accrued interest receivable 

on mortgage loans 24 — 24 140 — 140 — — — 

Off-balance sheet credit 

exposures 53 44 97 49 96 145 46 6 52 

Total ending balance $5,440 $78 $5,518 $6,353 $200 $6,553 $4,268 $18 $4,286 

Loan balances(3):

Non-accrual loans $18,650 $— $18,650 $13,677 $— $13,677 $6,370 $13 $6,383 

Total loans outstanding 2,806,535 26,743 2,833,278 2,333,991 21,977 2,355,968 1,971,657 17,489 1,989,146 

Average loans outstanding 

during the year 2,597,016 23,736 2,620,752 2,113,212 19,546 2,132,758 1,921,198 15,414 1,936,612 

Ratios:

Allowance for credit losses(4)

to total loans outstanding 0.18 % 0.13 % 0.17 % 0.24 % 0.47 % 0.24 % 0.21 % 0.07 % 0.21 %

Non-accrual loans to total 

loans outstanding 0.66 — 0.66 0.59 — 0.58 0.32 0.07 0.32 

Allowance for credit losses(5)

to non-accrual loans 26.34 NM 26.53 41.15 NM 41.91 66.28 92.31 66.33 

Net charge-offs to average 

loans outstanding 0.04 — 0.03 0.02 — 0.02 0.07 — 0.07 

(1) The Single-Family mortgage portfolio in 2021, 2020 and 2019 includes charge-offs of $0.1 billion, $0.3 billion and $1.3 billion, respectively, related to the transfer of 

loans from held-for-investment to held-for-sale.

(2) Primarily includes capitalization of past due interest related to non-accrual loans that receive payment deferral plans and loan modifications.

(3) Based on amortized cost basis of held-for-investment loans. 

(4) Represent allowance for credit losses on total held-for-investment loans. 

(5) NM - not meaningful due to the non-accrual loans balance rounding to zero.

n	 2021 vs. 2020

l The ratio of allowance for credit losses to total loans outstanding decreased as the allowance for credit losses 

decreased due to the reserve release driven by reduced expected credit losses related to the COVID-19 pandemic. 

This was partially offset by growth in our Single-Family mortgage portfolio as newly acquired loans had a higher ratio 

than the existing portfolio.

l The ratio of non-accrual loans to total loans outstanding increased as we placed certain loans in forbearance plans on 

non-accrual status. 

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 61
l The ratio of allowance for credit losses to non-accrual loans decreased as we placed certain loans in forbearance 

plans on non-accrual status.

n	 2020 vs. 2019

l The ratio of non-accrual loans to total loans outstanding increased as the increase in the number of loans we placed 

on non-accrual status outpaced the growth in our Single-Family mortgage portfolio. 

l The ratio of allowance for credit losses to non-accrual loans decreased as the increase in the allowance for credit 

losses was offset by the increase in the number of loans we placed on non-accrual status.

See Note 6 for additional information on our allowance for credit losses and Note 4 for additional information on our nonaccrual policy. 

The table below shows the contractual principal payments due by specified timeframe for held-for-investment loans 

outstanding as of December 31, 2021.

Table 15 - Principal Amounts Due for Held-for-Investment Loans 

December 31, 2021

(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 $87,916 $376,616 $1,011,848 $1,243,084 $2,719,464

 Adjustable-rate 874 3,683 10,110 8,720 23,387

Total Single-Family 88,790 380,299 1,021,958 1,251,804 2,742,851 

Multifamily:

 Fixed-rate 186 3,937 17,971 1,510 23,604 

 Adjustable-rate 933 1,610 510 — 3,053 

Total Multifamily 1,119 5,547 18,481 1,510 26,657 

Cost basis adjustments 63,770 

Total $2,833,278 

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 underwriting 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 Underwriting Standards and Quality Control Practices and 

Managing Seller/Servicer Performance 

We employ multiple strategies to maintain loan quality:

n	 Underwriting standards, as published in our Guide and incorporated in Freddie Mac Loan Advisor®, establish the 

requirements for eligibility, documentation, and representations and warranties;

n	 Loan quality control practices, including post-close credit review and the remedy management repurchase process, help to 

validate that the loan origination process is acceptable to us and loans are produced to perform at or above expected 

levels; 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 

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 62
and underwriting standards are used to assess loans based on a number of characteristics.

Limits are established on the purchase of loans with certain higher risk characteristics. These limits 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.

Loan Advisor is our main tool for assessing loan eligibility and documentation. Loan Advisor is a set of integrated software 

applications and services designed to give lenders access to our view of risk, loan quality, and eligibility during the origination 

process, which promotes efficient commerce between lenders and Freddie Mac. As a key component of Loan Advisor, Loan 

Product Advisor® (LPA) takes advantage of proprietary data models and intelligent automation to help lenders validate that 

submitted loans meet our underwriting standards. LPA features innovative tools and offerings leveraging algorithms to enhance 

the origination process and generates an assessment of a loan’s credit risk and overall quality.

Historically, the majority of our purchase volume was assessed using either LPA, Fannie Mae's comparable software Desktop 

Underwriter (DU), or the seller's proprietary automated underwriting system. We have implemented steps to require the loans 

we purchase to be assessed by one of Freddie Mac's proprietary underwriting software tools, LPA or Loan Quality Advisor®, 

prior to purchase. Substantially all of the loans we purchase are now assessed by Freddie Mac's proprietary underwriting 

software, helping validate their compatibility with our risk appetite.

With Loan Advisor, lenders can actively monitor representation and warranty relief earlier in the mortgage loan production 

process. Loan Advisor offers limited representation and warranty relief for certain loan components that satisfy automated data 

analytics related to appraisal quality, valuation, borrower assets, and borrower income. In general, limited representation and 

warranty relief is only offered when information provided by lenders is validated through the use of independent data sources. 

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 include 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" will result in a repurchase request or a repurchase 

alternative, such as recourse or indemnification.

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.

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 loan underwriting documentation for compliance with our standards using both 

random and targeted samples. We also perform quality control reviews of many delinquent loans and review loans that have 

resulted in credit losses before the representations and warranties are relieved. Sellers may appeal our ineligible loan 

determinations prior to repurchase of the loan.

We use a standard quality control process that facilitates more timely reviews and is designed to identify breaches of 

representations and warranties early in the life of the loan. Proprietary tools, such as Quality Control Advisor®, provide greater 

transparency into our customer quality control reviews. 

Appraisal Waivers 

Since June 2017, we have permitted sellers to originate certain eligible loans without a traditional appraisal by leveraging our 

proprietary models, along with historical data and public records through our Loan Product Advisor® Automated Collateral 

Evaluation (ACE). For mortgaged properties meeting certain qualifications as specified in the Guide, the property value 

(purchase price for purchase transactions and borrower provided estimated value for refinances) and condition are assessed 

using ACE. ACE uses our in-house automated valuation model, Home Value Explorer® (HVE). HVE was built and is periodically 

enhanced for the express purpose of managing collateral risk at Freddie Mac. ACE leverages statistically based, empirically 

derived confidence scores to assess collateral risk. House price appreciation during the COVID-19 pandemic has increased 

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 63
uncertainty for HVE, house price appreciation models, and traditional valuation methods, including appraisals. House prices 

have appreciated markedly despite the lagging performance of underlying fundamentals such as the unemployment rate and 

other economic indicators.

In response to the COVID-19 pandemic, in March 2020, we introduced expanded eligibility of ACE waivers to include no cashout refinance with LTV ratios up to 90%, cash-out refinances for primary residences with LTV ratios up to 70%, and second 

homes with LTV ratios up to 60%. During the pandemic, homeowners and appraisers expressed concerns with appraisers 

entering properties, which potentially could stall the process of closing loans. As a result of this expansion, combined with a 

historically high refinance market (ACE waivers are granted more often for refinanced loans), ACE waiver usage increased from 

approximately 11% during 2019 to 40% during 2020, and averaged 39% during 2021. We monitor the size of ACE waivers 

relative to Fannie Mae’s appraisal waivers to reduce prepayment misalignment risk in UMBS. 

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 executed loan modifications.

Temporary Underwriting Changes Due to the COVID-19 Pandemic

We announced temporary changes in our underwriting standards due to the COVID-19 pandemic, which may negatively affect 

the expected performance of purchased loans that were underwritten under these temporary changes. Many of these 

temporary changes have either expired or, in certain cases, been made permanent. 

In March and May 2020, we introduced a number of temporary measures to help provide sellers with the clarity and flexibility to 

continue to lend in a prudent and responsible manner during the COVID-19 pandemic. The flexibility we allowed in 

demonstrating a borrower's current employment status has expired and is not applicable to loan applications dated on or after 

May 1, 2021. The option to verify the borrower’s employment via email was included permanently in our Guide on April 7, 2021.

The following temporary measures have expired and are not applicable to loan applications dated on or after August 11, 2021:

n	 Requiring income and asset documentation to be dated closer to the loan closing date in order to verify the most up-todate information is being used to support the borrower's ability to repay and

n	 Establishing underwriting restrictions applicable to a borrower's accounts containing stocks, stock options, and mutual 

funds due to then current market volatility.

The following temporary measures are in effect until further notice:

n	 Requiring verification that the business is open and operating for self-employed borrowers;

n	 Requiring mortgages to be sold to Freddie Mac within six months of the note date; and

n	 Verifying that any mortgage that a borrower has is current or is brought current via reinstatement or by making at least 

three consecutive timely payments under a loss mitigation program.

The temporary measure that required additional income documentation for self-employed borrowers expired on February 2, 

2022 for most mortgages.

In March and April 2020, we announced loan processing flexibilities to expedite loan closings and help keep homebuyers, 

sellers, and appraisers safe during the COVID-19 pandemic. These flexibilities expired and are not applicable to loan 

applications dated on or after June 1, 2021. They included:

n	 Allowing desktop appraisals or exterior-only inspection appraisals for certain purchase transactions;

n	 Allowing exterior-only appraisals for certain no cash-out refinances;

n	 Allowing desktop appraisals on new construction properties (purchase transactions);

n	 Allowing flexibility on demonstrating that construction has been completed; and

n	 Allowing flexibility for borrowers to provide documentation (rather than requiring an inspection) to allow renovation 

disbursements (draws).

The following temporary flexibilities have expired and are not applicable to loan applications dated on or after May 1, 2021:

n	 Offering flexibility in condominium project reviews and

n	 Expanding the use of powers of attorney and remote online notarizations. Permanent updates to our requirements for the 

use of powers of attorney were included in our Guide and are effective for applications dated on or after June 30, 2021.

Some of these changes in our underwriting standards due to the COVID-19 pandemic may negatively affect the expected 

performance of loans purchased while these changes are in effect. The pandemic may also strain sellers' ability to increase 

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 64
their operational capacity to handle the historically high volume of refinance mortgages while maintaining proper quality control, 

which may further impact the credit quality of the loans we purchase during the affected periods. In addition, the CARES Act 

requires 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. This credit reporting requirement applies to all mortgage relief programs 

entered into between January 31, 2020 and the date that is 120 days after the declaration of the national emergency related to 

the COVID-19 pandemic ends. As a result, our ability to evaluate purchases of new loans may be adversely affected as credit 

scores may not fully reflect the impact of relief programs, offered by us or other creditors, into which borrowers may have 

entered.

We announced in April 2020 that we would temporarily purchase certain single-family mortgage loans that have entered into 

forbearance as a result of borrower hardship caused by the COVID-19 pandemic in order to help provide liquidity to the 

mortgage market and allow originators to keep lending. This temporary measure was extended to include mortgage loans with 

note dates on or after April 1, 2020 and on or before December 31, 2020 and with settlement dates on or before February 28, 

2021. The purchases of such loans have been insignificant. We also temporarily halted the purchase of negotiated bulk 

transactions and the purchase of flow loans with more than six months seasoning in May 2020.

At the instruction of FHFA, we implemented a 50 basis point adverse market refinance fee for refinance mortgages, excluding 

those with low balances and certain product types, with settlement dates on or after December 1, 2020. In July 2021, FHFA 

instructed us to eliminate this fee for loan deliveries effective August 1, 2021.

Underwriting Restrictions Related to Purchase Agreement

The Purchase Agreement requires us to limit our acquisition of certain single-family mortgage loans as follows:

n	 A maximum of 6% of purchase money mortgages and 3% of refinance mortgages over the preceding 52-week period can 

have two or more of the following characteristics at origination: combined LTV ratio greater than 90%; debt-to-income ratio 

greater than 45%; and FICO or equivalent credit score less than 680.

n	 Acquisitions of single-family mortgage loans secured by either second homes or investment properties are limited to 7% of 

the single-family mortgage loan acquisitions over the preceding 52-week period.

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 were required to implement by July 1, 2021 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, subject to the restrictions above; (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.

In September 2021, the Purchase Agreement limits on our acquisitions of single-family loans with certain LTV, DTI, and credit 

score characteristics at origination and on our acquisitions of single-family loans secured by second homes or investment 

properties were suspended. For additional information, see MD&A - Regulation and Supervision - Legislative and 

Regulatory Developments - September 2021 Letter Agreement with Treasury.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 65
Loan Purchase Credit Characteristics

We monitor and evaluate market conditions that could affect the credit quality of our single-family loan purchases. The graphs 

below show the credit profile of the single-family loans we purchased or guaranteed. 

Weighted Average Original LTV Ratio

77%

71% 71%

2019 2020 2021

Weighted Average Original Credit Score

751 759 753

2019 2020 2021

(1) Weighted average original credit score is based on three credit bureaus 

(Equifax, Experian, and TransUnion). 

The table below contains additional information about the single-family loans we purchased or guaranteed.

Table 16 - Single-Family New Business Activity

Year Ended December 31,

2021 2020 2019

(Dollars in billions) Amount % of Total Amount % of Total Amount % of Total

20- and 30-year or more amortizing fixed-rate $1,042 86 % $919 85 % $405 89 %

15-year amortizing fixed-rate 173 14 167 15 43 10 

Adjustable-rate 5 — 4 — 5 1 

Total $1,220 100 % $1,090 100 % $453 100 %

Percentage of purchases

DTI ratio > 45% 11 % 10 % 14 %

Original LTV ratio > 90% 11 11 19 

Transaction type:

 Cash window 43 61 48 

 Guarantor swap 57 39 52 

Property type:

Detached single-family houses and townhouses 93 93 92 

Condominium or co-op 7 7 8 

Occupancy type:

Primary residence 93 94 92 

Second home 3 3 4 

Investment property 4 3 4 

Loan purpose:

Purchase 35 30 55 

Cash-out refinance 25 18 18 

Other refinance 40 52 27 

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 66
Transferring Credit Risk to Third-Party Investors 

Types of Credit Enhancements

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 protected by primary mortgage 

insurance, which provides loan-level protection 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. 

In addition to obtaining credit enhancements required by our Charter, we also enter into various CRT transactions in which we 

transfer mortgage credit risk to third parties. 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 more information on our CRT transactions. 

Category Products CRT Coverage type Accounting treatment

Primary mortgage insurance Primary mortgage insurance No Front-end Attached

STACR 

STACR Trust notes Yes Back-end Freestanding

STACR debt notes Yes Back-end Debt

Insurance/reinsurance

ACIS Yes Back-end Freestanding

Other insurance/reinsurance products Yes Front-end Freestanding

Other

Senior subordinate securitization structures backed by 

seasoned loans (nonconsolidated) Yes Back-end Guarantee

Senior subordinate securitization structures backed by 

recently originated loans (consolidated) Yes Back-end Debt

Lender risk-sharing Yes Front-end Freestanding

Single-Family Mortgage Portfolio CRT Issuance

The table below provides the UPB of the mortgage loans covered by CRT transactions issued during the periods presented as 

well as the maximum coverage provided by those transactions.

Table 17 - Single-Family Mortgage Portfolio CRT Issuance

Year Ended December 31,

 2021 2020 2019

(In millions) UPB(1)

Maximum 

Coverage(2) UPB(1)

Maximum 

Coverage(2) UPB(1)

Maximum 

Coverage(2)

STACR $574,705 $11,024 $427,155 $11,141 $203,239 $6,671 

Insurance/reinsurance 465,043 7,885 422,719 4,181 210,650 2,687 

Other 5,094 1,062 15,563 2,379 43,888 3,526 

Less: UPB with more than 

one type of CRT (216,386) — (388,340) (769) (203,239) (723) 

Total CRT Issuance $828,456 $19,971 $477,097 $16,932 $254,538 $12,161 

(1) Represents the UPB of the assets included in the associated reference pool or securitization trust, as applicable. Prior periods have been revised to conform to the 

current period presentation. 

(2) For STACR transactions, represents the balance held by third parties at issuance. For insurance/reinsurance transactions, represents the aggregate limit of insurance 

purchased from third parties at issuance.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 67
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 SingleFamily mortgage portfolio. 

Table 18 - Single-Family Mortgage Portfolio Credit Enhancement Coverage Outstanding

December 31, 2021

(Dollars in millions) UPB(1) % of Portfolio Maximum Coverage(2)

Primary mortgage insurance(3) $545,293 20% $135,330 

STACR 1,024,013 37 32,641 

Insurance/reinsurance 914,003 33 16,209 

Other 42,273 1 10,598 

Less: UPB with multiple credit enhancements and other reconciling items(4) (1,034,546) (38) — 

Single-Family mortgage portfolio - credit-enhanced 1,491,036 53 194,778 

Single-Family mortgage portfolio - non-credit-enhanced 1,301,188 47 N/A

Total $2,792,224 100% $194,778 

December 31, 2020

(Dollars in millions) UPB(1) % of Portfolio Maximum Coverage(2)

Primary mortgage insurance(3) $472,881 20% $116,973 

STACR 853,733 37 29,665 

Insurance/reinsurance 876,815 38 11,586 

Other 50,275 2 11,384 

Less: UPB with multiple credit enhancements and other reconciling items(4) (1,101,461) (47) — 

Single-Family mortgage portfolio - credit-enhanced 1,152,243 50 169,608 

Single-Family mortgage portfolio - non-credit-enhanced 1,174,183 50 N/A

Total $2,326,426 100% $169,608 

(1) Represents the current UPB of the assets included in the associated reference pool or securitization trust, as applicable. Prior periods have been revised to conform 

to the current period presentation. 

(2) For STACR transactions, represents the outstanding balance held by third parties. For insurance/reinsurance transactions, represents the remaining aggregate limit 

of insurance purchased from third parties.

(3) Amounts exclude certain loans for which we do not control servicing, as the coverage information for these loans is not readily available to us.

(4) Other reconciling items primarily include timing differences in reporting cycles between the UPB of certain CRT transactions and the UPB of the underlying loans.

Our maximum coverage as a percentage of the UPB associated with credit-enhanced loans decreased to 13% as of December 

31, 2021 from 15% as of December 31, 2020, driven by the improved credit quality of the covered loans, which reduced the 

amount of credit coverage we required on those loans.

Credit Enhancement Coverage Characteristics

The table below provides the serious delinquency rates for the credit-enhanced and non-credit-enhanced loans in our SingleFamily 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 19 - Serious Delinquency Rates for Credit-Enhanced and Non-Credit-Enhanced Loans in Our Single-Family 

Mortgage Portfolio

December 31, 2021 December 31, 2020

(% of portfolio based on UPB)(1) % of Portfolio SDQ Rate % of Portfolio SDQ Rate

Credit-enhanced:

 Primary mortgage insurance 20 % 1.79 % 21 % 3.77 %

 CRT and other 47 1.24 41 3.22 

Non-credit-enhanced 47 0.93 50 2.13 

Total N/A 1.12 N/A 2.64 

(1) Excludes loans underlying certain securitization products for which loan-level data is not available.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 68
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 20 - Credit Enhancement Coverage by Year of Origination

December 31, 2021 December 31, 2020

(Dollars in millions) UPB

% of UPB with 

Credit 

Enhancement UPB

% of UPB with 

Credit 

Enhancement

Year of Loan Origination

 2021 $1,059,299 40 % N/A N/A

 2020 867,122 68 $971,092 36 %

 2019 157,971 71 276,302 73 

 2018 66,149 78 118,668 80 

 2017 88,800 72 147,856 75 

 2016 and prior 552,883 46 812,508 49 

Total $2,792,224 53 $2,326,426 50 

The following table provides information on the characteristics of the loans in our Single-Family mortgage portfolio without 

credit enhancement.

Table 21 - Single-Family Mortgage Portfolio Without Credit Enhancement(1) 

December 31, 2021 December 31, 2020

(Dollars in millions) UPB % of Portfolio UPB % of Portfolio

Low current LTV ratio(1)(2) $968,315 35 % $784,150 34 %

Short-term(1)(3) 73,947 2 81,681 3 

CRT pipeline(1)(4) 239,330 9 276,611 12 

Other(1)(5) 19,596 1 31,741 1 

Single-Family mortgage portfolio - non-credit-enhanced $1,301,188 47 % $1,174,183 50 %

(1) Loans with multiple characteristics are assigned to categories in this table based on the following order: low current LTV ratio, short-term, and CRT pipeline. 

(2) Represents loans with current LTV ratio less than or equal to 60%.

(3) Represents loans with an original maturity of 20 years or less. 

(4) Represents recently acquired loans that are targeted to be included in on-the-run CRT transactions and have not been included in a reference pool. 

(5) Primarily includes government guaranteed loans, ARM loans, loans with a current 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 Expenses and Recoveries

The recognition of expenses and recoveries associated with credit enhancements in our consolidated financial statements 

depends on the type of credit enhancement.

Expected recoveries from attached credit enhancements, mainly primary mortgage insurance, reduce the amount of the 

provision for credit losses on the covered loans. There is no separate credit enhancement expense or expected credit 

enhancement recovery for attached credit enhancements. Rather, the cost of the credit enhancement is reflected in our 

financial results as lower revenue, as we charge a lower guarantee fee for loans covered by these types of credit enhancements 

than we would otherwise charge for a similar loan without credit enhancement. If the loan proceeds to a loss event, we 

derecognize the loan and associated allowance for credit losses and recognize a receivable for the expected primary mortgage 

insurance proceeds. Similarly, we do not recognize a provision for credit losses on guarantees protected by subordination 

unless expected credit losses exceed the amount of subordination.

Expected recoveries from freestanding credit enhancements do not reduce the provision for credit losses on the covered loans 

but are recognized separately, at the same time that we recognize an allowance for credit losses on the covered loans, as a 

reduction to non-interest expense measured on the same basis as the allowance for credit losses on the covered loans. We 

recognize the payments we make to transfer credit risk under freestanding credit enhancements, primarily STACR Trust notes 

and insurance/reinsurance transactions, as credit enhancement expense when incurred.

In prior years, we obtained credit enhancement through the issuance of credit-linked debt, primarily STACR debt notes. We 

recognize the cost of these transactions as interest expense. We no longer issue credit-linked debt as part of our primary CRT 

strategy and therefore expect the effect of these transactions on our financial results to become less significant over time.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 69
See MD&A - Consolidated Results of Operations and MD&A - Our Business Segments - Single-Family for 

additional information on credit enhancement expense.

The table below presents the details of the credit enhancement recovery receivables we have recognized within other assets on 

our consolidated balance sheet. 

Table 22 - Single-Family Credit Enhancement Receivables

(In millions) December 31, 2021 December 31, 2020

Freestanding credit enhancement expected recovery receivables, net of allowance $114 $653 

Primary mortgage insurance receivables(1), net of allowance 76 74 

Total credit enhancement receivables $190 $727 

(1) Excludes $433 million and $444 million of deferred payment obligations associated with unpaid claim amounts as of December 31, 2021 and December 31, 2020, 

respectively. We have reserved substantially all of these unpaid amounts as collectability is uncertain.

Monitoring Loan Performance and Characteristics

We review loan performance, including delinquency statistics and related loan characteristics, in conjunction with housing 

market and economic conditions, including economic effects associated with the COVID-19 pandemic, to assess credit risk 

when estimating our allowance for credit losses. We also use this information to determine if our pricing and eligibility standards 

reflect the risk associated with the loans we purchase and guarantee. 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 | 2021 Form 10-K 70
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

Ratio of the UPB of the loan to the value of the underlying 

property collateralizing the loan. Original LTV ratio is 

measured at loan origination, while CLTV ratio is defined 

as the ratio of the current loan UPB to the estimated 

current property value.

• 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

Statistically-derived number that may indicate a 

borrower's likelihood to repay debt. Original credit score 

represents each borrower's FICO score at the time of 

origination or our purchase, while current credit score 

represents each borrower's most recent FICO score, 

which is obtained by Freddie Mac as of the first month of 

the most recent quarter

• 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

• Detached single-family houses and townhouses are the 

predominant type of single-family property

• Condominiums historically have experienced greater volatility in 

house prices than detached single-family houses, which may 

expose us to more risk

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

Second liens Indicates whether the underlying property is covered by 

more than one loan at the time of origination

• Second liens can increase the risk of default

• Borrowers are free to obtain second-lien financing after 

origination, and we are not entitled to receive notification when 

a borrower does so

DTI ratio

Ratio of the borrowers' total monthly debt payments to 

gross monthly income. One indicator of the 

creditworthiness of the borrowers, as it measures 

borrowers' ability to manage monthly payments and repay 

debts

• 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 the borrowers' current credit worthiness

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 71
The tables below contain details of the characteristics of the loans in our Single-Family mortgage portfolio.

Table 23 - Credit Quality Characteristics of Our Single-Family Mortgage Portfolio 

December 31, 2021

(Dollars in billions) UPB

Original 

Credit

Score (1)

Current 

Credit

Score (1)(2)

Original

LTV Ratio

Current

LTV

Ratio

Current

LTV Ratio

>100%

Single-Family mortgage portfolio year of origination: 

2021 $1,059 752 751 71 % 66 % — %

2020 867 760 769 71 56 — 

2019 158 746 751 76 55 — 

2018 66 736 736 76 52 — 

2017 89 741 746 75 46 — 

2016 and prior 553 737 752 75 36 — 

Total $2,792 751 756 72 55 — 

December 31, 2020

(Dollars in billions) UPB

Original 

Credit

Score (1)

Current 

Credit

Score (1)(2)

Original

LTV Ratio

Current

LTV

Ratio

Current

LTV Ratio

>100%

Single-Family mortgage portfolio year of origination:

2020 $971 760 758 71 % 68 % — %

2019 276 747 754 77 67 — 

2018 119 739 739 77 62 — 

2017 148 742 747 75 56 — 

2016 187 748 758 73 49 — 

2015 and prior 625 737 750 75 41 — 

Total $2,326 749 754 74 58 — 

(1) Original credit score is 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 | 2021 Form 10-K 72
Table 24 - Characteristics of the Loans in Our Single-Family Mortgage Portfolio 

Year Ended December 31,

2021 2020 2019

(Dollars in billions) Amount % of Total Amount % of Total Amount % of Total

20- and 30-year or more amortizing fixed-rate $2,359 84 % 1,950 84 % 1,689 85 %

15-year amortizing fixed-rate 393 14 326 14 241 12 

Adjustable-rate 21 1 26 1 37 2 

Alt-A, interest-only, and option ARM 19 1 24 1 27 1 

Total $2,792 100 % $2,326 100 % $1,994 100 %

Percentage of portfolio based on UPB

Original LTV ratio range:

60% and below 25 % 22 % 18 %

Above 60% to 80% 51 51 52 

Above 80% to 90% 11 12 12 

Above 90% to 100% 12 13 16 

Above 100% 1 2 2 

Portfolio weighted average original LTV ratio 72 74 76 

Current LTV ratio range:

60% and below 58 51 51 

Above 60% to 80% 35 37 35 

Above 80% to 90% 5 10 9 

Above 90% to 100% 2 2 5 

Above 100% — — — 

Portfolio weighted average current LTV ratio 55 58 59 

Original credit score(1)

:

740 and above 65 64 61 

700 to 739 20 20 21 

680 to 699 7 7 7 

660 to 679 4 4 5 

620 to 659 3 4 4 

Less than 620 1 1 2 

Portfolio weighted average original credit score 751 749 745 

Current credit score(1)(2)

:

740 and above 70 70 66 

700 to 739 15 15 16 

680 to 699 5 5 5 

660 to 679 4 3 4 

620 to 659 4 4 4 

Less than 620 2 3 5 

Portfolio weighted average current credit score 756 754 749 

DTI ratio:

Above 45% 14 14 15 

Portfolio weighted average DTI ratio 34 35 35 

Property type:

Detached single-family houses and townhouse 93 92 92 

Condominium or co-op 7 8 8 

Occupancy type at origination:

Primary residence 91 90 90 

Second home 4 4 4 

Investment property 5 6 6 

Loan purpose:

Purchase 36 38 46 

Cash-out refinance 22 19 20 

Other refinance 42 43 34 

(1) Original credit score is 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 | 2021 Form 10-K 73
At December 31, 2021, approximately 4% of our loans had second-lien financing by the originator or other third party at 

origination, and these loans comprised approximately 9% of our seriously delinquent loan population. It is likely that additional 

borrowers have post-origination second-lien financing.

Participants in the mortgage market have characterized single-family loans based upon their overall credit quality at the time of 

origination, including as prime or subprime. While we have used the terms subprime and Alt-A in this Form 10-K, there is no 

universally accepted definition of subprime or Alt-A, and the classification of such loans may differ from company to company. 

We have not historically characterized the loans in our Single-Family mortgage portfolio as either prime or subprime for 

purposes of evaluating credit risk, and we do not rely on these loan classifications to evaluate the credit risk exposure relating 

to such loans in our Single-Family mortgage portfolio. To evaluate credit risk, we monitor the amount of loans we have 

guaranteed with characteristics that indicate a higher degree of credit risk.

There are also several types of loans that contain terms which result in scheduled changes in the borrower’s monthly payments 

after specified initial periods, such as option ARM and interest-only loans. These products may result in higher credit risk 

because the payment changes may increase the borrower’s monthly payment, resulting in a higher risk of default. Only a small 

percentage of our Single-Family mortgage portfolio consists of option ARM, Alt-A, and interest-only loans. We fully 

discontinued purchases of option ARM loans in 2007, Alt-A loans in 2009, and interest-only loans in 2010.

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 

December 31, 2021

CLTV ≤ 60 CLTV > 60 to 80 CLTV > 80 to 90 CLTV > 90 to 100 CLTV > 100 All Loans

(Original Credit 

score)

% of 

Portfolio SDQ Rate

% of 

Portfolio

SDQ 

Rate(1)

% of 

Portfolio

SDQ 

Rate(1)

% of 

Portfolio

SDQ 

Rate(1)

% of 

Portfolio SDQ Rate(1)

% of 

Portfolio SDQ Rate

% 

Modified(2)

< 620 0.8 % 6.69 % 0.2 % 11.68 % — % NM — % NM — % NM 1.0 % 7.50 % 8.5 %

620 to 679 4.4 3.29 2.3 3.05 0.3 2.56 % 0.1 2.57 % — NM 7.1 3.22 3.7 

≥ 680 51.9 0.80 32.3 0.78 5.3 0.54 2.3 0.25 — NM 91.8 0.78 0.6 

Not 

available 0.1 6.58 — NM — NM — NM — NM 0.1 6.85 18.7

Total 57.2 % 1.19 34.8 % 1.04 5.6 % 0.77 2.4 % 0.47 — % NM 100.0 % 1.12 1.0 

December 31, 2020

CLTV ≤ 60 CLTV > 60 to 80 CLTV > 80 to 90 CLTV > 90 to 100 CLTV > 100 All Loans

(Original Credit 

score)

% of 

Portfolio SDQ Rate

% of 

Portfolio

SDQ 

Rate(1)

% of 

Portfolio

SDQ 

Rate(1)

% of 

Portfolio

SDQ 

Rate(1)

% of 

Portfolio

SDQ 

Rate(1)

% of 

Portfolio SDQ Rate

% 

Modified(2)

< 620 0.9 % 9.27 % 0.3 % 14.96 % 0.1 % 18.74 % — % NM — % NM 1.3 % 11.00 % 10.2 %

620 to 679 4.2 5.93 2.5 7.93 0.5 8.17 0.1 7.92 % — NM 7.3 6.64 7.1 

≥ 680 45.4 1.83 34.5 2.31 8.9 2.37 2.4 0.96 0.1 12.56 % 91.3 2.00 0.6 

Not 

available 0.1 7.96 — NM — NM — NM — NM 0.1 8.79 16.9 

Total 50.6 % 2.46 37.3 % 2.94 9.5 % 2.90 2.5 % 1.69 0.1 % 18.11 100.0 % 2.64 1.4

(1) NM - not meaningful due to the percentage of the portfolio rounding to zero.

(2) Primarily includes loans modified through the Freddie Mac Flex Modification program.

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. However, local economic conditions can affect the borrower's ability to 

repay and the value of the underlying collateral, leading to concentrations of credit risk in certain geographic areas. In addition, 

certain states and municipalities may pass laws that limit our ability to foreclose or evict and make it more difficult and costly to 

manage our risk. 

See Note 16 for more information about the geographic distribution of our Single-Family mortgage portfolio.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 74
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.

Single-Family Delinquency Rates 

1.26%

1.01%

0.81%

0.33% 0.38%

0.20%

0.63%

2.64%

1.12%

One month past due Two months past due Seriously delinquent

4Q19 4Q20 4Q21

The percentages of loans that were one month past due and two months past due increased in early 2020 due to the COVID-19 

pandemic and have trended back towards pre-pandemic levels as the impact of the pandemic on early-stage delinquencies 

has started to stabilize. The percentage of loans one month past due can be volatile due to seasonality 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 decreased to 1.12% as of December 31, 2021, compared to 2.64% as of December 

31, 2020 as borrowers continued to exit forbearance and complete loan workout solutions that returned their mortgages to 

current status. In addition, 56% of the seriously delinquent loans at December 31, 2021 were covered by credit enhancements 

that are designed to partially reduce our credit risk exposure to these loans. See Note 4 for additional information on the 

payment status of our single-family mortgage loans. 

Loans in COVID-19 Related Forbearance Plans 

Pursuant to FHFA guidance and the CARES Act, we have offered mortgage relief options for borrowers affected by the

COVID-19 pandemic. Among other things, we have offered forbearance of up to 18 months to single-family borrowers 

experiencing a financial hardship, either directly or indirectly, related to the COVID-19 pandemic. We have also offered a 

payment deferral plan that allows a borrower to defer up to 18 months of payments for eligible homeowners who have the 

financial capacity to resume making their monthly payments, but who are unable to afford the additional monthly contributions 

required by a repayment plan. The CARES Act requires our servicers to report to credit bureaus that loans in mortgage 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 mortgage relief programs and the borrowers remain in compliance with the programs. This 

credit reporting requirement applies to all mortgage relief programs entered into between January 31, 2020 and the date that is 

120 days after the declaration of the national emergency related to the COVID-19 pandemic ends. Our ability to monitor the 

credit quality of loans in our Single-Family mortgage portfolio may be adversely affected as credit scores may not reflect the 

impact of relief programs, offered by us or other creditors, into which borrowers may have entered.

For the purpose of reporting delinquency rates, 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.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 75
The table below presents payment status information of our single-family loans in forbearance based on the loans' original 

contractual terms. 

Table 26 - Single-Family Loans in Forbearance Plans by Payment Status(1)

December 31, 2021

(Dollars in millions) Current

One Month 

Past Due

Two

Months

Past Due

Three 

Months to Six 

Months Past Due(2)

Greater Than Six 

Months Past Due(2) Total

UPB $1,553 $1,474 $1,233 $3,713 $7,890 $15,863 

Number of loans (in thousands) 8 7 6 18 36 75

As a percentage of our Single-Family 

mortgage portfolio(3) 0.06 % 0.05 % 0.05 % 0.13 % 0.28 % 0.57 %

December 31, 2020

(Dollars in millions) Current

One Month 

Past Due

Two

Months

Past Due

Three 

Months to Six 

Months Past Due(2)

Greater Than Six 

Months Past Due(2) Total

UPB $8,907 $5,443 $4,372 $15,366 $35,144 $69,232 

Number of loans (in thousands) 44 28 22 75 155 324

As a percentage of our Single-Family 

mortgage portfolio(3) 0.37 % 0.23 % 0.18 % 0.63 % 1.29 % 2.70 %

(1) Excludes certain loans for which we do not control servicing and loans underlying certain legacy transactions, as the forbearance information for these loans is 

either not reported to us by the servicers or is otherwise not readily available to us. These loans represented approximately 1.6% and 2.0% of the Single-Family 

mortgage portfolio as of December 31, 2021 and December 31, 2020, respectively. 

(2) The UPB of loans in forbearance that were three months or more past due and continuing to accrue interest was $5.9 billion and $42.2 billion, respectively, as of 

December 31, 2021 and December 31, 2020. 

(3) Based on loan count.

The CARES Act, as amended by the Consolidated Appropriations Act, 2021, provides temporary relief from the accounting 

requirements for TDRs for certain loan modifications that are the result of a hardship that is related, either directly or indirectly, 

to the COVID-19 pandemic. We have elected to apply this temporary relief and, therefore, do not account for qualifying loan 

modifications as TDRs. In addition, interpretive guidance issued by federal banking regulators and endorsed by the FASB staff 

has indicated that government-mandated modification or deferral programs related to the COVID-19 pandemic are not TDRs as 

the lender did not choose to grant a concession to the borrower. As a result, substantially all of the forbearance and other relief 

programs we have been offering because of COVID-19 have not been accounted for as TDRs. 

We generally place single-family loans on non-accrual status when the loan becomes three monthly payments past due. For 

loans in active forbearance plans that were current prior to receiving forbearance, we continue to accrue interest income while 

the loan is in forbearance and is three or more monthly payments past due when we believe the available evidence indicates 

that collectability of principal and interest is reasonably assured based on management judgment, taking into consideration 

additional factors, the most important of which is the current LTV ratio. When we accrue interest on loans that are three or more 

monthly payments past due, we measure an allowance for expected credit losses on unpaid accrued interest receivable 

balances such that the balance sheet reflects the net amount of interest we expect to collect. The balance of accrued interest 

receivable, net of allowance for credit losses, recognized on our consolidated balance sheet related to loans in COVID-19 

forbearance plans was $0.2 billion and $1.1 billion as of December 31, 2021 and December 31, 2020, respectively. See Note 4

for additional information on our accounting policies for forbearance programs related to the COVID-19 pandemic.

Prior to expiration of a borrower's forbearance plan, servicers are required to contact the borrower to determine how the 

payments missed during the forbearance period will be repaid. We require servicers to follow a defined loss mitigation hierarchy 

to determine which options to offer to borrowers. This hierarchy is determined based on certain factors, such as the borrowers’ 

delinquency status, reasons for delinquency, loan types, and types of hardships. Borrowers are not required to repay all past 

due amounts in a single lump sum. Upon expiration of the forbearance plan, borrowers may reinstate the loan or enter into 

either a repayment plan, a payment deferral plan, or a trial period plan pursuant to a loan modification. If the borrower is not 

eligible for any of the home retention options, we may seek to pursue a foreclosure alternative or foreclosure. As a result of 

loans exiting COVID-19 related forbearance plans through payment deferral plans or loan modifications during 2021 and 2020, 

we deferred $1.4 billion and $0.4 billion, respectively, of delinquent interest into non-interest-bearing principal balances that are 

due at the earlier of the payoff date, maturity date, or sale of the property.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 76
The table below presents a summary of single-family loans that received forbearance plans and were past due based on the 

loans' original contractual terms at some point during the forbearance period. 

Table 27 - Single-Family Loans that Received Forbearance Plans(1)

(Loan count in thousands) December 31, 2021 December 31, 2020

Active forbearance plan at end of period 67 280

Forbearance plan exits(2) (from January 1, 2020 to end of period):

 Reinstatement(3) 263 189

 Pay-off 67 39

 Payment deferral plan 374 166

 Other(4) 87 43

Total forbearance plan exits(5) 791 437

Total single-family loans that received forbearance plans(6) (from January 1, 2020 to end of period) 858 717

(1) Excludes certain loans for which we do not control servicing and loans underlying certain legacy transactions, as the forbearance information for these loans is either 

not reported to us by the servicers or is otherwise not readily available to us. These loans represented approximately 1.6% and 2.0% of the Single-Family mortgage 

portfolio as of December 31, 2021 and December 31, 2020, respectively. 

(2) Represents the exit path the borrower took upon exit from the forbearance plan, which could be during or at the end of the forbearance period.

(3) Includes forbearance plans where the borrower brought the mortgage current during forbearance. 

(4) Primarily includes forbearance plans where the borrowers remained delinquent and the exit paths were not determined at the end of the forbearance periods. Also 

includes other exit paths such as repayment plans, modifications, and foreclosure alternatives.

(5) 86% and 83% of loans that received and subsequently exited forbearance plans were current, paid off, or sold as of December 31, 2021 and December 31, 2020, 

respectively. 

(6) Based on number of forbearance plans. A loan may be included more than once if it received more than one forbearance plan during the period.

Engaging in Loss Mitigation Activities 

We offer a variety of borrower assistance programs, including refinance programs for certain eligible loans and loan workout 

activities for struggling borrowers. See MD&A - Our Business Segments - Single-Family for more information on our loss 

mitigation activities.

Relief Refinance Program

The following table includes information about the performance of our relief refinance mortgage portfolio.

Table 28 - Single-Family Relief Refinance Loans

December 31, 2021 December 31, 2020

(Dollars in millions) UPB Loan Count SDQ Rate UPB Loan Count SDQ Rate

Above 125% Original LTV $8,084 61,100 2.69 % $11,972 83,439 4.41 %

Above 100% to 125% Original LTV 15,538 116,683 2.51 23,064 159,542 4.33 

Above 80% to 100% Original LTV 27,035 222,332 2.05 38,994 293,582 3.88 

80% and below Original LTV 40,442 460,777 1.36 55,291 575,708 2.70 

Total $91,099 860,892 1.79 $129,321 1,112,271 3.38 

Loan Workout Activities

The table below contains credit characteristic data on our single-family modified loans. 

Table 29 - Credit Characteristics of Single-Family Modified Loans

December 31, 2021 December 31, 2020

(Dollars in billions) UPB

% of 

Portfolio CLTV Ratio SDQ Rate UPB

% of 

Portfolio CLTV Ratio SDQ Rate

Loan modifications(1) $21.9 1 % 51 % 14.65 % $27.6 1 % 58 % 22.39 %

(1) Primarily includes loans modified through the Freddie Mac Flex Modification program and excludes certain loans for which we do not control servicing.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 77
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 2020 3Q 2020 2Q 2020 1Q 2020 4Q 2019 3Q 2019 2Q 2019 1Q 2019

Current or paid off

one year after modification: 83 % 70 % 64 % 59 % 57 % 57 % 57 % 67 %

Current or paid off

two years after modification: N/A N/A N/A N/A 65 64 61 58 

(1) Primarily includes loans modified through the Freddie Mac Flex Modification program and excludes certain loans for which we do not control servicing.

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. 

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. Our management of REO properties is also governed by federal fair housing/fair lending requirements. We 

are revising our REO repair program to increase the number of homes we refurbish so as to attract more owner-occupant 

buyers.

Pursuant to FHFA guidance and the CARES Act, we were required to suspend COVID-19-related foreclosures, other than for 

vacant or abandoned properties, until July 31, 2021, and COVID-19-related REO evictions until September 30, 2021. As a result 

of these suspensions, the volume of our foreclosure sales decreased from 13,000 in 2019 to 4,000 in 2020 and 3,000 in 2021. 

After July 31, 2021, servicers implemented CFPB foreclosure regulations issued on June 28, 2021, which established temporary 

protections for borrowers affected by the COVID-19 pandemic through December 31, 2021.

Delays in Foreclosure Process and Average Length of Foreclosure Process 

Our serious delinquency rates and credit losses may be adversely affected by delays in the foreclosure process, particularly in 

states where a judicial foreclosure process is required. Foreclosures generally take longer to complete in such states, resulting 

in concentrations of delinquent loans in those states, as shown in the table below. At December 31, 2021, loans in states with a 

judicial foreclosure process comprised 37% of our Single-Family mortgage portfolio.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 78
The table below presents the length of time our loans have been seriously delinquent, by jurisdiction type. 

Table 31 - Seriously Delinquent Single-Family Loans by Jurisdiction

Year Ended December 31,

2021 2020 2019

Aging, by locality Loan Count % Loan Count % Loan Count %

Judicial states

<= 1 year 33,252 23 % 132,103 42 % 26,063 37 %

> 1 year and <= 2 years 30,896 21 9,627 3 7,416 11 

> 2 years 7,271 5 6,072 2 5,336 8 

Non-judicial states

<= 1 year 37,426 25 158,563 50 24,997 36 

> 1 year and <= 2 years 34,975 24 6,659 2 3,928 5 

> 2 years 3,402 2 2,283 1 1,981 3 

Combined

<= 1 year 70,678 48 290,666 92 51,060 73 

> 1 year and <= 2 years 65,871 45 16,286 5 11,344 16 

> 2 years 10,673 7 8,355 3 7,317 11 

Total 147,222 100 % 315,307 100 % 69,721 100 %

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. We 

expect the portion of our credit losses related to loans in states with judicial foreclosure processes will remain high as loans 

awaiting court proceedings in those states transition to REO or other loss events. The number of our single-family loans 

delinquent for more than one year increased 211% during 2021. 

Our servicing guidelines do not allow initiation of the foreclosure process on a primary residence until a loan is at least 121 days 

delinquent, regardless of where the property is located. However, we evaluate the timeliness of foreclosure completion by our 

servicers based on the state where the property is located. Our servicing guide provides for instances of allowable foreclosure 

delays in excess of the expected timelines for specific situations involving delinquent loans, such as when the borrower files for 

bankruptcy or appeals a denial of a loan modification. 

The table below presents average completion times for foreclosures of our single-family loans. 

Table 32 - Average Length of Foreclosure Process for Single-Family Loans

Year Ended December 31,

(Average days) 2021 2020 2019

Judicial states

Florida 1,262 1,037 1,143 

New Jersey 1,179 983 1,089 

New York 1,653 1,800 1,765 

All other judicial states 889 669 692 

Judicial states, in aggregate 970 802 872 

Non-judicial states, in aggregate 827 537 520 

Total 916 690 730 

As indicated in the table above, the average length of the foreclosure process for our single-family loans generally increased in 

2021 compared to 2020 as loans impacted by the COVID-19 pandemic and related foreclosure moratorium awaited court 

proceedings before transitioning to REO or other loss events.

Our REO inventory continued to decline in 2021, although at a slower pace than in 2020, primarily due to FHFA guidance and 

the CARES Act, which required us to suspend certain foreclosures and evictions due to the COVID-19 pandemic. In addition to 

significantly slower new REO inflows, increased buyer demand resulting from low interest rates and a housing shortage kept 

REO dispositions at a steady pace. Foreclosure and eviction suspensions began to end in 3Q 2021, and our REO inventory 

began to increase in 4Q 2021. Even in the absence of these unique circumstances, the decline of our REO inventory continued 

to be driven in part by the improved credit quality of our portfolio, effective loss mitigation and REO disposition strategies, and 

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 79
a large proportion of property sales to third parties at foreclosure. Third-party sales at foreclosure auction allow us to avoid the 

REO property expenses that we would have otherwise incurred if we held the property in our REO inventory until disposition. 

The table below shows our Single-Family REO activity.

Table 33 - Single-Family REO Activity

Year Ended December 31,

2021 2020 2019

(Dollars in millions)

Number of 

Properties Amount

Number of 

Properties Amount

Number of 

Properties Amount

Beginning balance - REO 1,766 $199 4,989 $565 7,100 $780 

Additions 1,693 159 2,361 214 7,910 786 

Dispositions (1,844) (179) (5,584) (580) (10,021) (1,001) 

Ending balance - REO 1,615 179 1,766 199 4,989 565 

Beginning balance, valuation allowance (1) (10) (11) 

Change in valuation allowance (2) 9 1 

Ending balance, valuation allowance (3) (1) (10) 

Ending balance - REO, net $176 $198 $555 

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. 

Table 34 - Single-Family Collateral Deficiency Ratios

Year Ended December 31,

2021 2020 2019

REO dispositions and third-party foreclosure sales 6.8 % 20.4 % 21.7 %

Short sales 19.1 22.6 24.5 

Our collateral deficiency ratios declined during 2021 compared to 2020, primarily driven by house price appreciation as well as 

effective cost control and disposition strategies. 

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 as much as 10% or more. As of December 31, 2021, approximately 36% 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 29% of the properties were being prepared for sale (i.e., valued, marketing strategies determined, and 

repaired). As of December 31, 2021, approximately 22% of our REO properties were listed and available for sale, and 13% 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 284 days and 250 days for our REO dispositions during 

2021 and 2020, respectively. 

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 80
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	 Maintaining policies and procedures for new business activity, including prudent underwriting standards;

n	 Managing our portfolio, including loss mitigation activities; and

n	 Transferring credit risk to third-party investors.

Maintaining Policies and Procedures for New Business Activity, Including Prudent 

Underwriting Standards

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 maintain credit discipline throughout the 

process. 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 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, the type of loan, location of 

the property, and the strength of the local market. 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 rare 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 singlefamily 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 rising interest rates or adverse market conditions, increasing the likelihood of borrower default.

Occasionally, we securitize loans or bonds contributed by third parties that are underwritten by us after origination. Prior to 

securitization, we are not exposed to the credit risk of these underlying loans or bonds. However, as we may guarantee some 

or all of the securities issued by the trusts used in these transactions, we effectively assume credit risk equal to the guaranteed 

UPB. Similar to our primary securitizations, these other securitizations generally provide for structural credit enhancements 

(e.g., subordination or other loss sharing arrangements) that allocate first loss exposure to third parties.

Notwithstanding the effects of the COVID-19 pandemic on the multifamily market and broader economic environment, the 

credit quality of our multifamily new loan purchases and guarantees in 2021 remained consistent with prior periods.

The graphs below show the original credit profile of the multifamily loans we purchased or guaranteed.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 81
 Weighted Average Original LTV Ratio 

68% 69% 68%

2019 2020 2021

 Weighted Average Original DSCR

1.33 1.40 1.35

2019 2020 2021

The table below presents the percentage of our Multifamily new business activity that had certain characteristics that may be 

considered higher risk.

Table 35 - Percentage of Multifamily New Business Activity With Higher Risk Characteristics 

Year Ended December 31,

2021 2020 2019

Original LTV ratio greater than 80%(1) 1 % 1 % 2 %

Original DSCR less than or equal to 1.10(1) 1 1 1 

(1) Shown as a percentage of Multifamily new business activity.

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, while retaining that role in our SB Certificate transactions. 

Servicers for unsecuritized loans over $1 million must generally provide us with an assessment of the mortgaged property at 

least annually based on the servicer's analysis of the property as well as the borrower's financial statements. 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.

Substantially all 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 PC securitizations. By their nature, loans 

awaiting securitization that we hold for sale remain on our balance sheet for a shorter period than loans we hold for investment. 

For unsecuritized loans, 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 short-term extension of up to 12 months. These arrangements are entered into 

with the expectation that we will recover our initial investment or minimize 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. Our multifamily loan modification and other workout 

activities on unsecuritized loans have been minimal in the last three years.

For consolidated loans underlying our PC securitizations, we generally retain full credit risk exposure through our guarantee, 

although we may subsequently transfer a portion of that credit risk using other CRT products.

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. 

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 82
Loans in COVID-19 Related Forbearance Plans 

Pursuant to FHFA guidance and the CARES Act, Freddie Mac and Fannie Mae offer multifamily borrowers mortgage 

forbearance with the condition that they suspend all evictions during the forbearance period for renters unable to pay rent. 

Under our forbearance program, which is available until otherwise instructed by FHFA, multifamily borrowers with a fully 

performing loan as of February 1, 2020 can defer their loan payments for up to 90 days by showing hardship as a consequence 

of the COVID-19 pandemic and by gaining lender approval. After the forbearance period, the borrower is required to repay the 

forborne loan amounts in no more than 12 equal monthly installments.

In June 2020, in coordination with FHFA, we announced three supplemental forbearance relief options that servicers may use to 

assist borrowers that continue to be affected by the COVID-19 pandemic. These supplemental relief options added to the 

original tenant protections by providing flexibility to tenants to repay past due rent over time and not in a lump sum, and 

extended the prohibition on charging tenants fees and penalties for past due rent through both the forbearance and repayment 

periods. The three supplemental relief options include: (1) the option to delay the start of the repayment period following the 

initial forbearance period, (2) an extension of the repayment period, and (3) an extension of the forbearance period with an 

optional extended repayment period. 

In coordination with FHFA, we have implemented numerous protections for tenants as part of our forbearance program. In May 

2020, pursuant to FHFA guidance, we introduced an online multifamily property lookup tool to help renters determine if they are 

temporarily protected from eviction due to nonpayment of rent during the COVID-19 national health emergency. In August 

2020, we modified our forbearance program to introduce requirements for borrowers with a forbearance plan to provide 

notification to tenants of certain protections available to those tenants. In August 2021, we further modified our forbearance 

program to provide reminders to borrowers of the continuing applicability of the CARES Act requirement that tenants be given 

at least 30 days' notice to vacate, and to request that borrowers provide their tenants with information on tenant assistance 

resources.

We report multifamily delinquency rates based on the UPB of loans in our Multifamily mortgage portfolio that are two monthly 

payments or more past due based on the loan's current contractual terms, or in the process of foreclosure, as reported by our 

servicers. Loans in forbearance are not considered delinquent as long as the borrower is in compliance with the forbearance 

agreement, including the agreed upon repayment plan.

As of December 31, 2021 and December 31, 2020, the UPB of multifamily loans in our COVID-19 forbearance program was 

$1.7 billion and $7.8 billion, respectively. Since the inception of our COVID-19 forbearance program, 77.0% of loans, based on 

UPB, that received relief have exited forbearance through full repayment of the forborne amounts, while 17.8% remain active in 

either their forbearance or repayment periods. The remaining percentage exited our forbearance program through either 

delinquency or a third-party modification program.

Of the loans that remain in our COVID-19 forbearance program, 68.7%, based on UPB, are in securitizations with first loss 

credit protection provided by subordination. The weighted average subordination level of securitizations with subordination that 

have loans in forbearance was 14.2% as of December 31, 2021. 13.0% of loans in forbearance are scheduled to mature prior to 

2023. 

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 primarily reduce our credit risk exposure to the underlying borrower by using one of our 

securitization products. 

The following table summarizes our principal types of credit enhancements. See Our Business Segments - Multifamily - 

Business Overview - Products and Activities for additional information on our securitization and credit risk transfer products. 

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 83
Category Products CRT Coverage Type Accounting 

Treatment

Subordination

Primary securitization products Yes Back-end Guarantee

Other securitization products:

• Securitizations of purchased collateral Yes Back-end Guarantee/Debt

• Securitizations of collateral contributed by third parties No Front-end Guarantee

Lender risk-sharing Securitizations in which we issue fully guaranteed securities and 

simultaneously enter into a separate loss sharing agreement. 

Yes Front-end Freestanding

Insurance/reinsurance MCIP Yes Back-end Freestanding

SCR SCR Trust notes

SCR debt notes

Yes

Yes

Back-end

Back-end

Freestanding

Debt

Multifamily Mortgage Portfolio CRT Issuance 

The table below provides the UPB of the mortgage loans covered by CRT transactions issued during the periods presented as 

well as the maximum coverage provided by those transactions.

Table 36 - Multifamily Mortgage Portfolio CRT Issuance

December 31,

2021 2020 2019

(In millions) UPB(1)

Maximum 

Coverage(2) UPB(1)

Maximum 

Coverage(2) UPB(1)

Maximum 

Coverage(2)

Subordination $68,836 $5,079 $66,187 $5,741 $67,648 $8,011 

SCR 14,502 827 — — — — 

Insurance/reinsurance — — 2,646 65 1,873 84 

Lender risk-sharing 1,015 110 1,568 217 1,263 149 

Total CRT Issuance $84,353 $6,016 $70,401 $6,023 $70,784 $8,244 

(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 SCR 

transactions, represents the UPB of securities held by third parties at issuance. For insurance/reinsurance transactions, represents the aggregate limit of insurance 

purchased from third parties at issuance. For lender risk-sharing, represents the amount of loss recovery that is available subject to the terms of counterparty 

agreements at issuance.

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 securitization 

transactions. As of December 31, 2021 and December 31, 2020, our maximum coverage provided by subordination in 

nonconsolidated VIEs was $43.9 billion and $42.8 billion, respectively. 

The table below presents the UPB, delinquency rates, and forbearance rates for both credit-enhanced and non-creditenhanced loans underlying our Multifamily mortgage portfolio.

Table 37 - Credit-Enhanced and Non-Credit-Enhanced Loans Underlying Our Multifamily Mortgage Portfolio

December 31,

2021 2020

(Dollars in millions) UPB

Delinquency 

Rate

Forbearance 

Rate(1)(2) UPB

Delinquency 

Rate

Forbearance 

Rate(1)(2)

Credit-enhanced:

Subordination $360,113 0.08 % 0.33 % $328,897 0.18 % 1.99 %

Other 28,565 0.16 0.77 17,352 0.17 2.73 

Total credit-enhanced 388,678 0.08 0.36 346,249 0.18 2.03 

Non-credit-enhanced 25,985 0.05 1.25 42,098 0.02 1.83 

Total $414,663 0.08 0.42 $388,347 0.16 2.01 

(1) Excludes loans granted forbearance outside of our COVID-19 forbearance program. These loans represented less than 0.1% of the Multifamily mortgage portfolio as 

of December 31, 2021 and December 31, 2020.

(2) Forbearance rate includes loans in a forbearance program, including loans in their repayment period.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 84
Our securitizations remain our principal risk transfer mechanism. Through 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. 

The table below provides information on the level of subordination outstanding on our securitizations with subordination.

Table 38 - Level of Subordination Outstanding

December 31,

2021 2020

(Dollars in millions) UPB

Delinquency 

Rate

Forbearance 

Rate UPB

Delinquency 

Rate

Forbearance 

Rate

Less than 10% $109,174 — % 0.01 % $53,220 0.04 % 0.15 %

10% or greater 250,939 0.11 0.47 275,677 0.20 2.35 

Total $360,113 0.08 0.33 $328,897 0.18 1.99 

Weighted average subordination level 12% 13% 

The increase in the "Less than 10%" level of subordination outstanding in 2021 was driven by ongoing issuances of typical K 

Certificate securitizations with lower subordination levels. The lower subordination levels are still expected to absorb a 

substantial amount of expected and stressed credit losses. We have not experienced significant credit losses associated with 

our guarantees on our primary securitizations.

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 that 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. 

The table below contains details on the loans underlying our Multifamily mortgage portfolio that are not credit enhanced.

Table 39 - Credit Quality of Our Multifamily Mortgage Portfolio Without Credit Enhancement

December 31,

2021 2020

(Dollars in millions) UPB

Delinquency 

Rate

Forbearance 

Rate UPB

Delinquency 

Rate

Forbearance 

Rate

Unsecuritized loans:

Held-for-sale $12,596 0.07 % 0.48 % $21,794 0.04 % 0.85 %

Held-for-investment 7,180 — — 8,655 — 1.40 

Securitized loans 4,097 — 6.42 6,711 — 6.84 

Other mortgage-related guarantees 2,112 0.16 — 4,938 — 0.07 

Total $25,985 0.05 1.25 $42,098 0.02 1.83 

REO Activity

Our REO activity has remained low in the past several years as a result of the strong property performance of our Multifamily 

mortgage portfolio. As of December 31, 2021, and December 31, 2020, we had no REO properties.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 85
Natural Disaster and Climate Risk Management

Major natural or environmental disasters or other catastrophic events in an area where we own or guarantee mortgage loans, 

especially in densely populated geographic areas and in high-risk areas, such as coastal areas vulnerable to severe storms and 

flooding or areas prone to earthquakes or wildfires, expose us to credit risk in a variety of ways, including 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 own or guarantee. This could increase our serious delinquency rates and average loan loss severity in 

the affected areas.

Historically, our losses from natural or environmental disasters have not been significant. We require all homes underlying 

single-family mortgages in our portfolio to have homeowner's insurance coverage throughout the life of the loan. In addition, 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 a 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 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. In 

addition, our Single-Family segment reviews flood models from other third-party sources to help us assess potential or 

emerging flood risk exposure. 

We also have insurance requirements to address catastrophic risks relevant to the characteristics and location of properties 

securing multifamily loans we purchase. For properties located in SFHAs, we require flood insurance coverage. Furthermore, 

we require property insurance to cover earthquake damage if required by a seismic risk assessment. Freddie Mac reviews 

insurance compliance prior to loan purchase. 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 related to flooding and earthquakes. 

Freddie Mac’s loss exposure is further limited by the geographic diversity of our mortgage portfolio, borrower equity in the 

properties underlying mortgage loans, relief options for borrowers affected by natural disasters, our credit risk transfer 

products, and community support provided by FEMA and local and federal governments for areas affected 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 16 and MD&A - Risk Management - Credit Risk, respectively.

An increased frequency and intensity of major natural disasters may be indicative of the impact of climate change and is 

expected to persist for the foreseeable future. In addition, significant long-term climate change effects could increase the 

vulnerability of areas to natural disasters as well as the impact of these events.

In 2021, our Climate Advisory Group engaged leadership on climate matters to drive climate-related activities and facilitate 

cross-divisional collaboration and decision-making. We are also developing a corporate framework for incorporating climate 

risks into the existing risk management structure to help ensure that climate risk is considered in key business decisions. 

In December 2021, FHFA instructed us to designate climate change as a priority concern and actively consider its effects in our 

decision making and, to this end, included climate change as a priority for Freddie Mac in the 2022 Conservatorship Scorecard. 

We are exploring the role that we, along with FHFA and others, can play in helping to address climate risk. Developing solutions 

to these challenges is complicated by the range and diversity of affected stakeholders, the possible need for legislative or 

regulatory action, insurance industry capacity, and the need to balance risk mitigation, affordability, and sustainability.

For additional information, see Risk Factors - Credit Risks - We are exposed to increased credit losses and creditrelated expenses in the event of a major natural disaster, other catastrophic event, including a pandemic, or significant 

climate change effects.

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 manage our exposure to counterparty credit risk using the following 

principal strategies:

n	 Maintaining eligibility standards;

n	 Evaluating creditworthiness and monitoring performance; and

n	 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 

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 86
significant exposure.

Sellers and Servicers

Overview 

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. 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 our sellers or servicers lack appropriate controls, experience a failure in their controls, or experience an operational 

disruption, including as a result of financial stress, legal or regulatory actions, or ratings downgrades, 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. 

In our Multifamily business, 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.

In addition, our Single-Family business is exposed to settlement risk from the non-performance of sellers and servicers as a 

result of our forward settlement loan purchase programs. For additional details, see Financial Intermediaries, 

Clearinghouses, and Other Counterparties - Other Counterparties - Forward Settlement Counterparties.

Maintaining Eligibility Standards

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 and Fannie Mae are 

coordinating with FHFA to establish new eligibility rules for sellers and servicers of single-family mortgages.

Evaluating Counterparty Creditworthiness and Monitoring Performance

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 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 originated by that counterparty and generally no longer allow that 

counterparty to service loans for us, while seeking to transfer servicing of existing portfolios.

As discussed in more detail in MD&A - Our Business Segments, we acquire a significant portion of both our single-family 

and multifamily loan purchase volume from several large lenders, and a large percentage of our loans are also serviced by 

several large servicers. 

We have significant exposure to non-depository and smaller depository financial institutions in our Single-Family business. 

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.

In recent years, non-depository institutions have made up a greater portion of mortgage originations while depository 

institutions have declined as a portion of the mortgage market. As a result, we are acquiring a greater portion of our business 

from non-depository institutions.

The table below summarizes the concentration of our Single-Family mortgage purchases acquired from non-depository sellers.

Table 40 - Single-Family Mortgage Purchases from Non-Depository Sellers 

2021 2020

% of Purchases % of Purchases

Top five non-depository sellers 30 % 26 %

Other non-depository sellers 41 40 

Total 71 % 66 %

For our single-family servicing, we utilize both depository institutions and non-depository institutions. Some of these nondepository institutions service a large share of our loans. 

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 87
The table below summarizes the concentration of non-depository servicers of our Single-Family mortgage portfolio.

Table 41 - Single-Family Mortgage Portfolio Non-Depository Servicers 

December 31, 2021 December 31, 2020

% of Portfolio(1)

% of Seriously Delinquent 

Single-Family Loans % of Portfolio(1)

% of Seriously Delinquent 

Single-Family Loans

Top five non-depository servicers 19 % 17 % 18 % 17 %

Other non-depository servicers 35 32 30 28 

Total 54 % 49 % 48 % 45 %

(1) Excludes loans where we do not exercise control over the associated servicing.

For our mortgage-related securities, we guarantee the payment of principal and interest, and when the underlying borrowers do 

not pay their mortgages, our Guide requires single-family servicers to advance the missed mortgage interest payments from 

their own funds for up to 120 days. After this time, we will make the missed mortgage principal and interest payments to 

security holders until the mortgages are no longer held by the securitization trust. 

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. We implemented the 24-month 

policy on January 1, 2021. Prior to that time, in accordance with FHFA instruction, we generally purchased loans from trusts if 

they were delinquent for 120 days, subject to certain exceptions.

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 the borrowers. Should the borrower not reinstate the loan, we 

will reimburse the servicer for the advanced amounts at completion of foreclosures or loan workout activities.

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.

Working with Underperforming Seller and Servicer Counterparties and Limiting Our Losses from Their 

Nonperformance of Obligations, When Possible

Seller and servicer performance is actively managed for both single-family and multifamily loans. 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 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 can 

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. The UPB of loans subject to repurchase 

requests issued to our single-family sellers and servicers was $1.3 billion and $0.5 billion at December 31, 2021 and 

December 31, 2020, respectively. The increase in repurchase requests is due to increased loan purchase volume during 

the year and a trend of higher defect rates in 2021. See Note 16 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.

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. For SB Certificate securitizations 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 

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 88
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 

Overview 

We have exposure to credit enhancement providers through certain credit enhancements we obtain on single-family loans. 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.

With respect to primary mortgage insurers, we currently cannot differentiate pricing 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. 

As part of our insurance/reinsurance CRT 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. 

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.

Maintaining Eligibility Standards

We maintain eligibility standards for mortgage insurers and other insurers and reinsurers. Our eligibility requirements include 

financial requirements determined using a risk-based framework and are designed to promote the ability of mortgage insurers 

to fulfill their intended role of providing consistent liquidity throughout the mortgage cycle. Our mortgage insurers are required 

to submit audited financial information and certify compliance with the Private Mortgage Insurer Eligibility Requirements on an 

annual basis. Our eligibility requirements also include operational requirements.

Evaluating Counterparty Creditworthiness and Monitoring Our Exposure

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.

The table below summarizes our exposure to single-family mortgage insurers as of December 31, 2021. 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 42 - Single-Family Primary Mortgage Insurers

December 31, 2021

(In millions) Credit Rating(1)

Credit Rating

Outlook(1) UPB Coverage(2)

Arch Mortgage Insurance Company A Negative $104,008 $26,045 

Mortgage Guaranty Insurance Corporation (MGIC) BBB+ Stable 103,818 25,928 

Radian Guaranty Inc. (Radian) BBB+ Stable 98,884 23,949 

Essent Guaranty, Inc. BBB+ Stable 83,077 20,747 

Enact(3) BBB Stable 84,462 20,834 

National Mortgage Insurance (NMI) BBB Stable 67,603 17,001 

Others N/A N/A 3,441 826 

Total $545,293 $135,330 

(1) Ratings and outlooks are for the corporate entity to which we have the greatest exposure. Latest rating available as of December 31, 2021. Represents the lower of 

S&P and Moody's credit ratings and outlooks stated in terms of the S&P equivalent. 

(2) 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.

(3) Enact was previously known as Genworth Mortgage Insurance Corporation.

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.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 89
Except for those insurers under regulatory supervision, which no longer issue new coverage, we continue to acquire new loans 

with mortgage insurance from the mortgage insurers shown in the table above. For more information about counterparty credit 

risk associated with mortgage insurers, see Note 16.

The table below displays the concentration of our single-family credit risk exposure to our ACIS counterparties.

Table 43 - Single-Family ACIS Counterparties 

December 31, 2021 December 31, 2020

(Dollars in billions) Maximum Coverage(1) % of Total Maximum Coverage(1) % of Total

Top five ACIS counterparties $6.8 43 % $5.3 48 %

All other ACIS counterparties 8.9 57 5.8 52 

Total $15.7 100 % $11.1 100 %

(1) Represents maximum coverage exclusive of the collateral posted to secure the counterparties' obligations.

As of December 31, 2021 and December 31, 2020, our ACIS counterparties posted collateral of $4.1 billion and $2.4 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. We have taken steps to reduce the associated legal risk. 

For more information on our single-family CRT transactions, see MD&A - Our Business Segments - Single-Family - 

Business Overview - Products and Activities - CRT Activities, and MD&A - Risk Management - Single-Family 

Mortgage Credit Risk - Transferring Credit Risk to Third-Party Investors.

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. Our pricing does not currently reflect any incremental credit, liquidity, or operational risk associated with our guarantee 

of resecuritized Fannie Mae securities. 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.

For additional information on commingled resecuritizations and the associated risks, see MD&A - Our Business Segments 

- Single-Family and Risk Factors.

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 and clearinghouses. 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. 

n	 Cleared and exchange-traded derivatives - 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 and/or of changes in the counterparty's exposure generated by the derivative 

transactions.

n	 OTC derivatives - 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 with a market value above an agreed upon threshold, if any, 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 in accordance with 

agreed-upon thresholds, if any, when we are in a derivative liability position. The collateral posting thresholds we assign to 

our OTC counterparties, as well as the ones they assign to us, are generally based on S&P or Moody's credit rating. The 

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 90
lowering or withdrawal of our or our counterparty's credit rating by S&P or Moody's may increase our or our counterparty's 

obligation to post collateral, depending on the amount of the counterparty's exposure to Freddie Mac with respect to the 

derivative transactions. Only OTC derivatives transactions executed prior to March 1, 2017 are subject to collateral posting 

thresholds. Based upon regulations that took effect March 1, 2017, OTC derivative transactions executed or materially 

amended after that date require posting of variation margin without the application of any thresholds. Our OTC derivative 

transactions became subject to new initial margin requirements on September 1, 2021.

Evaluating Counterparty Creditworthiness and Monitoring Performance

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. 

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 44 - Derivative Counterparty Credit Exposure

December 31, 2021

(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):

A+, A, or A- 7 $1,233 $20

Cleared and exchange-traded derivatives 2 56 94 

Total 9 $1,289 $114 

Approximately 98% 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, 2021. The remaining exposure was primarily due to market movements between the 

measurement of a derivative at fair value and our receipt of the related collateral, as well as exposure amounts below the then 

applicable counterparty collateral posting threshold, if any. The concentration of our derivative exposure among our primary 

OTC derivative counterparties remains high and could further increase. 

Other Counterparties

We enter into other types of transactions in the ordinary course of business that expose us to counterparty credit risk, including 

those below. An individual counterparty may be included in more than one transaction type below.

n	 Other investments - We are exposed to the non-performance of institutions relating to other investments (including nonmortgage-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 more 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/

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 91
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.

n	 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.

We also execute forward purchase and sale commitments of mortgage-related securities, including dollar roll transactions, 

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 clearing system, 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, 2021, the gross fair value of such forward purchase and 

sale commitments that were in derivative asset positions was $64 million.

n	 Secured lending activities - 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 of our small 

and medium-sized 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. 

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.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 92
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 mortgagerelated 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 security, 

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 security 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 

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 

models include the possibility of future negative interest rate scenarios and that risk is included in our hedging framework.

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 more 

discussion of our market risk exposures, including those related to derivatives, institutional counterparties, and other market 

risks.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 93
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 basis point 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 basis point 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 

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 sixmonth 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 basis point parallel 

movement in interest rates (PVS-L) and the other to a nonparallel movement (PVS-YC), resulting from a 25 basis point 

change in slope of the yield curve. The 50 basis point shift and 25 basis point 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 

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 94
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 downrate 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

Beginning in October 2021, we transitioned from LIBOR to SOFR in measuring the company's interest-rate risk. As a result, for 

periods after September 30, 2021, the measurement of the price sensitivity and valuation of our assets and liabilities uses the 

SOFR curve instead of the LIBOR yield curve. This change did not have a significant impact on measurement of our interestrate risk or our financial 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 basis point shift in the yield curve. The interest-rate sensitivity of a mortgage portfolio varies across a wide 

range of interest rates. 

Table 45 - PVS-YC and PVS-L Results Assuming Shifts of the Yield Curve

December 31, 2021 December 31, 2020

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(2) $368 $3,531 $7,101 ($314) $3,837 $7,979 

Guarantees(2)(3) (242) (1,181) (1,830) 193 (1,828) (3,559) 

Total assets 126 2,350 5,271 (121) 2,009 4,420 

Liabilities 18 (2,385) (4,870) (54) (3,237) (7,503) 

Derivatives (144) 94 (217) 185 1,180 2,839 

Total $— $59 $184 $10 ($48) ($244) 

PVS $— $59 $184 $10 $— $— 

(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 securities of consolidated trusts 

held by the mortgage-related investments portfolio are both categorized as assets on this table.

(2) Prior periods were revised to conform to the current period presentation as securitized buy-ups were reclassified from Investments to Guarantees.

(3) Represents the interest-rate risk from our Single-Family guarantees, which include buy-ups, float, and upfront fees (including buy-downs). 

Table 46 - Duration Gap and PVS Results

Year Ended December 31,

2021 2020

(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 0.2 $8 $50 0.5 $11 $73 

Minimum (1.2) — — (0.7) — — 

Maximum 1.0 45 200 1.5 44 275 

Standard deviation 0.4 7 44 0.4 8 68 

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). 

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 95
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 basis point shift in the yield curve for the periods presented, would have been higher if we had not used 

derivatives.

Table 47 - PVS-L Results Before Derivatives and After Derivatives 

PVS-L (50 bps)

(In millions)

Before

Derivatives

After

Derivatives

Effect of

Derivatives

December 31, 2021 (1) $508 $59 ($449) 

December 31, 2020 (1) 601 — (601) 

(1) Before derivatives, our adverse PVS-L rate movement is -50 bps whereas after derivatives our adverse PVS-L rate movement is +50 bps.

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 LIBOR-, 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 the loan or hedge it by using forward TBA securities or derivatives. 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.

n	 Although the mortgage-related investments portfolio and Single-Family guarantees are the primary sources of interest-rate 

risk to the company, other core businesses 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.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 96
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.

Earnings 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 Earnings 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. 

Based upon the composition of our financial assets and liabilities, including derivatives, at December 31, 2021, we would 

generally recognize fair value losses when interest rates increase if we did not apply fair value hedge accounting.

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. We use LIBOR as our benchmark 

interest rate for our fair value hedge accounting and intend to use SOFR in the future as we transition away from LIBOR. See 

Note 9 for additional information on hedge accounting.

Earnings 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 basis points, non-parallel shifts in the yield curve in which long-term 

interest rates increase or decrease by 100 basis points, and non-parallel shifts in the yield curve in which short-term and 

medium-term interest rates increase or decrease by 100 basis points. 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.

Table 48 - Earnings Sensitivity to Changes in Interest Rates

(In millions) December 31, 2021 December 31, 2020

Interest Rate Scenarios

Parallel yield curve shifts: 

 +100 basis points $16.7 $97.9 

 -100 basis points (16.7) (97.9) 

Non-parallel yield curve shifts - long-term interest rates:

 +100 basis points (27.3) (10.9) 

 -100 basis points 27.3 10.9 

Non-parallel yield curve shifts - short-term and medium-term interest rates:

 +100 basis points 44.0 108.7 

 -100 basis points (44.0) (108.7) 

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 

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 97
Risks - Changes in interest rates could negatively affect the fair value of financial assets and liabilities, our results of 

operations, and our 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.

Transition from LIBOR 

In March 2021, the ICE Benchmark Administration Limited, the administrator of LIBOR, confirmed its intention to cease 

publishing the 1-week and 2-month U.S. Dollar LIBOR setting after December 2021 and to cease publishing the other most 

widely used tenors of U.S. Dollar LIBOR after June 2023. The U.K. Financial Conduct Authority, which regulates LIBOR 

publication, announced that it would not compel panel bank submissions after those dates. Freddie Mac has exposure to 

LIBOR, including financial instruments that mature after or extend beyond June 2023. Our exposure arises from floating rate 

securities that we historically issued, loans and securities we acquired (including loans we subsequently resecuritized), and 

derivatives we entered into that reference LIBOR. To manage the risk related to the LIBOR transition and prepare for and 

continue progress towards an orderly transition from LIBOR, we have formed LIBOR transition committees across businesses, 

functions, and products to develop appropriate strategies to address this transition. Senior management and the committees 

are working with FHFA on our plans for transition implementation. We also provide ongoing public communications, updates, 

and education about the status of this transition. 

The Federal Reserve Board and the Federal Reserve Bank of New York convened the Alternative Reference Rates Committee 

(ARRC), a group of private-market participants, to help ensure a successful transition from U.S. Dollar LIBOR to a more robust 

reference rate. The Federal Reserve Bank of New York began publishing the ARRC's recommended alternative, SOFR, in April 

2018. Various industry groups have continued working to implement plans and documentation to facilitate a transition to SOFR 

as the new market-accepted benchmark. We have been a member of the ARRC since 2018 and have participated in many of its 

working groups. 

We support the ARRC’s recommendation to replace U.S. Dollar LIBOR with SOFR and have taken steps to transition to that 

reference rate. We have issued SOFR-based debt securities and executed SOFR-based securitizations and interest-rate 

derivatives transactions. We purchase single-family ARMs and multifamily floating-rate loans indexed to SOFR, and effective 

January 1, 2021, we no longer purchase single-family ARMs and multifamily floating-rate loans tied to LIBOR. Beginning July 1, 

2021, we ceased issuing multifamily LIBOR-based securities. We continue to work with our customers, investors, and servicers 

to prepare to transition existing LIBOR-based ARM products containing ARRC-recommended fallback language to SOFRbased ARM products. In addition, in 4Q 2021, we transitioned from LIBOR to SOFR in measuring our interest-rate risk.

For a discussion of the risks related to the LIBOR transition, see Risk Factors - Market Risks - The discontinuance of 

LIBOR could negatively affect the fair value of our financial assets and liabilities, results of operations, and net worth. A 

transition to an alternative reference interest rate could present operational problems and subject us to possible 

litigation risk. We may be unable to take a consistent approach across our financial products.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 98
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 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 RCSA 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 RCSA 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 of defense.

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 attacks, other security incidents, 

and third-party failures; and issues requiring remediation. Other factors contributing to our heightened operational risk are 

discussed in Risk Factors - Operational Risks. We also continue to manage other operational risks, such as compliance risk.

While our operational risk profile remains elevated, we are continuing to strengthen our operational control environment by 

building out our operational risk resources within the first and second lines of defense.

Operational Resiliency Risk

Operational resiliency risk is the risk of the inability of an organization to quickly adapt to disruptions while maintaining 

continuous business operations and safeguarding its people, assets, and overall reputation. The inability to manage resiliency 

risk of our critical processes and supporting technology can negatively impact our ability to meet our business objectives. Our 

operational resiliency risk has increased as a result of the COVID-19 pandemic and is being managed through operational 

changes. For select applications, we have successfully completed the infrastructure migration to the cloud, enabling near 

continuous availability across primary and alternate data centers. However, further improvements are underway to reduce 

resiliency risk of our business critical processes. These improvements are designed to enable stability of business critical 

processes and meet the desired recovery time objectives.

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. 

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, damage our reputation, 

and cause financial losses.

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 99
Cybersecurity Risk

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 in those of our customers, counterparties, 

service providers, and financial institutions. Cybersecurity risks for companies like ours have increased significantly in recent 

years. Like many companies and government entities, from time to time we have been, and expect to continue to be, the target 

of attempted cyberattacks and other information security threats, including those from nation-state and nation-state supported 

actors. 

We continue to invest in the cybersecurity area to strengthen our capabilities to prevent, detect, respond to and mitigate risk, 

and protect our systems, networks, and other technology assets against unauthorized attempts to access confidential or other 

information (including personal information) or to disrupt or degrade our business operations. We have obtained insurance 

coverage relating to cybersecurity risks. However, this insurance may not be sufficient to provide adequate loss coverage or the 

insurer may deny coverage for a particular claim, and such insurance may not always be available to us on commercially 

reasonable terms or at all. Although to date we have not experienced any cyberattacks resulting in significant impact to our 

company, there is no assurance that our cybersecurity risk management program will prevent cyberattacks from having 

significant impacts in the future.

Insider threats also remain a significant risk as the workforce diversifies to include contractors, remote workers, and part-time 

employees. Our third-party vendors and their supply chain connections remain another significant risk. While we have 

strengthened our capabilities over critical third-party monitoring and surveillance with continued focus on detecting deliberate 

actions such as malicious exploitation, theft or destruction of data (including personal information), or the compromise of our 

systems or networks, our control over the security posture of our third-party vendors and their supply chain connections 

remains limited.

For additional information, see Risk Factors - Operational Risks - Potential 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 cyberattacks and other unauthorized access, 

disclosure, and disruption.        

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, cyberattacks and other security incidents, adverse financial 

conditions, or other disruptions. We are enhancing 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 data breaches through third parties that access and store our data (including personal information) and their supply chains. 

Efforts are underway to improve our controls and procedures related to third-party data sharing. We have not experienced 

significant issues with our third-party vendors, service providers, sellers, servicers, or other counterparties during the COVID-19 

pandemic. We have increased our monitoring of 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. We are also working 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 operational risk.

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, or their vendors and other business partners, for certain 

important functions. Any failures by those parties to deliver products or services, or to manage risks effectively, could 

disrupt our business operations, or expose us to other operational risks.

Model Risk

Model risk is the potential for adverse consequences from model errors or decisions based on the incorrect use or application 

of model outputs. The unprecedented events surrounding the COVID-19 pandemic have generated an increased degree of 

model risk and uncertainty. As a result, we expect our models to 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, prepayments, and interest rates. In response, we are mitigating this increased risk by monitoring model 

performance and applying model overlays and adjustments when deemed appropriate. These will be driven by the latest 

developments and emerging trends in the economy, as well as any additional government interventions and internal policy 

Management's Discussion and Analysis Risk Management

FREDDIE MAC | 2021 Form 10-K 100
changes. However, these 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 threelines-of-defense 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 mitigate 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 of defense 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 address regulatory concerns requiring the strengthening of these areas. To the extent 

additional concerns are identified, we will continue to coordinate with FHFA and our internal auditors to assess the impact and 

remediate these 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 of December 31, 2021. 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 | 2021 Form 10-K 101
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.

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 liquid 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.

These updated liquidity requirements have been effective since December 1, 2020 and have resulted in higher funding costs 

and negatively affected our net interest income during 2021. In addition, they have impacted the size and the allowable 

investments in our other investments portfolio.

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;

n	 Guarantee fees (inclusive of fees that we receive at the time we purchase a loan); and

n	 Net worth.

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 other expenses; 

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.

Management's Discussion and Analysis Liquidity and Capital Resources 

FREDDIE MAC | 2021 Form 10-K 102
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 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 

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 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.

Liquidity Profile

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. Our ability to maintain sufficient liquidity, including by pledging mortgage-related and other 

securities as collateral to other institutions, could cease or change rapidly and the cost of the available funding could increase 

significantly due to changes in market interest rates, market confidence, operational risks, and other factors.

Table 49 - Liquidity Sources

(In millions)

Balance(1) at 

December 31, 2021

Balance(1) at 

December 31, 2020 Description

• Other Investments Portfolio - 

Liquidity and Contingency 

Operating Portfolio

 $80,262 $95,894 • The liquidity and contingency operating portfolio, included within 

our other investments portfolio, is primarily used for short-term 

liquidity management.

• Mortgage Loans and MortgageRelated Securities - Liquid

Portion of the MortgageRelated Investments Portfolio

 43,393 67,562 • The liquid portion of our mortgage-related investments portfolio 

can be pledged or sold for liquidity purposes. The amount of cash 

we may be able to successfully raise 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 liquid portion of the 

mortgage-related investments portfolio.

Management's Discussion and Analysis Liquidity and Capital Resources 

FREDDIE MAC | 2021 Form 10-K 103
Other Investments Portfolio

The table below summarizes the balances in our other investments portfolio, which includes the liquidity and contingency 

operating portfolio. The investments in our other investments portfolio are important to our cash flow, collateral management, 

asset and liability management, and ability to provide liquidity and stability to the mortgage market. The other investments 

portfolio is primarily used for short-term liquidity management, cash and other investments held by consolidated trusts, and 

other investments, which include investments in debt securities used to pledge as collateral, LIHTC partnerships, and secured 

lending activities.

Table 50 - Other Investments Portfolio

December 31, 2021 December 31, 2020

(In millions)

Liquidity and 

Contingency 

Operating 

Portfolio

Custodial 

Account Other

Total Other 

Investments 

Portfolio(1)

Liquidity and 

Contingency 

Operating 

Portfolio

Custodial 

Account Other

Total Other 

Investments 

Portfolio(1)

Cash and cash equivalents $8,455 $1,596 $99 $10,150 $6,509 $17,380 $— $23,889 

Securities purchased under 

agreements to resell 43,729 34,000 807 78,536 65,753 38,487 763 105,003 

Non-mortgage related securities 28,078 — 4,695 32,773 23,632 — 3,321 26,953 

Other assets — — 8,194 8,194 — — 7,252 7,252 

Total $80,262 $35,596 $13,795 $129,653 $95,894 $55,867 $11,336 $163,097 

(1) Represents carrying value.

Our non-mortgage-related investments in the liquidity and contingency operating portfolio 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 $3.5 billion and $3.1 billion as of December 31, 

2021 and December 31, 2020, respectively.

The liquidity and contingency operating portfolio also included collateral posted to us in the form of cash primarily by 

derivatives counterparties of $1.2 billion and $2.8 billion as of December 31, 2021 and December 31, 2020, respectively. We 

have invested this collateral in securities purchased under agreements to resell and non-mortgage-related securities as part of 

our liquidity and contingency operating portfolio, although the collateral may be subject to return to our counterparties based 

on the terms of our master netting and collateral agreements. 

Mortgage Loans and Mortgage-Related Securities

We invest principally in mortgage loans and mortgage-related securities, certain categories of which are largely unencumbered 

and liquid. Our primary source of liquidity among these mortgage assets is our holdings of agency 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 large size of our portfolio of liquid 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 MortgageRelated Investments Portfolio and Indebtedness for additional details.

Management's Discussion and Analysis Liquidity and Capital Resources 

FREDDIE MAC | 2021 Form 10-K 104
Primary Sources of Funding

Debt securities that we issue are classified either as debt securities of consolidated trusts held by third parties or debt of 

Freddie Mac. The following table lists the sources and balances of our funding as of the dates shown and a brief description of 

their importance to Freddie Mac. 

Table 51 - Funding Sources 

(In millions) December 31, 2021(1) December 31, 2020(1) Description

• Debt of Freddie Mac $177,131 $284,370 • Debt of Freddie Mac is used to fund our business activities.

• Debt Securities of 

Consolidated Trusts

 2,803,054 2,308,176 • Debt securities of consolidated trusts are 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 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® - We issue 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 - We issue 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 two years.

As of December 31, 2021, our aggregate indebtedness, calculated as the par value of debt of Freddie Mac, was $181.7 billion, 

which was below the current $300.0 billion debt cap limit imposed by the Purchase Agreement. The Purchase Agreement debt 

limit cap will decrease to $270.0 billion on January 1, 2023 as a result of the decrease in the Mortgage Asset limit under the 

Purchase Agreement to $225.0 billion on December 31, 2022. 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.

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.

Management's Discussion and Analysis Liquidity and Capital Resources 

FREDDIE MAC | 2021 Form 10-K 105
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 52 - Debt of Freddie Mac Activity 

Year Ended December 31,

2021 2020

(Dollars in millions) Par Value Average Rate(1) Par Value Average Rate(1)

Short-term:

Beginning balance $4,955 1.31 % $101,237 1.92 %

Issuances 22,050 0.04 162,290 1.02 

Repayments (24,569) 0.15 (16,608) 1.40 

Maturities (2,436) 1.49 (241,964) 1.40 

Ending balance — — 4,955 1.31 

Securities sold under agreement to repurchase 7,333 (0.10) — — 

Offsetting arrangements (7,333) — 

Securities sold under agreement to repurchase, net — — — — 

Total short-term debt — — 4,955 1.31 

Long-term:

Beginning balance 281,386 1.12 171,876 2.65 

Issuances 1,090 0.60 304,087 0.69 

Repayments (58,067) 0.70 (159,945) 1.64 

Maturities (42,794) 1.06 (34,632) 1.88 

Total long-term debt 181,615 1.11 281,386 1.12 

Total debt of Freddie Mac, net $181,615 1.11 % $286,341 1.12 %

(1) Average rate is weighted based on par value.

Our outstanding total debt of Freddie Mac balance decreased primarily due to a lower mortgage-related investments portfolio 

balance and lower cash window purchase volume. In 2020, we replaced a majority of our short-term debt with longer-term 

callable and non-callable debt to comply with the minimum liquidity requirements established by FHFA. As a result of this 

funding mix change, our funding cost has increased. 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, 2021, $62 billion of the outstanding 

$69 billion of callable debt may be called within one year, not including callable debt due to contractually mature within one 

year.

Maturity and Redemption Dates

The following table presents the 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 53 - Maturity and Redemption Dates 

As of December 31, 2021

(Par value in billions) Contractual Maturity Date Earliest Redemption Date

Debt of Freddie Mac(1):

1 year or less $56 $118 

1 year through 2 years 39 36 

2 years through 3 years 13 2 

3 years through 4 years 35 12 

4 years through 5 years 5 — 

Thereafter 32 12 

STACR and SCR debt(2) 9 9 

Total debt of Freddie Mac $189 $189 

(1) Includes 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, when such amounts meet the conditions for offsetting in the accounting guidance.

(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 borrower at any time generally without penalty and are, therefore, included as a separate category in the table.

Management's Discussion and Analysis Liquidity and Capital Resources 

FREDDIE MAC | 2021 Form 10-K 106
Debt Securities of Consolidated Trusts

The largest component of debt on our consolidated balance sheets is debt securities 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 fund the majority of our Single-Family 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 securities 

issued by the trusts, the majority of which are Level 1 Securitization Products.

Debt securities of consolidated trusts represent our liability to third parties that hold beneficial interests in our consolidated 

securitization trusts. Debt securities of consolidated trusts are principally repaid from the cash flows of the mortgage loans held 

by the securitization trusts that issued the debt securities. 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 more information on our purchases of loans from trusts, see Our Business Segments - Single-Family - 

Business Overview.

At December 31, 2021, our estimated net exposure to these debt securities (including the amounts that are due to Freddie Mac 

for debt securities 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 securities of our consolidated trusts.

Table 54 - Activity for Debt Securities of Consolidated Trusts Held by Third Parties

Year Ended December 31,

(In millions) 2021 2020

Beginning balance $2,240,602 $1,854,802 

Issuances 1,532,367 1,231,008 

Extinguishments (1,040,913) (845,208) 

Ending balance 2,732,056 2,240,602 

Unamortized premiums and discounts 70,998 67,574 

Debt securities of consolidated trusts held by third parties $2,803,054 $2,308,176 

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, 2022.

Table 55 - Freddie Mac Credit Ratings 

Nationally Recognized Statistical Rating

Organization

S&P Moody's Fitch

Senior long-term debt AA+ Aaa AAA

Short-term debt A-1+ P-1 F1+

Preferred stock(1) D Ca C

Outlook Stable Stable Negative

(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.

Management's Discussion and Analysis Liquidity and Capital Resources 

FREDDIE MAC | 2021 Form 10-K 107
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 nonqualified 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 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 is 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 is uncertain, including future payments of principal and interest related to debt securities of 

consolidated trusts held by third parties, STACR and SCR 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. 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 securitization and other mortgage-related guarantee activities. 

Our off-balance sheet arrangements related to securitization activities primarily consist of guaranteed K Certificates and SB 

Certificates. Our guarantee of these securitization activities and other mortgage-related guarantees may result in liquidity needs 

to cover potential cash flow shortfalls from borrower defaults. As of December 31, 2021 and December 31, 2020, the 

outstanding UPB of these guarantees was $366.0 billion and $337.0 billion, respectively. 

In addition to our securitization and other mortgage-related guarantees, we have certain other guarantees that are accounted 

for as derivative instruments and are recognized on our consolidated balance sheets at fair value. See Note 9 for additional 

information on these guarantees, which are not included in the totals above.

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. As of 

December 31, 2021 and December 31, 2020, the total amount of our off-balance sheet exposure related to Fannie Mae 

securities backing Freddie Mac resecuritization products was approximately $111.2 billion and $85.8 billion, respectively.

Commitments

We have entered 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. As of December 31, 2021 and December 31, 2020, these commitments totaled $16.5 billion and 

$59.2 billion in notional amount, respectively. 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 

and are not included in the totals above. See Note 9 for additional information on these commitments.

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," 

which were $4.2 billion and $4.8 billion at December 31, 2021 and December 31, 2020, respectively. 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, 2021 and December 31, 2020, there were no liquidity guarantee advances outstanding.

Management's Discussion and Analysis Liquidity and Capital Resources 

FREDDIE MAC | 2021 Form 10-K 108
Cash Flows

n		2021 vs. 2020 - Cash and cash equivalents (including restricted cash and cash equivalents) decreased by $13.7 billion

from $23.9 billion as of December 31, 2020 to $10.2 billion as of December 31, 2021, primarily due to a decrease in trust 

cash driven by lower loan prepayments and a decline in our operating cash due to a lower cash window purchase forecast 

and continued funding of maturities, calls, and buybacks of debt of Freddie Mac without issuing new debt.

n		2020 vs. 2019 - Cash and cash equivalents (including restricted cash and cash equivalents) increased by $18.7 billion from 

$5.2 billion as of December 31, 2019 to $23.9 billion as of December 31, 2020, primarily due to higher loan prepayments 

and our transition to comply with updated minimum liquidity requirements established by FHFA.

Capital Resources

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, under 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, under certain conditions, to 

eliminate deficits in our net worth. Obtaining equity funding from Treasury pursuant to its commitment under the Purchase 

Agreement enables us to avoid being placed into receivership by FHFA and to maintain the confidence of the debt markets as a 

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, 2021, which will be reduced by any future draws. 

In May 2017, FHFA, as Conservator, issued guidance to us to evaluate and manage our financial risk and to make business 

decisions, while in conservatorship, utilizing a risk-based CCF, a capital system with detailed formulae provided by FHFA. In 

December 2020, FHFA published a final rule that establishes the ERCF as a new enterprise regulatory capital framework for 

Freddie Mac and Fannie Mae. The ERCF, which went into effect in February 2021, has a transition period for compliance. 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 consent order or other transition order. Pursuant to the final rule, 

we are required to comply with the regulatory capital reporting requirements under the ERCF in 2022, with our initial quarterly 

capital report due by May 30, 2022, 60 days after the last day of the first quarter.

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 $28.0 billion as of December 31, 2021, no dividend is payable to 

Treasury for the quarter ended December 31, 2021. 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, 2021.

The aggregate liquidation preference of the senior preferred stock owned by Treasury was $98.0 billion as of December 31, 

2021. 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 

12.

Management's Discussion and Analysis Liquidity and Capital Resources 

FREDDIE MAC | 2021 Form 10-K 109
We invest our retained earnings primarily in short-term investments. The table below presents activity related to our net worth.

Table 56 - Net Worth Activity

Year Ended December 31,

(In millions) 2021 2020 2019

Ending balance, December 31 $16,413 $9,122 $4,477 

Cumulative-effect adjustment (1) — (240) — 

Beginning balance, January 1 16,413 8,882 4,477 

Comprehensive income (loss) 11,620 7,531 7,787 

Capital draws from Treasury — — — 

Senior preferred stock dividends declared — — (3,142) 

Total equity / net worth $28,033 $16,413 $9,122 

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 97,959 86,539 79,322 

(1) Cumulative-effect adjustment related to our adoption of CECL on January 1, 2020.

Management's Discussion and Analysis Liquidity and Capital Resources 

FREDDIE MAC | 2021 Form 10-K 110
CONSERVATORSHIP AND RELATED MATTERS 

Supervision of Our Company During Conservatorship

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. 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. Given our 

mission and the important role our Conservator has placed on Freddie Mac in addressing housing and mortgage market 

conditions, we sometimes take actions that could have a negative impact on our business, operating results, or financial 

condition. Certain of these actions are intended to help homeowners and the mortgage market. 

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, which we entered into through FHFA, in its capacity as Conservator, on September 7, 

2008, 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 sheet 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, or 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, 2021, the aggregate liquidation preference of 

the senior preferred stock was $98.0 billion, and the amount of available funding remaining under the Purchase Agreement was 

$140.2 billion, which will be reduced by any future draws. 

Treasury, as the holder of the senior preferred stock, is entitled to receive cumulative 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 

Management's Discussion and Analysis Conservatorship and Related Matters

FREDDIE MAC | 2021 Form 10-K 111
by, and paid at the direction of, the Conservator, acting as successor to the rights, titles, powers, and privileges of the Board of 

Directors. We have had a net worth sweep dividend requirement to Treasury on the senior preferred stock since the first quarter 

of 2013, which was implemented pursuant to the August 2012 amendment to the Purchase Agreement. Our cash dividend 

requirement each quarter 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 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 have another dividend requirement on 

the senior preferred stock until we have built sufficient capital 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.

After the Capital Reserve End Date, our dividend requirement to Treasury on the senior preferred stock 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. As a result, after the 

Capital Reserve End Date, all or significant portions of our future profits will be distributed to Treasury, and the holders of our 

common stock and non-senior preferred stock will not receive benefits that could otherwise flow from such profits. 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. 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. 

This would not affect our ability to draw funds from Treasury under the Purchase Agreement.

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. We are not permitted to redeem the senior 

preferred stock prior to the termination of Treasury's funding commitment under the Purchase Agreement. 

We are also required under the Purchase Agreement to pay a quarterly commitment fee to Treasury, which 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, this commitment fee requirement has been suspended since January 1, 2013 and until 

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 and warrant also 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: 

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.

In addition, the Purchase Agreement requires us to comply with the ERCF as published in December 2020, disregarding any 

subsequent amendment or other modification to that rule. For more 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	 Since 2014, we have been managing the mortgage-related investments portfolio so that the UPB of our mortgage assets 

does not exceed 90% of the cap under the Purchase Agreement, which reached $250 billion as of December 31, 2018. In 

February 2019, FHFA directed us to maintain the mortgage-related investments portfolio at or below $225 billion at all 

times. In November 2019, FHFA instructed us, by January 31, 2020, to include 10% of the notional value of certain 

interest-only securities owned by Freddie Mac in the calculation of this portfolio, while continuing to maintain the portfolio 

below the limit imposed by FHFA. The Purchase Agreement cap on our mortgage-related investments portfolio will be 

lowered from $250 billion to $225 billion at the end of 2022. Since January 2021, the calculation of mortgage assets 

Management's Discussion and Analysis Conservatorship and Related Matters

FREDDIE MAC | 2021 Form 10-K 112
subject to the Purchase Agreement cap also includes 10% of the notional value of interest-only securities. Our mortgagerelated investments portfolio was $123.5 billion as of December 31, 2021, including $12.5 billion representing 10% of the 

notional amount of the interest-only securities we held as of December 31, 2021. 

n	 With respect to the composition of our mortgage-related investments portfolio, FHFA instructed us to: (1) reduce the 

amount of agency MBS we hold to no more than $50 billion by June 30, 2021 and no more than $20 billion by June 30, 

2022, with all dollar caps to be based on UPB; and (2) reduce the UPB of our existing portfolio of collateralized mortgage 

obligations (CMOs), which are also sometimes referred to as REMICs, to zero by June 30, 2021. 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 securitization structures.

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 has been $300 billion since January 1, 

2019. As of December 31, 2021, our aggregate indebtedness for purposes of the debt cap was $181.7 billion. Our debt 

cap under the Purchase Agreement will decrease 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.

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. 

Our results against the limits imposed on our mortgage-related investments portfolio and aggregate indebtedness for the year 

ended December 31, 2021 are shown below.

Mortgage Assets(1) as of December 31, 

(In billions) 

$213 $189

$124

$250 $250 $250

$225 $225 $225

90% of mortgage-related investments

portfolio limit

Mortgage-related investments portfolio

limit

Mortgage-related investments portfolio

ending balance

2019 2020 2021

(1) 2021 and 2020 include 10% of the notional value of certain interest-only 

securities owned by Freddie Mac. 2020 has been revised to conform to the 

current presentation.

Indebtedness as of December 31,

(In billions)

$283 $287

$182

$300 $300 $300

Indebtedness limit

Total debt of Freddie Mac outstanding

2019 2020 2021

Management's Discussion and Analysis Conservatorship and Related Matters

FREDDIE MAC | 2021 Form 10-K 113
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, subject to the related Purchase Agreement restriction described below, which 

has been suspended; 

– A refinancing with streamlined underwriting for high LTV ratios; 

– A loan with temporary underwriting flexibilities due to exigent circumstances, as determined in consultation with 

FHFA; or 

– Secured by manufactured housing.

The Purchase Agreement also includes restrictions on the volume of our cash window activities, acquisitions of single-family 

loans with certain LTV, DTI, and credit score characteristics at origination, and acquisitions of single-family loans secured by 

second homes or investment properties, but these requirements have been suspended until the later of September 14, 2022 

and six months after Treasury so notifies Freddie Mac. For additional information on the suspended Purchase Agreement 

requirements, see MD&A – Regulation and Supervision – Legislative and Regulatory Developments – September 2021 

Letter Agreement with Treasury.

We will continue to manage these activities in accordance with our risk limits and guidance from FHFA.

Limits on Our Multifamily Loan Purchase Activity

The amount and type of multifamily loans that we purchase are significantly influenced by the loan purchase cap established by 

FHFA for our multifamily business. In October 2021, FHFA announced that the 2022 loan purchase cap for the multifamily 

business will be $78 billion, up from $70 billion in 2021. FHFA will continue to require at least 50% of the Multifamily new 

business activity to be mission-driven, affordable housing. FHFA has changed certain definitions of mission-driven, affordable 

housing and, in 2022, such definitions will include loans on affordable units in cost-burdened renter markets and loans to 

finance energy and water efficiency improvements with units affordable to renters at or below 60% of AMI. In 2022, FHFA also 

will require at least 25% of the Multifamily new business activity to be affordable to renters at or below 60% of AMI, up from 

20% in 2021. The loan purchase cap is subject to reassessment by FHFA throughout the year to determine whether an increase 

in the cap is appropriate based on a stronger than expected overall market. To prevent market disruption, if FHFA determines 

the actual size of the market is smaller than was initially projected, FHFA will not reduce the cap. For additional information on 

the Multifamily loan purchase cap, see MD&A - Our Business Segments - Multifamily - Products and Activities - Loan 

Purchase.

The Purchase Agreement also includes restrictions on our multifamily loan purchase activity, but these Purchase Agreement 

restrictions have been suspended until the later of September 14, 2022 and six months after Treasury so notifies Freddie Mac. 

For additional information, see MD&A – Regulation and Supervision - Legislative and Regulatory Developments – 

September 2021 Letter Agreement with Treasury.

Management's Discussion and Analysis Conservatorship and Related Matters

FREDDIE MAC | 2021 Form 10-K 114
FHFA's Strategic Plan: Fiscal Years 2021-2024 and 

Conservatorship Scorecard

In October 2020, FHFA released its Strategic Plan for fiscal years 2021-2024. This Strategic Plan establishes the goals needed 

for FHFA to fulfill its statutory duties.

This Strategic Plan formalizes the direction of FHFA, and its regulated entities, by updating FHFA's mission, vision, and values, 

and by establishing three new strategic goals:

n Ensuring safe and sound regulated entities through world-class supervision;

n Fostering competitive, liquid, efficient, and resilient (CLEAR) national housing finance markets; and

n Positioning FHFA as a model of operational excellence by strengthening its workforce and infrastructure.

In February 2021, FHFA released the 2021 Conservatorship Scorecard. The purpose of this Scorecard is to ensure that the 

Enterprises and CSS focus on their core mission responsibilities, operate in a manner appropriate for entities in conservatorship 

with limited capital buffers, and undertake those activities necessary to support an exit from conservatorship. In August 2021, 

FHFA removed the following two objectives from the 2021 Conservatorship Scorecard: (1) Roadmap Toward End of 

Conservatorship: Continue to provide support to FHFA as needed to develop a roadmap with milestones for exiting 

conservatorship, including the development of any capital restoration plans, and (2) Housing Market Reform and Alignment: 

Conduct such activities as directed by FHFA related to housing market reform. For more information on the 2021 

Conservatorship Scorecard, see Executive Compensation - CD&A - Determination of 2021 At-Risk Deferred Salary - 

At-Risk Deferred Salary Based on Conservatorship Scorecard Performance.

In November 2021, FHFA released the 2022 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 more information on the 2022 Conservatorship Scorecard, 

see our Current Report on Form 8-K filed on November 18, 2021.

For more information on the conservatorship and related matters, see Regulation and Supervision, Risk Factors - 

Conservatorship and Related Matters, Note 2, Note 12, 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.

Equitable Housing Finance Plan

On September 7, 2021, FHFA announced that Freddie Mac and Fannie Mae will be required to submit equitable housing 

finance plans to FHFA. These plans will cover a three-year period and will be updated annually. The plans are intended to 

identify and address barriers to sustainable housing opportunities, including the Enterprises' goals and action plans to advance 

equity in housing finance for the next three years. FHFA will also require the Enterprises to submit annual progress reports on 

the actions undertaken during the prior year to implement their plans. In December 2021, we submitted our 2022-2024 

Equitable Housing Finance Plan to FHFA. 

Management's Discussion and Analysis Conservatorship and Related Matters

FREDDIE MAC | 2021 Form 10-K 115
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 set forth in 

the GSE Act. 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 initial and 

subsequent 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. Our first resolution plan must be submitted to FHFA in April 2023.

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:

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 

Management's Discussion and Analysis Regulation and Supervision

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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 would be required to determine the carrying value of our assets, which 

could lead to substantially different financial results. For more 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

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. 

In May 2017, FHFA, as Conservator, issued guidance to us to evaluate and manage our financial risk and to make business 

decisions utilizing a risk-based CCF, a capital system with detailed formulae provided by FHFA. We have used FHFA's CCF, 

and internal capital methodologies, where available, to measure risk for making economically effective decisions. The CCF 

includes specific requirements relating to risk on our book of business and modeled returns on our new acquisitions. In 

December 2020, FHFA published the ERCF, establishing a new regulatory capital framework for Freddie Mac and Fannie Mae. 

In accordance with FHFA guidance, we are transitioning the management of our business from the CCF to the ERCF. 

The ERCF establishes risk-based and leverage capital requirements for the Enterprises, and includes the following: 

n	 Supplemental 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 final rule includes leverage-based and risk-based 

requirements, which together determine the requirements for each tier of capital;

n	 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;

n	 A requirement to file quarterly public capital reports with FHFA starting in 2022, regardless of our status in conservatorship; 

n	 A requirement to maintain capital for operational and market risk, in addition to our credit risk;

n	 Specific minimum percentages, or "floors," on the risk-weights applicable to single-family and multifamily exposures, 

which have the effect of increasing the capital required to be held for loans otherwise subject to lower risk weights;

n	 Specific floors on the risk-weights applicable to retained portions of credit risk transfer transactions, which have the effect 

of decreasing the capital relief obtained from these transactions; and 

n	 Additional elements based on U.S. banking regulators' regulatory capital framework, including the phased implementation 

of advanced approaches as an alternative to the standardized approach for measuring risk weighted assets.

The ERCF will require us to hold substantially more capital than prior requirements. Our current capital levels are significantly 

below the levels that would be required under the ERCF. The ERCF, which went into effect in February 2021, 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 later compliance date provided in a consent order or other 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, 2025 or any later compliance 

date specified by FHFA. Pursuant to the final rule, we are required to comply with the regulatory capital reporting requirements 

under the ERCF in 2022, with our initial quarterly capital report due by May 30, 2022, 60 days after the last day of the first 

quarter. Further, the Purchase Agreement includes a covenant requiring us to comply with the ERCF disregarding any 

subsequent amendment or other modifications to the final rule. As a result, any amendments or FHFA-directed modifications to 

the ERCF may affect our compliance with this covenant. For additional information on these capital standards, see Note 19 

and 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. In accordance with FHFA guidance, in August 2021, we disclosed the results of both our 

2021 and 2020 "severely adverse" scenario stress tests. 

Management's Discussion and Analysis Regulation and Supervision

FREDDIE MAC | 2021 Form 10-K 117
New Products 

The GSE Act requires Freddie Mac and Fannie Mae to obtain the approval of FHFA before initially offering any product (as 

defined in the statute), subject to certain exceptions. 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 these statutory requirements in July 2009, it 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 October 2020, 

FHFA published a proposed rule that, if adopted, will replace the interim final rule. The proposed rule outlines the process for 

FHFA review and timelines for approving a new product. It sets forth the criteria for evaluating whether a new product is within 

the Enterprise’s Charter, is in the public interest, and is consistent with maintaining the safety and soundness of the Enterprise 

or the mortgage finance system. It also establishes a new three-part objective test for determining whether an activity is a new 

activity.

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. In February 2010, FHFA stated that it does not intend for us to undertake uneconomic or high-risk activities in 

support of the housing goals nor does it intend for the state of conservatorship to be a justification for withdrawing our support 

from these market segments.

FHFA housing goals applicable to our 2021 purchases consist of four goals and one subgoal for single-family owner-occupied 

housing, one multifamily affordable housing goal, and two multifamily affordable housing subgoals. Single-family goals are 

expressed as a percentage of the total number of eligible loans underlying our total single-family loan purchases, while the 

multifamily goals are expressed in terms of minimum numbers of units financed.

Three of the single-family housing goals and the subgoal target purchase mortgage loans for low-income families, very lowincome families, and/or families that reside in low-income areas. The single-family housing goals also include one goal that 

targets refinancing loans for low-income families. The multifamily affordable housing goal targets multifamily rental housing 

affordable to low-income families. The multifamily affordable housing subgoals target multifamily rental housing affordable to 

very low-income families and small (5- to 50-unit) multifamily properties affordable to low-income families. 

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 

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 Regulatory Risks - We 

may make certain changes to our business in an attempt to meet our housing goals, duty to serve, and equitable 

housing finance requirements, which may adversely affect our profitability.

Affordable Housing Goal Results and Housing Plan

In December 2021, FHFA informed us that, for 2020, we achieved four of our five single-family affordable housing goals and all 

three of our multifamily goals. Because FHFA determined that we failed to meet one of our housing goals for 2020 and that 

achievement of that goal was feasible, FHFA required us to submit a housing plan that indicates how we plan to meet the 

missed goal during 2022 to 2024. We submitted our housing plan to FHFA in February 2022. Our performance on the goals, as 

determined by FHFA, is set forth in the table below.

Management's Discussion and Analysis Regulation and Supervision

FREDDIE MAC | 2021 Form 10-K 118
Table 57 - 2020 and 2019 Affordable Housing Goals Results

2020 2019

Affordable Housing Goals

Benchmark 

Level

Market 

Level Results 

Benchmark 

Level

Market 

Level Results

Single-Family

Low-income home purchase goal 24 % 27.6 % 28.5 % 24 % 26.6 % 27.4 %

Very low-income home purchase goal 6 % 7.0 % 6.9 % 6 % 6.6 % 6.8 %

Low-income areas home purchase goal 18 % 22.4 % 21.8 % 19 % 22.9 % 22.9 %

Low-income areas home purchase subgoal 14 % 17.6 % 17.1 % 14 % 18.1 % 18.0 %

Low-income refinance goal 21 % 21.0 % 19.7 % 21 % 24.0 % 22.4 %

Multifamily

Low-income goal (units) 315,000 N/A 473,338 315,000 N/A 455,451 

Very low-income subgoal (units) 60,000 N/A 107,105 60,000 N/A 112,773 

Small multifamily (5-50 units) low-income subgoal 10,000 N/A 28,142 10,000 N/A 34,847 

We expect to report our performance with respect to the 2021 affordable housing goals included in Table 58 below in March 

2022. At this time, based on preliminary information, we believe we met all five of our single-family goals and all three of our 

multifamily goals. We expect that FHFA will make a final determination on our 2021 performance following the release of market 

data in 2022.

2021-2024 Single-Family and 2021-2022 Multifamily Affordable Housing Goals

In December 2021, FHFA announced its higher benchmark levels for the single-family affordable housing goals for Freddie Mac 

for 2022 to 2024. These goals include two new single-family home purchase subgoals: a Minority Census Tracts Home 

Purchase Subgoal and a Low-Income Census Tracts Home Purchase Subgoal. These two new goals replace the previous lowincome areas subgoal.

FHFA also announced its benchmark levels for the multifamily affordable housing goals for Freddie Mac for 2022. In response 

to public comments on the proposed affordable housing goals and the differential impact of COVID-19 on various multifamily 

origination segments, the multifamily housing goals apply to 2022 only. In 2022, FHFA expects to engage in further rulemaking 

to establish the multifamily benchmarks for 2023 and will notify the Enterprises of the low-income areas home purchase goal 

benchmark level for 2022. FHFA also established different benchmark levels for Freddie Mac and Fannie Mae for the small 

multifamily low-income subgoal (23,000 for Freddie Mac and 17,000 for Fannie Mae).

Our single-family and multifamily affordable housing goal benchmark levels for 2021 and our single-family affordable housing 

goal benchmark levels for 2022-2024 and multifamily affordable housing goal benchmark levels for 2022 are set forth below.

Table 58 - 2021-2024 Single-Family and 2021-2022 Multifamily Affordable Housing Goal Benchmark Levels

Affordable Housing Goals

Benchmark

Levels for 2021

Benchmark

Levels for 

2022-2024

Single-Family 

Low-income home purchase goal 24 % 28 %

Very low-income home purchase goal 6 % 7 %

Low-income areas home purchase goal 18 % TBD

Low-income areas subgoal 14 % N/A

Minority census tracts home purchase subgoal (new) N/A 10 %

Low-income census tracts home purchase subgoal (new) N/A 4 %

Low-income refinance goal 21 % 26 %

Multifamily 

Low-income goal (units) 315,000 415,000 

Very low-income subgoal (units) 60,000 88,000 

Small multifamily (5-50 units) low-income subgoal (units) 10,000 23,000 

Management's Discussion and Analysis Regulation and Supervision

FREDDIE MAC | 2021 Form 10-K 119
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. In 

December 2016, FHFA issued a final rule to implement our duty to serve these underserved markets. Under this rule, 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 2018-2021. FHFA has evaluated our 2020 Duty to 

Serve performance under this plan and determined that we complied with our Duty to Serve requirements in all three 

underserved markets in 2020. As required by the FHFA Duty to Serve regulation, in May 2021, we submitted to FHFA a 

proposed Duty to Serve Underserved Markets Plan covering a three-year period from 2022 to 2024. In October 2021, we 

submitted to FHFA a revised proposed Plan that reflected FHFA feedback. On December 21, 2021, FHFA requested that 

Freddie Mac resubmit our Plan to address additional feedback.

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 2021, we completed $1.3 trillion of new business purchases subject to this requirement and accrued $539.8 million of 

related expense, of which $350.9 million is related to the Housing Trust Fund administered by HUD and $188.9 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.

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 Conservatorship and Related Matters - Limits on Our Mortgage-Related Investments 

Portfolio and Indebtedness for more information.

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 

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.

Management's Discussion and Analysis Regulation and Supervision

FREDDIE MAC | 2021 Form 10-K 120
Consumer Financial Protection Bureau

The CFPB regulates consumer financial products and services. The CFPB adopted a number of final rules relating to loan 

origination, finance, and servicing practices that generally went into effect in January 2014. The 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 loans that generally would constitute 

qualified mortgages under applicable CFPB regulations. The directive generally restricts us from acquiring loans that are not 

fully amortizing, have a term greater than 30 years, or have points and fees in excess of 3% of the total loan amount (or other 

threshold amount for loans of less than $114,847). Under CFPB rules, one category of qualified mortgages consists of loans 

that are eligible for purchase or guarantee by either Freddie Mac or Fannie Mae. Under the final rule, as amended in April 2021, 

this category of qualified mortgages will expire upon the earlier of the Enterprise's exit from conservatorship or the mandatory 

compliance date of final amendments to the definition of a qualified mortgage in the ability-to-repay rule (October 1, 2022), 

rather than on July 1, 2021.

While the CFPB issued a final rule in October 2020 that extended the category of qualified mortgages that consists of loans that 

are eligible for purchase or guarantee by either Freddie Mac or Fannie Mae, FHFA provided that the Enterprises were only 

permitted to purchase such loans until August 31, 2021, provided the application received date for such loans was prior to July 

1, 2021. In December 2020, the CFPB issued a final rule that amended the qualified mortgage definition by establishing pricing 

thresholds for loans to qualify as qualified mortgages, eliminated the DTI threshold and the standards for determining monthly 

debt and income under Appendix Q, and refined the general qualified mortgage definition to require lenders to consider and 

verify borrowers’ income, assets, debts, and DTI or residual income. While the mandatory compliance date of these final 

amendments to the definition of qualified mortgage is October 1, 2022 the Enterprises adopted this policy on July 1, 2021 

pursuant to FHFA directive. Under the amended ability-to-repay rule, qualified mortgages will include loans for which lenders 

consider and verify the borrower’s income, assets, debts, and DTI or residual income, meet the newly established pricing 

thresholds, and satisfy the previously established requirements regarding product features, pricing, points, and fees.

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.

Legislative and Regulatory Developments

September 2021 Letter Agreement with Treasury

On September 14, 2021, we, acting through FHFA as our Conservator, and Treasury entered into a letter agreement to suspend 

the following Purchase Agreement requirements related to our cash window activities, multifamily loan purchase activity, singlefamily loan acquisitions:

n	 Cash Window Activity - Beginning on January 1, 2022, we are required to limit the volume purchased through the cash 

window to $1.5 billion per lender during any period comprising four calendar quarters;

n	 Multifamily New Business Activity - We are required to cap multifamily loan purchases at $80 billion in any 52-week period, 

subject to annual adjustment by FHFA based on changes in the Consumer Price Index. At least 50% of our multifamily loan 

purchases in any calendar year must be, at the time of acquisition, classified as mission-driven pursuant to FHFA 

guidelines; and

n	Single-Family Loan Acquisitions - We are required to limit our acquisition of certain single-family mortgage loans.

l	 A maximum of 6% of purchase money mortgages and 3% of refinance mortgages over the preceding 52-week period 

can have two or more of the following characteristics at origination: combined LTV ratio greater than 90%; DTI ratio 

greater than 45%; and FICO or equivalent credit score less than 680.

Management's Discussion and Analysis Regulation and Supervision

FREDDIE MAC | 2021 Form 10-K 121
l	 We are required to limit acquisitions of single-family mortgage loans secured by either second homes or investment 

properties to 7% of the single-family mortgage loan acquisitions over the preceding 52-week period.

Each such suspension shall terminate on the later of September 14, 2022 and six months after Treasury so notifies Freddie 

Mac. We will continue to manage these activities pursuant to our risk limits and FHFA guidance.

Extension of Legislated 10 Basis Point Fee

In December 2011, Congress enacted the Temporary Payroll Tax Cut Continuation Act of 2011 (TCCA) pursuant to which, at 

the direction of FHFA, we increased the guarantee fee by 10 basis points on all single-family residential mortgages delivered to 

us on or after April 1, 2012. Pursuant to the TCCA, the revenue generated by this fee increase is paid to Treasury. Although the 

guarantee fee provision of the TCCA expired on October 1, 2021, FHFA advised us to charge and remit this 10 basis point fee 

to Treasury with respect to single-family residential loans acquired by us before January 1, 2022. On November 15, 2021, 

President Biden signed into law the Infrastructure Investment and Jobs Act, which extended our obligation to charge and remit 

to Treasury this 10 basis point fee on single-family residential mortgages delivered to us through October 1, 2032.

FHFA Proposed Rules to Amend the ERCF

On September 15, 2021, FHFA issued a notice of proposed rulemaking to amend the ERCF. The proposed amendments would 

refine the PLBA and the capital treatment of CRT transactions. Specifically, the proposed rule would replace the fixed PLBA 

equal to 1.5% of an Enterprise's adjusted total assets with a dynamic PLBA equal to 50% of the Enterprise's stability capital 

buffer (which is related to the Enterprise's relative share of total residential mortgage debt outstanding that exceeds 5%); 

replace the prudential floor of 10% on the risk weight assigned to any retained CRT exposure with a prudential floor of 5% on 

the risk weight assigned to any retained CRT exposure; and remove the requirement that an Enterprise must apply an overall 

effectiveness adjustment to its retained CRT exposures. 

On October 27, 2021, FHFA issued an additional notice of proposed rulemaking to amend the ERCF by introducing additional 

public disclosure requirements for the Enterprises. This proposed rule would implement quarterly quantitative and annual 

qualitative disclosure requirements for the Enterprises related to regulatory capital instruments, risk-weighted assets calculated 

under the ERCF’s standardized approach, and risk management policies and procedures. 

On December 16, 2021, FHFA issued a notice of proposed rulemaking that would require Freddie Mac and Fannie Mae to 

develop, maintain, and submit annual capital plans to FHFA. Under the proposed rule the Enterprises' capital plans would be 

required to include the following:

n	 An assessment of the expected sources and uses of capital over the planning horizon;

n	 Estimates of projected revenues, expenses, losses, reserves, and pro forma capital levels under a range of the Enterprise's 

internal scenarios, as well as under FHFA's scenarios;

n	 A description of all planned capital actions over the planning horizon;

n	 A discussion of how the Enterprise will, under expected and stressful conditions, maintain capital commensurate with its 

business risks and continue to serve the housing market; and

n	 A discussion of any expected changes to the Enterprise's business plan that are likely to have a material impact on the 

Enterprise's capital adequacy or liquidity.

The proposed rule also incorporates the determination of the stress capital buffer into the capital planning process and builds 

upon the existing supervisory expectation that the Enterprises incorporate forward-looking projections of revenue and losses to 

monitor and maintain their internal capital adequacy. FHFA is seeking comment on this proposed rule through February 25, 

2022.

We cannot predict whether and when FHFA will finalize these amendments to the ERCF or the content of any such amended 

rule that FHFA may adopt, or how this will affect our ability to comply with the covenant in the Purchase Agreement that 

requires us to comply with the ERCF as published in December 2020.

Special Purpose Credit Programs

On December 6, 2021, HUD’s Office of General Counsel issued a legal opinion that publicly clarifies that special purpose credit 

programs that are lawful under the Equal Credit Opportunity Act and other federal laws generally do not violate the Fair Housing 

Act's antidiscrimination provisions. On December 20, 2021, FHFA Acting Director Sandra Thompson issued a statement urging 

financial institutions, including Freddie Mac, Fannie Mae, and the Federal Home Loan Banks, to consider special purpose credit 

programs to advance equitable outcomes and fairness in the housing finance system. FHFA Acting Director Thompson further 

noted that, in addition to contemplating special purpose credit programs of their own, Freddie Mac, Fannie Mae, and the 

Federal Home Loan Banks can impact the availability of these programs by providing liquidity and support for existing and 

future special purpose credit programs, within the umbrella of safety and soundness. 

Management's Discussion and Analysis Regulation and Supervision

FREDDIE MAC | 2021 Form 10-K 122
Enterprise Fair Lending and Fair Housing Compliance

On December 20, 2021, FHFA released an advisory bulletin to provide FHFA's supervisory expectations and guidance to 

Freddie Mac and Fannie Mae on fair lending and fair housing compliance. 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.

Management's Discussion and Analysis Regulation and Supervision

FREDDIE MAC | 2021 Form 10-K 123
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-forinvestment 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, the most significant of which are the probability of default and severity of expected credit losses. 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 benefit (provision) for credit losses.

Changes in forecasted house price growth rates can have a significant effect on our allowance for credit losses. Our estimate of 

expected credit losses leverages an internally based model that uses a Monte Carlo simulation which generates many possible 

house price scenarios for up to 40 years for each metropolitan statistical area (MSA). These scenarios are used to estimate 

loan-level expected future cash flows and credit losses based on each loan’s individual characteristics. The table below shows 

our nationwide forecasted house price growth rates that were used in determining our allowance for credit losses as of 

December 31, 2021 and as of December 31, 2020. These growth rates are used as inputs to our models to develop the detailed 

forecasted life-of-loan house price growth rates for each MSA. See Note 6 for additional information regarding our current 

period benefit (provision) for credit losses and estimation process.

Table 59 - Forecasted House Price Growth Rates 

2022 2023

December 31, 2021 6.2 % 2.5 %

2021 2022

December 31, 2020 5.4 % 3.0 %

Management's Discussion and Analysis Critical Accounting Estimates

FREDDIE MAC | 2021 Form 10-K 124
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, our assets would be liquidated. The liquidation proceeds might not be sufficient to pay 

claims outstanding against Freddie Mac, repay the liquidation preference of our preferred stock, or make 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 wellqualified and diverse 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. In addition, we face increased competition for talented executives and other employees as a result of the 

increased availability of job opportunities in the current economy.

COVID-19 Pandemic

n	 The ongoing COVID-19 pandemic has significantly affected general economic conditions and the housing market. Our 

business and financial condition may be adversely affected by the effects of the COVID-19 pandemic.

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 

data accuracy, mortgage fraud, and our sellers' origination operations. Changes to the process could increase our risks.

n	 Declines in national or regional house prices or other adverse changes in the housing market could negatively affect both 

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 will continue to be, adversely affected by delays and deficiencies in the single-family foreclosure 

process.

n	 We are exposed to increased credit losses and credit-related expenses in the event of a major natural disaster, other 

catastrophic event, including a pandemic, or significant climate change effects.

n	 Our CRT transactions may not be available to us in adverse economic conditions. These transactions also lower our 

profitability.

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 new 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. Commingling 

certain Fannie Mae securities in resecuritizations has increased our counterparty risk.

Risk Factors

FREDDIE MAC | 2021 Form 10-K 125
n	 The profitability of our Multifamily business could be adversely affected by a significant decrease in demand for our K 

Certificates and SB Certificates.

n	 The discontinuance of LIBOR could negatively affect the fair value of our financial assets and liabilities, results of 

operations, and net worth. A transition to an alternative reference interest rate could present operational problems and 

subject us to possible litigation risk. We may be unable to take a consistent approach across our financial products.

Liquidity Risks

n	 Our activities may be adversely affected by limited availability of financing and increased funding costs.

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, damage our reputation, and cause financial losses.

n	 Potential 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 

cyberattacks and other unauthorized access, disclosure, and disruption.

n	 We rely on third parties, 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 

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.

Legal and Compliance Risks

n	 Legislative or regulatory changes or actions could adversely affect our business activities and financial results. We face risk 

of non-compliance with our legal and regulatory obligations.

n	 We may make certain changes to our business in an attempt to meet our housing goals, duty to serve, and equitable 

housing finance requirements, which may adversely affect our profitability.

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. Some or all of our functions could be transferred to other institutions, and we could cease to exist as a stockholderowned 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.

Several bills were introduced in past sessions of Congress concerning the future status of Freddie Mac, Fannie Mae, and the 

mortgage finance system, including bills that provided for the wind down of Freddie Mac and Fannie Mae and modification of 

the terms of the Purchase Agreement. While none of these bills was enacted, it is possible that similar or new bills will be 

introduced and considered in the future.

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. Under the Purchase Agreement, we cannot exit from conservatorship, other than in connection with receivership, unless 

all currently pending material litigation relating to the conservatorship and/or the Purchase Agreement has been resolved or 

settled and for two or more consecutive periods we have common equity tier 1 capital (which does not include our senior 

preferred stock) of at least 3% of our adjusted total assets. While we are increasing our net worth as a result of changes to our 

senior 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 conservatorshiprelated 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. 

Risk Factors

FREDDIE MAC | 2021 Form 10-K 126
Treasury would be required to consent to the termination of our conservatorship other than as discussed above or in 

connection with receivership, and there can be no assurance Treasury would do so. 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.

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.

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 FHFAmandated 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 

current Administration has not articulated a formal position on housing finance reform or the future of Freddie Mac and Fannie 

Mae. Nonetheless, the Administration and FHFA have indicated that their current areas of focus in the housing market include 

issues related to affordability, equity, sustainability, and climate. For example, in 4Q 2021, the Administration and FHFA 

announced actions to promote affordable and sustainable housing, and our 2022 Conservatorship Scorecard includes several 

objectives related to promoting sustainable and equitable housing finance markets, affordable housing opportunities, and 

consideration of climate risks.

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. For example, FHFA may require us to undertake activities that (1) reduce our 

profitability; (2) expose us to additional credit, market, funding, operational, and other risks; or (3) provide additional support for 

the mortgage market that serves our mission, but adversely affects our financial results.

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. 

In October 2021, the three additional CSS Board members FHFA previously appointed left the CSS Board. If FHFA appoints 

three additional independent members, the CSS Board members we and Fannie Mae appoint could be outvoted by non-GSE 

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.

From time to time, FHFA has prevented us from engaging in business activities or transactions that we believe would be 

profitable, and it may do so again in the future. For example, FHFA has limited the size and composition of our mortgagerelated 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 proposed 

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, 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. The combination of the restrictions on our business activities and our 

potential inability to generate sufficient revenue through our guarantee activities to offset the effects of those restrictions may 

have an adverse effect on our results of operations and financial condition.

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 and multifamily 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. The Purchase Agreement also requires us to comply with the ERCF as published in December 2020, 

disregarding any subsequent amendment or other modification to that rule. 

Risk Factors

FREDDIE MAC | 2021 Form 10-K 127
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 status 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 more information, see

Conservatorship and Related Matters - Freddie Mac's Future is Uncertain.

In the event of non-compliance with any Purchase Agreement covenants, although such non-compliance would not affect our 

ability to draw from Treasury under the Purchase Agreement, Treasury may be entitled to specific performance, damages, and 

other such remedies as may be available at law or in equity. In addition, if the corrective actions we were to take or plan to take 

to comply with such covenants were determined by FHFA to be insufficient or unsuccessful, FHFA could impose penalties on 

us or take other remedial action.

If FHFA placed us into receivership, our assets would be liquidated. The liquidation proceeds might not be 

sufficient to pay claims outstanding against Freddie Mac, repay the liquidation preference of our preferred stock, 

or make 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 set forth in the 

GSE Act. Several bills were introduced in past sessions of Congress that provided 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 more information, see MD&A - Regulation and 

Supervision.

Being placed into receivership would terminate our conservatorship. The purpose of receivership is to liquidate our assets and 

resolve claims against us. 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 upon our liquidation. 

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 

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.

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.

Risk Factors

FREDDIE MAC | 2021 Form 10-K 128
Our business and results of operations may be materially adversely affected if we are unable to attract and retain 

well-qualified and diverse 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. In addition, we face increased competition for talented executives and 

other employees as a result of the increased availability of job opportunities in the current economy.

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. Our voluntary employee turnover in 2021 increased slightly overall compared to historical 

experience, with a more notable increase at the officer level. If we are unable to attract and retain talent, our ability to manage 

our business effectively, implement strategic initiatives successfully and control operational risk would be adversely affected, 

and this ultimately would adversely affect our financial performance. 

Actions taken by Congress, FHFA, and Treasury to date, or that may be taken by them in the future, have had, and may 

continue to have, an adverse effect on our retention and recruitment of executives and other employees. We are subject to 

significant restrictions on the amount and type of compensation we may pay while under conservatorship. For example:

n	 The Equity in Government Compensation Act of 2015 limits the compensation and benefits for our Chief Executive Officer 

to the same level in effect as of January 1, 2015 while we are in conservatorship or receivership. Accordingly, annual direct 

compensation for our Chief Executive Officer 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 executive compensation program. FHFA has advised us that, given our conservatorship 

status, our executive compensation program is designed generally to provide for lower pay levels relative to large financial 

services firms that are not in conservatorship. FHFA has instructed us to benchmark to the lower end of the range of 

market compensation for new executive hires and compensation increase requests for existing executives, which limits our 

ability to offer market-competitive compensation to our executives if FHFA does not grant an exception. 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 our senior preferred stock 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 reduce our flexibility to offer competitive compensation, which adversely affects 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 Chief Executive Officer compensation continues to make 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 and diverse talent. The increased availability of job opportunities in the current economy has made the attraction 

and retention of executive and employee talent more competitive. If this increased competition persists and if we are unable to 

attract and retain executives and other employees with the necessary skills and talent, we would face increased operational 

risk. Leadership departures, or multiple such departures at approximately the same time, and challenges in integrating new 

leaders, could materially adversely affect our business, results of operations, and financial condition. 

COVID-19 Pandemic

The ongoing COVID-19 pandemic has significantly affected general economic conditions and the housing market. 

Our business and financial condition may be adversely affected by the effects of the COVID-19 pandemic.

Although the U.S. and global economies have begun to recover from the COVID-19 pandemic as many health and safety 

restrictions have been lifted and vaccine distribution has increased, certain adverse consequences of the pandemic continue to 

impact the macroeconomic environment. The growth in economic activity and demand for goods and services, alongside labor 

shortages and supply chain complications, has also contributed to rising inflationary pressures. The extent of the continuing 

impact of COVID-19 on the economic environment, the housing market, and our business depends on future developments, 

which are highly uncertain and difficult to predict, including, but not limited to, the duration and magnitude of the pandemic, the 

willingness of the government to provide financial assistance in response to the COVID-19 pandemic, the actions taken to 

contain the virus or treat its impact, the rate of distribution and administration of vaccines globally, the severity and duration of 

Risk Factors

FREDDIE MAC | 2021 Form 10-K 129
any resurgence of COVID-19 variants, and how quickly and to what extent economic and operating conditions and consumer 

and business spending can return to their pre-pandemic levels. 

Notwithstanding the negative effects of COVID-19 on the macroeconomic environment, house and multifamily property price 

growth, low mortgage rates, and strength in housing demand have contributed to a strong performance by the housing market. 

We cannot, however, exclude the risk that the housing sector’s performance in the future may vary due to the many 

uncertainties driven by the ongoing COVID-19 pandemic and its impact on the economy as well as actions taken in response to 

the pandemic.

Since the inception of the COVID-19 pandemic, Freddie Mac has taken several steps to support the mortgage market, such as 

forbearance for Freddie Mac-owned mortgages and other measures to assist homeowners, renters, multifamily property 

owners, lenders, and sellers. While we believe our initial actions have reduced our credit losses to date, it is possible that these 

actions or future actions may not ultimately be successful due to the ongoing impact of the COVID-19 pandemic or otherwise 

and, therefore, may negatively affect our financial condition and results of operations, perhaps significantly. Borrowers that 

obtain forbearance may be unable to resume making payments on their mortgage loans at the end of the forbearance period, 

which could result in losses. COVID-related foreclosure and eviction moratoriums have largely expired, and an elevated level of 

foreclosures and evictions could lead to higher operational costs and REO inventory. While our Single-Family serious 

delinquency rate has declined since its peak in 2020, we expect our Single-Family serious delinquency rate and the volume of 

our single-family loss mitigation activity to remain above pre-pandemic levels as a result of the pandemic and our forbearance 

programs.

To the extent the pandemic adversely affects our business, financial condition, liquidity, or results of operations, it has the 

effect of heightening many of the other risks described in this 2021 Annual Report on Form 10-K.

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 K Certificates, SB Certificates, and 

certain other senior subordinate securitization structures. 

We continue to 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 also expect to continue acquiring loans with higher LTV ratios through our Home Possible and Home One 

initiatives, as well as loans with higher DTI ratios, generally up to 50%, which will increase our exposure to credit risk. Our 

efforts to increase eligible borrowers' access to single-family mortgage credit, including our affordable housing program and 

our plan for fulfilling our duty to serve underserved markets and recent FHFA requirements and guidance related to equitable 

housing, may expose us to increased mortgage credit risk.

We face significant risks related to our delegated underwriting process for single-family loans, including risks 

related to data accuracy, mortgage fraud, and our sellers' origination operations. Changes to the process could 

increase our risks.

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 risk-based audits 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, 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, deter loan fraud, or reduce our 

exposure to these risks. 

We can exercise certain contractual remedies, including requiring repurchase of the loan, for loans that do not meet our 

standards. However, at the direction of FHFA, we have significantly revised our representation and warranty framework 

Risk Factors

FREDDIE MAC | 2021 Form 10-K 130
(including changes to remedies for certain defects) to relieve sellers of certain repurchase obligations with respect to singlefamily loans in specific cases. As a result, we may face greater exposure to credit and other losses under this revised 

framework, because our ability to seek recovery or repurchase from sellers is more limited, and we must identify breaches of 

representations and warranties early in the life of the loan. 

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, borrower assets, and 

borrower income. In general, limited representation and warranty relief is offered when information provided by the lender is 

validated against independent data sources. 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 more information, see MD&A - Risk Management - Single-Family Mortgage 

Credit Risk and MD&A - Risk Management - Operational Risk - Third-Party Risk. 

Declines in national or regional house prices or other adverse changes in the housing market 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 and other adverse changes in 

the housing market. This could (1) significantly increase our expected credit losses; (2) result in higher stress losses for both the 

Single-Family and Multifamily portfolios; (3) increase our losses on 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 business, as default 

rates could be higher than we expected when we issued the guarantees; (5) negatively affect loan pricing, 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 more information regarding these risks, see MD&A - Risk Management - Credit Risk.

The proportion of our refinance loan purchases to total loan purchases could decrease if mortgage interest rates increase. This 

could increase our exposure to mortgage credit risk, as refinance loans (particularly those that do not involve "cash-out") 

generally present less credit risk than purchase loans. 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.

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, and counterparties to derivatives, short-term lending, and other funding transactions 

(e.g., cash and other investments transactions). For more 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 that could adversely affect their liquidity and financial condition 

and cause some of them to fail. 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 

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 legal or regulatory actions or ratings downgrades. 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.

 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 

Risk Factors

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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, revised as directed by FHFA, 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	 Increased exposure to non-depository and smaller financial institutions - A large volume of our single-family loans is 

acquired from and serviced by non-depository and smaller financial 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 to perform their obligations to 

us. In particular, non-depository servicers grew their servicing portfolios in the last several years as a result of higher 

originations. This appears to have resulted in operational strains that have subjected some of these servicers to regulatory 

scrutiny. 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. 

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, which could potentially cause a decline in their 

servicing performance and cause us to terminate 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 operational failure of the clearing members, exchanges, clearinghouses, or other financial intermediaries we 

use to facilitate derivatives, short-term lending, securities, and other transactions. If a clearing member or clearinghouse were 

to fail, we could lose the collateral or margin posted with the clearing member or clearinghouse. 

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. 

Risk Factors

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Our loss mitigation activities may be unsuccessful or costly and may adversely affect our financial results. 

Our loss mitigation activities, including the forbearance and other programs we have implemented in response to the COVID-19 

pandemic, 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 mortgagerelated 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 more information on our loss mitigation activities, see MD&A - Our Business Segments - Single-Family - Business 

Results - Loss Mitigation Activities and MD&A - Risk Management - Single-Family Mortgage Credit Risk - Engaging 

in Loss Mitigation Activities.

We have been, and will continue to be, adversely affected by delays and deficiencies in the single-family 

foreclosure process.

The average length of time for foreclosure of a Freddie Mac Single-Family loan has significantly increased since 2008, 

particularly in states that require a judicial foreclosure process, and may further increase. 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 house prices regionally or nationally, which could adversely affect our financial results. Pursuant to FHFA guidance 

and the CARES Act, we were required to suspend COVID-19-related foreclosures, other than for vacant or abandoned 

properties, until July 31, 2021, and COVID-19-related REO evictions until September 30, 2021. These foreclosure and eviction 

moratoriums will result in higher costs and expenses for the affected properties.

We are exposed to increased credit losses and credit-related expenses in the event of a major natural disaster, 

other catastrophic event, including a pandemic, or significant climate change effects.

The occurrence, severity, and duration of a major natural or environmental disaster or other catastrophic event, including a 

pandemic, in an area where we own or guarantee mortgage loans, especially in densely populated geographic areas and in 

high-risk areas, such as coastal areas vulnerable to severe storms and flooding or areas prone to earthquake or wildfires, could 

increase our credit losses and credit-related expenses. A natural disaster or catastrophic event that either 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 events could generate credit losses and credit-related 

expenses and have a material adverse effect on our business and financial results. We may not have adequate insurance 

coverage for some of these natural disaster and catastrophic events.

An increased frequency and intensity of major natural disasters may be indicative of the impact of climate change and are 

expected to persist for the foreseeable future. Although historically our losses from these events have not been significant, we 

remain exposed to risk, particularly in connection with geographically widespread weather events, changes in weather patterns, 

and significant climate change effects, such as rising sea levels, wildfires, and increased storms and flooding. Significant longterm climate change effects could increase the vulnerability of an area to natural disasters, which could discourage housing 

activity, decrease mortgage originations, and negatively affect house prices and property values in affected areas. Investors 

may place greater weight on these risks when making asset pricing decisions, which could increase our cost or ability to 

transfer risk. Increases in the intensity and frequency of natural disasters, 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, will increase the foregoing risks. In addition, the unpredictability 

Risk Factors

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of natural disasters and the complexity of forecasting long-term climate change effects negatively affect our ability to forecast 

losses from such events.

Further, actions taken by Congress, the Administration, and FHFA in response to climate change concerns may create 

transition risks that impact the housing market and our business. For example, policy actions to address climate change could 

result in a potentially disruptive transition away from carbon-intense industries. Such a transition could impact certain industries 

and regional economies, affecting the ability of borrowers in those industries or regions to pay their mortgage loans. Several 

bills have been introduced or legislation enacted in past sessions of Congress to address environmental matters, including 

climate change, and President Biden has indicated that addressing climate change will be a priority for the Administration. 

In addition, FHFA, as Conservator, has instructed us to designate climate change as a priority concern and actively consider its 

effects on our decision making and, to this end, included climate change as a priority for Freddie Mac in the 2022 

Conservatorship Scorecard. FHFA may require us to undertake activities that promote environmental sustainability but that 

adversely affect our business or financial results.

Our CRT transactions may not be available to us in adverse economic conditions. These transactions also lower 

our profitability.

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, our ability 

to transfer Single-Family credit risk was temporarily negatively affected by adverse market conditions resulting from the 

COVID-19 pandemic. It is possible that our CRT strategies 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 most singlefamily and back-end multifamily 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 credit risk transfer 

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 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. 

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.

We expect that the temporary reduction of interest rates to near zero will, gradually over the course of the next year, be 

reversed, with the Federal Reserve signaling its concerns with respect to inflation and tapering its purchases of mortgage and 

other securities. The timing and impact of this expected reversal of interest rates trends is unknown.

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.

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-raterelated 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.

Risk Factors

FREDDIE MAC | 2021 Form 10-K 134
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-forsale, 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 

our activities 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 a decline 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 our mortgage-related investments portfolio activities. 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, including any reduction in the Federal Reserve's purchases of mortgage-related securities 

undertaken to support financial markets during the COVID-19 pandemic, 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. This risk is heightened 

with FHFA restrictions on our cash window volumes and on pooling, limiting our pooling flexibility and ability to manage 

alignment. For more information, see MD&A - Our Business Segments - Single-Family - Business Overview - Products 

and Activities.

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. 

Commingling certain Fannie Mae securities in resecuritizations has increased our counterparty risk. 

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 market 

acceptance of the UMBS. We cannot provide any assurance that these efforts will reduce the pricing disparities discussed 

above over the long-term. This alignment is more challenging during periods of increased refinances, automation, innovation, 

and change in the industry, such as we experienced in 2021. 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, 

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and securitization programs, policies, and practices may affect the degree to which the UMBS receives widespread 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.

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 are 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. 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, REMICs, 

or other securities to be paid on that payment date, regardless of whether such Freddie Mac-issued securities were backed by 

Fannie Mae-issued 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 may discourage the Enterprises from issuing commingled securities and may create 

incentives to resort to single-issuer resecuritizations, undermining the goal of fungibility of Freddie Mac and Fannie Mae UMBS.

The profitability of our Multifamily business could be adversely affected by a significant decrease in demand for 

our K Certificates and SB Certificates.

Our current Multifamily business model is highly dependent on our ability to finance purchased multifamily loans through 

securitization into K Certificates and SB Certificates. A significant decrease in demand for K Certificates and SB Certificates 

could have an adverse impact on the profitability of the Multifamily business 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 K Certificates and SB Certificates, but those 

strategies may 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 performance of our K Certificates and SB Certificates.

The discontinuance of LIBOR could negatively affect the fair value of our financial assets and liabilities, results of 

operations, and net worth. A transition to an alternative reference interest rate could present operational 

problems and subject us to possible litigation risk. We may be unable to take a consistent approach across our 

financial products.

In March 2021, ICE Benchmark Administration Limited, the administrator of LIBOR, confirmed its intention to cease publishing 

the 1-week and 2-month U.S. Dollar LIBOR settings after December 2021 and to cease publishing the other, most widely used, 

tenors of U.S. Dollar LIBOR after June 2023. The U.K. Financial Conduct Authority, which regulates LIBOR publication, 

announced that it would not compel panel bank submissions after those dates. Although the discontinuance of the U.S. Dollar 

LIBOR tenors that continue to be published is therefore expected in mid-2023, we are not able to predict whether SOFR, the 

ARRC-recommended alternative reference rate, will become the market-accepted replacement benchmark, or what impact 

such a transition may have on our business, results of operations, and financial condition. 

The transition from LIBOR could affect the financial performance of instruments we hold, require changes to hedging strategies, 

and adversely affect our financial performance. The transition could adversely affect the pricing, liquidity, value of, return on, 

and trading for a broad array of financial products that are included in our financial assets and liabilities. We have various 

financial products, including mortgage loans, mortgage-related securities, and derivatives, that are tied to LIBOR, and many of 

these products will mature after June 2023. While the documentation for certain of these products provides us with discretion 

to select an alternative reference rate if LIBOR is discontinued, there is a possibility of disputes, litigation, and other actions 

arising with customers, investors, and counterparties concerning, for example, our exercise of this discretion or the 

interpretation and enforceability of fallback language and related provisions. In certain other cases, the documentation limits 

our discretion to select an alternative reference rate if LIBOR is no longer available, representative, or viable, creating 

uncertainty and the risk of legal disputes. New York State has enacted legislation that is intended to minimize legal and 

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economic uncertainty following U.S. Dollar LIBOR’s cessation by replacing LIBOR references in certain contracts governed by 

New York law with a benchmark based on SOFR, including any spread adjustment, recommended by the Federal Reserve, the 

Federal Reserve Bank of New York or the ARRC. However, this legislation does not apply to all contracts, and it is uncertain 

whether the documentation for our products will allow those products to qualify for the legal protection against litigation 

contained in other proposed federal and state legislation dealing with the LIBOR transition. These potential challenges in 

implementing an alternative reference rate could result in customers, investors, and counterparties acquiring fewer products 

and entering into fewer transactions, which could result in losses or reputational damage or otherwise adversely affect our 

business. 

The large volume of products and transactions that may require changes to documentation, systems, or remediation could 

present substantial operational and legal challenges and result in significant costs. We may be unable to have a consistent 

approach to the LIBOR transition with respect to our products, including within a particular class of products, which could 

disrupt the market for those products. It is possible that actions we take in connection with the discontinuance of LIBOR, 

including the adoption of SOFR, could subject us to basis risk, monetary losses, and possible disputes and litigation. In 

addition, the transition could result in inquiries or other actions from regulators in respect of our preparation, readiness and 

transition plans.

The use of SOFR as the alternative reference rate for LIBOR-based products may present certain market concerns. Among the 

concerns, although a term structure for SOFR has been developed, the ARRC-recommended scope of use of SOFR term rates 

is limited. SOFR represents an overnight, risk-free rate, whereas U.S. Dollar LIBOR has various tenors and reflects a credit risk 

component. It is still uncertain how soon acceptance and widespread market adoption of SOFR will occur, whether the use of 

overnight SOFR and SOFR averages will predominate over the use of SOFR term rates, whether SOFR will be more or less 

volatile than LIBOR during times of economic stress, and whether sufficient liquidity of SOFR-based products will develop.

As described above, we have identified material exposures to LIBOR but cannot reasonably estimate the expected impact or 

other consequences of such exposure. For additional information regarding the actions we have taken to prepare for an orderly 

transition from LIBOR, see MD&A - Risk Management - Market Risk - Transition from LIBOR.

Liquidity Risks

Our activities may be adversely affected by limited availability of financing and increased funding costs.

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, 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 interest rates, market confidence, operational risks, regulatory requirements, or other factors. 

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 and callable debt issuances. Such increased reliance on short-term and callable 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 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. The Federal Reserve requires 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, 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 penalties and reputational harm. Unlike certain of our competitors, we do not 

have access to the Federal Reserve's discount window.

Risk Factors

FREDDIE MAC | 2021 Form 10-K 137
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; and future draws that significantly reduce the amount of available funding remaining under the 

Purchase Agreement. 

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, 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.

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.

Our credit ratings are important to our liquidity. We currently receive ratings for our unsecured debt from three nationally 

recognized statistical rating organizations (S&P, Moody's, and Fitch). These ratings are primarily based on the support we 

receive from Treasury and therefore are affected by changes in the credit ratings of the U.S. government. 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 debt credit ratings, including actions by governmental entities, changes in government support for us, 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, higher borrowing costs, lower asset values, and 

higher credit losses, and could cause us to experience net losses and net worth deficits.

For more 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, damage our reputation, and cause financial losses.

Operational risk is 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 impairment of our liquidity, disruption of our business (e.g., issuing mortgage 

and/or debt securities), incorrect payments to investors in our securities, errors in our financial statements, liability to customers 

or investors, further legislative or regulatory intervention, 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 manage and 

analyze significant amounts of information, much of which is provided by third parties. This information may be incorrect, or we 

may fail to properly manage or analyze it.

The transactions we process are complex and are subject to various legal, accounting, tax, and regulatory standards, which 

can change rapidly in response to external events, such as the implementation of government-mandated programs and 

changes in market conditions. Our financial, accounting, data processing, or other operating systems and facilities may contain 

design flaws or may fail to operate properly, adversely affecting our ability to process these transactions, including our ability to 

Risk Factors

FREDDIE MAC | 2021 Form 10-K 138
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 an increasing volume of 

transactions or new types of transactions or products could constrain our ability to pursue new business initiatives or improve 

existing business activities. 

Our technological connections with our customers, counterparties, service providers, and other financial institutions continue to 

increase, which increases our risk exposure with respect to an operational failure of their infrastructure systems. We have 

developed, and expect to continue to develop, software tools for use by our customers in the customers' loan production 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 increase our use of a third-party cloud infrastructure platform for both customer-facing applications and 

internal-use applications. If we do not implement changes to this platform 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, could experience system breakdowns or failures, 

outages, downtime, cyberattacks and other security incidents, 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.

We face increased operational risk due to the magnitude and complexity of the new initiatives we are undertaking. Some of 

these initiatives require significant changes to our operational systems. In some cases, the changes must be implemented 

within a short period of time. Our legacy systems may create increased operational risk for these new initiatives.

We also face significant 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 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 mortgagerelated securities hosted on the CSS platform may experience payment delays. 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. For example, as a result of amendments to the CSS LLC agreement required by FHFA, during 

conservatorship, the CSS Board Chair must be designated by FHFA, and all CSS Board decisions require the affirmative vote 

of the Board Chair.

Our employees could act improperly for their own or third-party gain and cause unexpected losses or reputational damage. 

While we have processes and systems in place designed to prevent and detect fraud, these processes may not be successful.

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.

Potential 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 cyberattacks 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, vendors, service 

providers, and financial institutions. 

Cybersecurity risks for companies like ours have significantly increased in recent years, in part because of the proliferation of 

new technologies, the use of the internet and telecommunications technologies to conduct financial transactions, and the 

increased sophistication and activities of organized crime, hackers, terrorists, and other external parties, including foreign statesponsored actors. There have been several highly publicized cases involving financial services companies, consumer-based 

companies, and other organizations 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.

Risk Factors

FREDDIE MAC | 2021 Form 10-K 139
Like many companies and government entities, from time to time we have been, and expect to continue to be, the target of 

attempted cyberattacks and other security incidents. Such incidents may include malware, ransomware, denial-of-service 

attacks, social engineering, unauthorized access, human error, theft or misconduct, fraud, and phishing, as part of an effort to 

disrupt operations, potentially test cybersecurity capabilities, or obtain confidential, proprietary, or other information (including 

personal information). We could also be adversely affected by cyberattacks or other security 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. The 

ongoing COVID-19 pandemic also increases the risk that we may experience cybersecurity incidents as a result of our 

employees, vendors, 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, exchanges, clearinghouses, fiscal and paying 

agents, and other financial institutions, we could be adversely affected if any of them is subject to a successful cyberattack or 

other security incident. Third parties with which we do business may also 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 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 be 

held responsible for data breaches resulting from cyberattacks or other security incidents attributed to third parties with whom 

we do business in relation to the information we share with them.

Although we devote significant resources to protecting our critical assets and provide employee awareness training about 

phishing, malware, and other cybersecurity risks, these measures may not provide effective security. Our computer systems, 

software, end point devices, and networks may be vulnerable to cyberattacks and other security incidents, supply chain 

disruptions, or other attempts to harm them or misuse or steal information (including personal information). 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, counterparties, vendors, service providers, financial institutions, 

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. We may not be able to anticipate, prevent, detect, 

recognize, or react to threats to our systems, networks, and assets, or implement effective preventative measures against 

cyberattacks or other security incidents, especially because the techniques used change frequently or are not recognized until 

launched. 

A cyberattack or other security 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. Although to date we have not experienced any such incident resulting in significant impact to the 

company, our cybersecurity risk management program may not prevent such an incident from having a significant impact in the 

future. 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, 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 cyberattack or 

other security incident.

The occurrence of one or more cyberattacks or other security incidents could result in thefts of important assets (such as cash 

or source code) or the unauthorized 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 or malfunctions in our operations or the operations 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. We could also face regulatory and other legal action, including 

for any failure to provide timely disclosure concerning, or appropriately to limit trading in our securities, following an incident. 

We might be required to expend significant additional resources to modify 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. In addition, customers, counterparties, vendors, service providers, financial intermediaries, and 

governmental organizations may not be adequately protecting the information that we share with them. As a result, a 

cyberattack or other security incident on their systems and networks, or a breach of their cybersecurity measures, may result in 

harm to our business and business relationships.

Risk Factors

FREDDIE MAC | 2021 Form 10-K 140
We rely on third parties, 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 expose us to other operational risks.

Our use of third parties, including vendors, service providers, sellers, and servicers, 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, UMBS issuance and 

administration (i.e., CSS), and data 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, 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 increased 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 other harm, such as in the 

event of a cyberattack or other security incident impacting our data (including personal information), fraud, or damage to our 

reputation if one or more of these third parties fails to maintain adequate risk and control environments. 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 to project significant factors in our businesses, including, but not limited to, interest rates and house prices 

under a variety of scenarios. We also use models to project borrower prepayment and default behavior and loss severity 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 of prepayment and default behavior 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. In particular, the COVID-19 pandemic 

has increased the degree of uncertainty concerning key inputs into our financial cash flows, such as projections of interest 

rates, house prices, credit defaults, negative yields, and prepayments, and we expect our models to face significant 

challenges in accurately forecasting these inputs.

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 credit risk transfer of loans; the 

purchase and sale of securities; funding; the setting of guarantee fee prices; and the management of interest-rate, market, 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. 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 more information on our use of models.

Legal and Compliance Risks

Legislative or regulatory changes or actions could adversely affect our business activities and financial results. 

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 our Conservator. Our 

compliance systems and programs may not be adequate to confirm that we are in compliance with all legal, regulatory, and 

other requirements. We could incur fines or other negative consequences for violations of such requirements. For example, 

Risk Factors

FREDDIE MAC | 2021 Form 10-K 141
FHFA has raised concerns that we need to strengthen our compliance practices by further developing our compliance 

framework with respect to identifying, assessing, monitoring, testing, and reporting compliance risk. Although we are taking 

steps to strengthen our compliance program and address FHFA’s concerns, our efforts may not be successful. Until we 

satisfactorily remediate FHFA’s concerns, we may be subject to continued regulatory criticism. We also rely upon third parties 

and their respective compliance risk management programs, and the failure or limits of any such third-party compliance 

programs may expose us to legal and compliance risk.

Our business 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, could 

result in reduced profitability and increased compliance risk, particularly because of the identified weaknesses in our 

compliance program noted above. If we were not to comply with our legal and regulatory obligations, this could result in 

enforcement actions, investigations, fines, monetary and other penalties, and harm to our reputation. 

For example, we are, or may in the future become, subject to a variety of complex and evolving laws, regulations, rules, and 

standards in the United States (at the federal, state and local level), as well as contractual obligations, regarding privacy and 

cybersecurity. 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 state to state 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 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 noncompliance. Further, any failure or perceived failure to comply with our public privacy policies and other public statements 

about privacy and cybersecurity could potentially subject us to regulatory investigations, enforcement or legal actions, and 

harm to our reputation and, if such public policies or statements are found to be deceptive, unfair, or misrepresentative of our 

actual practices, we may be subject to fines, monetary or other penalties, and other damage to our business and results.

We expect the Administration will continue to implement a regulatory reform agenda that is significantly different from that of 

the previous one. This reform agenda could include a heightened focus on affordability, equity, sustainability, and climate. It is 

uncertain whether, and to what extent, potential action by Congress or the Administration will affect our regulatory compliance. 

We may make certain changes to our business in an attempt to meet our housing goals, duty to serve, and 

equitable housing finance requirements, which may adversely affect our profitability.

We may make adjustments to our loan sourcing and purchase strategies in an effort to meet our housing goals and subgoals, 

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.

If we do not meet our housing goals or duty to serve 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 

adversely affect our profitability. The benchmark levels for our single-family and multifamily affordable housing goals for 2022 

increased significantly compared to those for 2021. 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 housing goals. 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 

how we plan to meet the missed goal during 2022 to 2024. We submitted our housing plan to FHFA in February 2022. If we fail 

to comply with this housing plan, when approved, FHFA could take additional action against us. 

Risk Factors

FREDDIE MAC | 2021 Form 10-K 142
Legal Proceedings

We are involved as a party to a variety of legal proceedings arising from time to time in the ordinary course of business. See 

Note 18 for more information regarding our involvement as a party to various legal proceedings. We discuss below certain 

litigation against the U.S. government concerning conservatorship and the 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. These lawsuits challenge certain government actions related to the conservatorship 

(including actions taken in connection with the imposition of conservatorship) and the Purchase Agreement. 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. Cases are currently pending in the U.S. 

Court of Federal Claims and the U.S. District Court for the Eastern District of Pennsylvania. In addition, one such case, filed in 

the U.S. District Court for the Southern District of Texas, was appealed to the U.S. Court of Appeals for the Fifth Circuit and 

subsequently to the U.S. Supreme Court. On June 23, 2021, the Supreme Court held that the shareholders’ statutory claim is 

barred and found the “for cause” removal provision for the director of FHFA in HERA unconstitutional. The Supreme Court held 

that the August 2012 amendment to the Purchase Agreement should not be voided as a result of the constitutional violation 

and remanded the case to the lower courts to determine what other remedy, if any, the shareholders are entitled to receive on 

their constitutional claim. Another such case, filed in the U.S. District Court for the District of Minnesota, was appealed to the 

U.S. Court of Appeals for the Eighth Circuit. On October 6, 2021, the Eighth Circuit affirmed the dismissal of all of the plaintiffs’ 

claims except their claim that the “for cause” removal provision in HERA was unconstitutional. The Eighth Circuit reversed 

dismissal of that claim and remanded the case to the district court for consideration of the same issue that the Supreme Court 

remanded, i.e., what remedy, if any, the shareholders are entitled to receive on their claim. In addition, on October 1, 2021, a 

case was filed in the U.S. Court of Federal Claims claiming that FHFA’s placement of Freddie Mac into conservatorship violated 

HERA and represented an unlawful taking or illegal exaction and breached an implied regulatory contract with certain banks. 

Plaintiffs are also appealing a September 2020 order by the U.S. District Court for the Western District of Michigan to dismiss 

the case in that Court and several orders by the U.S. Court of Federal Claims dismissing certain claims filed in that Court. 

Freddie Mac is not a party to any of these lawsuits. However, a number of other lawsuits have been filed against Freddie Mac 

concerning the August 2012 amendment to the Purchase Agreement. See Note 18 for information on the lawsuits filed against 

Freddie Mac. Pershing Square Capital Management, L.P. (Pershing) is a plaintiff in one of the lawsuits filed against Freddie 

Mac. Pershing has filed reports with the SEC, most recently in March 2014, indicating that it beneficially owned more than 5% 

of our common stock. We do not know Pershing's current beneficial ownership of our common stock. For more information, 

see Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

It is not possible for us to predict the outcome of these lawsuits (including the outcome of any appeal), or the actions the U.S. 

government (including Treasury and FHFA) might take in response to any ruling or finding in any of these lawsuits or any future 

lawsuits. However, it is possible that we could be adversely affected by these events, 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. 

Pursuant to the Purchase Agreement, all currently pending material litigation related to our conservatorship and/or the 

Purchase Agreement must be resolved or settled and we must indemnify Treasury and the United States from and against any 

loss, cost, or damage of any kind arising out of our placement into conservatorship or the August 2012 amendment to the 

Purchase Agreement in order to (1) use up to $70 billion in proceeds from issuances of common stock to build capital or (2) exit 

from conservatorship. 

Legal Proceedings

FREDDIE MAC | 2021 Form 10-K 143
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, 2022, we had 1,545 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 in effect in accordance with their terms. During 2021, the deferral period lapsed on 351 RSUs, and as of December 31, 

2021, no RSUs remained outstanding. At December 31, 2021, no stock options were outstanding. See Note 12 for more 

information.

ISSUER PURCHASES OF EQUITY SECURITIES

We did not repurchase any of our common or preferred stock during 2021. 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 505000

Louisville, KY 40233-5000

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 | 2021 Form 10-K 144
Financial Statements and Supplementary Data

Financial Statements

FREDDIE MAC | 2021 Form 10-K 145
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, a stockholderowned government sponsored enterprise, and its subsidiaries (the “Company” or “Freddie Mac”) as of December 31, 2021 and 

2020, and the related consolidated statements of comprehensive income (loss), of equity and of cash flows for each of the 

three years in the period ended December 31, 2021, 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, 2021, 

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, 2021 and 2020, and the results of its operations and its cash flows for each of the 

three years in the period ended December 31, 2021 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, 2021, 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 do not provide adequate mechanisms for information known to the Federal Housing 

Finance Agency (FHFA) that may have financial statement disclosure ramifications to be communicated to management of 

Freddie Mac.

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 - Controls and Procedures. We considered this material weakness in 

determining the nature, timing, and extent of audit tests applied in our audit of the 2021 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.

Change in Accounting Principle

As discussed in Note 6 to the consolidated financial statements, the Company changed the manner in which it accounts for 

credit losses in 2020. 

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.

Financial Statements Report of Independent Registered Public Accounting Firm

FREDDIE MAC | 2021 Form 10-K 146
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 (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 delegated to management authority to 

conduct business operations during conservatorship. The Company is dependent upon the continued support of Treasury and 

FHFA. 

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 - Probability of Default

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 $4.9 billion as of December 31, 2021. Management estimates the allowance for credit 

losses for single-family loans on a pooled basis using a discounted cash flow model. Management projects cash flows they 

expect to collect using historical experience, such as historical default rates and severity of loss based on loan characteristics, 

adjusted for current and future economic forecasts. As disclosed by management, the process involves the use of models that 

require management to make judgments about matters that are difficult to predict, the most significant of which are the 

probability of default and severity of expected credit losses. 

The principal considerations for our determination that performing procedures relating to the allowance for credit losses for 

single-family mortgage loans held-for-investment specific to the probability of default is a critical audit matter are (i) the 

significant judgment by management when determining the probability of default, which in turn led to a high degree of auditor 

judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s 

determination, and (ii) 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 

determination of the allowance for credit losses for single-family mortgage loans held-for-investment, including controls over 

the model, data, and judgments specific to the probability of default. These procedures also included, among others, (i) testing 

management’s process for determining the allowance for credit losses for single-family loans held-for investment specific to the 

probability of default, and (ii) testing the completeness, accuracy, reliability and relevance of the data used by management. 

These procedures also included the use of professionals with specialized skill and knowledge to assist in evaluating the 

appropriateness of management’s model and evaluating the reasonableness of the probability of default. 

/s/ PricewaterhouseCoopers LLP

Washington, DC

February 10, 2022

We have served as the Company's auditor since 2002.

Financial Statements Report of Independent Registered Public Accounting Firm

FREDDIE MAC | 2021 Form 10-K 147
FREDDIE MAC

Consolidated Statements of Comprehensive Income (Loss)

Year Ended December 31,

(In millions, except share-related amounts) 2021 2020 2019

Net interest income

Interest income $61,527 $62,340 $72,895

Interest expense (43,947) (49,569) (61,047) 

Net interest income 17,580 12,771 11,848 

Non-interest income (loss)

Guarantee income 1,032 1,442 1,089 

Investment gains (losses), net 2,746 1,813 818 

Other income (loss) 593 633 323 

Non-interest income (loss) 4,371 3,888 2,230 

Net revenues 21,951 16,659 14,078 

Benefit (provision) for credit losses 1,041 (1,452) 746 

Non-interest expense

Salaries and employee benefits (1,398) (1,344) (1,434) 

Other administrative expense (1,253) (1,191) (1,130) 

Total administrative expense (2,651) (2,535) (2,564) 

Credit enhancement expense (1,518) (1,058) (749) 

Benefit for (decrease in) credit enhancement recoveries (542) 323 41 

REO operations income (expense) (12) (149) (229) 

Legislated 10 basis point fee expense (2,342) (1,836) (1,617) 

Other expense (728) (723) (657) 

Non-interest expense (7,793) (5,978) (5,775) 

Income (loss) before income tax (expense) benefit 15,199 9,229 9,049 

Income tax (expense) benefit (3,090) (1,903) (1,835) 

Net income (loss) 12,109 7,326 7,214 

Other comprehensive income (loss), net of taxes and reclassification adjustments (489) 205 573 

Comprehensive income (loss) $11,620 $7,531 $7,787 

Net income (loss) $12,109 $7,326 $7,214 

Future increase in senior preferred stock liquidation preference (11,620) (7,291) (7,787) 

Net income (loss) attributable to common stockholders $489 $35 ($573) 

Net income (loss) per common share $0.15 $0.01 ($0.18) 

Weighted average common shares outstanding (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 Comprehensive Income

FREDDIE MAC | 2021 Form 10-K 148
FREDDIE MAC

Consolidated Balance Sheets

December 31,

(In millions, except share-related amounts) 2021 2020

Assets

Cash and cash equivalents (includes $1,695 and $17,379 of restricted cash and cash equivalents) $10,150 $23,889 

Securities purchased under agreements to resell 71,203 105,003 

Investment securities, at fair value 53,015 59,825 

Mortgage loans held-for-sale (includes $10,498 and $14,199 at fair value) 19,778 33,652 

Mortgage loans held-for-investment (net of allowance for credit losses of $4,947 and $5,732) 2,828,331 2,350,236 

Accrued interest receivable 7,474 7,754 

Deferred tax assets, net 6,214 6,557 

Other assets (includes $6,594 and $6,980 at fair value) 29,421 40,499 

Total assets $3,025,586 $2,627,415 

Liabilities and equity

Liabilities

Accrued interest payable $6,268 $6,210 

Debt (includes $2,478 and $2,592 at fair value) 2,980,185 2,592,546 

Other liabilities (includes $287 and $958 at fair value) 11,100 12,246 

Total liabilities 2,997,553 2,611,002 

Commitments and contingencies (Notes 5, 9, 18)

Equity

Senior preferred stock (liquidation preference of $97,959 and $86,539) 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 and 650,059,292 shares outstanding — — 

Additional paid-in capital — — 

Retained earnings (accumulated deficit) (54,993) (67,102) 

AOCI, net of taxes, related to:

Available-for-sale securities 297 810 

Other (143) (167) 

AOCI, net of taxes 154 643 

Treasury stock, at cost, 75,804,333 shares and 75,804,594 shares (3,885) (3,885) 

Total equity 28,033 16,413 

Total liabilities and equity $3,025,586 $2,627,415 

The table below presents the carrying value and classification of the assets and liabilities of consolidated VIEs on our consolidated balance sheets.

December 31,

(In millions) 2021 2020

Consolidated Balance Sheet Line Item

Assets:

Mortgage loans held-for-investment $2,784,626 $2,273,347 

All other assets 54,300 83,982 

Total assets of consolidated VIEs $2,838,926 $2,357,329 

Liabilities:

Debt $2,803,054 $2,308,176 

All other liabilities 5,823 5,610 

Total liabilities of consolidated VIEs $2,808,877 $2,313,786 

The accompanying notes are an integral part of these consolidated financial statements.

Financial Statements Consolidated Balance Sheets

FREDDIE MAC | 2021 Form 10-K 149
FREDDIE MAC

Consolidated Statements of Equity

Shares Outstanding

Senior

Preferred

Stock

Preferred

Stock, at

Redemption

Value

Common

Stock, at

Par Value

Additional

Paid-In

Capital

Retained

Earnings

(Accumulated

Deficit)

AOCI,

Net of

Tax

Treasury

Stock, 

at Cost

Total

(In millions) Equity 

Senior

Preferred

Stock

Preferred

Stock

Common

Stock

Balance at December 31, 2018 1 464 650 $72,648 $14,109 $— $— ($78,260) ($135) ($3,885) $4,477 

Comprehensive income (loss):

Net income (loss) — — — — — — — 7,214 — — 7,214 

Other comprehensive income (loss):

Changes in net unrealized gains (losses) on 

available-for-sale securities (net of taxes of 

$177 million) — — — — — — — — 668 — 668 

Reclassification adjustment for gains on 

available-for-sale securities included in net 

income (net of taxes of $35 million) — — — — — — — — (133) — (133) 

Other (net of taxes of $10 million) — — — — — — — — 38 — 38 

Comprehensive income (loss) — — — — — — — 7,214 573 — 7,787 

Senior preferred stock dividends paid — — — — — — — (3,142) — — (3,142) 

Ending balance at December 31, 2019 1 464 650 $72,648 $14,109 $— $— ($74,188) $438 ($3,885) $9,122 

Comprehensive income (loss):

Net income (loss) — — — — — — — 7,326 — — 7,326 

Other comprehensive income (loss):

Changes in net unrealized gains (losses) on 

available-for-sale securities (net of taxes of 

$133 million) — — — — — — — — 502 — 502 

Reclassification adjustment for gains on 

available-for-sale securities included in net 

income (net of taxes of $83 million) — — — — — — — — (310) — (310) 

Other (net of taxes of $6 million) — — — — — — — — 13 — 13 

Comprehensive income (loss) — — — — — — — 7,326 205 — 7,531 

Cumulative effect from adoption of CECL — — — — — — — (240) — — (240) 

Ending balance at December 31, 2020 1 464 650 $72,648 $14,109 $— $— ($67,102) $643 ($3,885) $16,413 

Comprehensive income (loss):

Net income (loss) — — — — — — — 12,109 — — 12,109 

Other comprehensive income (loss):

Changes in net unrealized gains (losses) on 

available-for-sale securities (net of taxes of 

$36 million) — — — — — — — — (134) — (134) 

Reclassification adjustment for gains on 

available-for-sale securities included in net 

income (net of taxes of $101 million) — — — — — — — — (379) — (379) 

Other (net of taxes of $4 million) — — — — — — — — 24 — 24 

Comprehensive income (loss) — — — — — — — 12,109 (489) — 11,620 

Ending balance at December 31, 2021 1 464 650 $72,648 $14,109 $0 $0 ($54,993) $154 ($3,885) $28,033

The accompanying notes are an integral part of these consolidated financial statements.

Financial Statements Consolidated Statements of Equity

FREDDIE MAC | 2021 Form 10-K 150
FREDDIE MAC

Consolidated Statements of Cash Flows

 

Year Ended December 31,

(In millions) 2021 2020 2019

Cash flows from operating activities

Net income (loss) $12,109 $7,326 $7,214 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Amortization of cost basis adjustments (1,922) 214 (466) 

(Benefit) provision for credit losses (1,041) 1,452 (746) 

Investment (gains) losses, net (4,312) (3,390) (1,100) 

(Benefit for) decrease in credit enhancement recoveries 557 (289) (2) 

Hedge accounting earnings mismatch 147 (162) (288) 

Deferred income tax expense (benefit) 473 (590) 817 

Purchases of mortgage loans acquired as held-for-sale (59,270) (69,908) (65,516) 

Proceeds from sales of mortgage loans acquired as held-for-sale 69,891 68,065 71,557 

Proceeds from repayments of mortgage loans acquired as held-for-sale 390 116 517 

Payments to servicers for pre-foreclosure expense and servicer incentive fees (340) (232) (282) 

Change in accrued interest receivable 396 (1,046) (120) 

Change in interest payable 57 (238) 177 

Change in income taxes receivable (586) 845 712 

Other, net (196) (1,256) (277) 

Net cash provided by (used in) operating activities 16,353 907 12,197 

Cash flows from investing activities

Purchases of investment securities (124,710) (159,202) (111,136) 

Proceeds from sales of investment securities 154,352 175,422 97,274 

Proceeds from maturities and repayments of investment securities 7,701 31,504 18,786 

Purchases of mortgage loans acquired as held-for-investment (542,222) (695,645) (228,628) 

Proceeds from sales of mortgage loans acquired as held-for-investment 9,255 11,657 15,218 

Proceeds from repayments of mortgage loans acquired as held-for-investment 757,186 744,571 348,387 

Advances under secured lending arrangements (264,790) (144,828) (54,176) 

Repayments of secured lending arrangements 501 1,515 1,275 

Net proceeds from dispositions of real estate owned and other recoveries 244 670 1,150 

Net (increase) decrease in securities purchased under agreements to resell 26,467 (39,143) (31,343) 

Derivative premiums and terminations, swap collateral, and exchange settlement payments, net 1,070 (9,185) (8,163) 

Other, net (804) (691) (492) 

Net cash provided by (used in) investing activities 24,250 (83,355) 48,152 

Cash flows from financing activities

Proceeds from issuance of debt securities of consolidated trusts held by third parties 825,632 811,707 264,373 

Repayments and redemptions of debt securities of consolidated trusts held by third parties (782,545) (713,382) (351,099) 

Proceeds from issuance of debt of Freddie Mac 23,153 465,260 554,812 

Repayments of debt of Freddie Mac (127,911) (452,548) (531,103) 

Net increase (decrease) in securities sold under agreements to repurchase 7,333 (9,843) 3,856 

Payment of cash dividends on senior preferred stock — — (3,142) 

Other, net (4) (46) (130) 

Net cash provided by (used in) financing activities (54,342) 101,148 (62,433) 

Net (decrease) increase in cash and cash equivalents (includes restricted cash and cash equivalents) (13,739) 18,700 (2,084) 

Cash and cash equivalents (includes restricted cash and cash equivalents) at the beginning of year 23,889 5,189 7,273 

Cash and cash equivalents (includes restricted cash and cash equivalents) at end of period $10,150 $23,889 $5,189 

Supplemental cash flow information

Cash paid for:

Debt interest $69,093 $70,073 $70,918 

Income taxes 3,204 1,690 306 

Non-cash investing and financing activities (Notes 4, 7, and 8)

The accompanying notes are an integral part of these consolidated financial statements.

Financial Statements Consolidated Statements of Cash Flows

FREDDIE MAC | 2021 Form 10-K 151
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 more 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. 

During 2021, our chief operating decision maker began making decisions about allocating resources and assessing segment 

performance based on two reportable segments, Single-Family and Multifamily. See Note 15 for additional information on the 

change in our segment reporting presentation. 

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.

Consolidation and Equity Method Accounting

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.

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 

include 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 are entitled to the 

interest income earned on these short-term investments, which is recorded as interest income on our consolidated statements 

of comprehensive income.

Comprehensive Income

Comprehensive income includes all changes in equity during a period, except those resulting from investments by, or 

distributions to, stockholders. We define comprehensive income as consisting of net income (loss) plus other comprehensive 

income (loss), which primarily consists of unrealized gains and losses on available-for-sale securities. 

Financial Statements Notes to the Consolidated Financial Statements | Note 1

FREDDIE MAC | 2021 Form 10-K 152
Other Significant Accounting Policies

The table below identifies our other significant accounting policies and the related note in which information about them can be 

found. 

Note Accounting Policy

Note 3 Securitization Activities 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 and Offsetting Arrangements

Note 12 Stockholders' Equity 

Note 12 Earnings Per Share

Note 14 Income Taxes

Note 15 Segment Reporting

Note 17 Fair Value Disclosures

ASU 2020-06, Debt-Debt with 

Conversion and Other Options 

(Subtopic 470-20) and 

Derivatives and HedgingContracts in Entity's Own 

Equity (Subtopic 815-40): 

Accounting for Convertible 

Instruments and Contracts in 

an Entity's Own Equity

The amendments in this Update simplify an issuer's 

accounting for certain financial instruments with 

characteristics of liabilities and equity, primarily by 

eliminating many of the current separation models used 

to account for convertible debt and convertible preferred 

stock.

January 1, 

2021

The adoption of the amendments did not

have a material effect on our consolidated

financial statements.

ASU 2020-08, Codification 

Improvements to Subtopic 

310-20, ReceivablesNonrefundable Fees and Other 

Costs 

The amendments in this Update clarify the guidance for 

the reevaluation of whether a callable debt security's 

amortized cost basis exceeds the amount repayable by 

the issuer at the next call date.

January 1, 

2021

The adoption of the amendments did not 

have a material effect on our consolidated 

financial statements. 

Recently Adopted Accounting Guidance

Standard Description Date of 

Adoption

Effect on Consolidated Financial 

Statements

Recently Issued Accounting Guidance, Not Yet Adopted Within Our Consolidated Financial Statements

Standard Description

Date of 

Planned 

Adoption

Effect on Consolidated Financial 

Statements

ASU 2021-04, Earnings Per 

Share (Topic 260), DebtModifications and 

Extinguishments (Subtopic 

470-50), Compensation-Stock 

Compensation (Topic 718), and 

Derivatives and HedgingContracts in Entity's Own 

Equity (Subtopic 815-40): 

Issuer's Accounting for Certain 

Modifications or Exchanges of 

Freestanding Equity-Classified 

Written Call Options

The amendments in this Update require issuers to 

account for modifications or exchanges of freestanding 

equity-classified written call options based on the reason 

for the modification or exchange, to issue equity, to 

issue or modify debt, or for other reasons.

January 1, 

2022

The adoption of these amendments will not

have a material effect on our consolidated 

financial statements.

Financial Statements Notes to the Consolidated Financial Statements | Note 1

FREDDIE MAC | 2021 Form 10-K 153
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, and September 14, 

2021. The amount of available funding remaining under the Purchase Agreement was $140.2 billion as of December 31, 2021. 

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 the Consolidated Financial Statements | Note 2

FREDDIE MAC | 2021 Form 10-K 154
end of each fiscal quarter, from September 30, 2019 through the Capital Reserve End Date. As a result, the liquidation 

preference of the senior preferred stock increased from $95.0 billion on September 30, 2021 to $98.0 billion on December 31, 

2021 based on the $2.9 billion increase in our Net Worth Amount during 3Q 2021 and will increase to $100.7 billion on March 

31, 2022 based on the $2.7 billion increase in our Net Worth Amount during 4Q 2021. 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. 

However, 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. 

We have had a net worth sweep dividend requirement to Treasury on the senior preferred stock since the first quarter of 2013, 

which was implemented pursuant to the August 2012 amendment to the Purchase Agreement. 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 capital 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.

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 and multifamily 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. However, Treasury's 

consent is required for a termination of conservatorship other than in connection with receivership or under the limited 

circumstances specified in the Purchase Agreement involving maintenance of certain capital and resolution of currently pending 

material litigation related to our conservatorship and the Purchase Agreement. 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 the Consolidated Financial Statements | Note 2

FREDDIE MAC | 2021 Form 10-K 155
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 receivership or under limited circumstances involving 

maintenance of certain capital levels and resolution of currently pending material litigation related to our conservatorship 

and the Purchase Agreement);

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 mortgagerelated 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.

In addition, the Purchase Agreement requires us to comply with the ERCF as published in December 2020, disregarding any 

subsequent amendment or other modification to that rule.

The Purchase Agreement also required us to reduce the UPB of the mortgage assets in our mortgage-related investments 

portfolio to a limit of $250 billion at December 31, 2018. The Purchase Agreement cap on our mortgage-related investments 

portfolio will be lowered to $225 billion on December 31, 2022. Since January 2021, the calculation of mortgage assets subject 

to the Purchase Agreement cap also includes 10% of the notional value of interest-only securities.

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 is currently 

$300 billion and will decrease 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. 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.

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.

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 and multifamily 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: 

Financial Statements Notes to the Consolidated Financial Statements | Note 2

FREDDIE MAC | 2021 Form 10-K 156
l	 Offer to purchase loans for cash consideration and operate this cash window with non-discriminatory pricing; 

l	 Beginning on January 1, 2022, limit the volume purchased through the cash window to $1.5 billion per lender during 

any period comprising four calendar quarters; and

l	 Comply with directives, regulations, restrictions, or other requirements prescribed by FHFA related to equitable 

secondary market access by community lenders.

n	 Multifamily New Business Activity - We are required to cap multifamily loan purchases at $80 billion in any 52-week period, 

subject to annual adjustment by FHFA based on changes in the Consumer Price Index. At least 50% of our multifamily loan 

purchases in any calendar year must be, at the time of acquisition, classified as mission-driven pursuant to FHFA 

guidelines.

n	 Single-Family Loan Acquisitions - We are required to limit our acquisition of certain single-family mortgage loans.

l A maximum of 6% of purchase money mortgages and 3% of refinance mortgages over the preceding 52-week period 

can have two or more of the following characteristics at origination: combined LTV ratio greater than 90%; DTI ratio 

greater than 45%; and FICO or equivalent credit score less than 680.

l We are required to limit acquisitions of single-family mortgage loans secured by either second homes or investment 

properties to 7% of the single-family mortgage loan acquisitions over the preceding 52-week period.

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 are required to implement by July 1, 2021 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, subject to the related Purchase Agreement restriction described below, which 

has been suspended; 

– A refinancing with streamlined underwriting for high LTV ratios; 

– A loan with temporary underwriting flexibilities due to exigent circumstances, as determined in consultation with 

FHFA; or 

– Secured by manufactured housing.

In September 2021, the Purchase Agreement requirements related to the $1.5 billion limit on our cash window volumes and 

requirements related to our multifamily loan purchase activity, acquisitions of single-family loans with certain LTV, DTI, and 

credit score characteristics at origination, and acquisitions of single-family loans secured by second homes or investment 

properties were suspended. Each such suspension shall terminate on the later of September 14, 2022 and six months after 

Treasury notifies us.

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. 

Financial Statements Notes to the Consolidated Financial Statements | Note 2

FREDDIE MAC | 2021 Form 10-K 157
In addition, Treasury may terminate its funding commitment and declare the Purchase Agreement null and void if a court 

vacates, modifies, amends, conditions, enjoins, stays, or otherwise affects the appointment of the Conservator or otherwise 

curtails the Conservator's powers. Treasury may not terminate its funding commitment under the Purchase Agreement solely by 

reason of our being in conservatorship, receivership or other insolvency proceeding, or due to our financial condition or any 

adverse change in our financial condition.

Waivers and Amendments

The Purchase Agreement provides that most provisions of the agreement may be waived or amended by mutual written 

agreement of the parties; however, no waiver or amendment of the agreement is permitted that would decrease Treasury's 

aggregate funding commitment or add conditions to Treasury's funding commitment if the waiver or amendment would 

adversely affect in any material respect the holders of our debt securities or mortgage guarantee obligations.

Third-Party Enforcement Rights

In the event of our default on payments with respect to our debt securities or mortgage guarantee obligations, if Treasury fails 

to perform its obligations under its funding commitment and if we and/or the Conservator are not diligently pursuing remedies 

in respect of that failure, the holders of these debt securities or mortgage guarantee obligations may file a claim in the United 

States Court of Federal Claims for relief requiring Treasury to fund to us the lesser of:

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.

Impact of Conservatorship and Related Developments on the MortgageRelated Investments Portfolio

In February 2019, FHFA directed us to maintain the mortgage-related investments portfolio at or below $225 billion at all times. 

We began including 10% of the notional value of certain interest-only securities owned by Freddie Mac in the calculation of this 

portfolio for purposes of the FHFA cap during 1Q 2020 as instructed by FHFA in November 2019. 

The size of this portfolio for purposes of the FHFA and Purchase Agreement caps was $123.5 billion at December 31, 2021, 

including $12.5 billion representing 10% of the notional amount of the interest-only securities we held as of December 31, 

2021. 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) reduce the 

amount of agency MBS we hold to no more than $50 billion by June 30, 2021 and no more than $20 billion by June 30, 2022, 

with all dollar caps to be based on UPB; and (2) reduce the UPB of our existing portfolio of collateralized mortgage obligations 

(CMOs), which are also sometimes referred to as REMICs, to zero by June 30, 2021. 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 securitization structures.

Government Support for Our Business

We receive substantial support from Treasury and are dependent upon its continued support in order to continue operating our 

business. Our ability to access funds from Treasury under the Purchase Agreement is critical to:

n	 Keeping us solvent;

n	 Allowing us to focus on our primary business objectives under conservatorship; and

n	 Avoiding the appointment of a receiver by FHFA under statutory mandatory receivership provisions. 

At December 31, 2021, our assets exceeded our liabilities under GAAP. As a result, FHFA will not submit a draw request from 

Treasury on our behalf. Based on our Net Worth Amount at December 31, 2021 and the applicable Capital Reserve Amount, we 

will not have a dividend requirement to Treasury in March 2022. Since conservatorship began through December 31, 2021, we 

have paid cash dividends of $119.7 billion to Treasury at the direction of the Conservator.

See Note 8 and Note 12 for more information on the conservatorship and the Purchase Agreement.

Financial Statements Notes to the Consolidated Financial Statements | Note 2

FREDDIE MAC | 2021 Form 10-K 158
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, 2021, 2020, and 2019, 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 and Government Support 

for Our Business; 

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 transactions discussed in Note 4 and Note 12; 

n	 The allocation or transfer of 4.2 basis points of each dollar of new business purchases to certain housing funds as required 

under the GSE Act; and

n	 The legislated 10 basis point fee on single-family loans that is remitted to Treasury as required by law.

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.

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 entered into a limited liability 

company (LLC) agreement with Fannie Mae. Additionally, we and Fannie Mae each appointed two executives to the CSS Board 

of Managers and signed governance and operating agreements for CSS, including an updated customer services agreement 

with Fannie Mae and CSS in May 2019. In June 2019, we 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, 

2021, we contributed $76 million of capital to CSS, and we have contributed $734 million since the fourth quarter of 2014. The 

carrying value of our investment in CSS was $8 million and $16 million as of December 31, 2021 and December 31, 2020, 

respectively, and was included in other assets on our consolidated balance sheets. 

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). The revised LLC agreement also removed the requirement that any CSS Board decision 

must be approved by at least one of the CSS Board members appointed by Freddie Mac and one appointed by Fannie Mae. 

These amendments 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. 

Under the revised CSS LLC agreement, the CSS Board will continue to include two Freddie Mac and two Fannie Mae 

representatives, and it will also include two additional members: the Chief Executive Officer of CSS and an independent, nonExecutive 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 Board Chair and the Chief Executive Officer of CSS may continue 

to serve on the CSS Board after conservatorship. FHFA appointed a CSS Board member to serve as Chair in January 2020, 

and FHFA subsequently appointed three additional CSS Board members, one in June 2020 and two in January 2021. In 

October 2021, FHFA announced that it had named a new interim CSS Board Chair and that the independent members FHFA 

previously appointed had left the CSS Board. If FHFA were to appoint three additional independent members to the CSS 

Board, the CSS Board members we and Fannie Mae appoint could be outvoted by non-GSE designated Board members on 

any matter during conservatorship and on a number of significant matters, including approval of the annual budget and 

strategic plan for CSS, if either we or Fannie Mae exits from conservatorship. Certain material post-conservatorship decisions, 

however, would require approval of at least one Board member designated by us and one designated by Fannie Mae, including 

those decisions involving a material change in CSS’s functionality, such as the addition of a new business line or reduction in 

CSS’s support of the UMBS, capital contributions beyond those necessary to support CSS’s ordinary business operations, 

appointment or removal of the Chief Executive Officer of CSS, and admission of new members.

Financial Statements Notes to the Consolidated Financial Statements | Note 2

FREDDIE MAC | 2021 Form 10-K 159
NOTE 3 

Securitization Activities and Consolidation

Our primary business activities in our 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. See Note 5 for additional information on our guarantee activities. We also 

use trusts that are VIEs in certain credit risk transfer products.

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.

We do not believe the maximum exposure to loss from our involvement with VIEs for which we are not the primary beneficiary 

discussed below 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, including possible recoveries under credit enhancements. Certain 

of our interest-rate risk-related guarantees to VIEs for which we are not the primary beneficiary may create exposure to loss 

that is unlimited. We account for these interest-rate risk-related guarantees at fair value as discussed further in Note 5 and 

generally reduce our exposure to these guarantees with unlimited interest rate exposure through separate derivative contracts 

with third parties. See Note 9 for additional information on derivatives.

Securitization Activities

Single-Family

Level 1 Securitization Products

Level 1 Securitization Products consist of UMBS, 55-day MBS, and 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 securities 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 mortgagerelated investments portfolio are accounted for as debt issuances. 

We no longer issue securities with a 45-day payment delay. As a result, we are offering an optional exchange program for 

security holders to exchange certain existing fixed-rate Gold PCs and Giant PCs for corresponding UMBS and other applicable 

55-day payment delay Freddie Mac securities. We make a one-time payment to exchanging security holders for the value of the 

10 additional days of payment delay based on float compensation rates we calculate. When existing PCs are exchanged for 

UMBS or 55-day MBS under our exchange program, we account for the exchange as a debt modification, as the terms of the 

securities are not substantially different and the exchange does not result in a change in the creditor. The float compensation 

we pay in conjunction with the exchange is deferred as a basis adjustment to the debt and amortized into interest expense over 

the remaining life of the debt. See Note 4 and Note 8 for additional information on loans and debt securities of consolidated 

trusts.

At December 31, 2021 and December 31, 2020, we were the primary beneficiary of, and therefore consolidated, Level 1 

securitization trusts with assets totaling $2.7 trillion and $2.3 trillion, respectively. During 2021 and 2020, we issued 

approximately $1.2 trillion and $1.1 trillion, respectively, of Level 1 Securitization Products. Our exposure for guarantees to 

Financial Statements Notes to the Consolidated Financial Statements | Note 3

FREDDIE MAC | 2021 Form 10-K 160
consolidated securitization trusts is generally equal to the UPB of the loans recorded on our consolidated balance sheets. 

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 full 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 these securities as their 

resecuritization does 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 customer-driven 

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. 

When we purchase a multiclass resecuritization product as an investment in our mortgage-related investments portfolio, 

we generally record the security as an investment in debt securities rather than extinguishment of debt since we are 

generally investing in the debt securities of a nonconsolidated entity. We do not consolidate multiclass resecuritization 

trusts in which we hold variable interests, as we are not deemed to be the primary beneficiary of the trusts, unless we have 

the unilateral ability to liquidate the trust. 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, 

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 Fannie Mae’s status as a GSE and the funding commitment available to it 

through its senior preferred stock purchase agreement with Treasury, and we do not charge an incremental guarantee fee to 

commingle Fannie Mae collateral in resecuritization transactions. The UPB of Fannie Mae securities underlying commingled 

Financial Statements Notes to the Consolidated Financial Statements | Note 3

FREDDIE MAC | 2021 Form 10-K 161
Freddie Mac resecuritization trusts for which we are not the primary beneficiary totaled $110.8 billion and $85.3 billion as of 

December 31, 2021 and December 31, 2020, respectively. See Note 5 for additional information on our guarantee of Fannie 

Mae securities.

Other Securitization Products

We do not consolidate our Single-Family senior subordinate securitization structures 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. During 2021 and 2020, we issued approximately $4.0 billion and 

$7.0 billion, respectively, of guaranteed securities in these securitization structures. The maximum exposure to loss for our 

Single-Family senior subordinate securitization structures for which we are not the primary beneficiary totaled $26.5 billion and 

$28.1 billion at December 31, 2021 and December 31, 2020, respectively, and represents the UPB of the beneficial interests 

that we have guaranteed. The total assets of these nonconsolidated VIEs totaled $32.3 billion and $33.7 billion at December 31, 

2021 and December 31, 2020, respectively. 

We are the primary beneficiary of and, therefore, consolidate the trusts used to issue other types 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 $6.1 billion and $11.2 billion at 

December 31, 2021 and December 31, 2020, respectively. We do not consolidate the trusts used to issue other types of our 

Single-Family other securitization products that do not meet these conditions. The maximum exposure to loss for these SingleFamily securitizations for which we are not the primary beneficiary totaled $1.5 billion and $1.7 billion at December 31, 2021

and December 31, 2020, respectively. The total assets of these nonconsolidated VIEs, excluding certain nonfinancial assets 

held by the VIEs, totaled $1.3 billion and $1.8 billion at December 31, 2021 and December 31, 2020, respectively. 

Multifamily

K Certificates

In a K Certificate transaction, we sell multifamily loans to a non-Freddie Mac trust that issues senior, mezzanine, 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 mezzanine or 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 any 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 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 K Certificate 

transactions as investments in debt securities.

During 2021 and 2020, we issued approximately $58.9 billion and $55.6 billion, respectively, of K Certificates. The maximum 

exposure to loss for our K Certificate securitizations for which we are not the primary beneficiary totaled $281.9 billion and 

$253.0 billion at December 31, 2021 and December 31, 2020, respectively, and primarily represents the UPB of the beneficial 

interests that we have guaranteed. The total assets of these nonconsolidated VIEs totaled $321.1 billion and $291.3 billion at 

December 31, 2021 and December 31, 2020, respectively. 

SB Certificates

In a SB Certificate transaction, we securitize multifamily small balance loans using a non-Freddie Mac SB Certificate trust that 

issues senior classes of securities that we guarantee, as well as subordinated classes of securities that we do not guarantee. 

Similar to our K Certificate transactions, we are not the primary beneficiary of and, therefore, do not consolidate our SB 

Certificate trusts, as we do not have the ability to direct loss mitigation activities of the underlying loans, which is the most 

significant activity affecting the economic performance of the VIE.

In a typical SB Certificate transaction, we sell loans to a SB Certificate trust, derecognize the transferred loans and account for 

our guarantee to the nonconsolidated SB Certificate trust. We account for our investments in the beneficial interests issued by 

nonconsolidated SB Certificate trusts as investments in debt securities.

During 2021 and 2020, we issued approximately $4.5 billion and $4.4 billion, respectively, of SB Certificates. The maximum 

Financial Statements Notes to the Consolidated Financial Statements | Note 3

FREDDIE MAC | 2021 Form 10-K 162
exposure to loss for our SB Certificate securitizations for which we are not the primary beneficiary totaled $22.4 billion and 

$21.5 billion at December 31, 2021 and December 31, 2020, respectively, and primarily represents the UPB of the beneficial 

interests that we have guaranteed. The total assets of these nonconsolidated VIEs totaled $24.9 billion and $23.9 billion at 

December 31, 2021 and December 31, 2020, respectively.

WI K-Deal Certificates

In a WI K-Deal Certificate transaction, we forward sell a K Certificate security that will be issued in the future to a WI K-Deal 

trust at a fixed price, thereby reducing our exposure to future changes in interest rates and K Certificate benchmark 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. 

We began issuing WI K-Deal Certificates in 2021 and issued approximately $2.0 billion of WI Certificates and initially 

consolidated the trusts. Upon delivering the K Certificate into the trust, we no longer have a variable interest and therefore 

deconsolidate the WI K-Deal trust. As of December 31, 2021, we continued to consolidate WI K-Deal trusts with underlying 

assets totaling $0.9 billion. 

Other Securitization Products 

We are the primary beneficiary of and, therefore, consolidate the trusts used to issue certain of our other securitization products 

because 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 in these other securitization products with underlying assets totaling $19.3 billion and $14.3 billion at 

December 31, 2021 and December 31, 2020, respectively. During 2021 and 2020, we issued approximately $7.0 billion and 

$6.0 billion, respectively, of other securitization products that we consolidated.

We do not consolidate the trusts used to issue our other securitization products when we do not meet the above conditions. 

For those products, we account for our guarantee to the nonconsolidated VIE. During 2021 and 2020, we issued approximately 

$2.4 billion and $3.1 billion of these securities, respectively. The maximum exposure to loss for our other securitization products 

for which we are not the primary beneficiary totaled $14.8 billion and $14.9 billion at December 31, 2021 and December 31, 

2020, respectively, and primarily represents the UPB of the beneficial interests that we have guaranteed. The total assets of 

these nonconsolidated VIEs totaled $16.7 billion and $16.9 billion at December 31, 2021 and December 31, 2020, respectively.

CRT Activities

In our CRT Trust note transactions, which include both STACR Trust notes and SCR Trust notes, a trust issues credit-linked 

notes whose repayments are based on the credit performance of a reference pool of mortgage loans. The trust 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 and do not consolidate the trusts used in the CRT Trust note transactions. The maximum 

exposure to loss for our CRT Trust notes for which we are not the primary beneficiary represents our recorded expected 

recovery receivable and totaled $44 million and $420 million at December 31, 2021 and December 31, 2020, respectively. The 

total assets of these nonconsolidated VIEs totaled $23.6 billion and $17.3 billion at December 31, 2021 and December 31, 

2020, respectively.

Consolidated VIEs

We consolidated the VIEs for which we are the primary beneficiary as discussed above. Our exposure on debt securities of 

consolidated trusts represents our liability to third parties that hold beneficial interests in our consolidated trusts. 

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:

Financial Statements Notes to the Consolidated Financial Statements | Note 3

FREDDIE MAC | 2021 Form 10-K 163
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 net fair value of the assets and liabilities recognized. 

Guarantees to consolidated VIEs are eliminated in consolidation and are therefore not separately recognized on our 

consolidated balance sheets.

The table below presents the carrying value and classification of the assets and liabilities of consolidated VIEs on our 

consolidated balance sheets.

Table 3.1 - Consolidated VIEs

(In millions) December 31, 2021 December 31, 2020

Consolidated Balance Sheet Line Item

Assets:

Cash and cash equivalents (includes $1,595 and $17,289 of restricted cash and 

cash equivalents) $1,596 $17,290 

Securities purchased under agreements to resell 34,000 38,487 

Investment securities, at fair value 420 591 

Mortgage loans held-for-investment, net 2,784,626 2,273,347 

Accrued interest receivable, net 7,019 7,134 

Other assets 11,265 20,480 

Total assets of consolidated VIEs $2,838,926 $2,357,329 

Liabilities:

Accrued interest payable $5,823 $5,610 

Debt 2,803,054 2,308,176 

Total liabilities of consolidated VIEs $2,808,877 $2,313,786 

Nonconsolidated VIEs

The following table presents the carrying amounts and classification of the assets and liabilities recorded on our consolidated 

balance sheets related to 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 involvement with such VIEs primarily consists of investments in 

debt securities issued by resecuritization trusts and guarantees of senior securities issued by certain Multifamily securitization 

trusts. 

Table 3.2 - Nonconsolidated VIEs

(In millions) December 31, 2021 December 31, 2020

Assets and Liabilities Recorded on our Consolidated Balance Sheets(1)

Assets:

Investment securities, at fair value $16,506 $28,459 

Accrued interest receivable, net 220 239 

Other assets(2) 5,589 5,614 

 Liabilities:

Debt 67 — 

Other liabilities(3) 5,172 4,562 

(1) Includes our variable interests in REMICs and Strips, K Certificates, SB Certificates, certain senior subordinate securitization structures, and other securitization 

products that we do not consolidate.

(2) Primarily includes guarantee assets.

(3) Primarily includes guarantee obligations.

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. 

Financial Statements Notes to the Consolidated Financial Statements | Note 3

FREDDIE MAC | 2021 Form 10-K 164
NOTE 4

Mortgage Loans

On January 1, 2020, we adopted CECL, which changed certain of our significant accounting policies for mortgage loans heldfor-investment, as discussed further in the sections below.

The table below provides details of the loans on our consolidated balance sheets. 

Table 4.1 - Mortgage Loans

December 31, 2021 December 31, 2020

(In millions) Single-Family Multifamily Total Single-Family Multifamily Total

Held-for-sale UPB $5,446 $14,871 $20,317 $10,702 $23,789 $34,491 

Cost basis and fair value adjustments, net (813) 274 (539) (1,637) 798 (839) 

 Total held-for-sale loans, net 4,633 15,145 19,778 9,065 24,587 33,652 

Held-for-investment UPB 2,742,851 26,657 2,769,508 2,271,576 21,923 2,293,499 

Cost basis adjustments 63,684 86 63,770 62,415 54 62,469 

Allowance for credit losses (4,913) (34) (4,947) (5,628) (104) (5,732) 

 Total held-for-investment loans, net 2,801,622 26,709 2,828,331 2,328,363 21,873 2,350,236 

Total mortgage loans, net $2,806,255 $41,854 $2,848,109 $2,337,428 $46,460 $2,383,888 

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-thaninsignificant 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 (losses), net on our consolidated statements of comprehensive 

income, with subsequent changes in this valuation allowance also being recorded in investment gains (losses), 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 that are originally classified as held-for-sale. 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 (losses), net on our consolidated statements of comprehensive 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 (loss)) 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.

The table below provides details of the UPB of loans we purchased, reclassified from held-for-investment to held-for-sale, and 

sold during the periods presented.

Financial Statements Notes to the Consolidated Financial Statements | Note 4

FREDDIE MAC | 2021 Form 10-K 165
Table 4.2 - Loans Purchased, Reclassified from Held-for-Investment to Held-for-Sale, and Sold

Year Ended December 31,

(In billions) 2021 2020 2019

Single-Family

Purchases:

 Held-for-investment loans $1,215.3 $1,085.9 $451.2 

Reclassified from held-for-investment to held-for-sale(1) 1.6 4.6 13.6 

Sale of held-for-sale loans(2) 5.5 9.0 13.1 

Multifamily

Purchases:

 Held-for-investment loans 9.4 9.6 9.5 

 Held-for-sale loans 59.1 69.7 65.3 

Reclassified from held-for-investment to held-for-sale(1) 2.6 2.7 1.9 

Sale of held-for-sale loans(3) 70.4 66.7 71.3 

(1) We reclassify loans from held-for-investment to held-for-sale when we no longer have both the intent and ability to hold the loans for the foreseeable future. For 

additional information regarding the fair value of our loans classified as held-for-sale, see Note 17.

(2) Our sales of single-family loans reflect the sale of single-family seasoned loans. 

(3) Our sales of multifamily loans occur primarily through the issuance of Multifamily K Certificates and SB Certificates. See Note 3 for more information on our K 

Certificates and SB 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 write-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 write-off is reversed through benefit 

(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. 

Prior to adoption of CECL, when we reclassified a loan from held-for-investment to held-for-sale, we wrote off the entire 

difference between the loan's amortized cost basis and its fair value if the loan had a history of credit-related issues. If the 

write-off amount exceeded the existing allowance for credit losses amount, an additional provision for credit losses was 

recorded. Any declines in loan fair value after the date of reclassification were recognized as a valuation allowance, with an 

offset recorded to investment gains (losses), net.

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

2021 2020

(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(1) $1,642 $66 $— $4,628 $300 $— 

Held-for-sale to held-for-investment(2) 266 18 — 1,721 147 34 

Multifamily reclassifications from:

Held-for-investment to held-for-sale 2,602 7 — 2,703 9 (6) 

 Held-for-sale to held-for-investment 76 — — 775 (1) 4 

(1) Prior to reclassification from held-for-investment to held-for-sale, we charged off $57 million against the allowance for credit losses during 2021 compared to $264 

million during 2020.

(2) Allowance for credit losses reversed upon reclassifications from held-for-sale to held-for-investment for loans that were previously charged off and the present 

values of expected future cash flows were in excess of the amortized cost basis upon reclassification.

Financial Statements Notes to the Consolidated Financial Statements | Note 4

FREDDIE MAC | 2021 Form 10-K 166
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.

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.

For loans in active forbearance plans that were current prior to receiving forbearance, we continue to accrue interest income 

while the loan is in forbearance and is three or more monthly payments past due when we believe the available evidence 

indicates that collectability of principal and interest is reasonably assured based on management judgment, taking into 

consideration additional factors, the most important of which is current LTV ratio. When we accrue interest on loans that are 

three or more monthly payments past due, we measure an allowance for expected credit losses on unpaid accrued interest 

receivable balances such that the balance sheet reflects the net amount of interest we expect to collect. See Note 6 for 

additional information on the allowance for credit losses on accrued interest receivable and Note 13 for additional information 

on interest income on mortgage loans.

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 

Non-accrual Amortized Cost Basis

Interest Income 

Recognized(1)

(In millions) January 1, 2021 December 31, 2021

Year Ended 

December 31, 2021

Single-Family:

20- and 30-year or more, amortizing fixed-rate $12,151 $17,013 $197 

15-year amortizing fixed-rate 696 844 7 

Adjustable-rate 193 233 1 

Alt-A, interest-only, and option ARM 637 560 7 

Total Single-Family 13,677 18,650 212 

Total Multifamily — — — 

Total Single-Family and Multifamily $13,677 $18,650 $212 

Non-accrual Amortized Cost Basis

Interest Income 

Recognized(1)

(In millions) January 1, 2020 December 31, 2020

Year Ended 

December 31, 2020

Single-Family:

20- and 30-year or more, amortizing fixed-rate $5,598 $12,151 $235 

15-year amortizing fixed-rate 242 696 10 

Adjustable-rate 91 193 3 

Alt-A, interest-only, and option ARM 439 637 10 

Total Single-Family 6,370 13,677 258 

Total Multifamily 13 — — 

Total Single-Family and Multifamily $6,383 $13,677 $258 

(1) 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.

Financial Statements Notes to the Consolidated Financial Statements | Note 4

FREDDIE MAC | 2021 Form 10-K 167
The table below provides the amount of accrued interest receivable, net 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 is charged off.

Table 4.5 - Accrued Interest Receivable, Net and Related Charge-offs 

Accrued Interest Receivable, Net Accrued Interest Receivable Related Charge-offs

(In millions) December 31, 2021 December 31, 2020

Year Ended 

December 31, 2021

Year Ended 

December 31, 2020

Single-Family loans $7,065 $7,292 ($742) ($333) 

Multifamily loans 125 139 — — 

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 (outside of our relief refinance programs) 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. For reporting purposes:

n	 Loans within the Alt-A category continue to be presented in that category following modification, even though the borrower 

may have provided full documentation of assets and income to complete the modification and

n Loans within the option ARM category continue to be presented in that category following modification, even though the 

modified loan no longer provides for optional payment provisions.

Financial Statements Notes to the Consolidated Financial Statements | Note 4

FREDDIE MAC | 2021 Form 10-K 168
Table 4.6 - Amortized Cost Basis of Single-Family Held-for-Investment Loans by Current LTV Ratio and Vintage

December 31, 2021

Year of Origination 

Total

(In millions) 2021 2020 2019 2018 2017 Prior

Current LTV Ratio:

 20- and 30-year or more, amortizing fixed-rate

 ≤ 60 $260,244 $397,680 $77,812 $39,143 $61,434 $405,467 $1,241,780 

 > 60 to 80 467,193 334,560 60,570 18,914 12,715 17,354 911,306 

 > 80 to 90 124,074 28,944 2,034 482 208 818 156,560 

 > 90 to 100 66,851 1,083 126 45 29 309 68,443 

 > 100 75 2 4 8 18 328 435 

 Total 20- and 30-year or more, amortizing fixed-rate 918,437 762,269 140,546 58,592 74,404 424,276 2,378,524 

 15-year amortizing fixed-rate

 ≤ 60 93,732 111,899 17,335 7,161 13,602 78,001 321,730 

 > 60 to 80 52,521 18,834 1,136 137 54 36 72,718 

 > 80 to 90 3,785 168 6 2 2 3 3,966 

 > 90 to 100 598 2 1 1 1 2 605 

 > 100 4 — — 1 1 3 9 

 Total 15-year amortizing fixed-rate 150,640 130,903 18,478 7,302 13,660 78,045 399,028 

 Adjustable-rate 

 ≤ 60 2,054 1,554 727 543 1,657 10,011 16,546 

 > 60 to 80 2,435 535 209 90 190 151 3,610 

 > 80 to 90 417 16 6 3 4 2 448 

 > 90 to 100 116 — — — — 1 117 

 > 100 1 — — — — — 1 

 Total Adjustable-rate 5,023 2,105 942 636 1,851 10,165 20,722 

 Alt-A, Interest-only, and option ARM

 ≤ 60 — — — — — 7,506 7,506 

 > 60 to 80 — — — — — 644 644 

 > 80 to 90 — — — — — 64 64 

 > 90 to 100 — — — — — 29 29 

 > 100 — — — — — 18 18 

 Total Alt-A, Interest-only, and option ARM — — — — — 8,261 8,261 

Total Single-Family loans $1,074,100 $895,277 $159,966 $66,530 $89,915 $520,747 $2,806,535 

Total for all loan product types by Current LTV ratio:

 ≤ 60 $356,030 $511,133 $95,874 $46,847 $76,693 $500,985 $1,587,562 

 > 60 to 80 522,149 353,929 61,915 19,141 12,959 18,185 988,278 

 > 80 to 90 128,276 29,128 2,046 487 214 887 161,038 

 > 90 to 100 67,565 1,085 127 46 30 341 69,194 

 > 100 80 2 4 9 19 349 463 

Total Single-Family loans $1,074,100 $895,277 $159,966 $66,530 $89,915 $520,747 $2,806,535 

Financial Statements Notes to the Consolidated Financial Statements | Note 4

FREDDIE MAC | 2021 Form 10-K 169
December 31, 2020

Year of Origination

Total

(In millions) 2020 2019 2018 2017 2016 Prior

Current LTV Ratio:

 20- and 30-year or more, amortizing fixed-rate

≤ 60 $203,333 $52,820 $33,139 $64,834 $115,978 $431,406 $901,510 

> 60 to 80 437,107 141,094 64,236 59,110 40,614 44,636 786,797 

> 80 to 100 206,457 53,926 8,822 2,117 654 3,983 275,959 

> 100 202 7 25 64 61 948 1,307 

 Total 20- and 30-year or more, amortizing fixed-rate 847,099 247,847 106,222 126,125 157,307 480,973 1,965,573 

 15-year amortizing fixed-rate

≤ 60 78,269 17,753 9,914 19,650 29,916 83,842 239,344 

> 60 to 80 67,904 12,169 2,195 961 215 135 83,579 

> 80 to 100 8,553 400 17 12 9 17 9,008 

> 100 21 — 3 5 3 7 39 

 Total 15-year amortizing fixed-rate 154,747 30,322 12,129 20,628 30,143 84,001 331,970 

 Adjustable-rate 

≤ 60 1,427 850 731 2,429 2,042 12,993 20,472 

> 60 to 80 1,403 877 537 1,061 329 528 4,735 

> 80 to 100 232 125 34 29 2 8 430 

> 100 — — — — — 1 1 

Total adjustable-rate 3,062 1,852 1,302 3,519 2,373 13,530 25,638 

 Alt-A, Interest-only, and option ARM

≤ 60 — — — — — 8,620 8,620 

> 60 to 80 — — — — — 1,818 1,818 

> 80 to 100 — — — — — 314 314 

> 100 — — — — — 58 58 

Total Alt-A, interest-only, and option ARM — — — — — 10,810 10,810 

Total Single-Family loans $1,004,908 $280,021 $119,653 $150,272 $189,823 $589,314 $2,333,991 

Total for all loan product types by Current LTV ratio:

≤ 60 $283,029 $71,423 $43,784 $86,913 $147,936 $536,861 $1,169,946 

> 60 to 80 506,414 154,140 66,968 61,132 41,158 47,117 876,929 

> 80 to 100 215,242 54,451 8,873 2,158 665 4,322 285,711 

> 100 223 7 28 69 64 1,014 1,405 

Total Single-Family loans $1,004,908 $280,021 $119,653 $150,272 $189,823 $589,314 $2,333,991 

Multifamily

The table below presents the amortized cost basis of our multifamily held-for-investment loans, 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 the Consolidated Financial Statements | Note 4

FREDDIE MAC | 2021 Form 10-K 170
Table 4.7 - Amortized Cost Basis of Multifamily Held-for-Investment Loans by Credit Quality Indicator and Vintage

December 31, 2021

Year of Origination

(In millions) 2021 2020 2019 2018 2017 Prior Total

Revolving 

Loans

Category:

Pass $6,955 $7,116 $5,273 $979 $610 $2,795 $2,275 $26,003 

Special mention — 40 372 — 3 42 — 457 

Substandard — 62 171 4 2 44 — 283 

Doubtful — — — — — — — — 

Total $6,955 $7,218 $5,816 $983 $615 $2,881 $2,275 $26,743 

December 31, 2020

Year of Origination

(In millions) 2020 2019 2018 2017 2016 Prior Total

Revolving 

Loans

Category:

Pass $7,486 $6,491 $1,075 $722 $590 $2,715 $2,024 $21,103 

Special mention — 524 115 — 8 108 — 755 

Substandard — — 6 41 — 72 — 119 

Doubtful — — — — — — — — 

Total $7,486 $7,015 $1,196 $763 $598 $2,895 $2,024 $21,977 

Past Due Status

The table below presents the amortized cost basis of our single-family and multifamily held-for-investment loans, by payment 

status. Pursuant to FHFA guidance and the CARES Act, we have offered mortgage relief options for borrowers affected by the 

COVID-19 pandemic. Among other things, we have offered forbearance to single-family and multifamily borrowers experiencing 

a financial hardship, either directly or indirectly, related to the COVID-19 pandemic. 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

December 31, 2021

(In millions) Current

One

Month

Past Due

Two

Months

Past Due

Three Months or 

More Past Due, 

or in Foreclosure(1) Total

Three Months or 

More Past Due 

and Accruing 

Interest

Non-accrual 

With No 

Allowance(2)

Single-Family:

20- and 30-year or more, amortizing 

fixed-rate $2,338,076 $14,833 $3,214 $22,401 $2,378,524 $5,784 $857 

15-year amortizing fixed-rate 396,030 1,550 230 1,218 399,028 392 13 

Adjustable-rate 20,302 105 31 284 20,722 54 8 

Alt-A, interest-only, and option ARM 7,450 175 58 578 8,261 41 94 

 Total Single-Family 2,761,858 16,663 3,533 24,481 2,806,535 6,271 972 

 Total Multifamily(3) 26,743 — — — 26,743 — — 

Total Single-Family and Multifamily $2,788,601 $16,663 $3,533 $24,481 $2,833,278 $6,271 $972 

Referenced footnotes are included after the prior period table.

Financial Statements Notes to the Consolidated Financial Statements | Note 4

FREDDIE MAC | 2021 Form 10-K 171
December 31, 2020

(In millions) Current

One

Month

Past Due

Two

Months

Past Due

Three Months or

More Past Due,

or in Foreclosure(1) Total

Three Months or 

More Past Due 

and Accruing 

Interest

Non-accrual 

With No 

Allowance(2)

Single-Family:

20- and 30-year or more, amortizing 

fixed-rate $1,891,981 $15,798 $5,941 $51,853 $1,965,573 $40,162 $648 

15-year amortizing fixed-rate 326,651 1,439 429 3,451 331,970 2,723 11 

Adjustable-rate 24,483 192 79 884 25,638 690 5 

Alt-A, interest-only, and option ARM 9,227 292 130 1,161 10,810 538 115 

 Total Single-Family 2,252,342 17,721 6,579 57,349 2,333,991 44,113 779 

 Total Multifamily(3) 21,977 — — — 21,977 — — 

Total Single-Family and Multifamily $2,274,319 $17,721 $6,579 $57,349 $2,355,968 $44,113 $779 

(1) Includes $0.7 billion and $1.0 billion of loans that were in the process of foreclosure as of December 31, 2021 and December 31, 2020, respectively.

(2) Loans with no allowance for loan losses primarily represent those loans that were previously charged-off and therefore the collateral value 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 accrued interest receivable and advances of pre-foreclosure costs when determining whether a loan has an allowance for 

credit losses.

(3) As of December 31, 2021 and December 31, 2020, includes $0.4 billion and $0.7 billion of multifamily loans in forbearance that are reported as current.

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. We implemented the 24-month 

policy on January 1, 2021. Prior to that time, in accordance with FHFA instruction, we generally purchased loans from trusts if 

they were delinquent for 120 days, subject to certain exceptions.

When we purchase loans from the trust, we record an extinguishment of the corresponding portion of the debt securities of the 

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 $4.2 billion and $5.6 billion in UPB of loans from consolidated trusts 

(or purchased delinquent loans associated with other mortgage-related guarantees) during the years ended December 31, 2021

and December 31, 2020, respectively.

Troubled Debt Restructurings

A modification to the contractual terms of a loan that results in granting a concession to a borrower experiencing financial 

difficulties is considered a TDR. A concession is deemed granted when, as a result of the restructuring, we do not expect to 

collect all amounts due, including interest accrued, at the original contractual interest rate. As appropriate, we also consider 

other qualitative factors in determining whether a concession is deemed granted, including whether the borrower's modified 

interest rate is consistent with that of a non-troubled borrower. We do not consider restructurings that result in an insignificant 

delay in payment to be a concession. We generally consider a delay in monthly amortizing payments of three months or less to 

be insignificant. A concession typically includes one or more of the following being granted to the borrower: 

n	 A trial period where the expected permanent modification will change our expectation of collecting all amounts due at the 

original contract rate;

n	 A delay in payment that is more than insignificant; 

n	 A reduction in the contractual interest rate; 

n	 Interest forbearance for a period of time that is more than insignificant or forgiveness of accrued but uncollected interest 

amounts; 

n	 Principal forbearance that is more than insignificant; and

n	 Discharge of the borrower's obligation in Chapter 7 bankruptcy.

The assessment as to whether a multifamily loan restructuring is considered a TDR contemplates the unique facts and 

circumstances of each loan. This assessment considers qualitative factors such as whether the borrower's modified interest 

rate is consistent with that of a non-troubled borrower having a similar credit profile at the time of modification. In certain cases, 

for maturing loans we may provide short-term loan extensions of up to one year 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 reducing the interest rate, extending the maturity for longer than one year, providing principal forbearance, or some 

combination of these terms.

Financial Statements Notes to the Consolidated Financial Statements | Note 4

FREDDIE MAC | 2021 Form 10-K 172
Section 4013 of the CARES Act provides temporary relief from the accounting and reporting requirements for TDRs for certain 

loan modifications related to COVID-19. Specifically, the CARES Act provides that a qualifying financial institution may elect to 

suspend:

n	 The requirements under U.S. GAAP for certain loan modifications that would otherwise be categorized as a TDR and

n	 Any determination that such loan modifications would be considered a TDR, including the related impairment for 

accounting purposes.

The relief provided by Section 4013 of the CARES Act has been extended by the Consolidated Appropriations Act, 2021. As a 

result, Section 4013 of the CARES Act applies to any modification related to an economic hardship as a result of the COVID-19 

pandemic, including a forbearance arrangement, an interest rate modification, a repayment plan, or any similar arrangement 

that defers or delays payment of principal or interest, that occurs during the period beginning on March 1, 2020 and ending on 

January 1, 2022 for a loan that was not more than 30 days past due as of December 31, 2019. We have elected to suspend 

TDR accounting for eligible modifications under Section 4013 of the CARES Act.

In addition, Section 4022 and Section 4023 of the CARES Act require us to offer forbearance to certain single-family and 

multifamily borrowers, respectively, with an economic hardship related to the COVID-19 pandemic. Guidance issued by federal 

banking regulators and endorsed by the FASB staff has indicated that government-mandated modification or deferral programs 

related to the COVID-19 pandemic should not be accounted for as TDRs as the lender did not choose to grant a concession to 

the borrower. We have concluded that the forbearance programs we are offering under Section 4022 and Section 4023 of the 

CARES Act are government-mandated deferral programs related to the COVID-19 pandemic, and therefore we will not account 

for such modifications as TDRs.

We recognize an allowance for credit losses on TDRs as discussed in Note 6. We recognize interest income at the modified 

interest rate, subject to our non-accrual policy as discussed in the Interest Income section above, with all other changes in the 

present value of expected future cash flows being recognized as a component of benefit (provision) for credit losses on our 

consolidated statements of comprehensive income (loss). We report single-family loans with modifications that were classified 

as TDRs based on the original product categories of the loans before modifications. The tables below include loans that were 

reclassified from held-for-investment to held-for-sale after TDR modifications.

The table below provides details of our single-family loan modifications that were classified as TDRs during the periods 

presented.

Table 4.9 - Single-Family TDR Modification Metrics 

2021 2020 2019

Percentage of single-family loan modifications that were classified as TDRs with:

 Interest rate reductions and related term extensions 13% 15% 9% 

 Principal forbearance and related interest rate reductions and term extensions 33 22 23 

Average coupon interest rate reduction 0.4 % 0.3 % 0.1 %

Average months of term extension 155 179 180

Substantially all of our completed single-family loan modifications classified as a TDR during 2021 resulted in a modified loan 

with a fixed interest rate.

Financial Statements Notes to the Consolidated Financial Statements | Note 4

FREDDIE MAC | 2021 Form 10-K 173
The table below presents the volume of single-family and multifamily loans that were newly classified as TDRs. Loans classified 

as a TDR in one period may be subject to further action (such as a modification or remodification) in a subsequent period. In 

such cases, the subsequent action would not be reflected in the table below since the loan would already have been classified 

as a TDR.

Table 4.10 - TDR Activity

Year Ended December 31,

2021 2020 2019

(Dollars in millions)

Number of 

Loans

Post-TDR

Amortized 

Cost Basis

Number of 

Loans

Post-TDR

Amortized 

Cost Basis

Number of 

Loans

Post-TDR

Amortized 

Cost Basis

Single-Family(1)(2):

20- and 30-year or more, amortizing fixed-rate 13,448 $2,368 22,471 $4,169 25,924 $4,331 

15-year amortizing fixed-rate 1,620 167 2,584 283 3,018 296 

Adjustable-rate 172 31 334 59 529 86 

Alt-A, interest-only, and option ARM 508 65 1,300 204 1,523 219 

Total Single-Family 15,748 2,631 26,689 4,715 30,994 4,932 

Multifamily — — — — — — 

(1) The pre-TDR amortized cost basis for single-family loans initially classified as TDRs during the years ended December 31, 2021, December 31, 2020, and December 

31, 2019 was $2.6 billion, $4.7 billion, and $4.9 billion, respectively.

(2) Includes certain bankruptcy events and forbearance plans, repayment plans, payment deferral plans, and modification activities that do not qualify for the temporary 

relief related to TDRs provided by the CARES Act, based on servicer reporting at the time of the TDR event.

The table below presents the volume of our TDR modifications that experienced payment defaults (i.e., loans that became two 

months delinquent or completed a loss event) during the applicable periods and had completed a modification during the year 

preceding the payment default. 

Table 4.11 - Payment Defaults of Completed TDR Modifications

Year Ended December 31,

2021 2020 2019

(Dollars in millions)

Number of 

Loans

Post-TDR

Amortized 

Cost Basis

Number of 

Loans

Post-TDR

Amortized 

Cost Basis

Number of 

Loans

Post-TDR

Amortized 

Cost Basis

Single-Family:

20- and 30-year or more, amortizing fixed-rate 3,044 $535 10,339 $1,869 13,428 $1,702 

15-year amortizing fixed-rate 121 13 482 58 451 36 

Adjustable-rate 30 5 130 19 132 15 

Alt-A, interest-only, and option ARM 337 53 749 144 871 129 

Total Single-Family 3,532 606 11,700 2,090 14,882 1,882 

Multifamily — — — — — — 

In addition to modifications, loans may be classified as TDRs as a result of other loss mitigation activities (i.e., repayment plans, 

forbearance plans, payment deferral plans, or loans in modification trial periods). During the years ended December 31, 2021, 

December 31, 2020, and December 31, 2019, 2,790, 3,862, and 5,158, respectively, of such loans (with a post-TDR amortized 

cost basis of $0.4 billion, $0.6 billion, and $0.6 billion, respectively) experienced a payment default within a year after the loss 

mitigation activity occurred.

Non-Cash Investing and Financing Activities

During the years ended December 31, 2021, December 31, 2020, and December 31, 2019, we acquired $705.4 billion, $435.5 

billion, and $238.4 billion, respectively, of loans held-for-investment in exchange for the issuance of debt securities of 

consolidated trusts in guarantor swap transactions. We received approximately $263.9 billion, $141.7 billion, and $50.0 billion

of loans held-for-investment from sellers during the years ended December 31, 2021, December 31, 2020, and December 31, 

2019, respectively, to satisfy advances to lenders that were recorded in other assets on our consolidated balance sheets. 

Financial Statements Notes to the Consolidated Financial Statements | Note 4

FREDDIE MAC | 2021 Form 10-K 174
NOTE 5 

Guarantees and Other Off-Balance Sheet Credit Exposures

We generate revenue through our guarantee activities by agreeing to absorb the credit risk associated with certain financial 

instruments that are owned or held by third parties. In exchange for providing this guarantee, we receive an upfront or ongoing 

guarantee fee that is 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 be dependent on our guarantee fee and the actual credit performance of the 

underlying financial instruments that we have guaranteed.

Guarantees to consolidated entities are eliminated in consolidation and therefore are not separately recognized on our 

consolidated balance sheets. The accounting treatment for guarantees provided to nonconsolidated entities or other third 

parties will depend on whether the guarantee contract qualifies as a financial guarantee. 

If the guarantee contract qualifies as a financial guarantee and exposes us to incremental credit risk, we will 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.

If the guarantee contract provided to nonconsolidated entities does not qualify as a financial guarantee, that contract will 

generally be accounted for as a derivative instrument and measured at fair value with changes in fair value recognized 

immediately in earnings.

Guarantee Activities

Our principal guarantee activities include the following:

Securitization Activity Guarantees

For substantially all of our securitization transactions, we guarantee the principal and interest payments on some or all of the 

issued beneficial interests. Typically, these guarantees will cover the senior classes of beneficial interests issued by the 

securitization trust(s). Securitization activity guarantees provided to nonconsolidated trusts will generally qualify and be 

accounted for as financial guarantees. Our maximum exposure on these guarantees is generally limited to the UPB of the 

beneficial interests 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 and do not charge an incremental guarantee 

fee to include Fannie Mae securities in our resecuritization products. Thus, we do not record a guarantee obligation with 

respect to Fannie Mae securities backing Freddie Mac resecuritization products. 

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. During 

2021 and 2020, we guaranteed $4.3 billion and $4.2 billion, respectively, of loans under new long-term standby 

commitments and

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. During 2021 and 2020, we guaranteed $0.7 billion and $1.4 

billion, respectively, of multifamily bonds.

Financial Statements Notes to the Consolidated Financial Statements | Note 5

FREDDIE MAC | 2021 Form 10-K 175
Our other mortgage-related guarantees will generally qualify and be accounted for as financial guarantees. Our maximum 

exposure on these guarantees is limited to the UPB of the mortgage-related assets that we have guaranteed.

Other Guarantees 

Other guarantees that do not qualify as financial guarantees are generally accounted for as derivative instruments and 

measured at fair value. These guarantees primarily include:

n	 Certain interest-rate guarantees related to our securitization activities that do not qualify as financial guarantees;

n	 Certain market value guarantees, including written options and written swaptions; and

n	 Guarantees of third-party derivative instruments.

Other 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 18 for information on 

ongoing litigation. These indemnification obligations will generally be accounted for and qualify as financial guarantees. The 

recognized liabilities on our consolidated balance sheets related to indemnifications were not significant at both December 31, 

2021 and December 31, 2020.

The table below shows our maximum exposure, recognized liability, and maximum remaining term of our recognized 

guarantees to nonconsolidated VIEs and other third parties. 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. The maximum 

exposure disclosed in the table is not 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, including possible recoveries under credit 

enhancements. 

Table 5.1 - Financial Guarantees 

December 31, 2021 December 31, 2020

(Dollars in millions, terms in years)

Maximum

Exposure(1)

Recognized

Liability(2)

Maximum

Remaining

Term

Maximum

Exposure(1)

Recognized

Liability(2)

Maximum

Remaining

Term

Single-Family:

Securitization activity guarantees $27,975 $398 39 $29,739 $401 39

Other mortgage-related guarantees 10,588 251 30 9,215 193 30

Total Single-Family $38,563 $649 $38,954 $594 

Multifamily:

Securitization activity guarantees $317,006 $4,663 38 $287,334 $4,031 39

Other mortgage-related guarantees 10,456 404 32 10,721 425 33

Total Multifamily $327,462 $5,067 $298,055 $4,456 

Other guarantees $69,799 $1,652 30 $47,703 $794 30

Fannie Mae securities backing Freddie Mac 

resecuritization products 111,150 — 40 85,841 — 41

(1) The maximum exposure represents the contractual amounts that could be lost if counterparties or borrowers defaulted, without consideration of proceeds from 

related collateral liquidation and possible recoveries under credit enhancements. For other guarantees, this amount primarily represents the notional value or UPB of 

our interest-rate and market value guarantees and guarantees of third-party derivatives. For certain of our other guarantees, our exposure may be unlimited; 

however, we generally reduce our exposure through separate derivative contracts with third parties.

(2) For securitization activity guarantees and other mortgage-related guarantees, this amount represents the guarantee obligation on our consolidated balance sheets 

and excludes our allowance for credit losses on off-balance sheet credit exposures. For other guarantees, this amount represents the fair value of the contract.

Financial Statements Notes to the Consolidated Financial Statements | Note 5

FREDDIE MAC | 2021 Form 10-K 176
The table below shows the payment status of the mortgage loans underlying our guarantees that are not measured at fair value.

Table 5.2 – UPB of Loans Underlying Our Guarantees by Payment Status 

December 31, 2021

(In millions) Current

One

Month

Past Due

Two

Months

Past Due

Three Months or

More Past Due,

or in Foreclosure Total(1)

Single-Family $38,964 $2,040 $692 $2,341 $44,037 

Multifamily(2) 370,541 47 7 317 370,912 

Total $409,505 $2,087 $699 $2,658 $414,949 

December 31, 2020

(In millions) Current

One

Month

Past Due

Two

Months

Past Due

Three Months or

More Past Due,

or in Foreclosure Total(1)

Single-Family $37,187 $2,204 $945 $3,922 $44,258 

Multifamily(2) 339,614 87 62 557 340,320 

Total $376,801 $2,291 $1,007 $4,479 $384,578 

(1) Loan-level payment status is not available for certain guarantees totaling $0.4 billion and $0.7 billion as of December 31, 2021 and December 31, 2020, 

respectively, and therefore is not included in the tables above.

(2) As of December 31, 2021 and December 31, 2020, includes $1.3 billion and $6.9 billion, respectively, of multifamily loans in forbearance that are reported as 

current.

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, primarily related to 

our multifamily business, including certain purchase commitments that are not accounted for as derivative instruments, liquidity 

guarantees, unfunded lending arrangements and other similar commitments. 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. The total notional value of off-balance sheet credit 

exposures was $14.5 billion and $15.4 billion at December 31, 2021 and December 31, 2020, respectively. See Note 6 for 

additional discussion of our allowance for credit losses on our off-balance sheet credit exposures. 

We also have certain multifamily purchase commitments totaling $6.2 billion and $5.5 billion at December 31, 2021 and 

December 31, 2020, respectively, that are excluded from the amounts above as they are not included in our allowance for 

credit losses. We have elected the fair value option for certain of these commitments.

Credit Enhancements

We obtain credit protection for most of our securitization activity 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. For our Multifamily guarantees, subordination is our principal credit enhancement. As of 

December 31, 2021 and December 31, 2020, our maximum coverage provided by subordination for our Multifamily guarantees 

in nonconsolidated VIEs was $43.9 billion and $42.8 billion, respectively. 

We also have other types of credit enhancements, primarily related to our Multifamily guarantees, in the form of collateral 

posting requirements, indemnification, pool insurance, bond insurance, recourse, and other similar arrangements. These credit 

enhancements, along with the proceeds received from the sale of the underlying mortgage collateral, are designed to recover 

all or a portion of the amounts paid under our financial guarantee contracts. For additional information on credit enhancements, 

see Note 6 and Note 11.

Financial Statements Notes to the Consolidated Financial Statements | Note 5

FREDDIE MAC | 2021 Form 10-K 177
NOTE 6

Allowance for Credit Losses

On January 1, 2020, we adopted CECL. The general objective of CECL is to 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. Under CECL, an allowance for credit losses is recognized before a loss event has 

been incurred, which results in earlier recognition of credit losses compared to the previous incurred loss methodology.

The table below summarizes changes in our allowance for credit losses. 

Table 6.1 - Details of the Allowance for Credit Losses 

December 31, 2021 December 31, 2020 December 31, 2019

 (In millions) 

SingleFamily Multifamily TotalSingleFamily Multifamily TotalSingleFamily Multifamily Total

Beginning balance(1) $6,353 $200 $6,553 $5,233 $68 $5,301 $6,176 $15 $6,191 

Provision (benefit) for 

credit losses (919) (122) (1,041) 1,320 132 1,452 (749) 3 (746) 

Charge-offs (1,107) — (1,107) (592) — (592) (1,737) — (1,737) 

Recoveries collected 197 — 197 210 — 210 452 — 452 

Other(2) 916 — 916 182 — 182 126 — 126 

Ending balance $5,440 $78 $5,518 $6,353 $200 $6,553 $4,268 $18 $4,286 

Components of the ending balance of the allowance for credit losses:

Mortgage loans heldfor-investment $4,913 $34 $4,947 $5,628 $104 $5,732 $4,222 $12 $4,234 

Advances of preforeclosure costs 450 — 450 536 — 536 — — — 

Accrued interest 

receivable on mortgage 

loans

 24 — 24 140 — 140 — — — 

Off-balance sheet credit 

exposures 53 44 97 49 96 145 46 6 52 

 Total $5,440 $78 $5,518 $6,353 $200 $6,553 $4,268 $18 $4,286 

(1) Includes transition adjustments recognized upon the adoption of CECL on January 1, 2020.

(2) Primarily includes capitalization of past due interest related to non-accrual loans that receive payment deferral plans and loan modifications. 

n	 2021 vs. 2020 - A benefit for credit losses in 2021 compared to a provision for credit losses in 2020 driven by the following 

factors:

l	 A reserve release due to reduced expected credit losses related to COVID-19 during 2021 as economic conditions 

improved. Our provision for credit losses increased during 2020 due to the increase in expected credit losses related 

to the economic effects of the pandemic.

l	 This was partially offset by an increase in expected losses on new single-family loans due to growth in our SingleFamily mortgage portfolio. We recognize expected credit losses at the time of loan acquisition.

n	 2020 vs. 2019 - A provision for credit losses in 2020 compared to a benefit for credit losses in 2019 driven by the following 

factors:

l	 A provision for credit losses due to: 

– Increased expected credit losses related to COVID-19 - Our provision for credit losses increased due to the 

increase in expected credit losses related to the economic effects of the COVID-19 pandemic.

– Portfolio growth - The expected losses on new single-family loans increased due to growth in our Single-Family 

mortgage portfolio. We recognize expected credit losses at the time of loan acquisition. 

l	 This was partially offset by a decrease in expected losses driven by growth in realized and forecasted house prices 

and declines in forecasted interest rates.

In addition, charge-offs increased in 2021 compared to 2020 due to an increase in the number of loans we placed on nonaccrual status. Charge-offs decreased in 2020 compared to 2019 due to a lower volume of transfers of single-family loans from 

held-for investment to held-for-sale.

Financial Statements Notes to the Consolidated Financial Statements | Note 6

FREDDIE MAC | 2021 Form 10-K 178
Allowance for Credit Losses Methodology

Upon adoption of CECL on January 1, 2020, we began applying the below allowance for credit losses methodologies. We 

recognize changes in the allowance for credit losses through benefit (provision) for credit losses on our consolidated 

statements of comprehensive income (loss).

Mortgage Loans Held-for-Investment

Our allowance for credit losses on mortgage loans pertains to single-family and multifamily loans classified as held-forinvestment 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 REO operations expense on our 

consolidated statements of comprehensive income (loss). 

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 attached credit enhancements. 

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 and TDRs we reasonably expect will occur. 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, 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 are adjusted for current and future economic forecasts, such as current 

and forecasted interest rates and house price growth rates, and estimated recoveries from loss mitigation activities, attached 

credit enhancements, 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 metropolitan statistical area (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 measure an allowance for credit losses for TDR loans on a pooled basis when they share similar risk characteristics, using 

either the discounted cash flow approach discussed above or based on the fair value of the collateral, less costs to sell when 

foreclosure is probable. When using a discounted cash flow approach, the present value of the expected future cash flows is 

discounted at the loan's prepayment-adjusted effective interest rate just prior to the restructuring, with no adjustments made to 

the effective interest rate for changes in the timing of expected cash flows subsequent to the restructuring.

We review the outputs of our model by considering qualitative factors such as current economic events and other external 

factors, including the economic effects of the COVID-19 pandemic and the impact of associated government relief programs, to 

determine whether the model outputs are consistent with our expectations. Additionally, we incorporate expected credit losses 

for TDRs that are reasonably expected to occur and the incidence of redefault we have experienced on similar loans that have 

completed a loan modification. 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.

Attached credit enhancements are obtained contemporaneously with, and in contemplation of, the origination of a financial 

instrument, and effectively travel with the financial instrument upon sale. Attached credit enhancements include primary 

mortgage insurance, which provides us with loan-level protection up to a specified percentage.

Financial Statements Notes to the Consolidated Financial Statements | Note 6

FREDDIE MAC | 2021 Form 10-K 179
Expected recoveries from attached credit enhancements 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 

attached credit enhancements that were previously offset against the allowance for credit losses as separate receivables.

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. 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 and current and forecasted economic conditions. 

Loan characteristics considered by our model include vintage, loan term, current DSCR, current LTV ratio, occupancy rate, and 

interest rate hedges. We generally forecast economic conditions over a reasonable and supportable two-year period prior to 

reverting to historical averages at the model input level over a five-year period, using a linear reversion method. We also 

consider as model inputs expected prepayments, contractually specified extensions, modifications we reasonably expect will 

occur, expected recoveries from collateral posting requirements, and the expected recoveries from attached credit 

enhancements.

Our loss rates incorporate published historical commercial loan performance data, which we calibrate for differences between 

that data and our portfolio experience. 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 attached credit 

enhancements) 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.

We review the outputs of our model 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.

Advances of Pre-foreclosure Costs 

We may incur expenses related to a mortgage loan subsequent to its original acquisition but prior to foreclosure (preforeclosure costs). These expenses are 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. See Note 11 for additional information on advances of pre-foreclosure costs.

Accrued Interest Receivable

When we accrue interest on mortgage loans that are three or more monthly payments past due, we measure an allowance for 

expected credit losses on the unpaid accrued interest receivable balances such that the balance sheet reflects the net amount 

of accrued interest we expect to collect. For additional information on our policy for recognition of interest income on mortgage 

loans, see Note 4. 

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 benefit (provision) for credit losses on our consolidated 

statements of comprehensive income (loss).

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. 

Financial Statements Notes to the Consolidated Financial Statements | Note 6

FREDDIE MAC | 2021 Form 10-K 180
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. Expected recoveries from guarantee credit enhancements are considered when measuring the allowance for 

loan losses. Many of our guarantees have credit enhancement provided by subordination that exceeds the amount of expected 

credit losses. As a result, we recognize an allowance for credit losses on off-balance sheet credit exposures only if expected 

credit losses exceed the 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.

Freestanding Credit Enhancements

Freestanding credit enhancements are entered into separately and apart from any other financial instruments or entered into in 

conjunction with some other transaction and are legally detachable and separately exercisable. Freestanding credit 

enhancements primarily include insurance/reinsurance transactions and STACR Trust notes transactions and are accounted for 

separately from the underlying mortgage loans or guarantees. Our allowance for credit losses does not consider expected 

recoveries from freestanding credit enhancements, which are recorded separately in other assets in our consolidated balance 

sheet.

We recognize the payments we make to transfer credit risk under freestanding credit enhancements in credit enhancement 

expense in our consolidated statements of comprehensive income when they are incurred. We recognize expected recoveries 

from freestanding credit enhancements 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. See Note 11 for additional information on credit enhancement assets.

Prior Period Allowance for Credit Losses and Related Information

Under the previous incurred loss impairment methodology that was effective prior to January 1, 2020, we assessed loan 

impairment on a collective basis unless we considered the loan to be impaired. We assessed loan impairment on an individual 

basis when, based on current information, it was probable that we would not receive all amounts due (including both principal 

and interest) in accordance with the contractual terms of the original loan agreement. 

Allowance for Loan Losses Determined on a Collective Basis 

Single-Family Loans

Prior to our implementation of CECL on January 1, 2020, we estimated allowance for loan losses on homogeneous pools of 

single-family loans using a model that evaluated a variety of factors affecting collectability. We reviewed the outputs of this 

model by considering qualitative factors such as macroeconomic and other factors to see whether the model outputs were 

consistent with our expectations. Management adjustments were made as necessary to take into consideration external factors 

and current economic events that had occurred but that were not yet reflected in the factors used to derive the model outputs. 

Significant judgment was exercised in making these adjustments. The homogeneous pools of single-family loans were 

determined based on common underlying characteristics, including current LTV ratios, trends in house prices, loan product 

type, and geographic region.

We rely upon third parties to service our loans. At loan delivery, the seller provides us with loan data, which includes 

characteristics and underwriting information. Each subsequent month, the servicers provide us with monthly loan-level 

servicing data, including delinquency and loss information. Our Single-Family allowance for loan losses default models 

produced estimates based on 12 months of loan-level performance data, which included a history of delinquency, foreclosures, 

foreclosure alternatives, and modifications. Our allowance for loan losses estimate included projections of: 

n	 Loss mitigation activities when a loss was incurred, including loan modifications for troubled borrowers and the incidence 

of redefault we had experienced on similar loans that had completed a loan modification and 

n	 Defaults we believed were likely to occur as a result of loss events that had occurred through the respective balance sheet 

date. 

We also considered macroeconomic and other factors that affect the quality of the loans underlying our portfolio, including 

regional housing trends, applicable house price indices, unemployment and employment dislocation trends, the effects of 

changes in government policies and programs, consumer credit statistics, and the extent of third-party insurance.

Our Single-Family allowance for loan losses severity was based on actual REO dispositions, short sales, and third-party sales 

that incorporated the most recent:

n	 Twelve months of sales experience realized on our distressed property dispositions and

n	 Twelve months of pre-foreclosure expenses on our distressed properties, including REO, short sales, and third-party sales.

Financial Statements Notes to the Consolidated Financial Statements | Note 6

FREDDIE MAC | 2021 Form 10-K 181
Our Single-Family allowance for loan losses severity estimate also captured expectations about recoveries from the collateral 

and attached credit enhancements, such as primary mortgage insurance. We used historical trends in house prices in our 

Single-Family allowance for loan losses process, primarily through the use of current LTV ratios in our default models and 

through the use of recent house price sales experience in our severity estimate. However, we did not use a forecast of trends in 

house prices in our Single-Family allowance for loan losses process.

For loans where foreclosure was probable, we measured impairment based upon an estimate of the fair value of the underlying 

collateral less estimated disposition costs. Our estimate also considered the effect of historical house price changes on 

borrower behavior.

We applied proceeds from attached credit enhancements (e.g., primary mortgage insurance) entered into contemporaneously 

with, and in contemplation of, a guarantee or loan purchase transaction as a recovery of our recorded investment in a chargedoff loan, up to the amount of loss recognized as a charge-off. Proceeds received in excess of our recorded investment in loans 

were recorded as a decrease to REO operations expense on our consolidated statements of comprehensive income.

Multifamily Loans

Multifamily loans evaluated collectively for impairment were aggregated into book year vintage portfolios. Potential impairment 

related to these portfolios was measured by benchmarking published historical commercial loan performance data to those 

vintages based upon available economic data related to multifamily real estate, including apartment vacancy and rental rates.

Allowance for Loan Losses Determined on an Individual Basis 

We considered a loan to be impaired when, based on current information, it was probable that we would not receive all 

amounts due (including both principal and interest) in accordance with the contractual terms of the original loan agreement.

Single-family loans individually evaluated for impairment included TDRs, as well as loans acquired under our financial 

guarantees with deteriorated credit quality prior to 2010. Impairment of a single-family loan having undergone a TDR was 

generally measured as the excess of our recorded investment in the loan over the present value of the expected future cash 

flows, discounted at the loan's effective interest rate. Our expectation of future cash flows incorporated, among other items, an 

estimated probability of default which was based on a number of market factors as well as the characteristics of the loan, such 

as past due status. If we determined that foreclosure on the underlying collateral was probable, we measured impairment 

based upon the fair value of the collateral, as reduced by estimated disposition costs and adjusted for estimated proceeds from 

primary mortgage insurance and similar sources. Multifamily loans individually evaluated for impairment included TDRs, loans 

three monthly payments or more past due, and loans that were impaired based on management judgment. Multifamily loans 

were generally measured individually for impairment based on the fair value of the underlying collateral, as reduced by 

estimated disposition costs.

Financial Statements Notes to the Consolidated Financial Statements | Note 6

FREDDIE MAC | 2021 Form 10-K 182
The table below presents the average recorded investment and interest income recognized for individually impaired loans.

Table 6.2 - Individually Impaired Loans

Year Ended December 31, 2019

(In millions)

Average Recorded 

Investment

Interest Income 

Recognized

Interest Income 

Recognized on 

Cash Basis(3)

Single-Family:

With no allowance recorded:(1)

20- and 30-year or more, amortizing fixed-rate $2,450 $262 $7 

15-year amortizing fixed-rate 20 1 — 

 Adjustable rate 200 11 — 

Alt-A, interest-only, and option ARM 891 66 1 

 Total with no allowance recorded 3,561 340 8 

With an allowance recorded:(2)

20- and 30-year or more, amortizing fixed-rate 32,960 1,805 156 

15-year amortizing fixed-rate 653 22 4 

 Adjustable rate 135 6 2 

Alt-A, interest-only, and option ARM 3,917 226 20 

 Total with an allowance recorded 37,665 2,059 182 

Combined Single-Family:

20- and 30-year or more, amortizing fixed-rate 35,410 2,067 163 

15-year amortizing fixed-rate 673 23 4 

 Adjustable rate 335 17 2 

Alt-A, interest-only, and option ARM 4,808 292 21 

 Total Single-Family 41,226 2,399 190 

Multifamily:

With no allowance recorded (1) 83 5 1 

With an allowance recorded — — — 

 Total Multifamily 83 5 1 

Total Single-Family and Multifamily $41,309 $2,404 $191 

(1) Individually impaired loans with no allowance primarily represent those loans for which the collateral value is sufficiently in excess of the loan balance to result in 

recovery of the entire recorded investment if the property were foreclosed upon or otherwise subject to disposition.

(2) Consists primarily of loans classified as TDRs.

(3) Consists of income recognized during the period related to loans on non-accrual status.

Financial Statements Notes to the Consolidated Financial Statements | Note 6

FREDDIE MAC | 2021 Form 10-K 183
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, 2021 December 31, 2020

Trading securities $49,003 $44,458 

Available-for-sale securities 4,012 15,367 

Total fair value of investment securities $53,015 $59,825 

We currently classify and account for our securities as either available-for-sale or trading. As of December 31, 2021 and 

December 31, 2020, we did not classify any securities as held-to-maturity, although we may elect to do so in the future. 

Securities classified as available-for-sale and trading are reported at fair value with changes in fair value included in AOCI, net 

of income taxes and investment gains (losses), net, respectively. See Note 17 for more information on how we determine the 

fair value of securities.

We generally record purchases and sales of securities on the trade date when the related forward commitments are exempt 

from the accounting guidance for derivatives. Alternatively, we record purchases and sales of securities on the expected 

settlement date, with a corresponding derivative recorded on the trade date, when the related forward commitments are not 

exempt from the accounting guidance for derivatives.

For most of our securities, interest income is recognized 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.

For certain securities, interest income is recognized using the prospective effective interest method. We apply this method to 

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.

For securities classified as trading or available-for-sale, we classify the cash flows 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 estimated fair values for our securities classified as trading. Our non-mortgage-related securities 

primarily consist of investments in U.S. Treasury securities.

Table 7.2 - Trading Securities 

(In millions) December 31, 2021 December 31, 2020

Mortgage-related securities $16,231 $17,505 

Non-mortgage-related securities 32,772 26,953 

Total fair value of trading securities $49,003 $44,458 

For trading securities held at December 31, 2021, 2020, and 2019, we recorded net unrealized losses of $589 million, $296 

million, and $8 million during 2021, 2020 and 2019, respectively.

Financial Statements Notes to the Consolidated Financial Statements | Note 7

FREDDIE MAC | 2021 Form 10-K 184
Available-for-Sale Securities

At both December 31, 2021 and December 31, 2020, all available-for-sale securities were mortgage-related securities.

The table below presents the amortized cost, gross unrealized gains and losses, and fair value for our securities classified as 

available-for-sale.

Table 7.3 - Available-for-Sale Securities

(In millions)

Amortized

Cost Basis

Gross Unrealized

Gains in Other 

Comprehensive Income

Gross Unrealized

Losses in Other 

Comprehensive Income

Fair

Value

Accrued 

Interest 

Receivable

December 31, 2021 $3,638 $376 ($2) $4,012 $10 

December 31, 2020 14,344 1,027 (4) 15,367 40 

The fair value of our available-for-sale securities held at December 31, 2021 scheduled to contractually mature after ten years 

was $1.6 billion, with an additional $1.5 billion scheduled to contractually mature after five years through ten years.

Gains and losses on the sale of securities are included in investment securities gains (losses), 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.

The table below summarizes the gross realized gains and gross realized losses from the sale of available-for-sale securities.

Table 7.4 - Gross Realized Gains and Gross Realized Losses from Sales of Available-for-Sale Securities

Year Ended December 31,

(In millions) 2021 2020 2019

Gross realized gains $540 $501 $219 

Gross realized losses (60) (108) (49) 

Net realized gains $480 $393 $170 

Non-Cash Investing and Financing Activities

During the years ended December 31, 2021, December 31, 2020, and December 31, 2019, we recognized $34.8 billion, 

$30.8 billion, and $10.9 billion, respectively, of investments in securities in exchange for the issuance of debt securities of 

consolidated trusts through partial sales of commingled single-class securities that were previously consolidated.

During 2021, we deconsolidated $1.1 billion in UPB of mortgage-related securities and debt securities of consolidated trusts 

where we were no longer deemed the primary beneficiary.

Financial Statements Notes to the Consolidated Financial Statements | Note 7

FREDDIE MAC | 2021 Form 10-K 185
NOTE 8

Debt

The table below summarizes the balances of total debt per our consolidated balance sheets.

Table 8.1 - Total Debt 

December 31,

(In millions) 2021 2020

Debt securities of consolidated trusts held by third parties $2,803,054 $2,308,176 

Debt of Freddie Mac:

Short-term debt — 4,955 

Long-term debt 177,131 279,415 

Total Debt of Freddie Mac 177,131 284,370 

Total debt $2,980,185 $2,592,546 

Debt securities that we issue are classified as either debt securities 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.

A portion of our outstanding unsecured debt consists of credit-linked notes. The principal types of unsecured credit-linked debt 

are single-family STACR debt notes and multifamily SCR debt notes. For these unsecured debt issuances, we create a 

reference pool of mortgage assets (generally loans) to which we currently have credit risk exposure and an associated 

securitization-like structure with notional credit risk positions. To the extent a specified credit event occurs on the mortgage 

assets in the reference pool, the outstanding balance of our debt obligations is written down, thereby reducing our future 

principal and interest payment obligations, and the benefits are recognized as investment gains (losses), net on our 

consolidated statements of comprehensive income.

We elected the fair value option on debt that contains embedded derivatives, including certain STACR and SCR debt notes, 

and certain other debt issuances. Changes in the fair value of these debt obligations are recorded in investment gains (losses), 

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 17. 

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 (losses), 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 dollar roll 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.

Under the Purchase Agreement, without the prior written consent of Treasury, 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 allowed to own on 

December 31 of the immediately preceding calendar year. Because of this debt limit, we may be restricted in the amount of 

debt we are allowed to issue to fund our operations. Under the Purchase Agreement, the amount of our "indebtedness" is 

determined without giving effect to the January 1, 2010 change in the accounting guidance related to transfers of financial 

assets and consolidation of VIEs. Therefore, "indebtedness" generally does not include debt securities of consolidated trusts 

Financial Statements Notes to the Consolidated Financial Statements | Note 8

FREDDIE MAC | 2021 Form 10-K 186
held by third parties. We also cannot become liable for any subordinated indebtedness without the prior consent of Treasury. 

See Note 2 for information regarding restrictions on the amount of mortgage-related securities that we may own.

Beginning January 1, 2019, our debt cap under the Purchase Agreement is $300 billion. Our debt cap under the Purchase 

Agreement will decrease to $270 billion on January 1, 2023 pursuant to the January 2021 Letter Agreement. As of 

December 31, 2021, our aggregate indebtedness for purposes of the debt cap was $181.7 billion. Our aggregate indebtedness 

primarily includes the par value of short- and long-term debt.

Debt Securities of Consolidated Trusts Held By Third Parties

Debt securities of consolidated trusts held by third parties represent our liability to third parties that hold beneficial interests in 

our consolidated securitization trusts. Debt securities 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.

The table below summarizes the debt securities of consolidated trusts held by third parties based on underlying loan product 

type.

Table 8.2 - Debt Securities of Consolidated Trusts Held by Third Parties 

December 31, 2021 December 31, 2020

(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:

30-year or more, fixed-rate 2022 - 2061 $2,178,150 $2,235,903 2.63 % 2021 - 2060 $1,799,065 $1,855,438 3.07 %

20-year fixed-rate 2022 - 2042 129,193 132,410 2.40 2021 - 2041 97,520 100,498 2.84 

15-year fixed-rate 2022 - 2037 379,805 388,893 2.14 2021 - 2036 303,142 310,612 2.46 

Adjustable-rate 2022 - 2052 21,546 22,038 2.30 2021 - 2051 23,964 24,484 2.76 

Interest-only 2026 - 2051 2,702 2,883 2.42 2026 - 2041 3,671 3,736 3.15 

FHA/VA 2022 - 2051 822 838 3.61 2021 - 2050 752 769 4.04 

Total Single-Family 2,712,218 2,782,965 2,228,114 2,295,537 

Multifamily 2022 - 2051 19,838 20,089 2.17 2021 - 2050 12,488 12,639 2.43 

Total debt securities of consolidated 

trusts held by third parties $2,732,056 $2,803,054 $2,240,602 $2,308,176 

(1) Includes $1,094 million and $205 million at December 31, 2021 and December 31, 2020, respectively, of debt securities of consolidated trusts that represents the 

fair value of debt for which the fair value option has been elected.

(2) The effective rate for debt securities of consolidated trusts held by third parties was 1.71% and 1.76% as of December 31, 2021 and December 31, 2020, 

respectively.

Short-Term Debt

Discount notes, Reference Bills securities, and medium-term notes are unsecured general corporate obligations. Discount 

notes and Reference Bills securities pay only principal at maturity. 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. 

Certain medium-term notes that have original maturities of one year or less are classified as short-term debt for purposes of 

this presentation. 

Financial Statements Notes to the Consolidated Financial Statements | Note 8

FREDDIE MAC | 2021 Form 10-K 187
The table below summarizes the balances and effective interest rates for short-term debt.

Table 8.3 - Short-Term Debt

December 31, 2021 December 31, 2020

(Dollars in millions) Par Value

Carrying 

Amount

Weighted

Average

Effective Rate Par Value

Carrying 

Amount

Weighted

Average

Effective Rate

Short-term debt:

Discount notes and Reference Bills $— $— — % $11 $11 0.69 %

Medium-term notes — — — 4,944 4,944 1.31 

Securities sold under agreements to repurchase 7,333 7,333 (0.10) — — — 

Offsetting arrangements(1) (7,333) (7,333) — — 

Total short-term debt $— $— — % $4,955 $4,955 1.31 %

(1) We offset payables related to securities sold under agreements to repurchase against receivables related to securities purchased under agreements to resell on our 

consolidated balance sheets, when such amounts meet the conditions for offsetting in the accounting guidance.

Long-Term Debt

The table below summarizes our long-term debt.

Table 8.4 - Long-Term Debt 

December 31, 2021 December 31, 2020

(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)

Long-term debt:

Fixed-rate:

Medium-term notes — callable 2022 - 2050 $68,411 $68,364 0.80 % 2021 - 2050 $122,967 $122,895 0.71 %

Medium-term notes — non-callable 2022 - 2028 6,551 6,573 0.54 2021 - 2028 7,710 7,758 0.75 

Reference Notes securities — noncallable 2022 - 2032 59,412 59,413 1.19 2021 - 2032 64,162 64,124 1.55 

STACR and SCR debt notes 2031 - 2042 103 106 12.69 2031 - 2042 111 114 12.71 

Variable-rate:

Medium-term notes — callable 2022 - 2025 166 166 1.75 2021 - 2025 371 371 1.93 

Medium-term notes — non-callable 2022 - 2026 33,090 33,087 0.23 2021 - 2026 68,838 68,824 0.63 

STACR 2023 - 2042 9,036 8,875 4.13 2023 - 2042 12,377 12,228 4.10 

Zero-coupon:

Medium-term notes — non-callable 2022 - 2039 4,846 2,740 6.05 2021 - 2039 4,850 2,578 5.99 

Other 2047 - 2051 — 74 0.45 2047 - 2050 — 57 0.49 

Hedging-related basis adjustments N/A (2,267) N/A 466 

Total long-term debt $181,615 $177,131 1.07 % $281,386 $279,415 1.09 %

(1) Represents par value, net of associated discounts or premiums and issuance costs. Includes $1.4 billion and $2.4 billion at December 31, 2021 and December 31, 

2020, respectively, of long term-debt that represents the fair value of debt for which the fair value option has been elected. 

(2) Based on carrying amount, excluding hedge-related basis adjustments.

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 the Consolidated Financial Statements | Note 8

FREDDIE MAC | 2021 Form 10-K 188
The table below summarizes the contractual maturities of long-term debt securities at December 31, 2021.

Table 8.5 - Contractual Maturities of Long-Term Debt and Debt Securities 

(In millions) Amounts

Annual Maturities

Long-term debt (excluding STACR and SCR debt notes):

2022 $48,625 

2023 38,688 

2024 13,274 

2025 35,436 

2026 4,717 

Thereafter 31,736 

Debt securities of consolidated trusts held by third parties, STACR, and SCR debt notes(1) 2,741,195 

Total 2,913,671 

Net discounts, premiums, debt issuance costs, hedge-related, and other basis adjustments(2) 66,514 

Total debt securities of consolidated trusts held by third parties, STACR, SCR and long-term debt $2,980,185 

(1) 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 borrower at any time generally without penalty.

(2) Other basis adjustments primarily represent changes in fair value on debt where we have elected the fair value option.

Non-Cash Investing and Financing Activities

During the years ended December 31, 2020 and December 31, 2019, we issued $0.8 billion and $0.7 billion, respectively, of 

debt of Freddie Mac in exchange for cash collateral that was previously pledged by sellers.

Financial Statements Notes to the Consolidated Financial Statements | Note 8

FREDDIE MAC | 2021 Form 10-K 189
NOTE 9

Derivatives

Derivatives are reported at their fair value on our consolidated balance sheets. Changes in fair value and interest accruals on 

derivatives not in qualifying fair value hedge relationships are recorded as investment gains (losses), net on our consolidated 

statements of comprehensive income. 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 sheet. 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 sheet. 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, noncash collateral held or posted is not presented as an offset against derivative assets or derivative liabilities on our consolidated 

balance sheets.

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 the acquisition and termination of derivatives, other than 

forward commitments, are generally classified in investing activities. Cash flows related to forward commitments are classified 

within the section of the consolidated statements of cash flows in accordance with the cash flows of the financial instruments 

to which they relate.

Use of Derivatives

We use derivatives primarily to hedge interest-rate sensitivity mismatches between our financial assets and liabilities. 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. 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 classify derivatives into three categories: 

n	 Exchange-traded derivatives; 

n	 Cleared derivatives; and 

n	 OTC derivatives.

Exchange-traded derivatives include standardized interest-rate futures contracts and options on futures contracts. Cleared 

derivatives include 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. OTC derivatives refer to those derivatives that are neither exchange-traded 

derivatives nor cleared derivatives.

Types of Derivatives

We principally use the following types of derivatives:

n	 LIBOR- and SOFR-based interest-rate swaps;

n	 LIBOR-, SOFR-, and Treasury-based purchased options (including swaptions); and

n	 LIBOR-, SOFR-, and Treasury-based exchange-traded futures.

We also purchase swaptions on credit indices in order to obtain protection against adverse movements in multifamily spreads 

which may affect the profitability of our K Certificate or SB Certificate transactions. In addition, our derivative positions also 

include written options and commitments.

Our written options primarily consist of call and put swaptions, which are sold to counterparties allowing them the option to 

enter into receive-fixed and pay-fixed interest rate swaps, respectively. 

We routinely enter into commitments to purchase and sell investments in securities, purchase and sell loans, and purchase and 

extinguish or issue debt securities 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.

Financial Statements Notes to the Consolidated Financial Statements | Note 9

FREDDIE MAC | 2021 Form 10-K 190
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 (i.e., LIBOR), using LIBOR-based 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 (i.e., LIBOR), using LIBOR-based interest-rate swaps. Under the last-oflayer 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 comprehensive 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 - mortgage loans 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 comprehensive 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 the Consolidated Financial Statements | Note 9

FREDDIE MAC | 2021 Form 10-K 191
Derivative Assets and Liabilities at Fair Value

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, 2021 December 31, 2020

Notional or

Contractual

Amount

Derivatives at Fair Value Notional or

Contractual

Amount

Derivatives at Fair Value

(In millions) Assets Liabilities Assets Liabilities

Not designated as hedges

Interest-rate risk management derivatives:

Swaps $561,393 $1,748 ($3,319) $559,596 $2,639 ($7,091) 

Written options 34,861 — (1,597) 18,259 — (735) 

Purchased options (1) 137,873 3,585 — 169,995 5,265 — 

Futures 126,528 — — 181,702 — — 

Total interest-rate risk management derivatives 860,655 5,333 (4,916) 929,552 7,904 (7,826) 

Mortgage commitment derivatives:

Forward contracts to purchase mortgage loans 7,582 15 (5) 37,122 183 — 

Forward contracts to purchase mortgage-related securities 16,605 26 (8) 45,185 203 — 

Forward contracts to sell mortgage-related securities 59,469 38 (73) 136,802 2 (759) 

Total mortgage commitment derivatives 83,656 79 (86) 219,109 388 (759) 

CRT-related derivatives 33,351 15 (37) 28,949 61 (47) 

Other 4,335 2 (21) 4,029 2 (16) 

Total derivatives not designated as hedges 981,997 5,429 (5,060) 1,181,639 8,355 (8,648) 

Designated as fair value hedges

Interest-rate risk management derivatives:

Swaps 154,819 37 (2,689) 180,686 224 (500) 

Total derivatives designated as fair value hedges 154,819 37 (2,689) 180,686 224 (500) 

Derivative interest receivable (payable)(2) 360 (413) 455 (523) 

Netting adjustments(3) (5,366) 7,880 (7,829) 8,717 

Total derivative portfolio, net $1,136,816 $460 ($282) $1,362,325 $1,205 ($954) 

(1) Includes swaptions on credit indices with a notional or contractual amount of $9.4 billion and $16.8 billion at December 31, 2021 and December 31, 2020, 

respectively, and a fair value of $1.0 million and $9.0 million at December 31, 2021 and December 31, 2020, respectively.

(2) Includes other derivative receivables and payables.

(3) Represents counterparty netting and cash collateral netting. 

See Note 10 for information related to our derivative counterparties and collateral held and posted.

Financial Statements Notes to the Consolidated Financial Statements | Note 9

FREDDIE MAC | 2021 Form 10-K 192
Gains and Losses on Derivatives

The table below presents the gains and losses on derivatives, including the accrual of periodic cash settlements, while not 

designated in qualifying hedge relationships and reported on our consolidated statements of comprehensive income (loss) as 

investment gains (losses), net. 

Table 9.2 - Gains and Losses on Derivatives

Year Ended December 31,

(In millions) 2021 2020 2019

Not designated as hedges

 Interest-rate risk management derivatives:

 Swaps $2,851 ($1,627) ($3,085) 

 Written options (77) (161) (235) 

 Purchased options (982) 2,404 423 

 Futures 235 (2,442) (946) 

 Total interest-rate risk management derivatives fair value gains (losses) 2,027 (1,826) (3,843) 

 Mortgage commitment derivatives 713 (1,856) (452) 

 CRT-related derivatives (41) 163 (1) 

 Other 30 57 52 

 Total derivatives not designated as hedges fair value gains (losses) 2,729 (3,462) (4,244) 

 Accrual of periodic cash settlements on swaps(1) (1,578) (1,576) (272) 

Total $1,151 ($5,038) ($4,516) 

(1) Includes interest on variation margin on cleared interest-rate swaps.

Financial Statements Notes to the Consolidated Financial Statements | Note 9

FREDDIE MAC | 2021 Form 10-K 193
Fair Value Hedges 

The table below presents the effects of fair value hedge accounting by consolidated statements of comprehensive income 

(loss) line, 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 9.3 - Gains and Losses on Fair Value Hedges

Year Ended December 31,

2021 2020 2019

(In millions)

Interest 

Income

Interest 

Expense

Interest 

Income

Interest 

Expense

Interest 

Income

Interest 

Expense

Total amounts of income and expense line items 

presented on our consolidated statements of 

comprehensive income in which the effects of fair 

value hedges are recorded:

 $61,527 ($43,947) $62,340 ($49,569) $72,895 ($61,047) 

Interest contracts on mortgage 

loans held-for-investment:

 Gain or (loss) on fair value hedging relationships:

Hedged items (457) — 5,071 — 4,569 — 

Derivatives designated as hedging instruments 529 — (4,836) — (4,309) — 

 Interest accruals on hedging instruments (433) — (434) — (48) — 

 Discontinued hedge related basis

 adjustment amortization (1,884) — (2,840) — (446) — 

Interest contracts on debt:

 Gain or (loss) on fair value hedging relationships: 

Hedged Items — 2,698 — (49) — (1,038) 

Derivatives designated as hedging instruments — (2,895) — 11 — 1,231 

 Interest accruals on hedging instruments — 931 — 835 — (184) 

 Discontinued hedge related basis adjustment

 amortization — 55 — 60 — 63 

The table below presents the hedged item cumulative basis adjustments due to qualifying fair value hedging and the related 

hedged item carrying amounts by their respective balance sheet line item. 

Table 9.4 - Cumulative Basis Adjustments Due to Fair Value Hedging 

December 31, 2021

Carrying 

Amount 

Assets / 

(Liabilities)

Cumulative Amount of Fair Value Hedging Basis 

Adjustment Included in the Carrying Amount

Closed Portfolio Under the Lastof-Layer Method

(In millions) Total

Under the 

Last-of-Layer 

Method

Discontinued - 

Hedge Related

Total Amount 

by Amortized 

Cost Basis

Designated 

Amount by 

UPB

Mortgage loans held-for-investment $855,173 $2,774 $— $2,774 $— $— 

Debt (124,235) 2,267 — (30) — — 

December 31, 2020

Carrying 

Amount 

Assets / 

(Liabilities)

Cumulative Amount of Fair Value Hedging Basis 

Adjustment Included in the Carrying Amount

Closed Portfolio Under the Lastof-Layer Method

(In millions) Total

Under the 

Last-of-Layer 

Method

Discontinued - 

Hedge Related

Total Amount 

by Amortized 

Cost Basis

Designated 

Amount by 

UPB

Mortgage loans held-for-investment $478,077 $5,117 ($318) $5,435 $220,301 $9,112 

Debt (176,512) (466) — (38) — — 

Financial Statements Notes to the Consolidated Financial Statements | Note 9

FREDDIE MAC | 2021 Form 10-K 194
NOTE 10

Collateralized Agreements and Offsetting Arrangements

Derivative Portfolio

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.

Over-the-Counter Derivatives

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. 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.

We have master netting agreements in place with all of our OTC derivative counterparties. 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.

In the event that all of our counterparties for OTC interest-rate swaps and option-based derivatives were to have defaulted 

simultaneously on December 31, 2021, our maximum loss for accounting purposes after applying netting agreements and 

collateral on an individual counterparty basis would have been approximately $20 million. A significant majority of our net 

uncollateralized exposure to OTC derivative counterparties is concentrated with four counterparties, all of which were 

investment grade as of December 31, 2021. 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.

Regulations adopted by certain financial institution regulators (including FHFA) that became effective March 1, 2017 require 

posting of variation margin without the application of any thresholds for OTC derivative transactions executed after that date. 

However, for OTC derivative transactions executed before March 1, 2017 the amount of collateral we pledge to counterparties 

related to our derivative instruments is determined after giving consideration to our credit rating. The aggregate fair value of our 

OTC derivative instruments containing credit-risk related contingent features, netted by counterparty, that were in a liability 

position on December 31, 2021 was $2.0 billion for which we posted cash and non-cash collateral of $1.9 billion in the normal 

course of business. A reduction in our credit ratings may trigger additional collateral requirements related to these OTC 

derivative instruments. If a reduction in our credit ratings had triggered additional collateral requirements related to these OTC 

derivative instruments on December 31, 2021, the maximum additional collateral we would have been required to post to our 

counterparties would be $0.1 billion. 

Beginning in September 1, 2021, Freddie Mac is subject to new initial margin requirements for OTC derivative transactions. The 

new initial margin requirements did not have a significant impact on our collateral posting arrangements.

Cleared and Exchange-Traded Derivatives

The majority of our interest-rate swaps are subject to the central clearing requirement. Changes in the value of open exchangetraded 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 reduction in our credit ratings could cause the clearinghouses 

or clearing members we use for our cleared and exchange-traded derivatives to demand additional collateral. 

Financial Statements Notes to the Consolidated Financial Statements | Note 10

FREDDIE MAC | 2021 Form 10-K 195
Other Derivatives

We also execute forward purchase and sale commitments of loans and mortgage-related securities, including dollar roll 

transactions, that are treated as derivatives for accounting purposes. The total exposure on our forward purchase and sale 

commitments was $79 million and $388 million at December 31, 2021 and December 31, 2020, respectively. 

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 the loss of the margin that we have posted to the MBSD/

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 MBSD/FICC may execute in the future.

Securities Purchased Under Agreements to Resell

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. 

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. 

Securities Sold Under Agreements to Repurchase

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.

Offsetting of Financial Assets and Liabilities

When we receive cash collateral, we recognize the amount received along with a corresponding obligation to return the 

collateral. When we post cash collateral, we derecognize the amount posted and record a corresponding asset for our right to 

receive the return of the collateral. We generally do not recognize or derecognize collateral received or pledged in the form of 

securities as the transferor in such arrangements does not relinquish effective control over the securities transferred. See Note 

9 for additional information on our consolidated balance sheets presentation of collateral related to derivatives transactions. At 

December 31, 2021 and December 31, 2020, all amounts of cash collateral related to derivatives with master netting and 

collateral agreements were offset against derivative assets, net or derivative liabilities, net, as applicable.

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 derivatives, 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 the Consolidated Financial Statements | Note 10

FREDDIE MAC | 2021 Form 10-K 196
Table 10.1 - Offsetting and Collateral Information of Financial Assets and Liabilities

December 31, 2021

Gross

Amount

Recognized

Amount Offset in the 

Consolidated

Balance Sheets Net Amount

Presented in

the Consolidated

Balance Sheets

Gross Amount

Not Offset in

the Consolidated

Balance Sheets(2)

Net

(In millions) Amount

Counterparty 

Netting

Cash 

Collateral 

Netting(1)

Assets:

Derivatives:

OTC derivatives $5,670 ($4,437) ($963) $270 ($250) $20 

Cleared and exchange-traded derivatives 60 (4) 38 94 — 94 

Mortgage commitment derivatives 79 — — 79 — 79 

Other 17 — — 17 — 17 

Total derivatives 5,826 (4,441) (925) 460 (250) 210 

Securities purchased under agreements to resell 78,536 (7,333) — 71,203 (71,203) — 

Total $84,362 ($11,774) ($925) $71,663 ($71,453) $210 

Liabilities:

Derivatives:

OTC derivatives ($7,979) $4,437 $3,417 ($125) $— ($125) 

Cleared and exchange-traded derivatives (39) 4 22 (13) 13 — 

Mortgage commitment derivatives (86) — — (86) — (86) 

Other (58) — — (58) — (58) 

Total derivatives (8,162) 4,441 3,439 (282) 13 (269) 

Securities sold under agreements to repurchase (7,333) 7,333 — — — — 

Total ($15,495) $11,774 $3,439 ($282) $13 ($269) 

December 31, 2020

Gross

Amount

Recognized

Amount Offset in the 

Consolidated

Balance Sheets Net Amount

Presented in

the Consolidated

Balance Sheets

Gross Amount

Not Offset in

the Consolidated

Balance Sheets(2)

Net

(In millions) Amount

Counterparty 

Netting

Cash 

Collateral 

Netting(1)

Assets:

Derivatives:

OTC derivatives $8,566 ($5,932) ($1,957) $677 ($648) $29 

Cleared and exchange-traded derivatives 17 — 60 77 — 77 

Mortgage commitment derivatives 388 — — 388 — 388 

Other 63 — — 63 — 63 

Total derivatives 9,034 (5,932) (1,897) 1,205 (648) 557 

Securities purchased under agreements to resell 105,003 — — 105,003 (105,003) — 

Total $114,037 ($5,932) ($1,897) $106,208 ($105,651) $557 

Liabilities:

Derivatives:

OTC derivatives ($8,812) $5,932 $2,759 ($121) $— ($121) 

Cleared and exchange-traded derivatives (37) — 26 (11) — (11) 

Mortgage commitment derivatives (759) — — (759) — (759) 

Other (63) — — (63) — (63) 

Total derivatives (9,671) 5,932 2,785 (954) — (954) 

Securities sold under agreements to repurchase — — — — — — 

Total ($9,671) $5,932 $2,785 ($954) $— ($954) 

(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 the Consolidated Financial Statements | Note 10

FREDDIE MAC | 2021 Form 10-K 197
Collateral Pledged

Collateral Pledged to Freddie Mac

We have cash pledged to us as collateral primarily related to OTC derivative transactions. We had $1.2 billion and $2.8 billion

pledged to us as collateral that was invested as part of our other investments portfolio as of December 31, 2021 and December 

31, 2020, respectively. 

We primarily execute securities purchased under agreements to resell transactions with central clearing organizations where we 

have the right to repledge the collateral that has been pledged to us, either with the central clearing organization or with other 

counterparties. At December 31, 2021 and December 31, 2020, we had $32.7 billion and $85.8 billion, respectively, of securities 

pledged to us in these transactions. In addition, at both December 31, 2021 and December 31, 2020, we had $0.8 billion of 

securities pledged to us for transactions involving securities purchased under agreements to resell not executed with central 

clearing organizations that we had the right to repledge. 

Collateral Pledged by Freddie Mac

For cash collateral related to commitments and securities purchased under agreements to resell transactions primarily with 

central clearing organizations, we posted less than $0.1 billion as of December 31, 2021 and $1.3 billion as of December 31, 

2020.

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 10.2 - Collateral in the Form of Securities Pledged

December 31, 2021

(In millions) Derivatives

Securities Sold 

Under Agreements 

to Repurchase Other(2) Total

Debt securities of consolidated trusts(1) $— $— $161 $161 

Trading securities 1,542 7,333 1,115 9,990 

Total securities pledged $1,542 $7,333 $1,276 $10,151 

December 31, 2020

(In millions) Derivatives

Securities Sold 

Under Agreements 

to Repurchase Other(2) Total

Debt securities of consolidated trusts(1) $121 $— $345 $466 

Trading securities 1,920 — 1,163 3,083 

Total securities pledged $2,041 $— $1,508 $3,549 

(1) Represents debt securities of consolidated trusts held by us in our mortgage-related investments portfolio which are recorded as a reduction to debt securities of 

consolidated trusts held by third parties on our consolidated balance sheets.

(2) Includes other collateralized borrowings and collateral related to transactions with certain clearinghouses.

The table below presents the underlying collateral pledged and the remaining contractual maturity of our gross obligations 

under securities sold under agreements to repurchase as of December 31, 2021. 

Table 10.3 - Underlying Collateral Pledged

December 31, 2021

(In millions)

Overnight and 

Continuous 30 days or Less

After 30 days 

Through 90 days

Greater Than 

90 days Total

U.S. Treasury securities and other $— $3,085 $4,248 $— $7,333 

Financial Statements Notes to the Consolidated Financial Statements | Note 10

FREDDIE MAC | 2021 Form 10-K 198
NOTE 11

Other Assets and Other Liabilities

The table below presents the components of other assets and other liabilities on our consolidated balance sheets.

Table 11.1 - Significant Components of Other Assets and Other Liabilities

December 31,

(In millions) 2021 2020

Other assets:

Real estate owned, net $176 $198 

Guarantee assets 5,919 5,509 

Servicer receivables 11,571 20,926 

Credit enhancement receivables 194 751 

Advances of pre-foreclosure costs 974 1,372 

Derivative assets, net 460 1,205 

All other 10,127 10,538 

Total other assets $29,421 $40,499 

Other liabilities:

Guarantee obligations $5,716 $5,050 

Derivative liabilities, net 282 954 

All other 5,102 6,242 

Total other liabilities $11,100 $12,246 

Financial Statements Notes to the Consolidated Financial Statements | Note 11

FREDDIE MAC | 2021 Form 10-K 199
NOTE 12

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. Dividends that are 

not paid in cash for any dividend period will accrue and be added to the liquidation preference of the senior preferred stock. In 

addition, any amounts Treasury pays to us pursuant to its funding commitment under the Purchase Agreement and any 

quarterly commitment fees that are not paid in cash to Treasury nor waived by Treasury will be added to the liquidation 

preference of the senior preferred stock. The liquidation preference of the senior preferred stock also increased by $3.0 billion

on December 31, 2017 pursuant to the December 2017 Letter Agreement. 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 end of each fiscal quarter, from 

September 30, 2019 through the Capital Reserve End Date. During 3Q 2021, our Net Worth Amount increased by $2.9 billion. 

As a result, the liquidation preference of the senior preferred stock increased to $98.0 billion on December 31, 2021 and will 

increase to $100.7 billion on March 31, 2022 based on the $2.7 billion increase in our Net Worth Amount during 4Q 2021. As 

described below, we may make payments to reduce the liquidation preference of the senior preferred stock in limited 

circumstances. As discussed in Note 2, the quarterly commitment fee has been suspended until the Capital Reserve End Date. 

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 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.

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. 

The dividend is presented in the period in which it is determinable for the senior preferred stock, as a reduction to net income 

(loss) available to common stockholders and net income (loss) per common share. The dividend is declared and paid in the 

following period and recorded as a reduction to equity in the period declared. There were no cash dividends paid in 2021 or 

2020. Dividends paid in cash during 2019 at the direction of the Conservator totaled $3.1 billion. See Note 2 for a discussion of 

our net worth sweep dividend.

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 

Financial Statements Notes to the Consolidated Financial Statements | Note 12

FREDDIE MAC | 2021 Form 10-K 200
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.

The table below provides a summary of our senior preferred stock outstanding at December 31, 2021.

Table 12.1 - 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 

Total non-draw adjustments 1.00 1.00 1.00 26,311 

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 $97,959 

No cash was received from Treasury under the Purchase Agreement in 2021 because we had positive net worth at December 

31, 2020, March 31, 2021, June 30, 2021, and September 30, 2021 and, consequently, FHFA did not request a draw on our 

behalf in 2021. At December 31, 2021, our assets exceeded our liabilities under GAAP; therefore, no draw is being requested 

from Treasury under the Purchase Agreement. The aggregate liquidation preference of the senior preferred stock owned by 

Treasury was $98.0 billion as of December 31, 2021 and $86.5 billion as of December 31, 2020.

Our quarterly senior preferred stock dividend requirement is currently 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 applicable 

Capital Reserve Amount is currently the amount of adjusted total capital necessary to meet the 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 have a dividend requirement on the senior preferred stock until we have built sufficient capital 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. 

After the Capital Reserve End Date, 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. See Note 2

for additional information.

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 

Financial Statements Notes to the Consolidated Financial Statements | Note 12

FREDDIE MAC | 2021 Form 10-K 201
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 (loss) per share. The weighted average shares of common stock outstanding for the years ended 

December 31, 2021, 2020, and 2019 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 

additional Freddie Mac stock or securities. Costs incurred in connection with the issuance of preferred stock are charged to 

additional paid-in capital.

Financial Statements Notes to the Consolidated Financial Statements | Note 12

FREDDIE MAC | 2021 Form 10-K 202
The table below provides a summary of our preferred stock outstanding at their redemption values at December 31, 2021. 

Table 12.2 - 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) 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 (2)

5% March 23, 1998 8.00 8.00 8.00 50.00 400 March 31, 2003 FMCKK

1998 Variable-rate(3) 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 (2)

5.10% March 19, 1999 3.00 3.00 3.00 50.00 150 March 31, 2004 (2)

5.79% July 21, 1999 5.00 5.00 5.00 50.00 250 June 30, 2009 FMCCK

1999 Variable-rate(4) November 5, 1999 5.75 5.75 5.75 50.00 287 December 31, 2004 FMCCL

2001 Variable-rate(5) January 26, 2001 6.50 6.50 6.50 50.00 325 March 31, 2003 FMCCM

2001 Variable-rate(6) 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(7) 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 (2)

2006 Variable-rate(8) 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(9) 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) Dividend rate resets quarterly and is equal to the sum of three-month LIBOR plus 1% divided by 1.377, and is capped at 9.00%.

(2) Issued through private placement.

(3) Dividend rate resets quarterly and is equal to the sum of three-month LIBOR plus 1% divided by 1.377, and is capped at 7.50%.

(4) 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.

(5) 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.

(6) Dividend rate resets on April 1 every year based on 12-month LIBOR minus 0.20%, and is capped at 11.00%. Optional redemption on March 31, 2003 and on 

March 31 every year thereafter.

(7) 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. 

(8) Dividend rate resets quarterly and is equal to the sum of three-month LIBOR plus 0.50% but not less than 4.00%.

(9) 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 three-month LIBOR 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 the Consolidated Financial Statements | Note 12

FREDDIE MAC | 2021 Form 10-K 203
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 2021 and 2020, except for 

issuances of treasury stock as reported on our consolidated statements of equity relating to stock-based compensation 

granted prior to conservatorship. Common stock delivered under these stock-based compensation plans consists of treasury 

stock or shares acquired in market transactions on behalf of the participants. During 2021, the deferral period lapsed on 351

RSUs. At December 31, 2021, no RSUs remained outstanding. In addition, there were 41,160 shares of restricted stock 

outstanding at both December 31, 2021 and December 31, 2020, respectively. At December 31, 2021, no stock options were 

outstanding.

Earnings Per Share

During 2021, 2020, and 2019, we had participating securities related to RSUs with dividend equivalent rights that received 

dividends as declared on an equal basis with common shares but were not obligated to participate in undistributed net losses. 

These participating securities consisted of vested RSUs that earned dividend equivalents at the same rate when and as 

declared on common stock. 

Consequently, in accordance with accounting guidance, we use the "two-class" method of computing earnings per common 

share. The "two-class" method is an earnings allocation formula that determines earnings per share for common stock and 

participating securities based on dividends declared and participation rights in undistributed earnings.

Basic earnings per common share is computed as net income attributable to common stockholders divided by the weighted 

average common shares outstanding for the period. The weighted average common shares outstanding 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.

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

No common dividends were declared in 2021, 2020, and 2019. No dividends were paid during 2021 and 2020 on the senior 

preferred stock as a result of the increase in the applicable Capital Reserve Amount pursuant to the September 2019 and 

January 2021 Letter Agreements. In 2019, we paid dividends of $3.1 billion in cash on the senior preferred stock at the direction 

of our Conservator. We did not declare or pay dividends on any other series of Freddie Mac preferred stock outstanding during 

2021.

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, 2021. Payment of 

Financial Statements Notes to the Consolidated Financial Statements | Note 12

FREDDIE MAC | 2021 Form 10-K 204
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 now 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 the Consolidated Financial Statements | Note 12

FREDDIE MAC | 2021 Form 10-K 205
NOTE 13

Net Interest Income

The table below presents the components of net interest income per our consolidated statements of comprehensive income 

(loss).

Table 13.1 - Components of Net Interest Income

Year Ended December 31,

(In millions) 2021 2020 2019

Interest income

Mortgage loans $59,130 $59,290 $68,583 

Investment securities 2,261 2,581 2,737 

Other 136 469 1,575 

Total interest income 61,527 62,340 72,895 

Interest expense

Debt securities of consolidated trusts held by third parties (42,209) (46,281) (53,980) 

Debt of Freddie Mac:

Short-term debt — (606) (1,910) 

Long-term debt (1,738) (2,682) (5,157) 

Total interest expense (43,947) (49,569) (61,047) 

Net interest income 17,580 12,771 11,848 

Benefit (provision) for credit losses 1,041 (1,452) 746 

Net interest income after benefit (provision) for credit losses $18,621 $11,319 $12,594 

Financial Statements Notes to the Consolidated Financial Statements | Note 13

FREDDIE MAC | 2021 Form 10-K 206
NOTE 14

Income Taxes

Income Tax Expense

Total income tax expense includes: 

n	 Current income tax expense, which represents the amount of federal tax currently payable to or receivable 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 14.1 - Federal Income Tax Expense

Year Ended December 31,

(In millions) 2021 2020 2019

Current income tax (expense) benefit ($2,617) ($2,493) ($1,018) 

Deferred income tax (expense) benefit (473) 590 (817) 

Total income tax (expense) benefit ($3,090) ($1,903) ($1,835) 

Income tax expense increased from both 2020 to 2021 and 2019 to 2020 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 14.2 - Reconciliation of Federal Statutory Income Tax Rate to Effective Tax Rate

Year Ended December 31,

2021 2020 2019

(Dollars in millions) Amount Percent Amount Percent Amount Percent

Statutory corporate tax rate ($3,192) 21.0 % ($1,938) 21.0 % ($1,900) 21.0 %

Tax-exempt interest 20 (0.2) 25 (0.3) 18 (0.2) 

Tax credits 133 (0.9) 55 (0.6) 48 (0.5) 

Valuation allowance (11) 0.1 (4) 0.1 9 (0.1) 

Other (40) 0.3 (41) 0.4 (10) 0.1 

Effective tax rate ($3,090) 20.3 % ($1,903) 20.6 % ($1,835) 20.3 %

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 the Consolidated Financial Statements | Note 14

FREDDIE MAC | 2021 Form 10-K 207
The table below presents the balance of significant deferred tax assets and liabilities at December 31, 2021 and December 31, 

2020. The valuation allowance relates to capital loss carryforwards included in Other items, net that we expect to expire 

unused.

Table 14.3 - Deferred Tax Assets and Liabilities

Year Ended December 31,

(In millions) 2021 2020

Deferred tax assets:

Deferred fees $3,179 $3,354 

Basis differences related to derivative instruments 1,629 1,810 

Credit related items and allowance for loan losses 815 844 

Basis differences related to assets held-for-investment and held-for-sale 544 999 

Other items, net 178 134 

Total deferred tax assets 6,345 7,141 

Deferred tax liabilities:

Unrealized gains related to available-for-sale securities (79) (543) 

Total deferred tax liabilities (79) (543) 

Valuation allowance (52) (41) 

Deferred tax assets, net $6,214 $6,557 

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, 2021, 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 $52 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, 2021.

Financial Statements Notes to the Consolidated Financial Statements | Note 14

FREDDIE MAC | 2021 Form 10-K 208
NOTE 15

Segment Reporting

During 2021, our chief operating decision maker began making decisions about allocating resources and assessing segment 

performance based on two reportable segments, Single-Family and Multifamily. In prior periods, we managed our business 

based on three reportable segments, Single-Family Guarantee, Multifamily, and Capital Markets. As our mortgage-related 

investments portfolio has declined over time, our capital markets activities have become increasingly focused on supporting 

our Single-Family and Multifamily businesses. As a result, we determined that, effective in 2021, our Capital Markets segment 

should no longer be considered a separate reportable segment, and our chief operating decision maker no longer reviews 

separate financial results or discrete financial information for our capital markets activities. Substantially all of the revenues and 

expenses that were previously directly attributable to our Capital Markets segment are now included in our Single-Family 

segment, while certain administrative expenses and other centrally-incurred costs previously allocated to the Capital Markets 

segment are now allocated between the Single-Family and Multifamily segments using various methodologies depending on 

the nature of the expense.

In connection with this change, we also changed the measure of segment profit and loss for each segment to be based on net 

income and comprehensive income calculated using the same accounting policies we use to prepare our general purpose 

financial statements in conformity with generally accepted accounting principles. The financial results of each reportable 

segment include directly attributable revenue and expenses. We allocate interest expense and other funding and hedgingrelated costs and returns on certain investments to each reportable segment using a funds transfer pricing process. We fully 

allocate to each reportable segment the 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. We have discontinued the reclassifications of certain activities between various line items that were 

included in our previous measure of segment profit and loss. Prior period information has been revised to conform to the 

current period presentation.

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

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.

Financial Statements Notes to the Consolidated Financial Statements | Note 15

FREDDIE MAC | 2021 Form 10-K 209
The table below presents the financial results for our Single-Family and Multifamily segments.

Table 15.1 - Segment Financial Results

Year Ended December 31, 2021 Year Ended December 31, 2020 Year Ended December 31, 2019

SingleFamily Multifamily Total SingleFamily Multifamily TotalSingle-

(In millions) Family Multifamily Total

Net interest income $16,273 $1,307 $17,580 $11,592 $1,179 $12,771 $10,664 $1,184 $11,848 

Non-interest income (loss)

Guarantee income 114 918 1,032 112 1,330 1,442 44 1,045 1,089 

Investment gains (losses), net 361 2,385 2,746 (112) 1,925 1,813 300 518 818 

Other income (loss) 479 114 593 457 176 633 216 107 323 

Non-interest income (loss) 954 3,417 4,371 457 3,431 3,888 560 1,670 2,230 

Net revenues 17,227 4,724 21,951 12,049 4,610 16,659 11,224 2,854 14,078 

Benefit (provision) for credit 

losses 919 122 1,041 (1,320) (132) (1,452) 749 (3) 746 

Non-interest expense

Administrative expense (2,033) (618) (2,651) (2,021) (514) (2,535) (2,061) (503) (2,564) 

Credit enhancement expense (1,470) (48) (1,518) (1,036) (22) (1,058) (734) (15) (749) 

Benefit for (decrease in) credit 

enhancement recoveries (523) (19) (542) 305 18 323 41 — 41 

REO operations income 

(expense) (12) — (12) (149) — (149) (229) — (229) 

Legislated 10 basis point fee 

expense (2,342) — (2,342) (1,836) — (1,836) (1,617) — (1,617) 

Other expense (695) (33) (728) (686) (37) (723) (616) (41) (657) 

Non-interest expense (7,075) (718) (7,793) (5,423) (555) (5,978) (5,216) (559) (5,775) 

Income (loss) before income 

tax (expense) benefit 11,071 4,128 15,199 5,306 3,923 9,229 6,757 2,292 9,049 

Income tax (expense) benefit (2,251) (839) (3,090) (1,094) (809) (1,903) (1,370) (465) (1,835) 

Net income (loss) 8,820 3,289 12,109 4,212 3,114 7,326 5,387 1,827 7,214 

Other comprehensive income 

(loss), net of taxes and 

reclassification adjustments

 (379) (110) (489) 104 101 205 472 101 573 

Comprehensive income 

(loss) $8,441 $3,179 $11,620 $4,316 $3,215 $7,531 $5,859 $1,928 $7,787 

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 15.2 - Segment Assets

(In millions) December 31, 2021 December 31, 2020

Single-Family $2,792,224 $2,326,426 

Multifamily 414,663 388,347 

Total segment assets 3,206,887 2,714,773 

Reconciling items(1) (181,301) (87,358) 

Total assets per consolidated balance sheets $3,025,586 $2,627,415 

(1) Reconciling items include assets in our mortgage portfolio that are not recognized on our consolidated balance sheets and assets recognized on our consolidated 

balance sheets that are not allocated to the reportable segments. 

Financial Statements Notes to the Consolidated Financial Statements | Note 15

FREDDIE MAC | 2021 Form 10-K 210
NOTE 16

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 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 as of December 31, 

2021 and December 31, 2020, respectively. See Note 4, Note 5, and Note 6 for more information about credit risk 

associated with single-family loans that we hold or guarantee. 

Table 16.1 - Concentration of Credit Risk of Our Single-Family Mortgage Portfolio

December 31, 2021 December 31, 2020 2021(1) 2020(1)

(Dollars in billions)

Portfolio 

UPB(2)

% of

Portfolio SDQ Rate

Portfolio 

UPB(2)

% of

Portfolio SDQ Rate

Credit 

Losses 

Amount

Credit 

Losses 

Amount

Region(3):

West $859 31 % 0.92 % $720 31 % 2.41 % $— $— 

Northeast 660 24 1.37 549 24 3.16 — 0.2 

North Central 416 15 0.98 357 15 2.06 0.1 0.1 

Southeast 461 16 1.21 375 16 2.95 — 0.1 

Southwest 396 14 1.14 325 14 2.59 — — 

Total $2,792 100 % 1.12 $2,326 100 % 2.64 $0.1 $0.4 

State:

California $498 18 % 0.99 $424 18 % 2.64 $— $— 

Texas 177 6 1.23 145 6 3.11 — — 

Florida 169 6 1.36 135 6 3.70 — — 

New York 121 4 2.07 103 4 4.56 — 0.1 

Illinois 109 4 1.44 96 4 2.96 — 0.1 

All other 1,718 62 1.03 1,423 62 2.34 0.1 0.2 

Total $2,792 100 % 1.12 $2,326 100 % 2.64 $0.1 $0.4 

(1) Consists of net charge-offs (excluding charge-offs of accrued interest receivable) and REO operations (income) expense.

(2) Excludes $439 million and $505 million in UPB of loans underlying certain securitization products for which data was not available as of December 31, 2021 and 

December 31, 2020, respectively. 

(3) Region designation: West (AK, AZ, CA, GU, HI, ID, MT, NV, OR, UT, WA); Northeast (CT, DE, DC, MA, ME, MD, NH, NJ, NY, PA, RI, VT, VA, WV); North Central (IL, IN, IA, 

MI, MN, ND, OH, SD, WI); Southeast (AL, FL, GA, KY, MS, NC, PR, SC, TN, VI); Southwest (AR, CO, KS, LA, MO, NE, NM, OK, TX, WY).

Multifamily Mortgage Portfolio

Numerous factors affect a multifamily borrower's ability to repay and the underlying property value. The most significant factors 

affecting credit risk are effective rents paid and capitalization rates for the mortgaged property. Effective rents paid vary among 

geographic regions of the United States. 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.

In the Multifamily mortgage portfolio, the primary concentration of credit risk is based on the legal structure of the investments 

Financial Statements Notes to the Consolidated Financial Statements | Note 16

FREDDIE MAC | 2021 Form 10-K 211
we hold. Our exposure to credit risk in our securitization-related 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.

The table below summarizes the concentration of multifamily loans in our Multifamily mortgage portfolio classified by legal 

structure, based on UPB.

Table 16.2 - Concentration of Credit Risk of Our Multifamily Mortgage Portfolio

December 31, 2021 December 31, 2020

(Dollars in billions) UPB

Delinquency

Rate(1) UPB

Delinquency

Rate(1)

Unsecuritized loans $22.8 0.04 % $33.4 0.04 %

Securitized loans 381.4 0.07 344.1 0.18 

Other mortgage-related guarantees 10.5 0.44 10.8 0.06 

Total $414.7 0.08 $388.3 0.16 

(1) Based on loans two monthly payments or more delinquent or in foreclosure.

Sellers and Servicers

We acquire a significant portion of our Single-Family and Multifamily loan purchase and guarantee volume from several large 

sellers. Single-Family top 10 sellers provided 50% and 44% of our purchase and guarantee volume during 2021 and 2020, 

respectively. None of our Single-Family sellers provided 10% or more of our purchase and guarantee volume during these 

periods. The table below summarizes the concentration of Multifamily sellers who provided 10% or more of our purchase and 

guarantee volume during 2021 and 2020.

Table 16.3 - Multifamily Seller Concentration

Multifamily Sellers 2021 2020

Berkadia Commercial Mortgage LLC 15 % 14 %

CBRE Capital Markets, Inc. 13 16 

JLL Real Estate Capital LLC 10 11 

Walker & Dunlop LLC 9 10 

Other top 10 sellers 32 31 

Top 10 Multifamily sellers 79 % 82 %

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 30% and 26% of our Single-Family purchase volume 

during 2021 and 2020, respectively.

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 include 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" will result in a repurchase request or a repurchase 

alternative, such as recourse or indemnification.

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.

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, 2021 and December 31, 2020, the UPB of loans subject to our repurchase requests issued to our SingleFamily sellers and servicers was approximately $1.3 billion and $0.5 billion, respectively (these figures include repurchase 

Financial Statements Notes to the Consolidated Financial Statements | Note 16

FREDDIE MAC | 2021 Form 10-K 212
requests for which appeals were pending). During 2021 and 2020, we recovered amounts with respect to $1.4 billion and $0.9 

billion, respectively, 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.

Significant portions of our single-family and multifamily loans are serviced by several large servicers. The table below 

summarizes the concentration of Single-Family and Multifamily servicers who serviced 10% or more of our Single-Family 

mortgage portfolio and Multifamily mortgage portfolio as of December 31, 2021 and December 31, 2020.

Table 16.4 - Servicer Concentration

Single-Family Servicers December 31, 2021(1) December 31, 2020(1)

Wells Fargo Bank, N.A. 8 % 11 %

Other top 10 servicers 39 38 

Top 10 Single-Family servicers 47 % 49 %

Multifamily Servicers(2) December 31, 2021 December 31, 2020

CBRE Capital Markets, Inc. 16 % 17 %

Berkadia Commercial Mortgage LLC 14 13 

JLL Real Estate Capital LLC 11 11 

Other top 10 servicers 39 39 

Top 10 Multifamily servicers 80 % 80 %

(1) Percentage of servicing volume is based on the total Single-Family mortgage portfolio, which includes loans where we do not exercise servicing control. However, 

loans where 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.

(2) Represents multifamily primary servicers.

We utilize both depository and non-depository servicers for single-family loans. Some of these non-depository servicers service 

a large share of our loans. As of December 31, 2021 and December 31, 2020, approximately 19% and 18% of our SingleFamily mortgage portfolio, excluding loans where we do not exercise control over the associated servicing, was serviced 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 pay their mortgages, 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. 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. We implemented the 24-month policy on January 1, 2021. Prior to that time, in accordance with 

FHFA instruction, we generally purchased loans from trusts if they were delinquent for 120 days, subject to certain exceptions.

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.

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. For SB 

Certificate securitizations and a smaller number of K Certificate securitizations, we serve as master servicer. Multifamily primary 

Financial Statements Notes to the Consolidated Financial Statements | Note 16

FREDDIE MAC | 2021 Form 10-K 213
servicers included in the table 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.

In March 2019, we implemented a set of revised Private Mortgage Insurer Eligibility Requirements (PMIERs) with enhancements 

to the risk-based capital requirements for mortgage insurers. In addition, we revised master policies with mortgage insurers 

which provide contract certainty and improve our ability to collect claims for mortgage insurance obligations. These policies 

were approved by FHFA and became effective on March 1, 2020.

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, 2021, mortgage insurers provided coverage with maximum loss 

limits of $135.3 billion, for $545.3 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 16.5 - Primary Mortgage Insurer Concentration

Mortgage Insurance Coverage(2)

Mortgage Insurer Credit Rating(1) December 31, 2021 December 31, 2020

Arch Mortgage Insurance Company A 19 % 20 %

Mortgage Guaranty Insurance Corporation BBB+ 19 18 

Radian Guaranty Inc. BBB+ 18 19 

Enact(3) BBB 15 15 

Essent Guaranty, Inc. BBB+ 15 16 

National Mortgage Insurance Corporation BBB 13 10 

Total 99 % 98 %

(1) Ratings are for the corporate entity to which we have the greatest exposure. Latest rating available as of December 31, 2021. Represents the lower of S&P and 

Moody's credit ratings stated in terms of the S&P equivalent.

(2) 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. 

(3) Enact was previously known as Genworth Mortgage Insurance Corporation.

As part of our insurance/reinsurance CRT 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.

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.

Financial Statements Notes to the Consolidated Financial Statements | Note 16

FREDDIE MAC | 2021 Form 10-K 214
Our other investments (including non-mortgage-related securities and cash equivalents) counterparties are primarily major 

financial 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, 2021 and December 31, 2020, including amounts related to our consolidated VIEs, the balance in 

our other investments portfolio was $129.7 billion and $163.1 billion, respectively. 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. As of December 31, 2021, all of our securities purchased under agreements to resell 

were fully collateralized. As of both December 31, 2021 and December 31, 2020, $0.8 billion of our securities purchased under 

agreements to resell were used to 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.

Financial Statements Notes to the Consolidated Financial Statements | Note 16

FREDDIE MAC | 2021 Form 10-K 215
NOTE 17

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 the Consolidated Financial Statements | Note 17

FREDDIE MAC | 2021 Form 10-K 216
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 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 vendors 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. This technique is referred to below as "median of external 

sources." The significant inputs used in the fair value measurement of assets and liabilities that are valued using the median of 

external sources pricing 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. This technique is referred to below as "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, the most common 

interrelationship that affects the majority of 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 the Consolidated Financial Statements | Note 17

FREDDIE MAC | 2021 Form 10-K 217
Securities

U.S. Treasury Securities Quoted prices in active markets Level 1

Mortgage-related 

securities

Majority of agency securities Median of external sources Level 2

Certain other agency securities Single external source Levels 2 and 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

Derivatives

Exchange-traded futures Quoted prices in active markets Level 1

Interest-rate swaps Discounted cash flows. Significant inputs include marketbased 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

Debt

Debt securities of consolidated trusts

held by third parties

See Mortgage-related securities Level 2 or 3

Debt of Freddie Mac Median of external sources Level 2

Single external source

Published yield matrices

Mortgage Loans

Single-Family loans GSE securitization market Benchmark security pricing for actively traded mortgagerelated securities with similar characteristics, adjusting for the 

value of our guarantee fee and our credit obligation related to 

performing our guarantee (see Guarantee obligation). The 

credit obligation is based on: delivery and guarantee fees 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 Median of external 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 thirdparty 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

Instrument Valuation Technique Classification in the 

Fair Value Hierarchy

Financial Statements Notes to the Consolidated Financial Statements | Note 17

FREDDIE MAC | 2021 Form 10-K 218
Multifamily loans Held-for-sale Discounted cash flows based on observable K Certificate and 

SB Certificate market spreads

Level 2

Held-for-investment Market prices from a third-party pricing service using 

discounted cash flows incorporating credit spreads for similar 

loans based on the loan's LTV and DSCR

Level 3

Non-derivative Purchase Commitments

Multifamily loan purchase commitments See Multifamily loans Level 2 or 3

Other Assets

Guarantee assets Single-Family Median of external sources with adjustments for specific loan 

characteristics

Level 3

Multifamily Discounted cash flows. Significant inputs include current OASto-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

Mortgage servicing rights Market prices from a third party or internally developed prices 

using discounted cash flows. Significant inputs include:

Level 3

 Estimated prepayment rates,

 Estimated costs to service both performing and non-accrual 

loans, and

 Estimated servicing income per loan (including ancillary 

income).

Significant increases (decreases) in cost to service per loan 

and prepayment rate in isolation would result in a significantly 

lower (higher) fair value measurement. Significant increases 

(decreases) in servicing income per loan in isolation would 

result in a significantly higher (lower) fair value measurement.

Other Liabilities

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 the Consolidated Financial Statements | Note 17

FREDDIE MAC | 2021 Form 10-K 219
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 17.1 - Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2021

(In millions) Level 1 Level 2 Level 3

Netting 

Adjustment(1) Total

Assets:

Investments securities:

Available-for-sale, at fair value $— $2,726 $1,286 $— $4,012 

Trading, at fair value:

Mortgage-related securities — 12,845 3,386 — 16,231 

Non-mortgage-related securities 31,780 992 — — 32,772 

Total trading securities, at fair value 31,780 13,837 3,386 — 49,003 

Total investments in securities 31,780 16,563 4,672 — 53,015 

Mortgage loans:

Held-for-sale, at fair value — 10,498 — — 10,498 

Other assets:

 Guarantee assets, at fair value — — 5,919 — 5,919 

 Derivative assets, net 33 5,416 17 — 5,466 

Netting adjustments(1) — — — (5,006) (5,006) 

Total derivative assets, net 33 5,416 17 (5,006) 460 

Non-derivative purchase commitments, at fair value — 131 — — 131 

All other, at fair value — — 84 — 84 

Total other assets 33 5,547 6,020 (5,006) 6,594 

Total assets carried at fair value on a recurring basis $31,813 $32,608 $10,692 ($5,006) $70,107 

Liabilities:

Debt securities of consolidated trusts held by third parties, at fair 

value $— $910 $184 $— $1,094 

Debt of Freddie Mac, at fair value — 1,274 110 — 1,384 

Other liabilities:

 Derivative liabilities, net — 7,726 23 — 7,749 

Netting adjustments(1) — — — (7,467) (7,467) 

Total derivative liabilities, net — 7,726 23 (7,467) 282 

Non-derivative purchase commitments, at fair value — 4 — — 4 

All other, at fair value — — 1 — 1 

Total other liabilities — 7,730 24 (7,467) 287 

Total liabilities carried at fair value on a recurring basis $— $9,914 $318 ($7,467) $2,765 

Referenced footnote is included after the prior period table.

Financial Statements Notes to the Consolidated Financial Statements | Note 17

FREDDIE MAC | 2021 Form 10-K 220
December 31, 2020

(In millions) Level 1 Level 2 Level 3

Netting 

Adjustment(1) Total

Assets:

Investments securities:

Available-for-sale, at fair value: $— $13,779 $1,588 $— $15,367 

Trading, at fair value:

Mortgage-related securities — 14,246 3,259 — 17,505 

Non-mortgage-related securities 26,255 698 — — 26,953 

Total trading securities, at fair value 26,255 14,944 3,259 — 44,458 

Total investments in securities 26,255 28,723 4,847 — 59,825 

Mortgage loans:

Held-for-sale, at fair value — 14,199 — — 14,199 

Other assets:

Guarantee assets, at fair value — — 5,509 — 5,509 

Derivative assets, net — 8,516 63 — 8,579 

Netting adjustments(1) — — — (7,374) (7,374) 

Total derivative assets, net — 8,516 63 (7,374) 1,205 

Non-derivative purchase commitments, at fair value — 158 — — 158 

All other, at fair value — — 108 — 108 

Total other assets — 8,674 5,680 (7,374) 6,980 

Total assets carried at fair value on a recurring basis $26,255 $51,596 $10,527 ($7,374) $81,004 

Liabilities:

Debt securities of consolidated trusts held by third parties, at fair 

value $— $2 $203 $— $205 

Debt of Freddie Mac, at fair value — 2,267 120 — 2,387 

Other liabilities:

 Derivative liabilities, net — 9,132 16 — 9,148 

Netting adjustments(1) — — — (8,194) (8,194) 

Total derivative liabilities, net — 9,132 16 (8,194) 954 

Non-derivative purchase commitments, at fair value — 1 — — 1 

All other, at fair value — — 3 — 3 

Total other liabilities — 9,133 19 (8,194) 958 

Total liabilities carried at fair value on a recurring basis $— $11,402 $342 ($8,194) $3,550 

(1) Represents counterparty netting, cash collateral netting, and net derivative interest receivable or payable.

Financial Statements Notes to the Consolidated Financial Statements | Note 17

FREDDIE MAC | 2021 Form 10-K 221
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 comprehensive income for Level 3 assets and liabilities.

Table 17.2 - Fair Value Measurements of Assets and Liabilities Using Significant Unobservable Inputs

Year Ended December 31, 2021

Balance,

January 1,

2021

Total Realized/Unrealized 

Gains (Losses)

Purchases Issues Sales

Settlements,

Net

Transfers

into

Level 3

Transfers

out of

Level 3(1)

Balance,

December 

31,

2021

Change in 

Unrealized 

Gains (Losses) 

Included in Net 

Income 

Related to 

Assets and 

Liabilities Still 

Held as of 

December 31, 

2021(2)

Change in 

Unrealized 

Gains (Losses), 

Net of Tax, 

Included in OCI 

Related to 

Assets and 

Liabilities Still 

Held as of 

December 31, 

(In millions) 2021

Included 

in

Earnings

Included in 

Other

Comprehensive

Income

Assets

Investments in 

securities:

Available-for-sale, at 

fair value 1,588 29 7 — — (32) (306) — — 1,286 26 7 

Trading, at fair value 3,259 (869) — 1,536 — (277) (83) — (180) 3,386 (872) — 

Total investments in 

securities 4,847 (840) 7 1,536 — (309) (389) — (180) 4,672 (846) 7 

Other assets:

Guarantee assets 5,509 (378) — — 1,742 — (954) — — 5,919 (378) — 

Derivative assets 63 (45) — — — (1) — — — 17 (46) — 

All other, at fair value 108 (9) — (6) 19 (8) (20) — — 84 (9) — 

Total other assets 5,680 (432) — (6) 1,761 (9) (974) — — 6,020 (433) — 

Total assets 10,527 (1,272) 7 1,530 1,761 (318) (1,363) — (180) 10,692 (1,279) 7 

Balance,

January 1,

2021

Total Realized/Unrealized 

(Gains) Losses

Purchases Issues Sales

Settlements,

Net

Transfers

into

Level 3

Transfers

out of

Level 3(1)

Balance,

December 

31,

2021

Change in 

Unrealized 

(Gains) Losses 

Included in Net 

Income 

Related to 

Assets and 

Liabilities Still 

Held as of 

December 31, 

2021(2)

Change in 

Unrealized 

(Gains) Losses, 

Net of Tax, 

Included in OCI 

Related to 

Assets and 

Liabilities Still 

Held as of 

December 31, 

2021

Included 

in

Earnings

Included in

other

comprehensive

income

Liabilities

Debt securities of 

consolidated trusts held 

by third parties, at fair 

value $203 ($27) $— ($8) $168 $— ($152) $— $— $184 ($16) $— 

Debt of Freddie Mac, at 

fair value 120 (3) — — 1 — (8) — — 110 (3) — 

Total Debt 323 (30) — (8) 169 — (160) — — 294 (19) — 

Other liabilities:

Derivative liabilities 16 15 — — 2 — (10) — — 23 5 — 

All other, at fair value 3 (8) — 7 — (1) — — — 1 (8) — 

Total other liabilities 19 7 — 7 2 (1) (10) — — 24 (3) — 

Total liabilities 342 (23) — (1) 171 (1) (170) — — 318 (22) — 

Referenced footnotes are included after the prior period table.

Financial Statements Notes to the Consolidated Financial Statements | Note 17

FREDDIE MAC | 2021 Form 10-K 222
Year Ended December 31, 2020

Balance,

January 1,

2020

Total Realized/Unrealized 

Gains (Losses)

Purchases Issues Sales

Settlements,

Net

Transfers

into

Level 3

Transfers

out of

Level 3(1)

Balance,

December 

31,

2020

Change in 

Unrealized 

Gains(Losses) 

Included in Net 

Income 

Related to 

Assets and 

Liabilities Still 

Held as of 

December 31, 

2020(2)

Change in 

Unrealized 

Gains (Losses), 

Net of Tax, 

Included in OCI 

Related to 

Assets and 

Liabilities Still 

Held as of 

December 31, 

(In millions) 2020

Included 

in

Earnings

Included in 

Other

Comprehensive

Income

Assets

Investments in 

securities:

Available-for-sale, at 

fair value $3,227 $27 ($8) $— $— ($218) ($344) $— ($1,096) $1,588 $15 ($38) 

Trading, at fair value 2,710 (251) — 1,555 — (281) (77) — (397) 3,259 (241) — 

Total investments in 

securities 5,937 — (224) (8) 1,555 — (499) (421) — (1,493) 4,847 (226) (38) 

Other assets:

Guarantee assets 4,426 250 — — 1,641 — (808) — — 5,509 250 — 

Derivative assets 15 22 — — 26 — — — — 63 21 — 

All other, at fair value 120 (3) — (15) 27 (19) (2) — — 108 (3) — 

Total other assets 4,561 269 — (15) 1,694 (19) (810) — — 5,680 268 — 

Total assets 10,498 45 (8) 1,540 1,694 (518) (1,231) — (1,493) 10,527 42 (38) 

Balance,

January 1,

2020

Total Realized/Unrealized 

(Gains) Losses

Purchases Issues Sales

Settlements,

Net

Transfers

into

Level 3

Transfers

out of

Level 3(1)

Balance,

December 

31,

2020

Change in 

Unrealized 

(Gains) Losses 

Included in Net 

Income 

Related to 

Assets and 

Liabilities Still 

Held as of 

December 31, 

2020(2)

Change in 

Unrealized 

(Gains) Losses, 

Net of Tax, 

Included in OCI 

Related to 

Assets and 

Liabilities Still 

Held as of 

December 31, 

2020

Included 

in

Earnings

Included in 

Other

Comprehensive

Income

Liabilities

Debt securities of 

consolidated trusts held 

by third parties, at fair 

value $203 $— $— $— $— $— $— $— $— $203 $— $— 

Debt of Freddie Mac, at 

fair value 129 (1) — — 4 — (12) — — 120 (1) — 

Total Debt 332 (1) — — 4 — (12) — — 323 (1) — 

Other liabilities:

Derivative liabilities 36 (8) — — 2 — (14) — — 16 (23) — 

All other, at fair value 1 — — 1 — 1 — — — 3 — — 

Total other liabilities 37 (8) — 1 2 1 (14) — — 19 (23) — 

Total liabilities 369 (9) — 1 6 1 (26) — — 342 (24) — 

(1) Transfers out of Level 3 during 2021 and 2020 consisted primarily of certain mortgage-related securities due to an increased volume and level of activity in the 

market and availability of price quotes from dealers and third-party pricing services. Certain Freddie Mac securities are classified as Level 3 at issuance and 

generally are classified as Level 2 when they begin trading. 

(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, 2021 and December 31, 2020, respectively. This amount includes any allowance for credit losses 

recorded on available-for-sale securities and amortization of basis adjustments.

Financial Statements Notes to the Consolidated Financial Statements | Note 17

FREDDIE MAC | 2021 Form 10-K 223
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 17.3 - Quantitative Information about Recurring Level 3 Fair Value Measurements 

December 31, 2021

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

Available-for-sale, at fair value

Mortgage-related securities

 $839 

Median of external 

sources

External pricing 

sources $72.8 - $83.7 $77.0

 322 Discounted cash flows OAS 87 - 198 bps 88 bps

 124 Other

Trading, at fair value

Mortgage-related securities

 2,846 Single external source

External pricing 

sources $0.0 - $7,343.1 $396.7

 273 

Median of external 

sources

External pricing 

sources $3.8 - $4.4 $4.1

 259 Discounted cash flows OAS (339) - 3,000 bps 551 bps

 9 Other

Guarantee assets, at fair value 5,531 Discounted cash flows OAS 17 - 186 bps 45 bps

 388 Other

Insignificant Level 3 assets(2) 101 

Total level 3 assets $10,692 

Liabilities

Debt securities of consolidated trusts held by third 

parties, at fair value 135 Other

Insignificant Level 3 liabilities(2) 183 

Total level 3 liabilities $318 

(1) Unobservable inputs were weighted primarily by the relative fair value of the financial instruments.

(2) Represents the aggregate amount of Level 3 assets or liabilities measured at fair value on a recurring basis that are individually and in the aggregate insignificant.

Financial Statements Notes to the Consolidated Financial Statements | Note 17

FREDDIE MAC | 2021 Form 10-K 224
December 31, 2020

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

Available-for-sale, at fair value

Mortgage-related securities(2)

 $1,009 

Median of external 

sources

External pricing 

sources $70.6 - $81.6 $75.9 

 410 Discounted cash flows OAS 90 - 90 bps 90 bps

 119 Single external source

External pricing 

sources $100.9 - $100.9 $100.9 

 50 Other

Trading, at fair value

Mortgage-related securities(2)

 2,204 Single external source

External pricing 

sources $0.0 - $8,894.6 $947.8 

 472 Discounted cash flows OAS (951) - 2,910 bps 834 bps

 583 Other

Guarantee assets, at fair value 5,195 Discounted cash flows OAS 15 - 186 bps 38 bps

 314 Other

Insignificant Level 3 assets(3) 171 

Total level 3 assets $10,527 

Liabilities

Debt securities of consolidated trusts held by third parties, at 

fair value $203 Single External Source

External Pricing 

Sources $97.3 - $107.0 $101.7 

Insignificant Level 3 liabilities(3) 139 

Total level 3 liabilities $342 

(1) Unobservable inputs were weighted primarily by the relative fair value of the financial instruments.

(2) Prior periods have been conformed to the current period presentation.

(3) Represents the aggregate amount of Level 3 assets or liabilities measured at fair value on a recurring basis that are individually and in the aggregate insignificant.

Financial Statements Notes to the Consolidated Financial Statements | Note 17

FREDDIE MAC | 2021 Form 10-K 225
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 17.4 - Assets Measured at Fair Value on a Non-Recurring Basis

December 31, 2021 December 31, 2020

(In millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Assets measured at fair value on a 

non-recurring basis:

Mortgage loans(1) $— $12 $797 $809 $— $6 $2,241 $2,247 

(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.

Table 17.5 - Quantitative Information about Non-Recurring Level 3 Fair Value Measurements

December 31, 2021

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)

Non-recurring fair value 

measurements

Mortgage loans $797 

Internal model Historical sales proceeds $3,956 - $744,000 $221,442

Internal model Housing sales index 72 - 439 bps 140 bps

Median of external sources External pricing sources $61.9 - $107.1 $97.3

December 31, 2020

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)

Non-recurring fair value 

measurements

Mortgage loans $2,241 

Internal model Historical sales proceeds $3,001 - $696,004 $202,539

Internal model Housing sales index 66 - 345 bps 119 bps

Median of external sources External pricing sources $59.5 - $104.0 $92.1

(1) Unobservable inputs were weighted primarily by the relative fair value of the financial instruments.

Financial Statements Notes to the Consolidated Financial Statements | Note 17

FREDDIE MAC | 2021 Form 10-K 226
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 17.6 - Fair Value of Financial Instruments

December 31, 2021

GAAP 

Measurement 

Category(1)

GAAP 

Carrying  

Amount

Fair Value

(In millions) Level 1 Level 2 Level 3

Netting 

Adjustments(2) Total

Financial Assets

Cash and cash equivalents Amortized cost $10,150 $10,150 $— $— $— $10,150 

Securities purchased under agreements 

to resell Amortized cost 71,203 — 78,536 — (7,333) 71,203 

Investments in securities:

Available-for-sale, at fair value FV - OCI 4,012 — 2,726 1,286 — 4,012 

Trading, at fair value FV - NI 49,003 31,780 13,837 3,386 — 49,003 

Total investments in securities 53,015 31,780 16,563 4,672 — 53,015 

Mortgage loans:

Loans held by consolidated trusts 2,784,626 — 2,563,588 238,133 — 2,801,721 

Loans held by Freddie Mac 63,483 — 35,856 29,803 — 65,659 

Total mortgage loans Various(3) 2,848,109 — 2,599,444 267,936 — 2,867,380 

Guarantee assets FV - NI 5,919 — — 5,923 — 5,923 

Derivative assets, net FV - NI 460 33 5,416 17 (5,006) 460 

Non-derivative purchase and other 

commitments FV - NI 131 — 217 — — 217 

Advances to lenders Amortized cost 4,932 — — 4,932 — 4,932 

Secured lending Amortized cost 1,263 — 1,187 76 — 1,263 

Total financial assets $2,995,182 $41,963 $2,701,363 $283,556 ($12,339) $3,014,543 

Financial Liabilities

Debt:

Debt securities of consolidated trusts 

held by third parties $2,803,054 $— $2,803,030 $656 $— $2,803,686 

Debt of Freddie Mac 177,131 — 185,793 3,957 (7,333) 182,417 

Total debt Various(4) 2,980,185 — 2,988,823 4,613 (7,333) 2,986,103 

Guarantee obligations Amortized cost 5,716 — — 6,240 — 6,240 

Derivative liabilities, net FV - NI 282 — 7,726 23 (7,467) 282 

Non-derivative purchase and other 

commitments FV - NI 13 — 4 101 — 105 

Total financial liabilities $2,986,196 $— $2,996,553 $10,977 ($14,800) $2,992,730 

(1) FV - NI denotes fair value through net income. FV - OCI denotes fair value through other comprehensive income.

(2) Represents counterparty netting, cash collateral netting, and net derivative interest receivable or payable.

(3) As of December 31, 2021, the GAAP carrying amounts measured at amortized cost, lower-of-cost-or-fair-value and FV - NI were $2.8 trillion, $9.3 billion and $10.5 

billion, respectively. 

(4) As of December 31, 2021, the GAAP carrying amounts measured at amortized cost and FV - NI were $3.0 trillion and $2.5 billion, respectively. 

Financial Statements Notes to the Consolidated Financial Statements | Note 17

FREDDIE MAC | 2021 Form 10-K 227
December 31, 2020

GAAP 

Measurement 

Category(1)

GAAP 

Carrying 

Amount

Fair Value

(In millions) Level 1 Level 2 Level 3(2)

Netting 

Adjustments(3) Total

Financial Assets

Cash and cash equivalents Amortized cost $23,889 $23,889 $— $— $— $23,889 

Securities purchased under agreements 

to resell Amortized cost 105,003 — 105,003 — — 105,003 

Investments in securities:

Available-for-sale, at fair value FV - OCI 15,367 — 13,779 1,588 — 15,367 

Trading, at fair value FV - NI 44,458 26,255 14,944 3,259 — 44,458 

Total investments in securities 59,825 26,255 28,723 4,847 — 59,825 

Mortgage loans:

Loans held by consolidated trusts 2,273,347 — 2,080,687 262,309 — 2,342,996 

Loans held by Freddie Mac 110,541 — 76,917 36,578 — 113,495 

Total mortgage loans Various(4) 2,383,888 — 2,157,604 298,887 — 2,456,491 

Guarantee assets FV - NI 5,509 — — 5,515 — 5,515 

Derivative assets, net FV - NI 1,205 — 8,516 63 (7,374) 1,205 

Non-derivative purchase and other 

commitments FV - NI 158 — 246 — — 246 

Advances to lenders Amortized cost 4,162 — — 4,162 — 4,162 

Secured lending Amortized cost 1,680 — 1,427 253 — 1,680 

Total financial assets $2,585,319 $50,144 $2,301,519 $313,727 ($7,374) $2,658,016 

Financial Liabilities

Debt:

Debt securities of consolidated trusts 

held by third parties $2,308,176 $— $2,382,157 $852 $— $2,383,009 

Debt of Freddie Mac 284,370 — 286,634 4,088 — 290,722 

Total debt Various(5) 2,592,546 — 2,668,791 4,940 — 2,673,731 

Guarantee obligations Amortized cost 5,050 — — 5,378 — 5,378 

Derivative liabilities, net FV - NI 954 — 9,132 16 (8,194) 954 

Non-derivative purchase and other 

commitments FV - NI 20 — 1 307 — 308 

Total financial liabilities $2,598,570 $— $2,677,924 $10,641 ($8,194) $2,680,371 

(1) FV - NI denotes fair value through net income. FV - OCI denotes fair value through other comprehensive income.

(2) Certain amounts were reclassified from secured lending to non-derivative purchase and other commitments. Prior periods have been revised to conform to the 

current period presentation.

(3) Represents counterparty netting, cash collateral netting, and net derivative interest receivable or payable.

(4) As of December 31, 2020, the GAAP carrying amounts measured at amortized cost, lower-of-cost-or-fair-value and FV - NI were $2.4 trillion, $19.5 billion and 

$14.2 billion, respectively. 

(5) As of December 31, 2020, the GAAP carrying amounts measured at amortized cost and FV - NI were $2.6 trillion and $2.6 billion, respectively.

Fair Value Option

We elected the fair value option for certain multifamily held-for-sale loans, multifamily held-for-sale loan purchase 

commitments, and debt. 

Multifamily Held-for-Sale Loans and Held-for-Sale Commitments

We elected the fair value option for certain fixed-rate multifamily loan purchase commitments and the related loans that were 

acquired for securitization. We use derivatives to economically hedge the interest rate-related fair value changes and a portion 

of the spread-related fair value changes of the multifamily commitments and loans for which we have elected the fair value 

option. These loans are classified as held-for-sale loans on our consolidated balance sheets to reflect our intent to sell in the 

future and are measured at fair value on a recurring basis, with subsequent gains or losses related to changes in fair value (net 

Financial Statements Notes to the Consolidated Financial Statements | Note 17

FREDDIE MAC | 2021 Form 10-K 228
of accrued interest income) reported in investment gains (losses), net, on our consolidated statements of comprehensive 

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 comprehensive income. 

Debt Securities of Consolidated Trusts Held by Third Parties 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 (losses), net, on our consolidated 

statements of comprehensive 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 certain loans and debt for which we have elected the fair value 

option. This table does not include interest-only securities related to debt securities of consolidated trusts and debt of Freddie 

Mac held by third parties with a fair value of $268 million and $173 million and multifamily held-for-sale loan purchase 

commitments with a fair value of $127 million and $157 million, as of December 31, 2021 and December 31, 2020, respectively.

Table 17.7 - Difference between Fair Value and UPB for Certain Financial Instruments with Fair Value Option Elected 

December 31, 2021 December 31, 2020

(In millions)

Multifamily

Held-For-Sale

 Loans

Debt of

 Freddie Mac

Debt Securities of 

Consolidated 

Trusts Held by 

Third Parties

Multifamily

Held-For-Sale

 Loans

Debt of

 Freddie Mac

Debt Securities of 

Consolidated 

Trusts Held by 

Third Parties

Fair value $10,498 $1,252 $958 $14,199 $2,216 $203 

UPB 10,224 1,220 958 13,400 2,189 200 

Difference $274 $32 $— $799 $27 $3 

Changes in Fair Value Under the Fair Value Option Election

The table below presents the changes in fair value included in investment gains (losses),net, on our consolidated statements of 

comprehensive income, related to items for which we have elected the fair value option. 

Table 17.8 - Changes in Fair Value under the Fair Value Option Election

December 31, 2021 December 31, 2020 December 31, 2019

(In millions) Gains (Losses) 

Multifamily held-for-sale loans ($407) $1,247 $853 

Multifamily held-for-sale loan purchase commitments 1,271 2,288 1,913 

Debt of Freddie Mac - long term 50 335 136 

Debt securities of consolidated trusts held by third parties 17 4 (4) 

Changes in fair value attributable to instrument-specific credit risk were not material for the years ended December 31, 2021, 

2020 or 2019 for any assets or liabilities for which we elected the fair value option.

Financial Statements Notes to the Consolidated Financial Statements | Note 17

FREDDIE MAC | 2021 Form 10-K 229
NOTE 18

Legal Contingencies

We are involved as a party 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. 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 and claims resolution are subject to many uncertainties and are not susceptible to accurate prediction. 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.

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 October 2013, defendants filed motions to dismiss the complaint. In October 2014, the District Court granted defendants' 

motions and dismissed the case in its entirety against all defendants, with prejudice. In November 2014, plaintiff filed a notice of 

appeal in the U.S. Court of Appeals for the Sixth Circuit. In July 2016, the Sixth Circuit reversed the District Court's dismissal 

and remanded the case to the District Court for further proceedings. In August 2018, the District Court denied the plaintiff's 

motion for class certification, and in January 2019, the Sixth Circuit denied plaintiff's petition for leave to appeal that decision. 

On September 17, 2020, the District Court granted a request from the plaintiff for summary judgment and entered final 

judgment in favor of Freddie Mac and the other defendants. On October 9, 2020, the plaintiff filed a notice of appeal in the Sixth 

Circuit. On January 27, 2021, Freddie Mac filed a motion to dismiss the appeal, which the Sixth Circuit denied on January 6, 

2022.

At present, it is not possible for us to predict the probable outcome of this lawsuit or any potential effect on our business, 

financial condition, liquidity, or results of operations. In addition, we are unable to reasonably estimate the possible loss or 

range of possible loss in the event of an adverse judgment in the foregoing matter due to the following factors, among others: 

the inherent uncertainty of the appellate process, and the inherent uncertainty of pre-trial litigation in the event the case is 

ultimately remanded to the District Court in whole or in part. In particular, while the District Court denied plaintiff's motion for 

class certification, this decision and the entry of final judgment in defendants' favor have been appealed. Absent a final 

resolution of whether a class will be certified, the identification of a class if one is certified, and the identification of the alleged 

statement or statements that survive dispositive motions, we cannot reasonably estimate any possible loss or range of possible 

loss.

LIBOR Lawsuit

On March 14, 2013, Freddie Mac filed a lawsuit in the U.S. District Court for the Eastern District of Virginia against the British 

Bankers Association and the 16 U.S. Dollar LIBOR panel banks and a number of their affiliates. The case was subsequently 

transferred to the U.S. District Court for the Southern District of New York. The complaint alleges, among other things, that the 

defendants fraudulently and collusively depressed LIBOR, a benchmark interest rate indexed to trillions of dollars of financial 

products, and asserts claims for antitrust violations, breach of contract, tortious interference with contract, and fraud. Freddie 

Mac filed an amended complaint in July 2013, and a second amended complaint in October 2014. In August 2015, the District 

Court dismissed the portion of our claim related to antitrust violations and fraud and we filed a motion for reconsideration. In 

March 2016, the District Court granted a portion of our motion, finding personal jurisdiction over certain defendants, and denied 

the portion of our motion with respect to statutes of limitation for our fraud claims. 

Financial Statements Notes to the Consolidated Financial Statements | Note 18 

FREDDIE MAC | 2021 Form 10-K 230
In May 2016, in a related case, the U.S. Court of Appeals for the Second Circuit reversed the District Court's dismissal of 

certain plaintiffs' antitrust claims and remanded the case to the District Court for consideration of whether, among other things, 

the plaintiffs are "efficient enforcers" of the antitrust laws. In December 2016, the District Court denied in part and granted in 

part defendants' renewed motions to dismiss on personal jurisdiction and efficient enforcer grounds. The District Court held 

that Freddie Mac is an efficient enforcer of the antitrust laws, but dismissed on personal jurisdiction grounds Freddie Mac's 

antitrust claims against all defendants except HSBC USA, N.A. (HSBC). In February 2017, the District Court effectively 

dismissed Freddie Mac's remaining antitrust claim against HSBC.

In February 2018, in a related case, the Second Circuit reversed the District Court's dismissal of certain plaintiffs' state law 

fraud and unjust enrichment claims on statutes of limitations grounds. The Second Circuit also reversed certain aspects of the 

District Court's personal jurisdiction rulings and remanded with instructions to allow the named appellant to amend its 

complaint. The District Court subsequently granted in part Freddie Mac's motion for leave to amend its complaint, and Freddie 

Mac filed its third amended complaint in April 2019. Subsequently, the District Court held that Freddie Mac's fraud claims were 

not reinstated by the Second Circuit's February 2018 decision.

In December 2021, in a related case, the Second Circuit reversed the District Court’s December 2016 ruling with respect to 

certain personal jurisdiction issues. While Freddie Mac was not a party to that appeal, this ruling should apply to Freddie Mac’s 

claims.

At present, Freddie Mac's only remaining causes of action are certain contract-based claims against Bank of America, N.A., 

Barclays Bank, Citibank, N.A., Credit Suisse, Deutsche Bank, Royal Bank of Scotland, and UBS AG.

Litigation Concerning the Purchase Agreement

Since July 2013, a number of lawsuits have been filed against us concerning the August 2012 amendment to the Purchase 

Agreement, which created the net worth sweep dividend provisions of the senior preferred stock. The plaintiffs in the lawsuits 

allege that they are holders of common stock and/or junior preferred stock issued by Freddie Mac and Fannie Mae. (For 

purposes of this discussion, junior preferred stock refers to the various series of preferred stock of Freddie Mac and Fannie 

Mae other than the senior preferred stock issued to Treasury.) It is possible that similar lawsuits will be filed in the future. The 

lawsuits against us are described below.

Litigation 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 case is 

the result of the consolidation of three putative class action lawsuits: Cacciapelle and Bareiss vs. Federal National Mortgage 

Association, Federal Home Loan Mortgage Corporation and FHFA, filed on July 29, 2013; American European Insurance 

Company vs. Federal National Mortgage Association, Federal Home Loan Mortgage Corporation and FHFA, filed on July 30, 

2013; and Marneu Holdings, Co. vs. FHFA, Treasury, Federal National Mortgage Association and Federal Home Loan Mortgage 

Corporation, filed on September 18, 2013. (The Marneu case was also filed as a shareholder derivative lawsuit.) A consolidated 

amended complaint was filed in December 2013. In the consolidated amended complaint, plaintiffs alleged, among other items, 

that the August 2012 amendment to the Purchase Agreement breached Freddie Mac's and Fannie Mae's respective contracts 

with the holders of junior preferred stock and common stock and the covenant of good faith and fair dealing inherent in such 

contracts. Plaintiffs sought unspecified damages, equitable and injunctive relief, and costs and expenses, including attorney 

and expert fees. 

The Cacciapelle and American European Insurance Company lawsuits were filed purportedly on behalf of a class of purchasers 

of junior preferred stock issued by Freddie Mac or Fannie Mae who held stock prior to, and as of, August 17, 2012. The Marneu

lawsuit was filed purportedly on behalf of a class of purchasers of junior preferred stock and purchasers of common stock 

issued by Freddie Mac or Fannie Mae over a not-yet-defined period of time. 

Arrowood Indemnity Company vs. Federal National Mortgage Association, Federal Home Loan Mortgage 

Corporation, FHFA, and Treasury. This case was filed on September 20, 2013. The allegations and demands made by 

plaintiffs in this case were generally similar to those made by the plaintiffs in the In re Fannie Mae/Freddie Mac Senior Preferred 

Stock Purchase Agreement Class Action Litigations case described above. Plaintiffs in the Arrowood lawsuit also requested 

that, if injunctive relief were not granted, the Arrowood plaintiffs be awarded damages against the defendants in an amount to 

be determined including, but not limited to, the aggregate par value of their junior preferred stock, the total of which they stated 

to be approximately $42 million. 

American European Insurance Company, Cacciapelle, and Miller vs. Treasury and FHFA. This case was filed as a 

shareholder derivative lawsuit, purportedly on behalf of Freddie Mac as a nominal defendant, on July 30, 2014. The complaint 

alleged that, through the August 2012 amendment to the Purchase Agreement, Treasury and FHFA breached their respective 

fiduciary duties to Freddie Mac, causing Freddie Mac to suffer damages. The plaintiffs asked that Freddie Mac be awarded 

compensatory damages and disgorgement, as well as attorneys' fees, costs, and other expenses. 

Financial Statements Notes to the Consolidated Financial Statements | Note 18 

FREDDIE MAC | 2021 Form 10-K 231
FHFA, joined by Freddie Mac and Fannie Mae, moved to dismiss the In re Fannie Mae/Freddie Mac Senior Preferred Stock 

Purchase Agreement Class Action Litigations case and the other related cases in January 2014. Treasury filed a motion to 

dismiss the same day. In September 2014, the District Court granted the motions and dismissed the plaintiffs' claims. All 

plaintiffs appealed that decision, and on February 21, 2017, the U.S. Court of Appeals for the District of Columbia Circuit 

affirmed in part and remanded in part the decision granting the motions to dismiss. The DC Circuit affirmed dismissal of all 

claims except certain claims seeking monetary damages for breach of contract and breach of implied duty of good faith and 

fair dealing. In March 2017, certain institutional and class plaintiffs filed petitions for panel rehearing with respect to certain 

claims. On July 17, 2017, the DC Circuit granted the petitions for rehearing and issued a modified decision, which permitted the 

institutional plaintiffs to pursue the breach of contract and breach of implied duty of good faith and fair dealing claims that had 

been remanded. The DC Circuit also removed language related to the standard to be applied to the implied duty claims, leaving 

that issue for the District Court to determine on remand. On October 16, 2017, certain institutional and class plaintiffs filed 

petitions for a writ of certiorari in the U.S. Supreme Court challenging whether the prohibition in the Housing and Economic 

Recovery Act (HERA) on injunctive relief against FHFA bars judicial review of the net worth sweep dividend provisions of the 

August 2012 amendment to the Purchase Agreement, as well as whether HERA bars shareholders from pursuing derivative 

litigation where they allege the conservator faces a conflict of interest. The Supreme Court denied the petitions on February 20, 

2018. On November 1, 2017, certain institutional and class plaintiffs and plaintiffs in another case in which Freddie Mac was not 

originally a defendant, Fairholme Funds, Inc. v. FHFA, Treasury, and Federal National Mortgage Association, filed proposed 

amended complaints in the District Court. Each of the proposed amended complaints names Freddie Mac as a defendant for 

breach of contract and breach of the covenant of good faith and fair dealing claims as well as for new claims alleging breach of 

fiduciary duty and breach of Virginia corporate law. On January 10, 2018, FHFA, Freddie Mac, and Fannie Mae moved to 

dismiss the amended complaints. On September 28, 2018, the District Court dismissed all of the claims except those alleging 

breach of the implied covenant of good faith and fair dealing. On November 18, 2021, the parties filed a stipulation to dismiss 

the Arrowood lawsuit without prejudice. On December 7, 2021, the District Court certified three classes in the In Re Fannie 

Mae/Freddie Mac Senior Preferred Stock Purchase Agreement Class Action Litigations based on share type, including a 

"Freddie Preferred Class" for holders of Freddie Mac junior preferred stock and a "Freddie Common Class" for holders of 

Freddie Mac common stock. To be included in one of these classes, shareholders must have held their shares as of December 

7, 2021 or acquired their shares after December 7, 2021 and before any final judgment is entered or settlement is reached in 

the lawsuit. Discovery is ongoing.

Litigation in the U.S. Court of Federal Claims

Reid and Fisher vs. the United States of America and Federal Home Loan Mortgage Corporation. This case was filed 

as a derivative lawsuit, purportedly on behalf of Freddie Mac as a "nominal" defendant, 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. On March 8, 

2018, the plaintiffs filed an amended complaint under seal, with a redacted copy filed on November 14, 2018. The United States 

filed a motion to dismiss on August 1, 2018 and an amended motion to dismiss on October 1, 2018. The court denied the 

United States' motion to dismiss on May 8, 2020 and granted plaintiffs' motion to certify the decisions for interlocutory appeal 

on June 11, 2020. The Federal Circuit denied the petition for interlocutory appeal on August 21, 2020. These proceedings are 

stayed pending a ruling on the Fairholme Funds appeals.

Fairholme Funds, Inc., et al. vs. the United States of America, Federal National Mortgage Association, and 

Federal Home Loan Mortgage Corporation. This case was originally filed on July 9, 2013 against the United States of 

America. On March 8, 2018, plaintiffs filed an amended complaint under seal. A redacted public version was filed on May 11, 

2018 and adds Freddie Mac and Fannie Mae as nominal defendants. The amended complaint alleges, among other items, that 

the net worth sweep dividend provisions of the senior preferred stock constitute an unlawful taking or exaction of private 

property for public use without just compensation, and that by enacting the net worth sweep, the government breached the 

fiduciary duty it owed to Freddie Mac and Fannie Mae, and implied-in-fact contracts between the United States on the one 

hand and Freddie Mac and Fannie Mae on the other. The plaintiffs ask that plaintiffs, Freddie Mac, and Fannie Mae be awarded 

(1) just compensation for the government's alleged taking or exaction of their property, (2) damages for the government's 

breach of fiduciary duties, and (3) damages for the government's breach of the alleged implied-in-fact contracts. In addition, 

plaintiffs seek pre- and post-judgment interest, attorneys' fees, costs, and other expenses. The United States filed a motion to 

dismiss on August 1, 2018 and an amended motion to dismiss on October 1, 2018. On December 6, 2019, the Court dismissed 

the claims plaintiffs labeled as direct claims and denied defendant's motion to dismiss with respect to the claims plaintiffs 

labeled as derivative. Accordingly, derivative takings, exaction, breach of fiduciary duty, and breach of implied-in-fact contract 

claims remain. By order dated March 9, 2020, the Court granted unopposed motions by plaintiffs and defendant to certify the 

December 6 opinion for interlocutory review, modified its December 6 opinion to include the language necessary for an 

interlocutory appeal to the U.S. Court of Appeals for the Federal Circuit, and stayed further proceedings in the case pending the 

completion of the interlocutory appeal process. The Federal Circuit granted the petition for interlocutory appeal on June 18, 

2020.

Financial Statements Notes to the Consolidated Financial Statements | Note 18 

FREDDIE MAC | 2021 Form 10-K 232
Perry Capital LLC vs. the United States of America, Federal National Mortgage Association, and Federal Home 

Loan Mortgage Corporation. This case was filed as a derivative lawsuit, purportedly on behalf of Freddie Mac and Fannie 

Mae as "nominal" defendants, on August 15, 2018. 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 or an illegal exaction in violation of the Fifth Amendment, and that by enacting the net worth sweep, the 

government breached the fiduciary duty it owed to Freddie Mac and Fannie Mae, and implied-in-fact contracts between the 

United States on the one hand and Freddie Mac and Fannie Mae on the other. The plaintiff asks that it, Freddie Mac, and 

Fannie Mae be awarded just compensation for the government's alleged taking of their property or damages for the illegal 

exaction; damages for the government's breach of fiduciary duties; and damages for the government's breach of the alleged 

implied-in-fact contracts. These proceedings are stayed pending a ruling on the Fairholme Funds appeals.

At present, it is not possible for us to predict the probable outcome of the lawsuits discussed above in the U.S. District Courts 

and the U.S. Court of Federal Claims (including the outcome of any appeal) or any potential effect on our business, financial 

condition, liquidity, or results of operations. In addition, we are unable to reasonably estimate the possible loss or range of 

possible loss in the event of an adverse judgment in the foregoing matters due to a number of factors, including the inherent 

uncertainty of pre-trial litigation. In addition, with respect to the In re Fannie Mae/Freddie Mac Senior Preferred Stock Purchase 

Agreement Class Action Litigations case, the plaintiffs have not demanded a stated amount of damages they believe are due.

Financial Statements Notes to the Consolidated Financial Statements | Note 18 

FREDDIE MAC | 2021 Form 10-K 233
NOTE 19

Regulatory Capital

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 

continues to monitor our capital levels, and we continue to provide quarterly submissions to FHFA on minimum capital in 

accordance with FHFA guidance. 

In May 2017, FHFA, as Conservator, issued guidance to us to evaluate and manage our financial risk and to make economic 

business decisions, while in conservatorship, utilizing a risk-based CCF, a capital system with detailed formulae provided by 

FHFA. In December 2020, FHFA published the ERCF, establishing a new regulatory capital framework for Freddie Mac and 

Fannie Mae. The ERCF, which went into effect in February 2021, has a transition period for compliance. 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 consent order or other transition order, and the compliance date for buffer 

requirements in the ERCF will be the date of termination of our conservatorship. In accordance with FHFA guidance, we are 

transitioning to ERCF to measure and manage risk. Pursuant to the final rule, we are required to comply with the regulatory 

capital reporting requirements under the ERCF in 2022, with our initial quarterly capital report due by May 30, 2022, 60 days 

after the last day of the first quarter.

On September 15, 2021, FHFA issued a notice of proposed rulemaking to amend the ERCF. The proposed amendments would 

refine the PLBA and the capital treatment of CRT transactions. On October 27, 2021, FHFA issued an additional notice of 

proposed rulemaking to amend the ERCF by introducing additional public disclosure requirements for the Enterprises. On 

December 16, 2021, FHFA issued a notice of proposed rulemaking that would require Freddie Mac and Fannie Mae to develop, 

maintain, and submit annual capital plans to FHFA. FHFA is seeking comment on this proposed rule through February 25, 2022.

Regulatory Capital Standards

The GSE Act established minimum, critical, and risk-based capital standards for us. However, per guidance received from 

FHFA, we no longer are required to submit risk-based capital reports to FHFA.

Prior to our entry into conservatorship, those standards determined the amounts of core capital that we were to maintain to 

meet regulatory capital requirements. Core capital consisted of the par value of outstanding common stock (common stock 

issued less common stock held in treasury), the par or stated value of outstanding non-cumulative, perpetual preferred stock, 

additional paid-in capital, and retained earnings (accumulated deficit), as determined in accordance with GAAP.

Minimum Capital

The minimum capital standard required us to hold an amount of core capital that was generally equal to the sum of 2.50% of 

aggregate on-balance sheet assets and approximately 0.45% of the sum of our guaranteed securities held by third parties and 

other aggregate off-balance sheet obligations.

Pursuant to regulatory guidance from FHFA, our minimum capital requirement was not affected by adoption of amendments to 

the accounting guidance for transfers of financial assets and consolidation of VIEs effective January 1, 2010. Specifically, upon 

adoption of these amendments, FHFA directed us, for purposes of minimum capital, to continue reporting guaranteed 

securities held by third parties using a 0.45% capital requirement. FHFA reserves the authority under the GSE Act to raise the 

minimum capital requirement for any of our assets or activities.

Critical Capital

The critical capital standard required us to hold an amount of core capital that was generally equal to the sum of 1.25% of 

aggregate on-balance sheet assets and approximately 0.25% of the sum of our guaranteed securities held by third parties and 

other aggregate off-balance sheet obligations.

Financial Statements Notes to the Consolidated Financial Statements | Note 19

FREDDIE MAC | 2021 Form 10-K 234
Performance Against Regulatory Capital Standards

The table below summarizes our net worth and estimated core capital and minimum capital levels reported to FHFA. 

Table 19.1 - Net Worth and Minimum Capital

(In millions) December 31, 2021 December 31, 2020

GAAP net worth (deficit) $28,033 $16,413 

Core capital (deficit)(1)(2) (44,769) (56,878) 

Less: Minimum capital(1) 24,302 22,694 

Minimum capital surplus (deficit)(1) ($69,071) ($79,572) 

(1) Core capital and minimum capital figures are estimates and represent amounts submitted to FHFA. FHFA is the authoritative source for our regulatory capital.

(2) Core capital excludes certain components of GAAP total equity (i.e., AOCI and senior preferred stock) as these items do not meet the statutory definition of core 

capital.

The Purchase Agreement provides that, if FHFA determines as of quarter end that our liabilities have exceeded our assets 

under GAAP, Treasury will contribute funds to us in an amount at least equal to the difference between such liabilities and 

assets.

Under the GSE Act, FHFA must place us into receivership if FHFA determines that our assets are and have been less than our 

obligations 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 advised us that, if, 

during that 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. If funding has been 

requested under the Purchase Agreement to address a deficit in our net worth, and Treasury is unable to provide us with such 

funding within the 60-day period specified by FHFA, FHFA would be required to place us into receivership if our assets remain 

less than our obligations during that 60-day period.

At December 31, 2021, our assets exceeded our liabilities under GAAP; therefore, no draw is being requested from Treasury 

under the Purchase Agreement. As of December 31, 2021, our aggregate funding received from Treasury under the Purchase 

Agreement was $71.6 billion. This aggregate funding amount does not include the initial $1.0 billion liquidation preference of 

senior preferred stock that we issued to Treasury in September 2008 as an initial commitment fee and for which no cash was 

received, and increases in the aggregate liquidation preference of the senior preferred stock related to the increases in our Net 

Worth Amount since December 2017 that have been permitted pursuant to the Purchase Agreement. 

Financial Statements Notes to the Consolidated Financial Statements | Note 19

FREDDIE MAC | 2021 Form 10-K 235
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 Chief Executive Officer and Chief Financial Officer 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, 2021. 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, 2021 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, 2021 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 Chief Executive Officer and Chief Financial Officer, 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 

Controls and Procedures

FREDDIE MAC | 2021 Form 10-K 236
assurance of achieving the desired control objectives, and we must apply judgment in implementing possible controls and 

procedures.

Management, including the company's Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the 

effectiveness of our disclosure controls and procedures as of December 31, 2021. As a result of management's evaluation, our 

Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as 

of December 31, 2021, 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, 2021 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	 The Director of FHFA is in frequent communication with our Chief Executive Officer (or if that office is vacant, with our 

President), typically meeting (in person or by phone) on at least a bi-weekly basis.

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.

In view of our mitigating actions related to this material weakness, we believe that our consolidated financial statements for the 

year ended December 31, 2021 have been prepared in conformity with GAAP.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL 

REPORTING DURING THE QUARTER ENDED 

DECEMBER 31, 2021

We evaluated the changes in our internal control over financial reporting that occurred during the quarter ended December 31, 

2021 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 | 2021 Form 10-K 237
Other Information

DIRECTOR ELECTION

On February 7, 2022, Kevin G. Chavers and Luke S. Hayden were elected to our Board of Directors, effective February 15, 

2022. Mr. Chavers brings extensive experience in mortgage finance, capital markets, and public policy to the Board of Directors 

and will serve on our Audit Committee and Nominating and Governance Committee. Mr. Hayden is an experienced executive 

who brings expertise in residential real estate finance, capital markets, and risk management to the Board of Directors and will 

serve on our Operations and Technology Committee and Risk Committee.

Mr. Chavers, 58, retired as Managing Director, Global Fixed Income Investment Team, at BlackRock, Inc. in 2021. After joining 

BlackRock in 2011, he also served as Managing Director, Global Public Policy Group, and Managing Director, BlackRock 

Solutions, Financial Markets Advisory Group. Prior to joining BlackRock, he held various positions at Morgan Stanley from 2003 

to 2011, including Managing Director, Senior Relationship Management and Head, Mortgage Strategy & Execution. Mr. Chavers 

joined Morgan Stanley from Goldman Sachs & Company, where he was Vice President, Principal Finance Group, Mortgage 

Securities Department from 1998 to 2003. He had previously held various positions in the U.S. Government from 1989 to 1998, 

ultimately serving as President of Ginnie Mae from 1995 to 1998. Mr. Chavers began his career as an associate at the law firm 

of Milbank, Tweed, Hadley & McCloy LLP. He currently serves as an Independent Trustee of Optimum Funds and as a member 

of the Board of Directors of Toorak Capital Partners, SMBC Americas Holdings, Inc. (SMBC), and Chimera Investment 

Corporation, Inc. (Chimera). He serves on the Audit Committee of SMBC and as the Chair of the Compensation Committee and 

a member of the Risk Committee of Chimera.

Mr. Hayden, 65, has been the CEO of Hayden Consulting, a firm that provides consulting services for mortgage banks, 

commercial banks, thrifts, REITs, and private equity firms, since 2012. He served as Vice Chairman of Residential Mortgage 

Services Holdings, Inc. from 2013 to 2021. Prior to joining Residential Mortgage Services Holdings, he was President of PHH 

Mortgage Corporation from 2010 to 2012 and Executive Vice President and Senior Managing Director at GMAC Residential 

Capital from 2007 to 2008. From 1992 to 2005, he held various positions at JPMorgan Chase & Company and its predecessors, 

eventually becoming Executive Vice President of Consumer Market Risk Management. Mr. Hayden began his career as a loan 

officer and loan purchaser at Ralph C. Sutro Company.

Messrs. Chavers and Hayden will receive compensation as non-executive directors of Freddie Mac as described in Directors, 

Corporate Governance, and Executive Officers – Corporate Governance – Director Compensation. 

Freddie Mac will also enter into indemnification agreements with Messrs. Chavers and Hayden, effective as of February 15, 

2022, the form of which is filed in the Exhibit Index. For a description of this indemnification agreement, see Directors, 

Corporate Governance, and Executive Officers – Corporate Governance – Director Compensation – 

Indemnification.

Other Information

FREDDIE MAC | 2021 Form 10-K 238
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.

On February 7, 2022, the Conservator executed a written consent electing the 13 directors listed below that we submitted for 

election as members of our Board of Directors. Messrs. Kevin G. Chavers and Luke S. Hayden are newly elected Board 

members effective February 15, 2022, with all other directors re-elected for another term effective February 15, 2022. See 

Other Information for additional information. 

n Mark H. Bloom n Aleem Gillani n Grace A. Huebscher

n Kathleen L. Casey n Mark B. Grier n Sara Mathew

n Kevin G. Chavers n Luke S. Hayden n Allan P. Merrill

n Michael J. DeVito n Christopher E. Herbert n Alberto G. Musalem

n Lance F. Drummond

We did not submit for election, and FHFA did not elect, Saiyid T. Naqvi, who retired from the Board of Directors on February 7, 

2022, the effective date of the Conservator's written consent, because he had reached the age limit set forth in our Corporate 

Governance Guidelines, or the Guidelines. 

See Directors, Corporate Governance, and Executive Officers — Directors — Director Biographical Information

for information about each of our current directors and Other Information for information about our two new directors. The 

terms of the directors elected by FHFA will 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.

Director Criteria, Diversity, Qualifications, Experience, and Tenure

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 initially 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 then available 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 supplement the knowledge the Board of Directors collectively would have in the areas of business, 

finance, accounting, risk management, technology (including cybersecurity), public policy, mortgage lending, real estate, lowincome 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 

Directors, Corporate Governance, and Executive Officers Directors

FREDDIE MAC | 2021 Form 10-K 239
community or consumer interests or one person who has demonstrated a career commitment to the provision of housing for 

low-income households. 

As set forth in the Guidelines, the Board of Directors seeks to have a diversity of talent, perspectives, experience, and cultures 

among its members by including minorities, women, and individuals with disabilities, and these are important factors in the 

Board of Directors’ candidate solicitation and nomination processes. FHFA requires us to ensure, to the maximum extent 

possible in balance with financially safe and sound business practices, inclusion of minorities, women, and individuals with 

disabilities in our process of nominating directors, as we do in all of our activities. 

Prioritizing diversity as an important part of our candidate solicitation and nomination process has resulted in a Board of 

Directors with members who have a variety of backgrounds and overall experience. Over half of our directors are women, 

minorities, or both. Our Non-Executive Chair is a minority woman, and a woman and/or minority serves in a leadership position 

as the Chair of the Audit, Compensation and Human Capital (CHC), Executive, and Risk Committees. Our Board of Directors 

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 15, 2022, and include Messrs. Chavers and Hayden. See Other Information for 

additional information about our two new directors. 

Gender

10

3

Men

Women

Race/Ethnicity

2 8

2

1

White

African American

Asian

Hispanic or Latino

Tenure

6

5

2

< 2 Years

2 < 5 Years

> 5 Years

Age

7

6

50s

60s

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 9, 2022. For biographical information 

regarding Messrs. Chavers and Hayden, who will join our Board of Directors effective February 15, 2022, see Other 

Information. 

Mark H. Bloom

Age Director Since Freddie Mac Committees Public Company Directorships

57 November 2019 • Compensation and Human Capital None

• Executive

• Operations and Technology, Chair 

• Risk

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 to the Board 

of Directors.

Experience and Qualifications

n Management Consultant, Operations & Technology (2021-present)

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 Technology Delivery Services 

(2007-2016)

Directors, Corporate Governance, and Executive Officers Directors

FREDDIE MAC | 2021 Form 10-K 240
n Various positions at JPMorgan Chase & Company, including Senior Vice President, Chase Home Financial Technology 

(2001-2007)

n Senior Vice President, eBusiness Solutions at CACI International, Inc. (1999-2001)

Kathleen L. Casey

Age Director Since Freddie Mac Committees Public Company Directorships

55 October 2019 • Audit • None

• Nominating and Governance

• Operations and Technology

Ms. Casey is an experienced leader with extensive financial regulatory policy experience. She brings high-level regulatory and 

financial oversight experience as well as a deep understanding of financial markets and governance to the Board of Directors.

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 Financial Accounting Foundation Board of Trustees (2018-present); Chair (2020-present)

n Member of the Board of Sepio Systems Inc. (2020-present)

n Member of the International Valuation Standards Council Board of Trustees (2016-present)

n Member of the Library of Congress Trust Fund Board (2011-present)

n Chair of the Alternative Investment Management Association Council (2012-2016)

Michael J. DeVito

Age Director Since Freddie Mac Committees Public Company Directorships

57 June 2021 • Executive None

Mr. DeVito brings more than 30 years of experience in the mortgage and financial services industries to Freddie Mac and its 

Board of Directors. He has extensive experience across home lending, including in loan origination, servicing, portfolio 

management, secondary marketing, credit, and risk management. 

Experience and Qualifications

n Chief Executive Officer of Freddie Mac (2021-present)

n Various positions with Wells Fargo and Company, including Executive Vice President - Head of Home Lending of Wells 

Fargo (2017-2020), Head of Home Lending Production (2015-2017), Head of Home Lending Servicing (2013-2015), Head of 

Default Servicing (2011-2013), Head of Loan Workout (2009-2011), Head of Education Financial Services (2007-2009) and 

Head of Mortgage Retail Underwriting and Operations (1996-2007)

Lance F. Drummond

Age Director Since Freddie Mac Committees Public Company Directorships

67 July 2015 • Audit • AvidXchange Holdings, Inc.

• Compensation and Human Capital, Chair • United Community Banks, Inc.

• Executive

• Operations and Technology

Mr. Drummond is a senior business leader who brings extensive experience, specializing in business transforming strategy 

development and execution, operations, technology, and process re-engineering to the Board of Directors.

Experience and Qualifications

n Executive in Residence, Christopher Newport University (2015-2017)

Directors, Corporate Governance, and Executive Officers Directors

FREDDIE MAC | 2021 Form 10-K 241
n Executive Vice President of Operations and Technology of TD Canada Trust (2011-2014)

n Executive Vice President of Human Resources and Shared Services of Fiserv Inc. (2009-2011)

n Senior Vice President 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 Vice President of Kodak 

Professional Division (1976-2002)

n Member of the Board and Executive, Risk, and Talent & Compensation Committees, and Chair of the Nominating and 

Governance Committee of United Community Banks, Inc. (2018-present)

n Member of the Board and Compensation and Risk Management Committees of AvidXchange (2020-present)

n Member of the Board and Conflicts and Management Compensation Committees and Chair of the Audit Committee of the 

Financial Industry Regulatory Authority (2018-present)

n	 Member of the Board and Audit Committee of CurAegis Technologies, Inc. (2018-2020)

Aleem Gillani

Age Director Since Freddie Mac Committees Public Company Directorships

59 January 2019 • Audit, Chair None 

• Compensation and Human Capital 

• Executive

Mr. Gillani is a seasoned executive with extensive experience at sophisticated financial institutions. He brings a blend of 

industry, financial, and risk management experience to the Board of Directors. 

Experience and Qualifications

n Various positions with SunTrust Banks, Inc., including Chief Financial Officer and Corporate Executive Vice President, 

Executive Vice President and Corporate Treasurer, and Senior Vice President and Chief Market Risk Officer (2007-2018)

n Senior Vice President 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 SunTrust Robinson Humphrey (2011-2018)

n Founding Chair of the Market Risk Council for the Risk Management Association (1998)

Mark B. Grier

Age Director Since Freddie Mac Committees Public Company Directorships

69 February 2020 • Executive None

• Nominating and Governance, Chair

• Risk

Mr. Grier is an executive with decades of finance, risk, and capital markets experience and contributes his deep expertise in 

capital management to the Board of Directors. 

Experience and Qualifications

n Interim Chief Executive Officer of Freddie Mac (2021)

n Various positions with Prudential Financial, Inc., including Vice Chairman, Member of the Office of the Chairman, and Chief 

Financial Officer (1995-2019)

n Various positions with The Chase Manhattan Corporation and its predecessors, including Executive Vice President, CoHead, Global Markets and Executive Vice President, Global Risk Management (1978-1995)

n Member of the Board of Trustees of The Geraldine R. Dodge Foundation (2021-present)

n Chair of the Board of the Global Impact Investing Network (2017-present)

n Member of the Board of Trustees of Eisenhower Fellowships (2013-present)

n Member of the Board of Achieve Inc. (2009-2020); Chair (2014-2020)

n Member of the Board of Trustees of the Tragedy Assistance Program for Survivors (2013-2019)

n Vice Chair and Member of the Board of Directors of Prudential Financial, Inc. (2008-2019)

Directors, Corporate Governance, and Executive Officers Directors

FREDDIE MAC | 2021 Form 10-K 242
Christopher E. Herbert 

Age Director Since Freddie Mac Committees Public Company Directorships

61 March 2018 • Compensation and Human Capital None

• Risk

Mr. Herbert is an experienced leader in the governmental and educational sectors and provides the Board of Directors with indepth 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 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 Director Since Freddie Mac Committees Public Company Directorships

62 December 2017 • Executive None

• Nominating and Governance

• Operations and Technology

• Risk, Chair

Ms. Huebscher is an executive with extensive experience in capital markets and real estate. She brings deep multifamily 

industry knowledge, entrepreneurial experience, and business savvy 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 Chief Executive Officer of Beech Street Capital, LLC (2009-2013)

n Various positions with Fannie Mae, including Vice President, Capital Markets (1997-2009)

n Member of the Board of The Kenyon Review (1998-present)

n Member of the Commercial Board of Governors of the Mortgage Bankers Association (2014-2017)

Sara Mathew

Age Director Since Freddie Mac Committees Public Company Directorships

66 December 2013 • Executive, Chair • Dropbox, Inc.

• State Street Corporation

• Xos, Inc.

Ms. Mathew is an executive with global financial and general management experience. Ms. Mathew's extensive business, 

financial, and management experience, and her public company board and audit committee experience, positions her to make 

valuable contributions to Board oversight of our internal control over financial reporting and compliance matters. 

Experience and Qualifications

n Various positions with Dun & Bradstreet Corporation (2001-2013), including Chairman and Chief Executive Officer 

(2010-2013); President and Chief Operating Officer (2007-2010); and Senior Vice President and CFO (2001-2006)

n	 Various finance and management positions with The Procter & Gamble Company, including Vice President of Finance for 

Australia, Asia, and India (1983-2001)

Directors, Corporate Governance, and Executive Officers Directors

FREDDIE MAC | 2021 Form 10-K 243
n Member of the Board and Audit and Compensation Committees of Dropbox, Inc. (2021-present)

n Member of the Board and Audit Committee and Chair of the Compensation Committee of Xos, Inc. (formerly NextGen 

Acquisition Corporation) (2020-present)

n Member of the Board, Executive and Risk Committees, Chair of the Human Resources Committee, and former member of 

the Nominating and Corporate Governance Committee of State Street Corporation (2018-present)

n Member of the Board and Audit Committee of Reckitt Benckiser Group plc (2019-2021)

n Member of the Board and Audit and Finance and Corporate Development Committees of Campbell Soup Company 

(2005-2019)

n Member of the Board, Chair of the Audit, Compliance and Risk Committee, member of the Nomination and Governance 

Committee, and former member of the Remuneration Committee of Shire plc (2015-2019)

n Member of the Board and Finance and Nominating and Corporate Governance Committees of Avon Products, Inc. 

(2014-2016)

n Member of the International Advisory Council of Zurich Financial Services Group (2012-2017)

n Member of the Board of Dun & Bradstreet Corporation (2008-2013)

Allan P. Merrill

Age Director Since Freddie Mac Committees Public Company Directorships

55 September 2020 • Audit • Beazer Homes USA, Inc.

• Nominating and Governance

Mr. Merrill is an experienced executive in the homebuilding industry and brings in-depth knowledge of the housing market as 

well as considerable executive leadership and financial experience to the Board of Directors.

Experience and Qualifications

n Various positions with Beazer Homes USA, Inc., including Chairman of the Board, President, and Chief Executive Officer, 

and Executive Vice President and Chief Financial Officer (2007-present)

n Various leadership positions with Move, Inc., including Executive Vice President 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-present) 

n Member of the Board of the Leading Builders of America (2011-present) 

n Member of the Board of Harvard University's Joint Center for Housing Studies (1992-present) 

Alberto G. Musalem

Age Director Since Freddie Mac Committees Public Company Directorships

53 June 2021 • Compensation and Human Capital None

• Operations and Technology

• Risk

Mr. Musalem is a financial executive who brings proven leadership and significant finance, capital markets, economics, and 

public policy experience to the Board of Directors.

Experience and Qualifications

n Adjunct Professor at Georgetown University (2022-present)

n Chief Executive Officer and Co-Founder of Evince Asset Management LP, a quantitative investment manager (2018-

present)

n Executive Vice President of the Federal Reserve Bank of New York (2014-2016)

n Chairman and Board Member of School the World (2012-2017)

n Managing Director and Partner of Tudor Investment Corporation (2000-2013)

n Adjunct Professor at Johns Hopkins University (2007)

n Economist at the International Monetary Fund (1996-2000)

n Analyst at Bankers Trust (1995)

n Analyst at McKinsey & Co. (1994)

Directors, Corporate Governance, and Executive Officers Directors

FREDDIE MAC | 2021 Form 10-K 244
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 Each of our directors is independent, except for the CEO.

n Our directors are elected annually.

n Each of the Audit, CHC, Nominating and Governance, Operations and Technology, and Risk Committees consists entirely 

of independent directors.

n Each committee operates pursuant to a written charter that has been approved by the Board of Directors (these 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, and Risk Committees conduct an annual 

self-evaluation, as will the newly formed Operations and Technology Committee.

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 Board of Directors reviews management talent and succession planning at least annually.

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. Based on the Nominating and Governance Committee’s evaluation and 

recommendation, our Board of Directors and, in certain circumstances, consistent with our Guidelines, our non-employee 

Board members on behalf of the Board of Directors, made the following determinations. The Board of Directors determined that 

all current non-employee Board members are, and that Messrs. Chavers and Hayden will be, independent, except that Mr. 

Grier was not considered to be independent during the period he served as our Interim CEO. Mr. DeVito is not considered to be 

an independent director due to his service as our CEO. With respect to former Board members who served in 2021, Mr. Saiyid 

T. Naqvi and Mr. Paul T. Schumacher were, and Mr. Brickman (our former CEO) was not determined to be independent.

Our Board of Directors determined that all members of our Audit, CHC, Nominating and Governance, 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 Board member, 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 Affiliation with the Company - Mr. Grier served as our interim CEO from March 15, 2021 to May 31, 2021. 

During this period, he was not considered an independent director. After he stepped down as Interim CEO, he returned to 

being an independent director, consistent with Section 303A.02(b)(i) of the NYSE Listed Company Manual, which does not 

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FREDDIE MAC | 2021 Form 10-K 245
preclude a director from being found independent after service as an interim CEO ends as the compensation he received 

during such service did not constitute a material relationship that would impair Mr. Grier's independence as our director.

n Employment Affiliations with Business Partners - Mr. Herbert is, and Mr. Bloom was, employed by organizations that 

engage or have engaged in business with us resulting in payments between us and such organizations. 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 the firm's consolidated gross revenues for each of the last three fiscal years. After 

considering the nature and extent of the specific relationships between these organizations and us, our Board of Directors 

concluded that the business relationships do not constitute material relationships between either Mr. Bloom or Mr. Herbert 

and us that would impair their respective independence as our directors.

Immediate family members of Messrs. Chavers and Hayden and Ms. Huebscher are employed by companies that engage 

or have engaged in business with us resulting in payments between us 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 do not constitute a 

material relationship that would impair Messrs. Chavers, Hayden, or Ms. Huebscher's 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 the business relationship does not constitute a material relationship that would impair Ms. Huebscher's 

independence as our director.

n Board Memberships with Business Partners - Messrs. Chavers, Drummond, and Merrill serve as directors of other 

organizations that engage in business with us resulting in payments between us and such organizations. After considering 

the nature and extent of the specific relationship between each of those organizations and us, and the fact that these 

Board members are directors of these other organizations rather than employees, our Board of Directors concluded that 

those 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 we conduct 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 a member 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, 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 of our 

business partners, our Board of Directors considered the nature and extent of our 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 of our business partners by Messrs. Bloom, Gillani, Grier, and 

Hayden do 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 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 FHFA'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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FREDDIE MAC | 2021 Form 10-K 247
Board Committees

The Board of Directors has six standing committees: Audit, CHC, Executive, 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/boardcommittees.html. The membership of each committee as of February 9, 2022, except as otherwise noted below, and the 

number of meetings held by each committee in 2021 are set forth below, together with a description of the primary 

responsibilities of each committee.

Committee Meetings in 2021 Chair Members

Audit Committee 10 Committee meetings Aleem Gillani

• Kathleen L. Casey

• Kevin G. Chavers(1)

• Lance F. Drummond

• Allan P. Merrill

Compensation and Human 

Capital Committee 8 Committee meetings Lance F. Drummond

• Mark H. Bloom

• Aleem Gillani

• Christopher E. Herbert

• Alberto G. Musalem

Executive Committee None Sara Mathew

• Mark H. Bloom

• Michael J. DeVito

• Lance F. Drummond

• Aleem Gillani

• Mark B. Grier

• Grace A. Huebscher

Nominating and Governance 

Committee 7 Committee meetings Mark B. Grier

• Kathleen L. Casey

• Kevin G. Chavers (1)

• Grace A. Huebscher

• Allan P. Merrill

Operations and Technology 

(established in October 2021) 1 Committee meeting Mark H. Bloom

• Kathleen L. Casey

• Lance F. Drummond

• Luke S. Hayden(1)

• Grace A. Huebscher

• Alberto G. Musalem

Risk Committee 7 Committee meetings Grace A. Huebscher

• Mark H. Bloom

• Mark B. Grier

• Luke S. Hayden(1)

• Christopher E. Herbert

• Alberto G. Musalem

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(1) Mr. Chavers will join the Audit and Nominating and Governance Committees and Mr. Hayden will join the Operations and Technology and Risk Committees, effective 

February 15, 2022.

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 things, 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 reports related to processes established by management to provide compliance with legal and regulatory requirements. 

The Audit Committee's activities during 2021 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 periodically reviews the company's guidelines and policies governing the processes for assessing and 

managing the company's risks and generally reviews the company's major financial risk exposures and the steps taken to 

monitor and control such exposures. The Audit Committee also approves all decisions regarding the appointment, removal, and 

compensation of the General Auditor, who reports independently to the Audit Committee, as well as the annual incentive 

funding level for our Internal Audit division. 

Our 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. Our 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 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 

processes, including: (1) an annual review of talent development programs and initiatives, including succession planning; (2) 

oversight of our diversity and inclusion programs and policies, and related management strategies; and (3) the design and 

execution of initiatives to strengthen our culture. 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 2021 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. 

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 assists the Board of Directors and its committees in conducting annual self-evaluations and identifying qualified 

individuals to become directors; reviews Board member independence and qualifications and recommends membership of the 

committees of the Board of Directors; and reviews potential conflicts of interest for members of senior management as well as 

certain related person transactions. 

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Operations and Technology Committee

The Operations and Technology Committee, which was established in October 2021 and consists entirely of independent 

directors, has responsibility for overseeing the development and execution of our enterprise information, operations, and 

technology strategies and information and operational resiliency programs. Specifically, the Operations and Technology 

Committee oversees: (1) 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, our management of information (including cybersecurity), technology, and operational resiliency risk, including 

the possibility that these risks will adversely affect the achievement of our mission and business objectives; and (3) our 

information (including cybersecurity and information security) and operational resiliency programs, including risk and controls. 

The Operations and Technology Committee also reviews capabilities for and adequacy of resources allocated to operations and 

technology and monitors and evaluates trends in technology that may affect our strategy and business objectives. See 

Directors, Corporate Governance, and Executive Officers — Board of Directors and Board Committee 

Information — Additional Board Oversight of Information and Cybersecurity Operations 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, and enterprise-wide strategic risk. The 

Risk Committee reviews and recommends the company's enterprise risk policy and Board-level risk appetite metrics and limits 

to the Board of Directors for approval 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 approves all decisions regarding the appointment or removal of the CRO, and the CRO reports independently to the Risk 

Committee. 

Additional Board Oversight of Information and Cybersecurity Operations

The Board of Directors and the Operations and Technology and Risk Committees oversee the company's information and 

cybersecurity operations by receiving periodic reports from the Chief Information Officer and other key officers. These updates 

include information regarding management's ongoing efforts to manage cybersecurity risk and the steps management has 

taken to address and mitigate the evolving cybersecurity threat environment. In addition, the Risk Committee receives updates 

regarding any assessments by external parties about the company's cybersecurity program. Senior management discusses 

cybersecurity developments with the Chairs of the Operations and Technology Committee and the Risk Committee and other 

Board members between Board and Board committee meetings, as necessary. Additionally, certain Board members are 

involved in, and have an opportunity to provide feedback on management's participation in, internal cybersecurity incident 

simulations, including tabletop exercises relating to cyber-attacks, ransomware, and other security events. 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 procedures to escalate information 

regarding certain cybersecurity incidents to the appropriate Board members in a timely fashion. The Board of Directors and its 

committees also have authority, as they deem appropriate to fulfill Board or Board committee responsibilities, to engage outside 

consultants or advisors, including technology and cybersecurity experts, and evaluate the company's information security 

program. See MD&A — Risk Management — Overview for more information on the Board of Directors' role in risk 

oversight.

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FREDDIE MAC | 2021 Form 10-K 250
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, our 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 Management Compensation Program. Unlike compensation for our executive officers, there is no provision in the 

director compensation program for pay that varies depending on business results. Although such incentive compensation is 

deemed appropriate to give management strong incentives to devise and execute business plans and achieve positive financial 

results, it is viewed as inconsistent with the oversight role of directors.

2021 Non-Employee Director Compensation Levels

Board compensation levels during conservatorship are shown in the table below.

Table 60 - 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 

Directors, Corporate Governance, and Executive Officers Corporate Governance

FREDDIE MAC | 2021 Form 10-K 251
2021 Director Compensation

The following table summarizes the 2021 compensation earned by all persons who served as a non-employee director during 

2021.

Table 61 - Director Compensation

Non-Employee Director Fees Earned or

Paid in Cash(1) Total

Sara Mathew $290,000 $290,000

Mark H. Bloom(2) 162,391 162,391 

Kathleen L. Casey 170,000 170,000 

Lance F. Drummond 180,000 180,000 

Aleem Gillani 185,000 185,000 

Mark B. Grier(3) 125,631 125,631 

Christopher E. Herbert 160,000 160,000 

Grace A. Huebscher 170,000 170,000 

Allan P. Merrill 170,000 170,000 

Alberto G. Musalem(4) 86,154 86,154 

Saiyid T. Naqvi(5) 175,000 175,000 

Paul T. Schumacher(5) 18,417 18,417 

(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) Reflects partial annual compensation for service as Chair of the Operations and Technology Committee. The committee was created, and Mr. Bloom became Chair, 

in October 2021.

(3) Mr. Grier served as our Interim Chief Executive Officer from March 15, 2021 to May 31, 2021. The amounts for Mr. Grier reflect the compensation that he received 

as a non-employee director before and after his service as our Interim Chief Executive Officer. During the period he served as our Interim Chief Executive Officer, he 

was paid as an officer of the Company and did not receive compensation as a non-employee director. See Summary Compensation Table for additional information. 

(4) Mr. Musalem joined the Board of Directors in June 2021.

(5) Mr. Schumacher left the Board of Directors in February 2021; Mr. Naqvi left in February 2022.

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 | 2021 Form 10-K 252
EXECUTIVE OFFICERS

As of February 9, 2022, our executive officers are as follows: 

Michael J. DeVito

Age Year of Affiliation Position

57 2021 Chief Executive Officer

Mr. DeVito has served as our CEO and a member of our Board of Directors since June 2021. See Directors, Corporate 

Governance, and Executive Officers —Directors — Director Biographical Information for a biography of Mr. DeVito. 

Michael T. Hutchins

Age Year of Affiliation Position

66 2013 President

Mr. Hutchins has served as our President since December 2020 after serving as our interim President beginning in November 

2020. In this role, he oversees the company's Single-Family, Multifamily, Investments and Capital Markets, Enterprise 

Operations and Technology, and Administration divisions. In addition, since the departure of the head of the Multifamily division 

in December 2021, he has actively managed that division. 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 Chief Executive Officer 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.

Christian M. Lown

Age Year of Affiliation Position

52 2020 Executive Vice President & Chief Financial Officer

Mr. Lown has served as our EVP & Chief Financial Officer since June 2020. In this role, he is responsible for the company's 

accounting, capital oversight, ESG, financial controls, financial planning and reporting, investor relations, procurement, and tax. 

Mr. Lown joined Freddie Mac from Navient Corporation where he served as Executive Vice President and Chief Financial Officer 

from March 2017 to June 2020. Prior to that, he served as Managing Director of the Financial Institutions Group and Co-Head 

of Global Financial Technology, North America Banks, and Diversified Finance at Morgan Stanley from 2006 to 2017; Director, 

Financial Institutions Group, at UBS AG from 2003 to 2006; and Associate, Financial Institutions Group, at Credit Suisse First 

Boston from 2001 to 2003.

Donna M. Corley

Age Year of Affiliation Position

48 1995 Executive Vice President - Single-Family Business

Ms. Corley has served as our EVP - Single-Family Business since February 2020 after serving as SVP & Interim Head of SingleFamily from November 2019 to February 2020. In this role, she is responsible for managing our relationships with our Seller/

Servicers, the performance of our guarantee book of business, and all sourcing, servicing, risk management, and business 

operations. Previously, she served as SVP & Chief Risk Officer of Single-Family Business, where she led the team responsible 

for analyzing and managing the risks that affect Freddie Mac's Single-Family business. She joined Freddie Mac in 1995 as a 

research analyst and since then has held various portfolio manager positions within the Investment and Capital Markets division 

and has also led Freddie Mac’s credit pricing, risk transfer, and securitization teams.

John Glessner

Age Year of Affiliation Position

49 2010 Senior Vice President - Investments and Capital Markets

Mr. Glessner has served as our SVP - Investments and Capital Markets since April 2021. In this role, he is responsible for 

managing our liquidity, financing, securitization, and derivative activities as well as our portfolio of single-family mortgage 

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FREDDIE MAC | 2021 Form 10-K 253
securities and loan investments. Previously, he served as our Senior Vice President 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 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 (CMO) 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.

Anil D. Hinduja

Age Year of Affiliation Position

58 2015 Executive Vice President - Chief Risk Officer

Mr. Hinduja has served as our EVP - Chief Risk Officer and head of Enterprise Risk Management 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 Chief Risk Officer for Barclays Africa Group Limited, Group Credit Director for Retail Credit Risk, and Chief 

Risk Officer 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, Chief Risk Officer for the North America Consumer 

Lending Group, and President and CEO of Citi Home Equity.

Frank Nazzaro 

Age Year of Affiliation Position

60 2018 Executive Vice President - Enterprise Operations & Technology

Mr. Nazzaro has served as our EVP - Enterprise Operations & Technology (EO&T) since April 2021 after serving as Chief 

Information Officer from October 2019 to April 2021, and Acting Chief Information Officer from May 2019 to October 2019. He 

provides corporate-wide leadership for the company’s technology 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 

and applications, he brings a wealth of experience in transformational IT activities and strong leadership capabilities essential to 

EO&T’s strategic initiatives, including Cloud migration, Modern Delivery, and Employee Technology Experience. He joined 

Freddie Mac in 2018 as Senior Vice President and Chief Technology Officer leading Enterprise Technology Solutions. From 

2016 to 2018, he was Group Vice President and CTO for Travelport LLC, where he led Cloud Architecture, Infrastructure, and 

Operations globally. From 2012 to 2016, he was CTO at CIT Group where he was responsible for Transformation, Architecture, 

Technology Strategy, and IT Infrastructure. He has held several senior technology and management roles at RBC Capital 

Markets, Bridgewater, and UBS.

Jerry Weiss

Age Year of Affiliation Position

63 2003 Executive Vice President - Chief Administrative Officer & Interim General Counsel

Mr. Weiss has served as our EVP - Chief Administrative Officer since August 2010 and as Interim General Counsel since March 

2021. As Chief Administrative Officer, he serves as the company's senior executive liaison to FHFA and Treasury, and he 

oversees the Government and Industry Relations and Public Policy, Public Relations and Corporate Marketing, Internal 

Communications, Conservatorship Affairs and Initiatives, Economic and Housing Research, Regulatory Affairs, Corporate 

Services, and Making Home Affordable - Compliance organizations. As Interim General Counsel, he is responsible for the 

company's legal division, including advising the Board of Directors and senior management on legal and governance matters 

and litigation strategy, and leading the company's efforts to navigate complex business and regulatory initiatives. In addition, 

since November 2014, he has served as a member of the Board of Managers of CSS. Prior to August 2010, Mr. Weiss served 

as our Chief Compliance Officer and in various other senior management capacities after joining us in October 2003. Before 

that, Mr. Weiss worked from 1990 at Merrill Lynch Investment Managers, including as First Vice President and Global Head of 

Compliance. From 1982 to 1990, Mr. Weiss was with a national law practice in Washington, D.C., where he specialized in 

securities regulation and corporate finance matters.

Directors, Corporate Governance, and Executive Officers Executive Officers

FREDDIE MAC | 2021 Form 10-K 254
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, 2021.

Named Executive Officers

Michael DeVito Chief Executive Officer(1)

Michael T. Hutchins President(2)

Christian M. Lown Executive Vice President & Chief Financial Officer

Donna Corley Executive Vice President - Single-Family Business

Anil Hinduja Executive Vice President - Chief Risk Officer

Jerry Weiss Executive Vice President - Chief Administrative Officer & Interim General Counsel

Mark B. Grier Former Interim Chief Executive Officer(3)

David M. Brickman Former Chief Executive Officer(4)

(1) Mr. DeVito became our Chief Executive Officer effective June 1, 2021.

(2) Mr. Hutchins served as our President and also served as our Principal Executive Officer from January 9, 2021 to March 14, 2021 while a search was underway for a 

new chief executive officer.

(3) Mr. Grier served as our Interim Chief Executive Officer from March 15, 2021 to May 31, 2021.

(4) Mr. Brickman served as our Chief Executive Officer until he resigned from the company effective January 8, 2021.

For information on our primary business objectives and the progress we made during 2021 toward accomplishing those 

objectives, see Introduction — About Freddie Mac.

Overview of Executive Management Compensation Program

Compensation in 2021 for each NEO, other than Messrs. Brickman, DeVito and Grier, whose compensation is discussed below, 

was governed by the Executive Management Compensation Program, or EMCP. The EMCP balances our need to retain and 

attract 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, which applies to our NEOs other than our CEO, 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.

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.

Executive Compensation Compensation Discussion and Analysis

FREDDIE MAC | 2021 Form 10-K 255
CEO Compensation

Compensation in 2021 for Messrs. Brickman, DeVito, and Grier (for the period during which Mr. Grier served as Interim CEO) 

consists of an annual Base Salary level of $600,000, in compliance with the Equity in Government Compensation Act of 2015. 

They did not participate in the EMCP and, therefore, did not receive any compensation subject to either corporate or individual 

performance. Messrs. Brickman, DeVito, and Grier 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 — 2021 Compensation 

Information For NEOs — Summary Compensation Table for additional information.

Elements of Target TDC

For all NEOs other than the CEO, compensation under the EMCP in 2021 consisted of the following elements: 

Base Salary Rate

Deferred Salary

n The amount earned in each quarter, including interest, is paid (1) on the last pay date of the corresponding quarter in 

the first year following the performance period for Fixed Deferred Salary; and (2) on the last pay date of the 

corresponding quarter in either the first or second year following the performance period for At-Risk Deferred Salary(1)

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

(1) As discussed below, pursuant to an update to the EMCP effective January 1, 2020, At-Risk Deferred Salary will be paid on the last pay date of the corresponding 

quarter of the second year following the performance period for Mr. Lown, who joined us as our CFO in June 2020. For executive officers hired before December 31, 

2019, including all other eligible NEOs, the increase in the mandatory deferral period for At-Risk Deferred Salary from one year to two years will take effect 

beginning with amounts earned in the 2022 performance period.

As in past years, 30% of Target TDC for each NEO (other than individuals who served as our CEO) is At-Risk Deferred Salary 

that is subject to reduction based on Conservatorship Scorecard performance as well as Corporate Scorecard and individual 

performance. This At-Risk Deferred Salary has been paid in end-of-quarter installments in the year following the performance 

year. In 2019, FHFA directed us to increase the mandatory deferral period for At-Risk Deferred Salary received by certain 

executive officers (including our NEOs) from one year to two years. For executive officers hired before December 31, 2019, this 

change is effective for At-Risk Deferred Salary earned beginning January 1, 2022. For executive officers hired on or after 

December 31, 2019, the change became effective immediately. Accordingly, At-Risk Deferred Salary earned beginning January 

1, 2022 by our current eligible NEOs (other than Mr. Lown) will be paid in quarterly installments in the corresponding calendar 

quarter in the second year following the performance year. Therefore, At-Risk Deferred Salary earned in 2022 by these NEOs 

will be paid in quarterly installments in 2024. For Mr. Lown, who was hired after December 31, 2019, all At-Risk Deferred Salary 

earned will be paid in quarterly installments in the second year following the performance year, resulting in his At-Risk Deferred 

Salary earned in 2020 being paid in quarterly installments in 2022 and his At-Risk Deferred Salary earned in 2021 being paid in 

quarterly installments in 2023.

The objectives against which 2021 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 2021 At-Risk Deferred Salary — At-Risk Deferred Salary Based on Conservatorship Scorecard 

Performance and Executive Compensation — CD&A — Determination of 2021 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 2021 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. 

Executive Compensation Compensation Discussion and Analysis

FREDDIE MAC | 2021 Form 10-K 256
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 Compensation 

and Human Capital Committee

n No golden parachute payments or other similar change in control 

provisions

n Annual compensation risk review n No tax "gross-ups"

n No executive perquisites other than reimbursement of tax, estate, 

and/or personal financial planning (which we discontinued in 2022) 

and reimbursement of relocation expenses

n No hedging or pledging of company securities permitted

n Evaluation of company performance against multiple measures, 

including non-financial measures

Determination of 2021 Target TDC for Eligible NEOs 

Role of Compensation Consultant

As part of the annual process to determine the Target TDC for each of the eligible NEOs, the CHC Committee receives 

guidance from Meridian Compensation Partners, LLC, or Meridian, its independent compensation consultant. In addition to the 

annual process to determine Target TDC, Meridian provides guidance to the CHC Committee throughout the year on other 

executive compensation matters.

Meridian 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 2021, the CHC Committee reviewed Meridian's independence based 

on the factors outlined in Exchange Act Rule 10C-1(b)(4) and determined that Meridian continues to be independent.

2021 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 included their status as U.S. public companies, the industry in which they 

operate, and their size (in terms of assets and number of employees) relative to the size of Freddie Mac.

When there is either no reasonable match or insufficient data from the Comparator Group for a position, or if Meridian believes 

that additional data sources would strengthen the analysis of competitive market compensation levels, the CHC Committee 

may use alternative survey sources.

FHFA has instructed us to benchmark to the lower end of the compensation ranges offered by the Comparator Group, which 

limits our ability to offer market-competitive compensation if FHFA does not grant an exception.

Executive Compensation Compensation Discussion and Analysis

FREDDIE MAC | 2021 Form 10-K 257
The Comparator Group used in determining compensation for 2021 consisted of the following companies:

The Allstate Corporation    Fannie Mae    Prudential Financial, Inc.

Ally Financial Inc.    Fifth Third Bancorp    Regions Financial Corporation

American Express Company    The Hartford Financial Services Group, Inc.    State Street Corporation

American International Group, Inc. JPMorgan Chase & Co* Synchrony Financial

Bank of America Corporation*    KeyCorp    Truist Financial Corporation

The Bank of New York Mellon Corporation    Mastercard Incorporated    U.S. Bancorp

Capital One Financial Corporation    MetLife, Inc.    Visa, Inc.

Citigroup Inc.* Northern Trust Corporation Voya Financial, Inc.

Citizens Financial Group, Inc.    PNC Financial Services Group, Inc.    Wells Fargo & Company*

Discover Financial Services

* Only mortgage or real estate division-level compensation data from these diversified banking firms may be utilized where available and appropriate 

for the position being benchmarked.

The CHC Committee has determined that these same companies will comprise the 2022 Comparator Group. 

Establishing Target TDC

The CHC Committee developed its 2021 Target TDC recommendations for the eligible NEOs, other than Messrs. Hutchins and 

Weiss, by reviewing data from the Comparator Group. For Mr. Hutchins, the CHC Committee reviewed data from a broader 

financial services survey including companies with significant assets under management. For Mr. Weiss, whose TDC remained 

unchanged in 2021 and was established for his role as Chief Administrative Officer prior to also becoming Interim General 

Counsel, there was not an appropriate market comparison in the data from the Comparator Group.

2021 Target TDC

The following table sets forth the components of 2021 Target TDC for each of our eligible NEOs.

Table 62 - 2021 Target TDC

2021 Target TDC

Named 

Executive 

Officer(1)

Base

Salary Rate

Fixed

Deferred 

Salary

At-Risk

Deferred 

Salary

Target TDC

Michael T. 

Hutchins $600,000 $1,675,000 $975,000 $3,250,000

Christian M. 

Lown(2) 600,000 1,500,000 900,000 3,000,000 

Donna M. 

Corley(3) 600,000 1,176,923 761,538 2,538,461 

Anil D. Hinduja 600,000 1,220,000 780,000 2,600,000 

Jerry Weiss 600,000 975,000 675,000 2,250,000 

(1) Messrs. Brickman, DeVito, and Grier did not participate in the EMCP in 2021 and therefore are not included in this table. For a discussion of their compensation, see 

Executive Compensation — CD&A — CEO Compensation. Although Mr. Hutchins served as our principal executive officer while the CEO office was vacant 

from January 9, 2021 to March 14, 2021, he remained our President and was therefore eligible to participate in the EMCP.

(2) In connection with his appointment as our Chief Financial Officer in June 2020, we agreed to pay Mr. Lown a cash sign-on award of $1,275,000 in recognition of 

forfeited compensation at his previous employer payable in three installments: $475,000 was paid in February 2021; $475,000 will be paid in February 2022; and 

$325,000 will be paid in February 2023. If Mr. Lown is not an employee of Freddie Mac on an installment payment date because he voluntarily resigns from the 

company or if the company terminates his employment due to the occurrence of any of the Forfeiture Events described in the Recapture and Forfeiture Agreement, 

the installment will be forfeited. Each installment is subject to repayment if, prior to the first anniversary of an installment payment, Mr. Lown voluntarily resigns 

from the company or if the company terminates his employment due to the occurrence of any of the Forfeiture Events described in the Recapture and Forfeiture 

Agreement.

(3) The amounts in the table reflect the prorated impact of the June 2021 increase to Ms. Corley's Target TDC from $2,000,000 to $3,000,000, consisting of a Deferred 

Salary increase of $1,000,000. Her Target TDC increased after considering her scope of responsibilities and data from the Comparator Group. 

Executive Compensation Compensation Discussion and Analysis

FREDDIE MAC | 2021 Form 10-K 258
Determination of 2021 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 2021. 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.

At-Risk Deferred Salary Based on Conservatorship Scorecard 

Performance

Half of each eligible NEO's 2021 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 2021 Conservatorship Scorecard and (2) the 

Assessment Criteria described below. FHFA independently assessed our performance against the 2021 Conservatorship 

Scorecard and the Assessment Criteria and determined that a 92% funding level was justified for the portion of the eligible 

NEOs' At-Risk Deferred Salary. In assessing our performance against the 2021 Conservatorship Scorecard, the factors 

considered by FHFA included our completion of all of the Conservatorship Scorecard objectives and our performance against 

the Assessment Criteria.

In making its assessment, FHFA used the following criteria (collectively, the Assessment Criteria):

n The extent to which our activities foster Competitive, Liquid, Efficient, And Resilient (CLEAR) national housing finance 

markets that support homeowners and renters with responsible and sustainable products and programs; 

n The extent to which we conduct business in a safe and sound manner, anticipate and mitigate emerging risk issues, and 

remediate identified risk concerns on a timely basis;

n	 The extent to which we meet expectations under all of FHFA’s requirements, including capital, liquidity, and resolution 

planning requirements;

n The extent to which we conduct initiatives with consideration for diversity and inclusion under statutory requirements 

consistent with FHFA's expectations; 

n The extent to which we cooperate and collaborate with Fannie Mae, CSS, the industry, and other stakeholders, in 

consultation with FHFA; and

n The extent to which we deliver work products that are high quality, thorough, creative, effective, and timely.

The table below presents the Conservatorship Scorecard objectives and FHFA's assessment of our achievement against those 

objectives.

I. Foster CLEAR National Housing Finance Markets

• Housing Goals / Duty-to-Serve: Fulfill Freddie Mac’s Housing Goals and Duty-toServe plans by offering sustainable mortgage programs and conducting effective 

outreach.

Goal was achieved.(1)

• UMBS: Carefully monitor and maintain UMBS cash flow alignment and take such 

further steps as necessary to ensure a well-functioning TBA securitization market.

Goal was achieved.

• Key On-going Initiatives: Successfully continue to implement key on-going 

initiatives.

All goals were achieved.

- COVID-19 Market Actions - Continue to respond as appropriate to mortgage 

market needs related to COVID-19.

- Multifamily Caps - manage to the multifamily cap requirements announced 

November 17, 2020.

- Credit Score Rule - Continue implementation of the final Credit Score Rule with 

adherence to the regulation’s requirements in a timely and effective manner.

- Collateral Evaluation Request for Information Process - Continue to support 

FHFA’s assessment of the collateral evaluation process, including alternative 

appraisal approaches and supporting technology.

- LIBOR Transition - Continue to ensure that there is an effective transition from 

LIBOR to approved alternative reference rates by announcing plans and 

milestones to transition legacy LIBOR products.

• Level Playing Field Standards and Increased Transparency: FHFA suspended these goals.

- Support strategies that enhance a level playing field for a wide range of mortgage 

market participants.

Performance Goals FHFA's Summary of Performance

Executive Compensation Compensation Discussion and Analysis

FREDDIE MAC | 2021 Form 10-K 259
- Continue to comply with prohibitions on volume-based pricing for purchases of 

mortgage loans from lenders and work to ensure that all approved lenders have 

access to Freddie Mac programs on consistent terms.

- Continue to operate the cash window and whole loan conduit and implement 

requirements related to focusing cash window and whole loan conduit purchases 

on small and regional lenders.

- Continue to assess additional data that could be made publicly available to inform 

risk transfer markets and foster a competitive mortgage market that does not 

crowd out private capital.

• Efficient Operation of State and Local Housing Markets: Assess opportunities and 

seek stakeholder feedback through an RFI to support and encourage state and local 

policies that enable the housing market to function more efficiently by (1) reducing 

the cost of housing production and/or (2) lowering the cost or risk of providing 

mortgage financing.

Goal was achieved.

• Natural Disaster Assessment: Monitor risks and exposures to Freddie Mac’s books 

of business from natural disasters.

Goal was achieved.

II. Ensure Safety and Soundness

• Risk Profile: Develop appropriate Freddie Mac risk limits to ensure risk and 

complexity are reduced to levels more appropriate for regulated entities with limited 

capital cushions.

FHFA suspended this goal.

• Capital Management and Planning: Implement capital management and capital 

planning capabilities that transition away from the existing Conservatorship Capital 

Framework to the Enterprise Capital Rule requirements.

All goals were achieved.

- Develop and implement transition plans that achieve compliance with the 

Enterprise Capital Rule in a reasonable amount of time under alternative 

scenarios.

- Implement capabilities to allocate capital and manage risk dynamically.

- Develop and implement sound capital management plans that appropriately tailor 

risk to Freddie Mac capital levels and incorporate resolution planning objectives.

• Resolution Planning: Begin developing, in coordination with and pursuant to 

guidance from FHFA, a plan to resolve Freddie Mac without recourse to extraordinary 

support from Treasury or taxpayers, that preserves the core businesses of Freddie 

Mac and minimizes potential disruption to housing and finance markets.

Goal was achieved.

• Risk Transfer: Continue to transfer credit risk to private markets in a commercially 

reasonable and safe and sound manner, including actively pursuing sales of less 

liquid assets such as non-performing loans and re-performing loans.

Goal was achieved.

• Mortgage Selling and Servicing: Continue mortgage selling, servicing, and asset 

management efforts that promote stability and readiness for continued COVID-19 

stress and the potential for more challenging market conditions.

All goals were achieved. Note that FHFA deferred 

the implementation of the updated Seller / Servicer 

Eligibility Requirements.

- Assist FHFA in finalizing and implementing updated Seller / Servicer Eligibility 

Requirements.

- Continue to assess additional counterparty risk management controls and 

requirements that further ensure appropriate safety and soundness.

- Continue to assess readiness and capability of servicers and appropriateness of 

servicing policies and processes.

- Carefully assess and mitigate, to the extent possible, any material adverse risk 

impacts from COVID-19 selling or servicing flexibilities.

- Partner with FHFA, the Mortgage Industry Standards Maintenance Organization 

(MISMO) and the Servicing Transfers Development Work Group membership, 

including the Consumer Financial Protection Bureau (CFPB), to further data 

standardization efforts.

• Core Operations and Technology: Increase focus on core Freddie Mac operational 

and technology management to ensure stability, resiliency, efficiency, and risk 

reduction.

All goals were achieved.

- Continue efforts to enhance business resiliency and recovery management 

capabilities to minimize the impact of disruptions and maintain business 

operations for mission-critical processes.

- Continue efforts to protect the availability, security, integrity, and confidentiality of 

information.

- Continue efforts to improve the efficiency and effectiveness of operations, 

including multi-year planning for legacy system modernization.

- Continue efforts to establish and improve enterprise-level data management and 

governance capabilities.

Performance Goals FHFA's Summary of Performance

Executive Compensation Compensation Discussion and Analysis

FREDDIE MAC | 2021 Form 10-K 260
- Ensure that the structure and design of core operations and technology systems 

are reflected in Freddie Mac resolution planning efforts.

- In partnership with CSS, ensure that CSS and the Common Securitization Platform 

(CSP) support the securitization needs of the Enterprises and operate in an 

efficient and safe and sound manner.

III. Prepare for a Transition Out of Conservatorship

• Efficient Utilization of Capital: Develop and implement strategies that ensure the 

efficient utilization of capital targeted to support the core guaranty business with 

adequate returns to attract the private capital necessary to enable an exit from the 

conservatorship.

This goals was consolidated under "II. Ensure 

Safety and Soundness - Capital Management and 

Planning" per direction from FHFA.

• Common Securitization Platform Strategy: Continue efforts to develop and 

implement, in conjunction with FHFA, a post-conservatorship strategy and 

governance framework for CSS/CSP.

We achieved this goal by providing FHFA with the 

requested analysis and recommendation. In 

October 2021, FHFA decided to better align CSS’ 

governance structure with its core mission of 

supporting the Enterprises. 

• Address Identified Areas in Need of Improvement: Timely resolve supervisory 

findings to FHFA’s satisfaction, and maintain an effective process to ensure that new 

findings are remediated by management in a timely fashion with appropriate board 

oversight.

Goal was achieved.

• Fair Lending: Maintain a sustainable, effective process for fair lending risk 

assessment, monitoring, and mitigation, and work with the FHFA’s Office of Fair 

Lending Oversight to prepare for transition to post-conservatorship fair lending 

supervision and oversight.

Goal was achieved.

Performance Goals FHFA's Summary of Performance

(1) Although the overall goal was achieved, we failed to meet one of our 2020 single-family affordable housing goals. FHFA notified us that we must prepare a 

housing plan describing the actions that we will take during 2022-2024 to improve our performance with respect to this missed goal. We met all other 2020 

single-family and multifamily affordable housing goals as well as our 2020 Duty to Serve goals. For additional information, see MD&A – Regulation and 

Supervision – Federal Housing Finance Agency – Affordable Housing Goals and MD&A – Regulation and Supervision – Federal Housing Finance 

Agency – Duty to Serve Underserved Markets Plan.

Executive Compensation Compensation Discussion and Analysis

FREDDIE MAC | 2021 Form 10-K 261
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, was subject to reduction based 

on the company's performance against the Corporate Scorecard goals and the NEO's individual performance. 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. Certain of the individual performance objectives for the eligible NEOs 

were either Conservatorship Scorecard objectives or Corporate Scorecard goals, or directly supported their achievement. 

No weightings were assigned to the Corporate Scorecard goals. As a result, it was necessary for the CHC Committee to use its 

judgment in determining the overall level of performance. In making its determination, the CHC Committee primarily considered 

the fact that almost all of the Corporate Scorecard goals were achieved or exceeded. The CHC Committee determined that, 

based on the company's performance against the Corporate Scorecard, no reduction should be applied due to company 

performance for this portion of At-Risk Deferred Salary.

The Board of Directors has adopted Corporate Scorecard goals for 2022 that align with our Strategic Plan.

The table below presents the Corporate Scorecard goals and the CHC Committee's assessment of our achievement against 

those goals.

Corporate Scorecard Goal Assessment of Performance

Financial Measures The company exceeded all elements of this goal with strong financial results and capital accretion.

Major Conservatorship Exit Milestones The company achieved or exceeded all elements of this goal, including executing on our capital 

management roadmap and preparing for resolution planning.

Major Remediation and Risk 

Reduction Milestones

The company achieved all elements of this goal, including remediation of significant issues, maturation of 

firm-wide risk management, and managing risk within established limits.

Technology The company exceeded all elements of this goal, including achieving capability milestones in information 

security.

Business Transformation The company achieved all elements of this goal through improvements in operational resiliency, payment 

modernization, information lifecycle management, and third party risk management.

People and Culture The company achieved or exceeded all elements of this goal, including the development of strategies and 

programs to support our corporate culture evolution.

Inclusion and Diversity The company achieved or exceeded all elements of this goal through the engagement of minority-, woman-, 

and disabled-owned businesses in capital markets and corporate transactions. 

Mission The company achieved all elements of this goal, including, based on preliminary information, meeting our 

2021 single-family and multifamily affordable housing goals, and developing strategies to address racial 

and social injustice in the housing market. 

The CHC Committee also assessed the individual performance of each eligible NEO. In making its assessments, the CHC 

Committee took into consideration input from Mr. DeVito as well as the company's Corporate Scorecard performance. In each 

case, the CHC Committee's determination was consistent with Mr. DeVito's recommendation. FHFA reviewed and approved 

the compensation associated with these determinations.

Each eligible NEO's individual performance is discussed below.

Executive Compensation Compensation Discussion and Analysis

FREDDIE MAC | 2021 Form 10-K 262
Michael T. Hutchins, President

Performance Highlights

n Effectively assumed leadership over Freddie Mac’s major divisions: Single-Family, Multifamily, Investments & Capital Markets, Enterprise Operations 

& Technology, and Administration.

n Provided strong leadership on all aspects of the company, including: developing the company’s business plan and financial budget; designing the 

Future of Work strategy; and other key priorities such as resolution planning and capital deliverables. 

n Led the Single-Family and Multifamily businesses to develop impactful equitable housing and sustainable homeownership plans as well as initiatives 

related to affordable housing and Duty to Serve goals. 

n Continued to enhance liquidity in the capital markets, level the playing field between small and large mortgage originators, and offer innovative credit 

risk transfer structures while managing to various risk/capital/volume limitations.

n Restructured the company’s operations and technology function to realign resources to enhance business synergies, increased operational efficiency 

with targeted investments for system modernization, and continued to strengthen operational risk management, including technology resiliency and 

cybersecurity capabilities.

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 reduction based on the 

company's performance against the Corporate Scorecard and his individual performance.

Christian M. Lown, Executive Vice President & Chief Financial Officer

Performance Highlights

n Led the advancement of several large financial projects, including: the transition to the Enterprise Regulatory Capital Framework; Dodd-Frank Stress 

Testing; and Resolution Planning.

n Continued focus on enhanced analytical and forecasting capabilities as well as improved financial analysis and budget planning for business insights 

and cost transparency.

n Continued focus on transformation of the enterprise supply chain organization and processes to achieve cost savings and improved efficiencies.

n Advanced operational and productivity initiatives, including: enhanced internal and external reporting; revised technology and operating processes; 

and accelerated development of corporate sustainability objectives.

n Strong leadership in the ongoing development of the Finance division staff with continued focus on expanding hiring pipelines and skill sets needed 

for future organizational success as well as ongoing job rotation.

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 reduction based on the 

company's performance against the Corporate Scorecard and his individual performance.

Donna M. Corley, Executive Vice President - Single-Family Business

Performance Highlights

n Led the continued strong financial performance of the Single-Family business, with focus on capital management, managing risks, identifying growth 

opportunities, and innovation.

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, enhancing fair lending techniques, and developing equitable and sustainable housing plans.

n Continued to elevate operational capabilities to provide a more efficient experience for our customers with a focus on continuously improving 

technology, managing operational risks, and improving business resiliency.

n Strong leadership in the ongoing support and development of staff of the Single-Family business with enhanced focus on organizational realignment 

of resources, expanded hiring pipelines, and prioritization of skill sets needed for current and future organizational success.

At-Risk Deferred Salary (Corporate Scorecard/Individual) Funding Decision

The CHC Committee determined that Ms. Corley should receive 97.5% of her At-Risk Deferred Salary that was subject to reduction based on the 

company's performance against the Corporate Scorecard and her individual performance.

Anil D. Hinduja, Executive Vice President - Chief Risk Officer

Performance Highlights

n Advanced the company’s risk management framework incorporating regulatory expectations. 

n Aligned the risk appetite framework with the Enterprise Regulatory Capital Framework while enhancing risk measurement. 

n Partnered with other leaders to develop a common approach to risk calibration for non-financial risks. 

n Strengthened capabilities within the independent risk function through continuing build-out of risk, compliance, and control capabilities. 

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 reduction based on the 

company's performance against the Corporate Scorecard and his individual performance.

Executive Compensation Compensation Discussion and Analysis

FREDDIE MAC | 2021 Form 10-K 263
Jerry Weiss, Executive Vice President - Chief Administrative Officer & Interim General Counsel

Performance Highlights

n Outstanding leadership performing dual senior executive-level roles as both Chief Administrative Officer and Interim General Counsel for almost the 

entire year.

n Provided guidance to the Board and senior management on a wide range of legal and governance issues, including: a variety of complex businessline initiatives; the transition in leadership of Freddie Mac; the development of equitable and sustainable housing plans; resolution planning; and 

implementation of initiatives to reduce risk and increase efficiency to support new products.

n Played a key role in partnering with the CEO and the Board in developing the company’s updated strategic plan and related corporate priorities and 

objectives.

n Partnered with other leaders to continue providing support to meet the evolving needs of the company, including: addressing FHFA’s regulatory and 

conservatorship initiatives; advancing housing and economic research and internal and external communications, and improving employees' on-site 

experience.

n Led the company’s Future of Work strategy and partnered with other leaders on the Return-to-Office planning to help grow our talent and support our 

staff in a dynamic environment due to COVID-19.

n Provided strong leadership in the ongoing development of the staff of the Legal and Administrative divisions with continued focus on leadership and 

management skills development. 

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 reduction based on the 

company's performance against the Corporate Scorecard and his individual performance.

Executive Compensation Compensation Discussion and Analysis

FREDDIE MAC | 2021 Form 10-K 264
2021 Deferred Salary

The following chart reports the actual amounts of 2021 Deferred Salary for each NEO, other than Messrs. Brickman, DeVito, 

and Grier who were not eligible for 2021 Deferred Salary. The actual amount earned in each calendar quarter is scheduled to be 

paid on the last pay date of the corresponding calendar quarter in 2022, except for Mr. Lown, whose At-Risk Deferred Salary 

earned in 2021 will be paid on the last pay date of the corresponding calendar quarter in 2023. See Executive 

Compensation — CD&A — Overview of Executive Management Compensation Program for additional information.

Table 63 - 2021 Deferred Salary

   2021 Actual Deferred Salary

Fixed

At-Risk

Named Executive 

Officer

Conservatorship 

Scorecard

Corporate 

Scorecard/ 

Individual

Mr. Hutchins $1,675,000 $448,500 $487,500

Mr. Lown 1,500,000 414,000 450,000 

Ms. Corley 1,176,923 350,308 371,250 

Mr. Hinduja 1,220,000 358,800 390,000 

Mr. Weiss 975,000 310,500 337,500 

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 2021 Target TDC for 

Eligible NEOs — 2021 Target TDC for 2021 Target TDC amounts for our eligible NEOs. Other than the agreements described 

below, there are no remaining 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.

We entered into memorandum agreements with Messrs. Grier and DeVito, in connection with their hiring as our Interim CEO 

and CEO, respectively. Consistent with the Equity in Government Compensation Act of 2015, the agreements provide for direct 

compensation consisting solely of Base Salary at the rate of $600,000 per year, pro-rated for their period of service in 2021. In 

addition, the agreements provide that Messrs. Grier and DeVito are eligible to participate in all employee benefit plans offered 

to Freddie Mac’s other executive officers. See Executive Compensation — CD&A — CEO Compensation for more 

information. In connection with Mr. DeVito's appointment as our CEO, he was offered relocation benefits to reimburse him for 

his costs associated with relocating to the Washington, D.C. area. These relocation benefits are subject to repayment if, within 

two years of receiving them, Mr. DeVito terminates his employment with us for any reason or Freddie Mac terminates his 

employment due to the occurrence of forfeiture events relating to material inaccurate information, termination for felony 

conviction or willful misconduct, gross neglect or gross misconduct, or violation of a post termination non-competition 

covenant. 

We entered into a letter agreement with Mr. Lown in connection with his employment as our EVP & Chief Financial Officer. The 

terms of Mr. Lown's agreement provided him with an annual Target TDC opportunity of $3,000,000, consisting of Base Salary 

of $600,000, Fixed Deferred Salary of $1,500,000, and At-Risk Deferred Salary of $900,000, as well as the opportunity to 

participate in all employee benefit plans offered to our executive officers pursuant to the terms of those plans, and certain 

relocation benefits. The letter agreement with Mr. Lown also provides for a cash sign-on award of $1,275,000 in recognition of 

forfeited compensation at his previous employer, payable in three installments: $475,000 was paid in February 2021; $475,000 

will be paid in February 2022; and $325,000 will be paid in February 2023. If Mr. Lown is not an employee of Freddie Mac on an 

installment payment date due to his voluntary resignation or if Freddie Mac has terminated his employment due to the 

occurrence of any of the Forfeiture Events described in the Recapture and Forfeiture Agreement, the installment will be 

forfeited. Each installment will be subject to repayment in the event that, prior to the first anniversary of an installment payment 

date, Mr. Lown voluntarily resigns from his employment with Freddie Mac for any reason or Freddie Mac terminates his 

employment due to the occurrence of any of the Forfeiture Events described in the Recapture and Forfeiture Agreement.

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.

Executive Compensation Compensation Discussion and Analysis

FREDDIE MAC | 2021 Form 10-K 265
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 — 2021 

Compensation Information for NEOs — Potential Payments Upon Termination of Employment.

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 12 months 

immediately following termination of employment, regardless of whether the executive officer's employment is terminated by 

the executive officer, by us, or by mutual agreement. During this period, each NEO agrees not to solicit or recruit any of our 

managerial employees. 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. Messrs. 

Brickman, DeVito, and Grier are or were not eligible to participate in the EMCP due to their service as our CEO or Interim CEO 

and, as such, have not 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. 

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. 

Violation of a Post-Termination Non-Competition Covenant

Executive Compensation Compensation Discussion and Analysis

FREDDIE MAC | 2021 Form 10-K 266
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), each an indemnitee. The form of agreement provides that indemnification rights under the agreement would terminate if 

and when the executive officer remained with 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. Similar 

indemnification rights would continue to be available to such executive officers under the Bylaws going forward. The 

indemnification agreements provide 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 only perquisite provided to our NEOs during 2021 was reimbursement for assistance with personal 

financial planning, tax planning, and/or estate planning, up to an annual maximum benefit of $4,500, with an additional $2,500 

allowance provided in the first year in which an NEO becomes eligible for the benefit. In 2022, we discontinued this perquisite.

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 

participant's Base Salary.

Executive Compensation Compensation Discussion and Analysis

FREDDIE MAC | 2021 Form 10-K 267
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." Messrs. Brickman and Weiss and Ms. Corley were the only NEOs who were eligible for the SERP II Benefit in 

2021.

For additional information regarding these benefits, see Executive Compensation — 2021 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.

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, special incentive plans, and merit increase pool funding.

n FHFA Directives. FHFA, as Conservator, has directed us to:

l	 Limit base salaries for all employees to no more than $600,000;

Executive Compensation Compensation Discussion and Analysis

FREDDIE MAC | 2021 Form 10-K 268
l	 Obtain FHFA’s decision before entering into any compensation arrangement for a new hire where the proposed Target 

TDC is $600,000 or above;

l	 Obtain FHFA’s decision before increasing the Total TDC of any employee where the proposed Target TDC is $600,000 

or above;

l	 Increase the mandatory deferral period for At-Risk Deferred Salary as described under Executive Compensation — 

CD&A — Overview of Executive Management Compensation Program — Elements of Target TDC; and

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.

n FHFA Guidance. FHFA, as Conservator, has instructed us to benchmark to the lower end of the range of market 

compensation for both new executive hires and compensation increase requests for existing executives, unless FHFA has 

granted an exception.

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:

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 Expenses 

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.

Executive Compensation Compensation Discussion and Analysis

FREDDIE MAC | 2021 Form 10-K 269
Compensation and Human Capital Committee Report

The Compensation and Human Capital Committee has reviewed and discussed the Compensation Discussion and 

Analysis with management and, based on such review and discussion, has recommended to the Board of Directors that the 

Compensation Discussion and Analysis be included in this Form 10-K.

This report is respectfully submitted by the members of the Compensation and Human Capital Committee.

Lance F. Drummond, Chair

Mark H. Bloom

Aleem Gillani

Christopher E. Herbert

Alberto G. Musalem

Executive Compensation Compensation Discussion and Analysis

FREDDIE MAC | 2021 Form 10-K 270
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 was conducted by members of our ERM and human resources 

divisions, and included an evaluation of: 

n The types of compensation offered (including fixed, variable, and deferred);

n Eligibility for participation in compensation programs;

n Compensation program design and governance;

n The process for establishing performance objectives; and

n Processes and program approvals for our compensation programs.

The assessment was discussed with the CHC Committee in January 2022. 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 the programs and 

practices would not be reasonably likely to have a material adverse effect on Freddie Mac.

Executive Compensation Compensation and Risk

FREDDIE MAC | 2021 Form 10-K 271
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 2021, we used the 2021 median employee who we identified as of December 31, 2021 using payroll data as 

reported on Form W-2, Box 5 and annualizing it for individuals that had not worked the full year. Except as noted below, we 

calculated that employee's total annual compensation for 2021 using the same method required for calculating total annual 

compensation for our CEO (and other NEOs) for purposes of Table 65 - 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 64 - CEO Pay Ratio

CEO Pay Ratio

Employee Total Compensation Ratio 

Michael J. DeVito (CEO) $687,647(1)

4.5 to 1

Median Employee 154,483(2)

(1) The total compensation of $687,647 for Mr. DeVito includes his annualized base salary and relocation benefits. See Executive Compensation — CD&A —CEO 

Compensation and Executive Compensation — 2021 Compensation Information for NEOs — Summary Compensation Table for further discussion.

(2) Reflects actual 2021 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 2021 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 | 2021 Form 10-K 272
2021 COMPENSATION INFORMATION FOR NEOs

The following sections set forth compensation information for our NEOs: Mr. Brickman (who served as CEO until January 8, 

2021); Mr. Hutchins (who served as our Principal Executive Officer from January 9, 2021 to March 14, 2021); Mr. Grier (who 

served as Interim CEO from March 15, 2021 to May 31, 2021); Mr. DeVito (who has served as CEO since June 1, 2021); Mr. 

Lown (who has served as our CFO since June 15, 2020); and the three other most highly compensated executive officers who 

were serving as executive officers as of December 31, 2021. 

Summary Compensation Table 

Table 65 - Compensation Summary 

   Salary

Bonus(3)

Non-Equity 

Incentive Plan 

Compensation(4)

All Other 

Compensation(5) Total

Named Executive Officer Year

Earned During 

Year(1) Deferred(2)

Michael J. DeVito(6) 2021 $355,385 $— $— $— $87,647 $443,032 

Chief Executive Officer

Michael T. Hutchins 2021 600,000 1,675,000 — 936,468 102,838 3,314,306 

President 2020 623,077 1,675,000 — 884,476 119,239 3,301,792 

2019 600,000 1,675,000 — 913,735 123,634 3,312,369 

Christian M. Lown(6) 2021 600,000 1,500,000 475,000 864,864 116,682 3,556,546 

EVP & Chief Financial Officer 2020 334,616 815,934 — 447,610 49,096 1,647,256 

Donna M. Corley(6) 2021 600,000 1,176,923 — 721,918 102,588 2,601,429 

EVP - Single-Family Business

Anil D. Hinduja 2021 600,000 1,220,000 — 749,174 102,610 2,671,784 

EVP - Chief Risk Officer 2020 623,077 1,220,000 — 707,581 115,622 2,666,280 

2019 600,000 1,220,000 — 730,988 117,651 2,668,639

Jerry Weiss(6) 2021 600,000 975,000 — 648,324 102,488 2,325,812 

EVP - Chief Administrative 

Officer & Interim General 

Counsel

Mark B. Grier(6) 2021 129,231 — — — — 129,231 

Former Interim Chief 

Executive Officer

David M. Brickman(7) 2021 11,538 — — — 981 12,519 

Former Chief Executive Officer 2020 600,000 — — — 102,000 702,000 

2019 600,000 837,500 — 456,867 112,621 2,006,988 

(1) Amounts shown in this sub-column consist of base salary paid during the year on a bi-weekly basis. Calendar year 2020 contained 27 bi-weekly pay periods, rather 

than the usual 26 bi-weekly pay periods. This additional pay period occurs approximately once every 11 years because we pay on a bi-weekly basis. As a result of 

the additional bi-weekly pay period in 2020, salary amounts for 2020 for Messrs. Hinduja, Hutchins, and Lown are slightly higher than the annual base salary rate. 

The 2020 base salary rate for each executive officer was as follows: for Mr. Hutchins: $600,000; for Mr. Lown: $600,000; and for Mr. Hinduja: $600,000. In 

February 2021, FHFA requested that Mr. Brickman repay the amount he received for the 27th pay period, and Mr. Brickman voluntarily agreed to do so.

(2) Amounts shown reflect Fixed Deferred Salary earned during the year. The interest rate for Fixed Deferred Salary earned during 2021, 2020, and 2019 was 0.05% 

0.795%, and 1.315%, 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 2021, 2020, and 2019 is included in All Other Compensation.

(3) Amount shown reflects a cash sign-on payment made to Mr. Lown in connection with his hiring. 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 2021, 2020, and 2019 was the same as noted for the interest rate for the Fixed Deferred Salary. Except in the case of Mr. Lown, At-Risk 

Deferred Salary earned during each quarter will be paid in cash on the last pay date of the corresponding quarter in the following year. For Mr. Lown, At-Risk 

Deferred Salary earned during each quarter will be paid in cash on the last pay date of the corresponding quarter in the second calendar year. See Executive 

Executive Compensation 2021 Compensation Information for NEOs

FREDDIE MAC | 2021 Form 10-K 273
Compensation — CD&A — Determination of 2021 At-Risk Deferred Salary and Executive Compensation — CD&A — Executive Management 

Compensation Program Overview.

(5) Amounts for 2021 reflect: (i) contributions made under our tax-qualified Thrift/401(k) Plan for plan year 2021; (ii) accruals earned pursuant to the SERP Benefit for 

plan year 2021; (iii) interest on Fixed Deferred Salary earned during 2020; and (iv) reimbursement of certain relocation expenses incurred by Messrs. DeVito and 

Lown and reimbursement of financial planning expenses incurred by Mr. Lown. The amounts for 2021 are as follows: 

Named Executive Officer Thrift/401(k) Plan

Contributions

SERP Benefit

Accruals

Interest on Fixed 

Deferred Salary

Relocation and 

Financial Planning 

Expenses

Mr. DeVito $— $— $— $87,647

Mr. Hutchins 24,650 77,350 838 — 

Mr. Lown 9,419 49,427 750 57,086 

Ms. Corley 24,650 77,350 588 — 

Mr. Hinduja 24,650 77,350 610 — 

Mr. Weiss 24,650 77,350 488 — 

Mr. Grier — — — — 

Mr. Brickman 981 — — — 

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 — 2021 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 Mr. DeVito, who, in 2021, was reimbursed for relocation expenses, as described above, and Mr. Lown who was reimbursed $56,496 in 

relocation expenses and $590 in financial planning services. Therefore, in accordance with SEC rules, amounts shown under "All Other Compensation" do not 

include perquisites, other than for Messrs. DeVito and Lown.

(6) Pursuant to SEC reporting requirements, because Mr. Lown first became an NEO in 2020, information for 2019 is not required to be disclosed. Similarly, because 

Messrs. DeVito, Weiss, and Grier and Ms. Corley first became NEOs in 2021, information for 2019 and 2020 is not required to be disclosed.

(7) Mr. Brickman resigned effective January 8, 2021. Mr. Brickman became CEO in July 2019, and, during his tenure as CEO, his compensation consisted solely of an 

annual Base Salary of $600,000. Prior to his service as CEO, he participated in the EMCP and was eligible for Deferred Salary.

Grants of Plan-Based Awards

The following table contains information concerning grants of plan-based awards to each of the NEOs during 2021. The 

Purchase Agreement prohibits us from issuing equity securities without Treasury's prior written consent. No stock awards were 

granted during 2021. 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 2021 Target TDC for 

NEOs, — Determination of 2021 At-Risk Deferred Salary, and — 2021 Deferred Salary.

Executive Compensation 2021 Compensation Information for NEOs

FREDDIE MAC | 2021 Form 10-K 274
Table 66 - 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

Mr. Hutchins Conservatorship Scorecard — $487,500

Corporate Scorecard/Individual — 487,500 

Total — 975,000 

Mr. Lown Conservatorship Scorecard — 450,000 

Corporate Scorecard/Individual — 450,000 

Total — 900,000 

Ms. Corley Conservatorship Scorecard — 380,769 

Corporate Scorecard/Individual — 380,769 

Total — 761,538 

Mr. Hinduja Conservatorship Scorecard — 390,000 

Corporate Scorecard/Individual — 390,000 

Total — 780,000 

Mr. Weiss Conservatorship Scorecard — 337,500 

Corporate Scorecard/Individual — 337,500 

Total — 675,000 

(1) Messrs. Brickman, DeVito, and Grier were not eligible to receive Deferred Salary in 2021, and therefore are not included in this table.

(2) The amounts reported reflect At-Risk Deferred Salary granted in 2021 which is subject to reduction based on: (i) corporate performance against the Conservatorship 

Scorecard; and (ii) 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 2021 are reported in the Non-Equity Incentive Plan Compensation column of Table 65 - Summary 

Compensation Table.

Outstanding Equity Awards at Fiscal Year-End

None of the NEOs had unexercised options or unvested RSUs as of December 31, 2021.

Option Exercises and Stock Vested

None of the NEOs exercised options or had RSUs vest during 2021.

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.

Nonqualified Deferred Compensation

Non-qualified 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, non-qualified 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 these plans were 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.

Executive Compensation 2021 Compensation Information for NEOs

FREDDIE MAC | 2021 Form 10-K 275
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 4 to Table 65 - 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. 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 contributions, earnings, withdrawals and distributions, and accumulated balances under the 

SERP and SERP II Benefits for each NEO.

Table 67 - SERP and SERP II Benefits 

Named Executive 

Officer

Executive

Contribution in

Last FY ($)(1)

Freddie Mac

Accruals in

Last FY ($)(2)

Aggregate

Earnings in

Last FY ($)(3)

Aggregate

Withdrawals/

Distributions ($)

Balance at

Last FYE ($)(4)

Mr. DeVito(5)

SERP Benefit $— $— $— $— $— 

Mr. Hutchins

SERP Benefit — 77,350 99,043 — 740,207 

Mr. Lown

SERP Benefit — 49,427 2,073 — 51,500 

Ms. Corley

SERP Benefit — 77,350 154,676 — 1,334,717

SERP II Benefit — — 18 — 171,378

Mr. Hinduja

SERP Benefit — 77,350 91,387 — 620,423

Mr. Weiss

SERP Benefit — 77,350 241,010 — 2,095,066 

SERP II Benefit — — 37,819 — 533,014 

Mr. Grier(5)

SERP Benefit — — — — —

Mr. Brickman

SERP Benefit — — 232,362 — 1,218,661(6)

SERP II Benefit — — 111,658 — 531,728

(1) The SERP and SERP II do not allow for employee contributions.

(2) Amounts reported reflect accruals under the SERP during 2021, including the 2.5% contribution accruals which will be allocated to NEO accounts in 2022. These 

amounts are also reported in the "All Other Compensation" column in Table 65 - Summary Compensation Table.

(3) Amounts reported represent the total interest and other earnings credited to each NEO under the SERP and SERP II Benefits.

(4) Amounts reported reflect the accumulated balances under the SERP and SERP II Benefits for each NEO and include the plan year 2021 accruals noted in footnote 2 

above. All NEOs are fully vested in their SERP and, for Messrs. Brickman and Weiss, and Ms. Corley, their SERP II Benefit account balances. 

Executive Compensation 2021 Compensation Information for NEOs

FREDDIE MAC | 2021 Form 10-K 276
The following 2020 SERP Benefit accrual amounts were reported in the "All Other Compensation" column in the 2020 Summary Compensation Table as 

compensation for each NEO for whom accruals were made during 2020: Mr. Hutchins: $81,698, Mr. Hinduja: $81,698 and Mr. Brickman: $77,775. See our Annual 

Report on Form 10-K filed on February 13, 2020. 

(5) Mr. DeVito was not eligible for the SERP Benefit in 2021 because he had not satisfied the one-year service requirement. Mr. Grier also did not satisfy the one-year 

service requirement during his service as our Interim CEO. 

(6) Amount reported reflects adjustments made to Mr. Brickman's SERP II balance related to tax and other withholdings.

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.

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, 2021. 

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, 2021. 

Executive Compensation 2021 Compensation Information for NEOs

FREDDIE MAC | 2021 Form 10-K 277
Table 68 - Compensation and Benefits if NEO Terminated Employment as of December 31, 2021 

Named Executive Officer(1) Death Disability Retirement(2)

All Other Not

For Cause

Terminations(3)

Michael T. Hutchins

Deferred Salary:

Fixed $1,675,000 $1,675,000 $1,675,000 

At Risk-Conservatorship Scorecard(4) 487,500 487,500 448,500 

At Risk-Corporate Scorecard/Individual(5) 487,500 487,500 487,500 

Interest on Deferred Salary(6) 827 1,325 1,306 

Total $2,650,827 $2,651,325 $2,612,306 

Christian M. Lown

Deferred Salary:

Fixed $1,500,000 $1,500,000 $1,110,000 

At Risk-Conservatorship Scorecard(4)(7) 450,000 450,000 414,000 

At Risk-Corporate Scorecard/Individual(5)(7) 450,000 450,000 450,000 

Interest on Deferred Salary(6) 749 1,650 1,419 

Total $2,400,749 $2,401,650 $1,975,419 

Donna M. Corley

Deferred Salary:

Fixed $1,176,923 $1,176,923 $870,923 

At Risk-Conservatorship Scorecard(4) 380,769 380,769 350,308 

At Risk-Corporate Scorecard/Individual(5) 380,769 380,769 371,250 

Interest on Deferred Salary(6) 544 969 796 

Total $1,939,005 $1,939,430 $1,593,277 

Anil D. Hinduja

Deferred Salary:

Fixed $1,220,000 $1,220,000 $902,800 

At Risk-Conservatorship Scorecard(4) 390,000 390,000 358,800 

At Risk-Corporate Scorecard/Individual(5) 390,000 390,000 390,000 

Interest on Deferred Salary(6) 624 1,000 826 

Total $2,000,624 $2,001,000 $1,652,426 

Jerry Weiss

Deferred Salary:

Fixed $975,000 $975,000 $975,000 

At Risk-Conservatorship Scorecard(4) 337,500 337,500 310,500 

At Risk-Corporate Scorecard/Individual(5) 337,500 337,500 337,500 

Interest on Deferred Salary(6) 515 825 812 

Total $1,650,515 $1,650,825 $1,623,812 

(1) Messrs. Brickman, DeVito, and Grier are excluded from this table because they were not eligible for any additional compensation in connection with a termination of 

employment.

(2) Messrs. Hutchins and Weiss are the only retirement-eligible NEOs under the EMCP.

(3) All Other Not For Cause Terminations refer to (i) voluntary terminations other than for retirement; or (ii) involuntary terminations other than for cause. No amount is 

shown for Messrs. Hutchins and Weiss because they are retirement eligible. In accordance with early termination provisions in the EMCP, the amounts disclosed for 

Deferred Salary: Fixed for all other NEOs have been reduced by 26% to reflect a December 31, 2021 termination event. 

Executive Compensation 2021 Compensation Information for NEOs

FREDDIE MAC | 2021 Form 10-K 278
(4) The amounts reported for Deferred Salary: At Risk-Conservatorship Scorecard reflect the funding level determined by FHFA with respect to performance against the 

2021 Conservatorship Scorecard. 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 Deferred Salary: At Risk-Corporate Scorecard/Individual in the Retirement and All Other Not For Cause Terminations columns reflect the 

assessment of 2021 performance approved by the CHC Committee and FHFA. For death or disability, the provisions are the same as for the amounts reported for 

Deferred Salary: At Risk-Conservatorship Scorecard.

(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, 2021. For Mr. Lown, 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 for executive 

officers hired on or after December 31, 2019.

(7) The amounts reported for At-Risk Deferred Salary reflect amounts earned by Mr. Lown in 2021 and do not include At-Risk Deferred Salary earned by Mr. Lown in 

2020 that, pursuant to the EMCP, we will pay to him in 2022. 

 

Executive Compensation 2021 Compensation Information for NEOs

FREDDIE MAC | 2021 Form 10-K 279
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 table shows the beneficial ownership of our common stock as of 

February 9, 2022 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 percentage ownership of that person. As of February 9, 2022, 

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. 

Stock Ownership By Directors and Executive Officers

Table 69 - 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. 9, 2022

Total Common Stock 

Beneficially Owned

Mark H. Bloom Director — — — 

Kathleen L. Casey Director — — — 

Lance F. Drummond Director — — — 

Aleem Gillani Director — — — 

Mark B. Grier Director and Former Interim Chief Executive Officer — — — 

Christopher E. Herbert Director — — — 

Grace A. Huebscher Director — — — 

Sara Mathew Director — — — 

Allan P. Merrill Director — — — 

Alberto G. Musalem Director — — — 

Michael J. DeVito Chief Executive Officer and Director — — — 

Michael T. Hutchins President — — — 

Christian M. Lown EVP & Chief Financial Officer — 

Donna M. Corley EVP - Single-Family Business 5,998 — 5,998(2)

Anil D. Hinduja EVP - Chief Risk Officer — — — 

Jerry Weiss EVP - Chief Administrative Officer & Interim 

General Counsel — — — 

David M. Brickman(3) Former Chief Executive Officer 3,395 — 3,395(2)

All directors and executive officers as a group (19 persons)(4) 9,393 — 9,393(2)

(1) Includes shares of stock beneficially owned as of February 9, 2022.

(2) Represents shares of stock beneficially owned prior to the company's entry into conservatorship.

(3) Mr. Brickman resigned from the company effective January 8, 2021.

(4) This table does not include Messrs. Chavers and Hayden who will join the Board of Directors effective February 15, 2022. Neither Mr. Chavers nor Mr. Hayden 

beneficially own any shares of our stock. 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

FREDDIE MAC | 2021 Form 10-K 280
Stock Ownership by Greater-Than 5% Holders

Table 70 - 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 a 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.

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, 2021. Prior to conservatorship, stockholders approved the Employee 

Stock Purchase Plan, the 2004 Stock Compensation Plan, and 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 | 2021 Form 10-K 281
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 our 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 a 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 2021, 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 12. 

We are the compliance agent for Treasury for certain foreclosure avoidance activities under HAMP. Among other duties, as the 

program compliance agent, we conduct examinations and review servicer compliance with the published requirements for the 

program.

FHFA, as Conservator, approved the Purchase Agreement and our role as compliance agent in the MHA Program and the 

Memorandum of Understanding with Treasury, FHFA, and Fannie Mae under the HFA Initiative. FHFA also instructed us to 

implement a $5,000 principal reduction incentive under HAMP in which Treasury will pay the incentive for borrowers with 

certain of our HAMP modified loans. The remaining transactions described in the sections referenced above did not require 

review and approval under any of our policies and procedures relating to transactions with related persons.

Certain Relationships and Related Transactions

FREDDIE MAC | 2021 Form 10-K 282
TRANSACTIONS WITH INSTITUTIONS RELATED TO 

EXECUTIVE OFFICERS

Mr. Lown’s brother, Jeffrey Lown, serves as the Chief Executive Officer 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 34,000 loans with a UPB as of December 31, 

2021 of $7.9 billion. These transactions are conducted in the ordinary course and on an arm's length basis. 

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 | 2021 Form 10-K 283
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 2021 and 2020.

Auditor Fees(1)

Table 71 - Auditor Fees

(In thousands) 2021 2020

Audit Fees(2) $22,744 $20,550 

Audit-Related Fees(3) 7,530 7,180 

Tax Fees(4) 2,432 48 

All Other Fees(5) 10 10 

Total $32,716 $27,788 

(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: (i) fees for the performance of certain agreed-upon procedures regarding aspects of compliance with the Purchase Agreement covenants; 

(ii) attestation-related services on debt offerings; (iii) compliance evaluation of the minimum servicing standards as set forth in the Uniform Single Attestation 

Program for Mortgage Bankers; (iv) fees related to accounting policy consultations; and (v) 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. 

(4) The tax fees related to non-audit tax compliance and consulting services arising from research and development tax credits and advice and recommendations 

related to tax planning and reporting matters.

(5) All other fees include: (i) our subscription to a web-based suite of human resources benchmark data; and (ii) 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 risk assessment, scope, and audit 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 preapprove 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 preapproval 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 

Principal Accounting Fees and Services

FREDDIE MAC | 2021 Form 10-K 284
the authority to address requests to pre-approve certain additional audit and non-audit services to be performed by the 

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 2021 and 2020.

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 and concurring/reviewing 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

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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 296.

Exhibits and Financial Statement Schedules

FREDDIE MAC | 2021 Form 10-K 286
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 

protection for certain specified credit events that are typically allocated to the non-issued notional credit risk positions of a 

STACR transaction. We also enter into other ACIS transactions that provide credit protection for certain specified credit 

events on loans not included in a reference pool created for a STACR transaction, 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.

n	 Agency securities - Generally refers to mortgage-related securities issued or guaranteed by the GSEs or government 

agencies.

n	 Alt-A loan - Although there is no universally accepted definition of Alt-A, many mortgage market participants have 

classified single-family loans as Alt-A if these loans have credit characteristics that range between their prime and 

subprime categories, if these loans are underwritten with lower or alternative income or asset documentation requirements 

compared to a full documentation loan, or both. We categorize loans in our single-family mortgage portfolio as Alt-A if the 

lender that delivered them to us classified the loans as Alt-A, or if the loans had reduced documentation requirements as 

well as a combination of certain credit characteristics and expected performance characteristics at acquisition which, when 

compared to full documentation loans in our portfolio, indicate that the loan should be classified as Alt-A. In the event we 

purchase a refinance loan and the original loan had been previously identified as Alt-A, such refinance loan may no longer 

be categorized as an Alt-A loan because the refinance loan is not identified by the servicer as an Alt-A loan. We categorize 

our investments in non-agency mortgage-related securities as Alt-A if the securities were identified as such based on 

information provided to us when we entered into these transactions.

n	 AMI - Area Median Income.

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	 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	 CCF - Conservatorship Capital Framework - An economic capital system with detailed formulae provided by FHFA to 

evaluate and manage our financial risk and to make economic business decisions while in conservatorship.

n	 CCO - Chief Compliance Officer.

n	 CD&A - Compensation Discussion and Analysis.

n	 CDC - Centers for Disease Control and Prevention

n	 CECL - The Current Expected Credit Losses impairment model as defined by FASB ASC Topic 326, Financial Instruments 

- Credit Losses, pursuant to ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit 

Losses on Financial Instruments; ASU 2019-04, Codification Improvements to Financial Instruments - Credit Losses (Topic 

326); ASU 2019-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial 

Instruments; and ASU 2019-11, Codification Improvements to Financial Instruments - Credit Losses (Topic 326).

n	 CEO - Chief Executive Officer.

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 

Glossary

FREDDIE MAC | 2021 Form 10-K 287
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.

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	 Comprehensive income (loss) - Consists of net income (loss) plus other comprehensive income (loss).

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 losses - Consists of net charge-offs and REO operations (income) expense.

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 - Credit score data is based on FICO scores, a credit scoring system developed by Fair, Isaac and Co. FICO 

scores are currently the most commonly used credit scores. 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	 CSP - Common Securitization Platform.

n Current LTV Ratio or CLTV - The current LTV ratios are management estimates, which are 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. 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.

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	 DEI - Diversity, Equity, and Inclusion. 

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 singlefamily 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 

Glossary

FREDDIE MAC | 2021 Form 10-K 288
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	 Dollar roll transactions - Transactions whereby we enter into an agreement to sell and subsequently repurchase (or 

purchase and subsequently resell) agency securities.

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.

n	 DTI - Debt-to-income.

n	 Duration - A measure of a financial instrument's price sensitivity to changes in interest rates.

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	 DUS - Fannie Mae's Delegated Underwriting and Servicing program.

n	 EMCP - Executive Management Compensation Program.

n	 Enterprises - Freddie Mac and Fannie Mae.

n	 ERC - Enterprise Risk Committee.

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.

n	 ERM - Enterprise Risk Management.

n	 ERP - Enterprise Risk Policy - The ERP sets forth the core components of the enterprise risk framework that defines how 

we identify, assess, manage, control, and report on risks.

n	 ESG - Environmental, Social, and Governance.

n	 EVP - Executive Vice President.

n	 Exchange Act - Securities Exchange Act of 1934, as amended.

n	 Fannie Mae - Federal National Mortgage Association.

n	 FASB - Financial Accounting Standards Board.

n	 Federal Reserve - Board of Governors of the Federal Reserve System.

n FEMA - Federal Emergency Management Agency.

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	 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 a number of 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	 Freddie Mac mortgage-related securities - Securities we issue and guarantee that are backed by mortgages.

n	 Front-end coverage type - Applies to transactions in which the credit risk transfer occurs prior to, or simultaneously with, 

our purchase of the loan.

n	 FSOC - Financial Stability Oversight Council.

Glossary

FREDDIE MAC | 2021 Form 10-K 289
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 

underlying loans, and initial upfront payments, such as credit fees.

n	 Guidelines - Corporate Governance Guidelines, as revised.

n	 HAMP - Home Affordable Modification Program - Refers to the effort under the MHA Program whereby the 

U.S. government, Freddie Mac, and Fannie Mae committed funds to help eligible homeowners avoid foreclosure and keep 

their homes through loan modifications. HAMP ended in December 2016.

n	 HERA - Housing and Economic Recovery Act.

n	 HFA - State or local Housing Finance Agency.

n	 HUD - U.S. Department of Housing and Urban Development. 

n	 Implied volatility - A measurement of how the value of a financial instrument changes due to changes in the market's 

expectation of potential changes in future interest rates. A decrease in implied volatility generally increases the estimated 

fair value of our mortgage-related assets and decreases the estimated fair value of our callable debt and option-based 

derivatives, while an increase in implied volatility generally has the opposite effect.

n	 Initial margin - The collateral that we post with a derivatives clearinghouse in order to do business with such 

clearinghouse. The amount of initial margin varies over time.

n	 Interest-only loan - A loan that allows the borrower to pay only interest (either fixed-rate or adjustable-rate) for a fixed 

period of time before payments of principal begin. After the interest-only period, the borrower may choose to refinance the 

loan, pay off the principal balance in total, or pay the scheduled principal and interest payment due on the loan.

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	 K Certificates - Structured pass-through certificates backed primarily by recently originated multifamily loans purchased 

by Freddie Mac.

n	 Legislated 10 basis point fee - 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 

Glossary

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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, generally excluding any second-lien loans (unless we own or guarantee the second lien).

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 LIBOR or SOFR. 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	 Mortgage assets - Refers to both loans and mortgage-related securities we hold in our mortgage-related investments 

portfolio.

n	 MSA - Metropolitan Statistical Area.

n	 Multifamily loan - A loan secured by a property with five or more residential rental units or by a manufactured housing 

community.

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	 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 (deficit) - The amount by which our total assets exceed (or are less than) our total liabilities as reflected on our 

consolidated balance sheets prepared in conformity with GAAP.

n	 Net worth sweep dividend requirement, 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 increased further to the 

amount of adjusted total capital necessary to meet capital requirements and buffers set forth in the ERCF in 1Q 2021 

pursuant to the January 2021 Letter Agreement. 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	 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., LIBOR, 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.

Glossary

FREDDIE MAC | 2021 Form 10-K 291
n	 Optigo® - Freddie Mac's Multifamily lender network and loan offerings.

n	 Option ARM loan - Loans that permit a variety of repayment options, including minimum, interest-only, fully amortizing 30-

year, and fully amortizing 15-year payments. The minimum payment alternative for option ARM loans allows the borrower 

to make monthly payments that may be less than the interest accrued for the period. The unpaid interest is added to the 

principal balance of the loan, known as negative amortization. For our non-agency mortgage-related securities that are 

backed by option ARM loans, we categorize securities as option ARM if the securities were identified as such based on 

information provided to us when we entered into these transactions. We have not identified option ARM securities as either 

subprime or Alt-A securities.

n	 Original LTV ratio - A credit measure for loans, calculated as the UPB of the loan divided by the lesser of the appraised 

value of the property at the time of loan origination or the borrower's purchase price. Second liens not owned or 

guaranteed by us are excluded from the LTV ratio calculation. The existence of a second-lien loan reduces the borrower's 

equity in the home and, therefore, can increase the risk of default and the amount of the gross loss if a default occurs.

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.

n	 PCs - Participation Certificates - Single-class pass-through securities that we issue and guarantee as part of a 

securitization transaction. Typically we purchase loans from sellers, place a pool of loans into a PC trust, and issue PCs 

from that trust. The PCs are generally transferred to the seller of the loans as consideration for the loans or are sold to 

third-party investors or retained by us if we purchased the loans for cash.

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	 Performing loan - A loan where the borrower is less than three months past due and is not in the process of foreclosure.

n	 PLBA - Prescribed leverage buffer amount.

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, and 

September 14, 2021.

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 nonparallel (PVS-YC) changes in SOFR.

n	 RCSA - Risk and Control Self-Assessment.

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 - An 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	 RSU - Restricted stock unit.

Glossary

FREDDIE MAC | 2021 Form 10-K 292
n	 S&P - Standard & Poor's.

n	 SB Certificates - Structured pass-through certificates backed primarily by recently originated small balance multifamily 

loans purchased by Freddie Mac.

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	 SCR Trust note - Structured 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 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	 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	 Seller/Servicer Guide (Guide) - The Guide consists of Freddie Mac's requirements relating to the purchase, sale, and 

servicing of single-family mortgages.

n	 Senior preferred stock - The shares of Variable Liquidation Preference Senior Preferred Stock issued to Treasury under 

the Purchase Agreement.

n	 Senior subordinate securitization structures - Structures in which we issue guaranteed senior securities and 

unguaranteed subordinated securities backed by reperforming single-family loans or recently originated single-family 

loans.

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 

Preference Senior Preferred Stock (Par Value $1.00 Per Share) dated September 27, 2012.

n	 September 2021 Letter Agreement - An agreement that we through the Conservator, acting on our behalf, entered into 

with Treasury on September 14, 2021 to amend the Purchase Agreement to suspend certain requirements that were added 

to the Purchase Agreement pursuant to the January 2021 Letter Agreement.

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 FEMA.

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 shortterm 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 four or fewer 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 singleclass 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	 Subprime - Participants in the mortgage market may characterize single-family loans, based upon their overall credit 

quality at the time of origination, generally considering them to be prime or subprime. Subprime generally refers to the 

Glossary

FREDDIE MAC | 2021 Form 10-K 293
credit risk classification of a loan. There is no universally accepted definition of subprime. The subprime segment of the 

mortgage market primarily serves borrowers with poorer credit payment histories and such loans typically have a mix of 

credit characteristics that indicate a higher likelihood of default and higher loss severities than prime loans. Such 

characteristics might include, among other factors, a combination of high LTV ratios, low credit scores, or originations 

using lower underwriting standards, such as limited or no documentation of a borrower's income. While we have not 

historically characterized the loans in our single-family mortgage portfolio as either prime or subprime, we monitor the 

amount of loans we have guaranteed with characteristics that indicate a higher degree of credit risk. Certain security 

collateral underlying our other securitization products has been identified as subprime based on information provided to 

Freddie Mac when the transactions were entered into. We also categorize our investments in non-agency mortgage-related 

securities as subprime if they were identified as such based on information provided to us when we entered into these 

transactions.

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	 Top risk - Enterprise-wide elevated risk or emerging risk that could significantly affect the organization's ability to achieve 

its strategic objectives, has the potential to create significant financial, operational, or reputational risk, and requires an 

appropriate risk response by senior management and reporting to the Risk Committee of the Board. 

n	 Treasury - U.S. Department of the Treasury.

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 

entity's expected losses; or (3) the right to receive the entity's expected residual returns.

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, 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.

Glossary

FREDDIE MAC | 2021 Form 10-K 294
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

FREDDIE MAC | 2021 Form 10-K 295
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 December 22, 2020 (incorporated by reference to 

Exhibit 3.1 to the Registrant’s Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on December 23, 2020)

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 numbers 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 are 000-53330 and 001-34139.

Exhibit Index

FREDDIE MAC | 2021 Form 10-K 296
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 numbers 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 are 000-53330 and 001-34139.

Exhibit Index

FREDDIE MAC | 2021 Form 10-K 297
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

4.31

Federal Home Loan Mortgage Corporation Global Debt Facility Agreement, dated February 11, 2021 (incorporated by reference to Exhibit 

4.2 to the Registrant’s Quarterly Report on Form 10-Q filed on April 29, 2021)

10.1

Federal Home Loan Mortgage Corporation Executive Deferred Compensation Plan (as amended and restated effective January 1, 2008) 

(incorporated by reference to Exhibit 10.28 the Registrant’s Registration Statement on Form 10 filed on July 18, 2008)†

10.2

First Amendment to the Federal Home Loan Mortgage Corporation Executive Deferred Compensation Plan (as amended and restated 

effective January 1, 2008) (incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q filed on November 

14, 2008)†

10.3

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)†

10.4

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)†

10.5

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)†

10.6

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)†

* The SEC file numbers 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 are 000-53330 and 001-34139.

† This exhibit is a management contract or compensatory plan, contract, or arrangement.

Exhibit Index

FREDDIE MAC | 2021 Form 10-K 298
Exhibit Description*

10.7

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)†

10.8

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)†

10.9

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)†

10.10

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)†

10.11

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)†

10.12

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)†

10.13 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)†

10.14

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)†

10.15

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)†

10.16

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)†

10.17

2020 Executive Management Compensation Program (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on 

Form 10-Q filed on October 30, 2019)†

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

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)†

10.20 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)†

10.21

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)†

10.22

Agreement, dated February 9, 2021, between Freddie Mac and David M. Brickman (incorporated by reference to Exhibit 10.1 to the 

Registrant's Quarterly Report on Form 10-Q filed on April 29, 2021)†

* The SEC file numbers 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 are 000-53330 and 001-34139.

† This exhibit is a management contract or compensatory plan, contract, or arrangement.

Exhibit Index

FREDDIE MAC | 2021 Form 10-K 299
Exhibit Description*

10.23 Memorandum Agreement, dated February 9, 2021, between Freddie Mac and David M. Brickman (incorporated by reference to Exhibit 

10.2 to the Registrant's Quarterly Report on Form 10-Q filed on April 29, 2021)†

10.24

Restrictive Covenant and Confidentiality Agreement, dated September 6, 2018, between Freddie Mac and David Brickman (incorporated by 

reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed on September 6, 2018)†

10.25 Memorandum Agreement, dated March 3, 2021, between Freddie Mac and Mark B. Grier (incorporated by reference to Exhibit 10.1 to the 

Registrant's Current Report on Form 8-K filed on March 16, 2021)†

10.26 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)†

10.27 Form of Indemnification Agreement between the Federal Home Loan Mortgage Corporation and Executive Officers†

10.28 Form of Indemnification Agreement between the Federal Home Loan Mortgage Corporation and Outside Directors†

10.29 PC Master Trust Agreement, dated May 16, 2019 (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 

10-Q filed July 31, 2019)

10.30

UMBS and MBS Master Trust Agreement, dated April 30, 2019 (incorporated by reference to Exhibit 10.2 to the Registrant's Quarterly 

Report on Form 10-Q filed on July 31, 2019)

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 numbers 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 are 000-53330 and 001-34139.

† This exhibit is a management contract or compensatory plan, contract, or arrangement.

Exhibit Index

FREDDIE MAC | 2021 Form 10-K 300
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 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)

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 Executive Vice President and 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 Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350

99.1 Third Amended and Restated Limited Liability Company Agreement of Common Securitization Solutions, LLC, dated as of January 9, 2020 

(incorporated by reference to Exhibit 99.1 to the Registrant's Annual Report on Form 10-K filed on February 13, 2020)

101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within 

the Inline XBRL document

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

104 Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are 

embedded within the Inline XBRL document

* The SEC file numbers 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 are 000-53330 and 001-34139.

Exhibit Index

FREDDIE MAC | 2021 Form 10-K 301
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/ Michael J. DeVito

Michael J. DeVito

Chief Executive Officer

Date: February 10, 2022

Signatures

FREDDIE MAC | 2021 Form 10-K 302
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/ Sara Mathew* Non-Executive Chair of the Board February 10, 2022

Sara Mathew

/s/ Michael J. DeVito Chief Executive Officer and Director February 10, 2022

Michael J. DeVito (Principal Executive Officer)

/s/ Christian M. Lown Executive Vice President and Chief Financial Officer February 10, 2022

Christian M. Lown (Principal Financial Officer)

/s/ Donald F. Kish Senior Vice President — Corporate Controller and February 10, 2022

Donald F. Kish Principal Accounting Officer (Principal Accounting Officer)

/s/ Mark H. Bloom* Director February 10, 2022

Mark H. Bloom

/s/ Kathleen L. Casey* Director February 10, 2022

Kathleen L. Casey

/s/ Launcelot F. Drummond* Director February 10, 2022

Launcelot F. Drummond

/s/ Aleem Gillani* Director February 10, 2022

Aleem Gillani

/s/ Mark B. Grier* Director February 10, 2022

Mark B. Grier

/s/ Christopher E. Herbert* Director February 10, 2022

Christopher E. Herbert

/s/ Grace A. Huebscher* Director February 10, 2022

Grace A. Huebscher

/s/ Allan P. Merrill* Director February 10, 2022

Allan P. Merrill

/s/ Alberto G. Musalem* Director February 10, 2022

Alberto G. Musalem

*By: /s/ Jerry Weiss

Jerry Weiss

Attorney-in-Fact

Signatures

FREDDIE MAC | 2021 Form 10-K 303
Form 10-K Index

Item Number Page(s)

PART I

Item 1 Business 1, 5-10, 31-41, 47-52, 

111-123

Item 1A Risk Factors 125-142

Item 1B Unresolved Staff Comments Not Applicable

Item 2 Properties 9

Item 3 Legal Proceedings 143

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 144

Item 6 Reserved Not Applicable

Item 7 Management's Discussion and Analysis of Financial Condition and Results of 

Operations

2-6, 11-28, 30, 42-46, 

53-110, 124

Item 7A Quantitative and Qualitative Disclosures About Market Risk 93-98

Item 8 Financial Statements and Supplementary Data 145-235

Item 9 Changes in and Disagreements With Accountants on Accounting and Financial 

Disclosure Not Applicable

Item 9A Controls and Procedures 101, 146-147, 236-237

Item 9B Other Information 238-239

Item 9C Disclosure Regarding Foreign Jurisdiction that Prevent Inspection Not Applicable

PART III

Item 10 Directors, Executive Officers and Corporate Governance 57-59, 239-254

Item 11 Executive Compensation 251-252, 255-279

Item 12 Security Ownership of Certain Beneficial Owners and Management and Related 

Stockholder Matters 280-281

Item 13 Certain Relationships and Related Transactions, and Director Independence 245-246, 282-283

Item 14 Principal Accounting Fees and Services 284-285

PART IV

Item 15 Exhibits and Financial Statement Schedules 286, 296-301

Item 16 Form 10-K Summary Not Applicable

Signatures 302-303

Index

FREDDIE MAC | 2021 Form 10-K 304
Exhibit 4.30

Description of Registrant’s Securities

Registered Pursuant to Section 12 of

The Securities Exchange Act of 1934

As of December 31, 2021, Federal Home Loan Mortgage Corporation (Freddie Mac) had 21 classes of securities registered 

under Section 12 of the Securities Exchange Act of 1934, as amended: (1) our voting common stock, no par value per share 

(Common Stock) and (2) twenty series of perpetual, non-cumulative preferred stock, par value of $1.00 per share (Preferred 

Stock). We also have four classes of perpetual, non-cumulative preferred stock outstanding that were issued through private 

placement and are not registered under Section 12.

Since September 2008, we have been operating in conservatorship, with the Federal Housing Finance Agency (FHFA) as our 

Conservator. In connection with our entry into conservatorship, we, through FHFA, in its capacity as Conservator, entered into 

the Senior Preferred Stock Purchase Agreement with the U.S. Department of the Treasury (Treasury). Under this Purchase 

Agreement, we issued Treasury one million shares of Variable Liquidation Preference Senior Preferred Stock (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 (Warrant). The 

conservatorship, Senior Preferred Stock Purchase Agreement as amended and restated (Purchase Agreement), Senior 

Preferred Stock, and Warrant have a significant impact on the rights, preferences, and privileges of the holders of our Common 

Stock and Preferred Stock.

The following description is a summary and does not purport to be complete. It is subject to and qualified in its entirety by 

reference to the Certificate of Designation for the Common Stock or class of Preferred Stock (as applicable, each a Certificate 

of Designation), Federal Home Loan Mortgage Corporation Act, as amended (our Charter), and our Amended and Restated 

Bylaws (Bylaws), each of which are incorporated by reference as an exhibit to this Annual Report on Form 10-K. We encourage 

you to read the Certificates of Designation, Charter, Bylaws, Purchase Agreement, and applicable provisions of Virginia law for 

additional information.

I. Description of Common Stock

General

Under Section 304 of our Charter, we are authorized to issue an unlimited number of shares of Common Stock. The Common 

Stock has the terms set forth in the Certificate of Designation. Computershare Trust Company, N.A., is the transfer agent, 

dividend disbursing agent, and registrar for the Common Stock.

Authorized Issuance

Our Common Stock was created by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. Under 

Section 731(d) of this Act, shares of our then-outstanding senior participating preferred stock were automatically converted into 

an equivalent number of shares of Common Stock. 

There are currently 4,000,000,000 shares of Common Stock issued or authorized for issuance by our Board of Directors. As of 

December 31, 2021, there were 725,863,886 shares of Common Stock issued and 650,059,553 shares outstanding. The 

outstanding shares of our Common Stock are fully paid and non-assessable. Any additional shares of Common Stock that we 

issue will be fully paid and non-assessable. Our Board of Directors may increase the authorized number of shares of Common 

Stock at any time, without the consent of the holders of Common Stock.

Under the Purchase Agreement, we cannot repurchase our Common Stock without Treasury’s consent.

Dividends

Dividends on shares of our Common Stock are not mandatory. Holders of our Common Stock are entitled to receive dividends 

when, as, and if declared by our Board of Directors out of assets legally available therefor. The Board of Directors fixes both the 

amount of dividends, if any, to be paid to holders of our outstanding Common Stock and the dates of payment. We will pay 

each dividend on shares of Common Stock to the holders of record of outstanding shares as they appear in our books and 

records on the record date fixed by our Board of Directors. The record date must not be earlier than 45 days or later than ten 

days before a dividend payment date. 

Our payment of dividends is subject to the following restrictions:

• Restrictions Relating to the Conservatorship - During conservatorship, any dividends will be 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. The Conservator has prohibited us from paying any dividends on our Common 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.

• Restrictions Under the Purchase Agreement - The Purchase Agreement prohibits us and any of our subsidiaries 

from declaring or paying any dividends on the Common Stock without the prior written consent of the Treasury.

• Restrictions Under the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended 

(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.

• 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.

• 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 outstanding, 

representing an aggregate of 464,170,000 shares and 1,000,000 shares, respectively, as of December 31, 2021. 

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.

Voting Rights

During conservatorship, the holders of our Common Stock have no voting rights. Upon its appointment as Conservator, FHFA 

immediately succeeded to the voting rights of holders of our Common Stock, including the right to elect members of our Board 

of Directors.

If the company was not in conservatorship, holders of our Common Stock would have the right to vote:

• For the election of members of our Board of Directors, to the extent prescribed by applicable federal law;

• With respect to amendment, alteration, supplementation, or repeal of the provisions of the Certificate of Designation 

(described below);

• With respect to such other matters, if any, as may be prescribed by our Board of Directors, in its sole discretion, or by 

applicable federal law. 

Holders of our Common Stock are not granted any right under our Charter or the Certificate of Designation to vote on specified 

matters in which stockholders in business corporations under state law are typically entitled to vote, such as amendments to 

our Charter or changes in our capital structure.

Holders of our Common Stock entitled to vote are entitled to one vote per share on all matters presented to them for their vote. 

Holders may cast votes in person or by proxy at a meeting of the holders of our Common Stock or, if so determined by our 

Board of Directors, by written consent of the holders of the requisite number of shares of our Common Stock. In connection 

with any meeting of the holders of shares of our Common Stock, our Board of Directors will fix a record date, which must not 

be earlier than 60 days or later than 10 days before the date of such meeting. The holders of record of shares of our Common 

Stock on the record date are entitled to notice of, and to vote at, any such meeting and any adjournment. We may establish 

reasonable rules and procedures regarding the solicitation of the vote of holders of our Common Stock at any such meeting or 

otherwise, the conduct of such vote, quorum requirements and the requisite number or percentage of affirmative votes required 

for the approval of any matter and as to all related questions. Such rules and procedures shall conform to the requirements of 

any national securities exchange on which our Common Stock may be listed.

Ownership Reports

The Certificate of Designation includes provisions that require certain persons to report to us their beneficial ownership of our 

Common Stock. Except as otherwise provided in the Certificate of Designation, any “beneficial owner” (as that term is defined 

in Rule 13d-3 under the Exchange Act) of the outstanding Common Stock must report such ownership to us and the NYSE (and 

to any other exchange on which our Common Stock is then listed). The required reports of beneficial ownership and any 

amendments must be submitted in writing to us and each exchange where the Common Stock is listed on the forms, in the 

time periods, and in the manner as would be required by Sections 13(d) and 13(g) of the Exchange Act and the rules and 

regulations thereunder if the Common Stock were registered under Section 12 of the Exchange Act. 

To ensure compliance with the beneficial ownership reporting requirements relating to our Common Stock, we may refuse to 

permit the voting of any shares of Common Stock in excess of 5% beneficially owned by any person who fails to comply with 

those requirements. Any beneficial owner of our Common Stock that we believe to be in violation of the beneficial ownership 

reporting requirements must respond to our inquiries for the purpose of determining the existence, nature, or extent of any such 

violation. If a response satisfactory to us has not been received within five business days after the date on which the inquiry 

was mailed, the shares of our Common Stock to which the inquiry relates will be considered for all purposes to be beneficially 

owned in violation of the reporting requirements, and we are authorized to take appropriate remedial actions, including the 

refusal to permit the voting of those excess shares. 
No Preemptive Rights and No Conversion  

No holder of our Common Stock has any preemptive right to purchase or subscribe for any of our other shares, rights, options, 

or other securities. The holders of shares of our Common Stock do not have any right to convert their shares into or exchange 

their shares for any of our other classes or series of stock or other securities or other obligations of Freddie Mac. 

No Redemption  

We do not have the right to redeem any shares of our Common Stock, and no holders of our Common Stock have the right to 

require us to redeem their shares. 

No Sinking Fund

Our Common Stock is not subject to any sinking fund, which is a separate capital reserve maintained to pay stockholders with 

preferred rights for their investment in the event of liquidation or redemption.

Liquidation Rights  

Upon our dissolution, liquidation, or winding up, after payment of or provision for our liabilities and the expenses of our 

dissolution, liquidation, or winding up, and after any payment or distribution has been made on any of our other classes or 

series of stock ranking prior to our Common Stock upon liquidation, the holders of the outstanding shares of our Common 

Stock will be entitled to receive out of our assets available for distribution to stockholders, before any payment or distribution is 

made on any of our other classes or series of stock ranking junior to Common Stock upon liquidation, the amount of $0.21 per 

share, plus a sum equal to all dividends declared but unpaid on their shares to the date of final distribution. The holders of the 

outstanding shares of any class or series of our stock ranking prior to, on a parity with, or junior to our Common Stock upon 

liquidation will also receive out of those assets payment of any corresponding preferential amount to which the holders of that 

stock may, by the terms thereof, be entitled. No stock with that corresponding right currently exists. The remaining balance of 

any of our assets available for distribution to stockholders upon a dissolution, liquidation or winding up will be distributed to the 

holders of our outstanding Common Stock in the aggregate. As of December 31, 2021, the Senior Preferred Stock had an 

aggregate liquidation preference of $98.0 billion, and the 24 outstanding classes of our preferred stock, other than the Senior 

Preferred Stock, had an aggregate liquidation preference of $14.1 billion plus any then-current dividends, which would have 

priority over our Common Stock upon liquidation. We are authorized to issue an unlimited amount of preferred stock.

Neither the sale of all or substantially all of our property or business, nor our merger, consolidation, or combination into or with 

any other corporation or entity, will be deemed to be a dissolution, liquidation, or winding up for the purpose of these provisions 

on liquidation rights. 

Additional Classes or Series of Stock

We have the right to create and issue additional classes or series of stock ranking prior to, on a parity with, or junior to our 

Common Stock, as to dividends, liquidation, or otherwise, without the consent of holders of our Common Stock. 

Amendments  

Without the consent of the holders of our Common Stock, we have the right to amend, alter, supplement, or repeal any terms of 

our Common Stock in the Certificate of Designation to cure any ambiguity, to correct or supplement any term that may be 

defective or inconsistent with any other term, or to make any other provisions so long as such action does not materially and 

adversely affect the interests of the holders of our Common Stock. Otherwise, the Certificate of Designation may be amended, 

altered, supplemented, or repealed only with the consent of the holders of at least two-thirds of the outstanding shares of our 

Common Stock. The creation of additional classes and series of stock whether ranking prior to, on a parity with, or junior to our 

Common Stock, or a split or reverse split of our Common Stock (including an attendant adjustment to its par value), does not 

require any consent. As a consequence, the rights of holders of our Common Stock could be adversely affected by the creation 

of additional classes or series of stock. The Conservator currently holds voting rights on any such matters requiring consent of 

the holders of our Common Stock. 

Listing

On July 8, 2010, we delisted our Common Stock from the NYSE pursuant to a directive by our Conservator. Our Common 

Stock is traded exclusively in the OTCQB Marketplace under the ticker symbol FMCC. We expect that our Common Stock will 

continue to trade in the OTCQB Marketplace so long as market makers demonstrate an interest in trading the Common Stock.

II. Description of Preferred Stock

Summary of Key Terms and Listing 

Under Section 306(f) of our Charter, we are authorized to issue an unlimited number of shares of preferred stock, on such terms 

and conditions as the Board of Directors shall prescribe. Each class of the Preferred Stock has the terms set forth in its 

Certificate of Designation. Computershare Trust Company, N.A., is the transfer agent, dividend disbursing agent, and registrar 

for the Preferred Stock.
On July 8, 2010, we delisted our Preferred Stock from the NYSE pursuant to a directive by our Conservator. Our Preferred 

Stock is traded exclusively in the OTCQB Marketplace. We expect that our Preferred Stock will continue to trade in the OTCQB 

Marketplace so long as market makers demonstrate an interest in trading the Preferred Stock.

The table below provides a summary of the Preferred Stock outstanding as of December 31, 2021, including dividend rates, 

issue dates, shares authorized and outstanding, redemption prices per share, total outstanding balances, earliest redemption 

dates, and ticker symbols. 

(In millions, except 

redemption price per share) Issue Date

Shares

Authorized

Shares

Outstanding

Redemption

Price per

Share

Total

Outstanding

Balance

Redeemable

On or After

OTCQB

Symbol

1996 Variable-rate(1) April 26, 1996 5.00 5.00 $50.00 $250 June 30, 2001 FMCCI

5% March 23, 1998 8.00 8.00 50.00 400 March 31, 2003 FMCKK

1998 Variable-rate(2) Sept 23/29, 1998 4.40 4.40 50.00 220 Sept 30, 2003 FMCCG

5.10% Sept 23, 1998 8.00 8.00 50.00 400 Sept 30, 2003 FMCCH

5.79% July 21, 1999 5.00 5.00 50.00 250 June 30, 2009 FMCCK

1999 Variable-rate(3) November 5, 1999 5.75 5.75 50.00 287 December 31, 2004 FMCCL

2001 Variable-rate(4) January 26, 2001 6.50 6.50 50.00 325 March 31, 2003 FMCCM

2001 Variable-rate(5) March 23, 2001 4.60 4.60 50.00 230 March 31, 2003 FMCCN

5.81% March 23, 2001 3.45 3.45 50.00 173 March 31, 2011 FMCCO

6% May 30, 2001 3.45 3.45 50.00 173 June 30, 2006 FMCCP

2001 Variable-rate(6) May 30, 2001 4.02 4.02 50.00 201 June 30, 2003 FMCCJ

5.70% October 30, 2001 6.00 6.00 50.00 300 December 31, 2006 FMCKP

2006 Variable-rate(7) July 17, 2006 15.00 15.00 50.00 750 June 30, 2011 FMCCS

6.42% July 17, 2006 5.00 5.00 50.00 250 June 30, 2011 FMCCT

5.90% October 16, 2006 20.00 20.00 25.00 500 Sept 30, 2011 FMCKO

5.57% January 16, 2007 44.00 44.00 25.00 1,100 December 31, 2011 FMCKM

5.66% April 16, 2007 20.00 20.00 25.00 500 March 31, 2012 FMCKN

6.02% July 24, 2007 20.00 20.00 25.00 500 June 30, 2012 FMCKL

6.55% Sept 28, 2007 20.00 20.00 25.00 500 Sept 30, 2017 FMCKI

2007 Fixed-to-floating rate(8) December 4, 2007 240.00 240.00 25.00 6,000 December 31, 2012 FMCKJ

(1) Dividend rate resets quarterly and is equal to the sum of three-month LIBOR plus 1% divided by 1.377. The dividend rate is capped at 9.00%. 

(2) Dividend rate resets quarterly and is equal to the sum of three-month LIBOR plus 1% divided by 1.377. The dividend rate is capped at 7.50%. 

(3) Dividend rate resets on January 1 every five years after January 1, 2005 based on a five-year Constant Maturity Treasury (CMT) rate. The dividend rate is capped at 

11.00%. Optional redemption on December 31, 2004 and on December 31 every five years thereafter. 

(4) Dividend rate resets on April 1 every two years after April 1, 2003 based on the two-year CMT rate plus 0.10%. The dividend rate is capped at 11.00%. Optional 

redemption on March 31, 2003 and on March 31 every two years thereafter. 

(5) Dividend rate resets on April 1 every year based on 12-month LIBOR minus 0.20%. The dividend rate is capped at 11.00%. Optional redemption on March 31, 2003 

and on March 31 every year thereafter. 

(6) Dividend rate resets on July 1 every two years after July 1, 2003 based on the two-year CMT rate plus 0.20%. The dividend rate is capped at 11.00%. Optional 

redemption on June 30, 2003 and on June 30 every two years thereafter. 

(7) Dividend rate resets quarterly and is equal to the sum of three-month LIBOR plus 0.50% but not less than 4.00%. 

(8) 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 three-month LIBOR 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. 

The outstanding shares of our Preferred Stock are fully paid and non-assessable. Any additional shares of Preferred Stock that 

we issue will be fully paid and non-assessable. Our Board of Directors may increase the authorized number of shares of any 

class of our Preferred Stock at any time, without the consent of the holders of any class of our Preferred Stock.

The Preferred Stock shall rank prior to the Common Stock to the extent provided in the Certificate of Designation; shall rank, as 

to both dividends and distributions upon liquidation, on a parity with the other classes of Preferred Stock as well as the four 

classes of perpetual, non-cumulative preferred stock that we issued through private placements; and shall rank junior to the 

Senior Preferred Stock.
Dividends and Dividend Restrictions

Dividends on shares of our Preferred Stock are not mandatory and are non-cumulative. Holders of our Preferred Stock are 

entitled to receive dividends when, as, and if declared by our Board of Directors out of assets legally available therefor on the 

payment dates as prescribed in the applicable Certificate of Designation. The Preferred Stock has the dividend rates as 

described in the table above. We will pay each dividend on shares of Preferred Stock to the holders of record of outstanding 

shares as they appear in our books and records on the record date fixed by our Board of Directors. The record date must not 

be earlier than 45 days or later than 10 days before a dividend payment date. 

Our payment of dividends is subject to the following restrictions:

• Restrictions Relating to the Conservatorship - During conservatorship, any dividends will be 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. The Conservator has prohibited us from paying any dividends on our 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.

• Restrictions Under the Purchase Agreement - The Purchase Agreement prohibits us and any of our subsidiaries 

from declaring or paying any dividends on our Preferred Stock without the prior written consent of Treasury.

• 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.

• 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.

• Restrictions Relating to Senior Preferred Stock - Payment of dividends on our Preferred Stock is subject to the 

prior payment of dividends on our Senior Preferred Stock.

Optional Redemption

Freddie Mac has the option to redeem the Preferred Stock, in whole or in part, out of funds legally available therefor, at the 

redemption price prescribed in the applicable Certificate of Designation plus the amount of any dividend that would otherwise 

be payable for the dividend period that ends on the date of redemption, whether or not declared. The Preferred Stock has the 

redemption prices and timing limitations as described in the table above. The dividend that would otherwise be payable will be 

included in the redemption price of the shares and will not be separately payable. 

If less than all of the outstanding shares are to be redeemed, Freddie Mac will select shares to be redeemed from the 

outstanding shares by lot or pro rata or by any other method which Freddie Mac in its sole discretion decides equitable.

During conservatorship and pursuant to the Purchase Agreement, we cannot redeem the Preferred Stock without FHFA and 

Treasury consent.

No Voting Rights

The shares of Preferred Stock shall not have any voting rights, general or special, other than with respect to amendment, 

alteration, supplementation, or repeal of the provisions of the applicable Certificate of Designation (described below).

During conservatorship, the holders of Preferred Stock have no voting rights. Upon its appointment as Conservator, FHFA 

immediately succeeded to the voting rights of holders of our Preferred Stock.

No Preemptive Rights and No Conversion

No holder of our Preferred Stock has any preemptive right to purchase or subscribe for any other shares, rights, options, or 

other securities. The holders of shares of our Preferred Stock do not have any right to convert their shares into or exchange 

their shares for any of our other classes or series of stock or other securities or other obligations of Freddie Mac. 

Liquidation Rights and Preference  

Upon our dissolution, liquidation, or winding up, after payment of or provision for our liabilities and the expenses of our 

dissolution, liquidation, or winding up, and after any payment or distribution has been made on any of our other classes or 

series of stock ranking prior to our Preferred Stock upon liquidation, the holders of the outstanding shares of our Preferred 

Stock will be entitled to receive out of our assets available for distribution to stockholders, before any payment or distribution is 

made on the Common Stock or any of our other classes or series of stock ranking junior to the Preferred Stock upon 

liquidation, the amount of the liquidation preference in the applicable Certificate of Designation (which amount equals the 

redemption price per share summarized in the table above), plus a sum equal to any dividend that would otherwise be payable 

for the dividend period through and including the date of final distribution. The holders of the outstanding shares of any class or 

series of our stock ranking on parity with the Preferred Stock upon liquidation shall be entitled to receive out of our assets 
available for distribution to shareholders, before any such payment or distribution shall be made on the Common Stock or any 

other class or series of stock of Freddie Mac ranking junior to the Preferred Stock and to such parity stock upon liquidation, any 

corresponding preferential amount to which the holders of that stock may, by the terms thereof, be entitled. The remaining 

balance of any of our assets available for distribution to stockholders upon a dissolution, liquidation, or winding up will be 

distributed to the holders of our outstanding Common Stock in the aggregate. If our assets available for distribution to 

stockholders shall be insufficient for the payment of the amount which the holders of the outstanding Preferred Stock shall be 

entitled to receive upon such dissolution, liquidation, or winding up, all of our assets available for distribution to stockholders 

shall be distributed to the holders of outstanding shares of Preferred Stock pro rata, so that the amounts so distributed shall 

bear to each other the same ratio that the respective distributive amounts to which they are so entitled bear to each other, and 

the holders of outstanding shares of Preferred Stock shall not be entitled to any further participation in any distribution of our 

assets. As of December 31, 2021, the Senior Preferred Stock had an aggregate liquidation preference of $98.0 billion, which 

would have priority over our Preferred Stock upon liquidation, and the 24 outstanding classes of our preferred stock, other than 

the Senior Preferred Stock, had an aggregate liquidation preference of $14.1 billion plus any then-current dividends. We are 

authorized to issue an unlimited amount of preferred stock.

Neither the sale of all or substantially all of our property or business, nor our merger, consolidation, or combination into or with 

any other corporation or entity, will be deemed to be a dissolution, liquidation, or winding up for the purpose of these provisions 

on liquidation rights. 

Additional Classes or Series of Stock

We have the right to authorize, create, and issue additional classes or series of stock ranking prior to, on a parity with, or junior 

to our Preferred Stock, as to dividends, liquidation, or otherwise, without the consent of holders of our Preferred Stock. 

Amendments

Without the consent of the holders of the Preferred Stock, we have the right to amend, alter, supplement, or repeal the terms of 

any series of our Preferred Stock to cure any ambiguity, to correct or supplement any provision that may be defective or 

inconsistent with any other provision, or to make any other provisions with respect to matters or questions arising under the 

applicable Certificate of Designation so long as such action does not materially and adversely affect the interests of the holders 

of the applicable series of Preferred Stock. Otherwise, the terms of any series of our Preferred Stock may be amended, altered, 

supplemented, or repealed only with the consent of the holders of at least two-thirds of the outstanding shares of the 

applicable series of our Preferred Stock. The creation and issuance of additional classes and series of stock, or the issuance of 

additional shares of any existing class or series of our stock, whether ranking prior to, on a parity with, or junior to our Preferred 

Stock does not require any consent. As a consequence, the rights of holders of our Preferred Stock could be adversely affected 

by the creation of additional classes or series of stock. The Conservator currently holds voting rights on any such matters 

requiring consent of the holders of our Preferred Stock.
Exhibit 10.27

INDEMNIFICATION AGREEMENT (“Agreement”)

between

FEDERAL HOME LOAN MORTGAGE CORPORATION (“Freddie Mac”) 

and [NAME] (“Indemnitee”)

WHEREAS, the inability to attract and retain qualified persons as directors and officers is 

detrimental to the best interests of Freddie Mac’s stockholders and Freddie Mac should act to 

assure such persons that there will be adequate certainty of protection through insurance and 

indemnification against risks of claims and actions against them arising out of their service to 

and activities on behalf of Freddie Mac; and

WHEREAS, Freddie Mac has adopted provisions in its bylaws (the “Bylaws”) providing 

for indemnification of its officers and directors against all liabilities reasonably incurred in 

connection with proceedings in which they are involved as a result of their service to Freddie 

Mac, except such liabilities as are incurred because of the indemnitee’s willful misconduct, 

knowing violation of criminal law or receipt of an improper personal benefit, and Freddie Mac 

wishes to clarify and enhance the rights and obligations of Freddie Mac and Indemnitee with 

respect to indemnification; and

WHEREAS, Freddie Mac has elected to follow the corporate governance practices and 

procedures of the law of the Commonwealth of Virginia, including without limitation the 

Virginia Stock Corporation Act, as the same may be amended from time to time; and

WHEREAS, in order to induce and encourage highly experienced and capable persons 

such as Indemnitee to serve and continue to serve as directors and officers of Freddie Mac and in 

any other capacity with respect to Freddie Mac, and to otherwise promote the desirable end that 

such persons will resist what they consider unjustified lawsuits and claims made against them in 

connection with the performance of their duties to Freddie Mac, with the knowledge that certain 

costs, judgments, penalties, fines, liabilities and expenses incurred by them in their defense of 

such litigation are to be borne by Freddie Mac and they will receive the maximum protection 

against such risks and liabilities as may be afforded under the Bylaws and applicable law; and

WHEREAS, Freddie Mac desires to have Indemnitee serve or continue to serve as a 

director or officer of Freddie Mac and in such other capacity with respect to Freddie Mac as 

Freddie Mac may request, as the case may be, free from undue concern for unpredictable, 

inappropriate or unreasonable legal risks and personal liabilities by reason of Indemnitee acting 

in accordance with the standards of the Bylaws in the performance of Indemnitee’s duties at 

Freddie Mac; and Indemnitee desires so to serve or to continue so to serve Freddie Mac, 

provided, and on the express condition, that such Indemnitee is furnished with the indemnity set 

forth hereinafter;

WHEREAS, the Federal Housing Finance Agency (“FHFA”) was appointed conservator 

of Freddie Mac on September 6, 2008;
Now, therefore, in consideration of Indemnitee’s service or continued service as a 

director or officer of Freddie Mac, the parties hereto agree as follows:

1. Service by Indemnitee. Indemnitee will serve or continue to serve as a director or 

officer of Freddie Mac in good faith so long as Indemnitee is duly elected or appointed and until 

such time as Indemnitee is removed as permitted by law or tenders a resignation in writing.

2. Indemnification. Freddie Mac shall indemnify Indemnitee to the fullest extent 

permitted by the Bylaws and Virginia law in effect on the date hereof or as the Bylaws or such 

law may from time to time be amended (but, in the case of any such amendment, only to the 

extent that such amendment permits Freddie Mac to provide broader indemnification rights than 

the Bylaws or said law permitted Freddie Mac to provide prior to such amendment). Without 

diminishing the scope of the indemnification provided by this Section, the rights of indemnification of Indemnitee provided hereunder shall include but shall not be limited to those rights 

hereinafter set forth, except that no indemnification shall be paid to Indemnitee:

a. to the extent expressly prohibited by Virginia law;

b. for which payment is actually made to Indemnitee or for Indemnitee’s benefit 

under a valid and collectible insurance policy or under a valid and enforceable indemnity 

clause, bylaw or agreement of Freddie Mac or any other entity that Indemnitee serves at 

the request of Freddie Mac, except in respect of any indemnity exceeding the payment 

under such insurance, clause, bylaw or agreement;

c. in connection with a Proceeding (or part thereof) initiated by Indemnitee unless 

such Proceeding (or part thereof) was authorized by the Board of Directors. 

3. Action or Proceedings Other than an Action by or in the Right of Freddie Mac. 

Except as limited by Section 2 above, Indemnitee shall be entitled to the indemnification rights 

provided in this Section if Indemnitee is a party or is threatened to be made a party to any 

Proceeding (other than an action by or in the name of Freddie Mac) by reason of the fact that 

Indemnitee is or was a director, officer, employee or agent of Freddie Mac, or is or was serving 

at the request of Freddie Mac as a director, officer, manager, partner, trustee, fiduciary, employee 

or agent of another corporation, limited liability company, partnership, joint venture, trust or 

other entity, including service with respect to an employee benefit plan. Pursuant to this Section, 

Indemnitee shall be indemnified against all Liabilities and Expenses actually and reasonably 

incurred by Indemnitee in connection with such Proceeding, except such Liabilities and 

Expenses as are incurred because of Indemnitee’s willful misconduct or knowing violation of 

criminal law; provided, however, that Freddie Mac may not indemnify Indemnitee in connection 

with any Proceeding charging improper personal benefit to Indemnitee, whether or not involving 

action in Indemnitee’s official capacity, to the extent Indemnitee was adjudged liable on the basis 

that personal benefit was improperly received by Indemnitee.

4. Indemnity in Proceedings by or in the Name of Freddie Mac. Except as limited 

by Section 2 above, Indemnitee shall be entitled to the indemnification rights provided in this 

Section if Indemnitee was or is a party or is threatened to be made a party to any Proceeding 

brought by or in the name of Freddie Mac to procure a judgment in its favor by reason of the fact 

2
that Indemnitee is or was a director, officer, employee or agent of Freddie Mac. Pursuant to this 

Section, Indemnitee shall be indemnified against all Liabilities and Expenses actually and 

reasonably incurred by Indemnitee in connection with such Proceeding, except such Liabilities 

and Expenses as are incurred because of Indemnitee’s willful misconduct or knowing violation 

of criminal law or of any federal or state securities law, including, without limitation, any claim 

of unlawful insider trading or the manipulation of the market for any security; provided, 

however, that Freddie Mac may not indemnify Indemnitee in connection with any Proceeding 

charging improper personal benefit to Indemnitee, whether or not involving action in 

Indemnitee’s official capacity, to the extent Indemnitee was adjudged liable on the basis that 

personal benefit was improperly received by Indemnitee.

5. Indemnification for Costs, Charges and Expenses of Successful Party. Notwithstanding the limitations of Sections 3 and 4 above, Freddie Mac shall indemnify Indemnitee who 

entirely prevails, on the merits or otherwise, in the defense of any Proceeding to which 

Indemnitee was a party because Indemnitee is or was director, officer, employee or agent of 

Freddie Mac or was serving at the request of Freddie Mac as a director, officer, manager, partner, 

trustee, fiduciary, employee or agent of another corporation, limited liability company, 

partnership, joint venture, trust or other entity, including service with respect to an employee 

benefit plan, against Expenses incurred by Indemnitee in connection with the Proceeding.

6. Partial Indemnification. If Indemnitee is entitled under any provision of this 

Agreement to indemnification by Freddie Mac for some or a portion of the Liabilities or 

Expenses actually and reasonably incurred in connection with any action, suit or proceeding 

(including an action, suit or proceeding brought by or on behalf of Freddie Mac), but not, 

however, for all of the total amount thereof, Freddie Mac shall nevertheless indemnify 

Indemnitee for the portion of such Liabilities and Expenses actually and reasonably incurred to 

which Indemnitee is entitled.

7. Indemnification for Expenses of a Witness. Notwithstanding any other provision 

of this Agreement, to the maximum extent permitted by applicable law, Indemnitee shall be 

entitled to indemnification against all Expenses actually and reasonably incurred or suffered by 

Indemnitee or on Indemnitee’s behalf if Indemnitee appears as a witness or otherwise incurs 

legal expenses as a result of or related to Indemnitee’s service as a director, officer, employee or 

agent of Freddie Mac, in any threatened, pending or completed Proceeding to which Indemnitee 

neither is, nor is threatened to be made, a party; provided, however, that no such indemnification 

will be provided with respect to Expenses incurred in obtaining legal advice regarding 

Indemnitee’s willful misconduct, knowing violation of criminal law or receipt of improper 

personal benefits.

8. Determination of Entitlement to Indemnification. Upon written request by 

Indemnitee for indemnification pursuant to Sections 3, 4, 5, 6 or 7, the entitlement of Indemnitee 

to indemnification, to the extent not provided pursuant to the terms of this Agreement, shall be 

determined by the following person or persons who shall be empowered to make such 

determination: (i) by the Board of Directors by a majority vote of a quorum consisting of 

directors not at the time parties to the proceeding; (ii) by a majority vote of a committee duly 

designated by the Board of Directors (in which designation directors who are parties may 

3
participate), consisting solely of two or more directors not at the time parties to the proceeding; 

(iii) by Special Legal Counsel (as defined below) (1) selected by the Board of Directors or its 

committee in a manner prescribed in subsection (i) or (ii) hereof, or (2) if a quorum of the Board 

of Directors cannot be obtained under subsection (i) hereof and a committee cannot be 

designated under subsection (ii) hereof, selected by a majority vote of the full Board of Directors 

(in which selection directors who are parties may participate); or (iv) by the stockholders, 

provided, however, that shares owned by or voted under the control of directors who are at the 

time parties to the proceeding may not be voted on the determination. Upon failure of the Board 

of Directors or committee designated by the Board of Directors, as applicable, so to select such 

Special Legal Counsel, or upon failure of Indemnitee so to approve, such Special Legal Counsel 

shall be selected upon application to a court of competent jurisdiction. Authorization of 

indemnification and evaluation as to reasonableness of Expenses shall be made in the same 

manner as the determination that indemnification is permissible, as provided in this Section 8, 

provided however, that, if the determination is made by Special Legal Counsel, authorization of 

indemnification and evaluation as to the reasonableness of Expenses shall be made by those 

entitled under subsection (iii) hereof to select such Special Legal Counsel.

Such determination of entitlement to indemnification shall be made not later than 90 

calendar days after receipt by Freddie Mac of a written request for indemnification. Such request 

shall include documentation or information which is necessary for such determination and which 

is reasonably available to Indemnitee. Any Expenses incurred by Indemnitee in connection with 

a request for indemnification or payment of Expenses hereunder, under any other agreement, any 

provision of the Bylaws or any directors’ and officers’ liability insurance, shall be borne by 

Freddie Mac. Freddie Mac hereby indemnifies Indemnitee for any such Expense and agrees to 

hold Indemnitee harmless therefrom irrespective of the outcome of the determination of 

Indemnitee’s entitlement to indemnification. If the person making such determination shall 

determine that Indemnitee is entitled to indemnification as to part (but not all) of the application 

for indemnification, such person shall reasonably prorate such partial indemnification among the 

claims, issues or matters at issue at the time of the determination.

9. Presumptions and Effect of Certain Proceedings. The Corporate Secretary of 

Freddie Mac shall, promptly upon receipt of Indemnitee’s request for indemnification, advise in 

writing the Board of Directors or such other person or persons empowered to make the 

determination as provided in Section 8 that Indemnitee has made such request for 

indemnification. The Corporate Secretary of Freddie Mac shall also promptly notify the 

Conservator that such a request has been made. Upon making such request for indemnification, 

Indemnitee shall be presumed to be entitled to indemnification hereunder and Freddie Mac shall 

have the burden of proof in making any determination contrary to such presumption. The 

termination of any Proceeding described in Sections 3 or 4 by judgment, order, settlement or 

conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself be 

determinative that the Indemnitee did not meet the relevant standard of conduct.

10. Remedies of Indemnitee in Cases where Claim is not Paid in Full in a Timely 

Manner. If a claim under this Agreement is not paid in full by Freddie Mac within 90 days after 

a written claim has been received by Freddie Mac, except in the case of a claim for an 

advancement of expenses, in which case the applicable period shall be 20 days, Indemnitee may 

4
at any time thereafter apply to either the United States District Court for the district within which 

Freddie Mac’s principal office is located or to the court where the Proceeding is pending, if any, 

for an order directing Freddie Mac to make an advancement of expenses or to provide 

indemnification. The court shall order Freddie Mac to make an advancement of expenses or to 

provide indemnification, as the case may be, if it determines that Indemnitee is entitled under this 

Agreement to such an advancement of expenses or indemnification, and in such event shall order 

Freddie Mac to pay Indemnitee’s reasonable expenses (including attorneys’ fees) to obtain the 

order. Neither the failure of Freddie Mac (including its Board of Directors, committee, Special 

Legal Counsel or its stockholders) to have made a determination, as provided in Section 8, prior 

to the commencement of such action permitted by this Section, that Indemnitee is entitled to 

receive an advancement of expenses or indemnification, nor the determination by Freddie Mac 

(including its Board of Directors, committee, Special Legal Counsel or its stockholders) that 

Indemnitee is not entitled to an advancement of expenses or indemnification, shall create a 

presumption to that effect or otherwise itself be a defense to Indemnitee’s application for an 

advancement of expenses or indemnification.

11. Remedies of Indemnitee in Cases of Determination not to Indemnify or to Pay 

Expenses. In the event that a determination is made that Indemnitee is not entitled to 

indemnification hereunder or if payment has not been timely made following a determination of 

entitlement to indemnification pursuant to Sections 8 and 9, or if Expenses are not paid pursuant 

to Section 17, Indemnitee shall be entitled to final adjudication in a court of competent 

jurisdiction of entitlement to such indemnification or payment from Freddie Mac. Alternatively, 

Indemnitee at Indemnitee’s option may seek an award in an arbitration to be conducted by a 

single arbitrator pursuant to the rules of the American Arbitration Association, such award to be 

made within 60 days following the filing of the demand for arbitration. Freddie Mac shall not 

oppose Indemnitee’s right to seek any such adjudication or award in arbitration or any other 

claim. The determination in any such judicial proceeding or arbitration shall be made de novo

and Indemnitee shall not be prejudiced by reason of a determination (if so made) pursuant to 

Sections 8 or 9 that Indemnitee is not entitled to indemnification. If a determination is made or 

deemed to have been made pursuant to the terms of Section 8 or 9 that Indemnitee is entitled to 

indemnification, Freddie Mac shall be bound by such determination and is precluded from 

asserting that such determination has not been made or that the procedure by which such 

determination was made is not valid, binding and enforceable. Freddie Mac further agrees to 

stipulate in any such court or before any such arbitrator that Freddie Mac is bound by all the 

provisions of this Agreement and is precluded from making any assertions to the contrary. If the 

court or arbitrator shall determine that Indemnitee is entitled to any indemnification or payment 

of Expenses hereunder, Freddie Mac shall pay all Expenses actually and reasonably incurred by 

Indemnitee in connection with such adjudication or award in arbitration (including, but not 

limited to, any appellate Proceedings).

12. Other Rights to Indemnification. The rights to indemnification and to the 

advance-ment of expenses conferred in this Agreement shall not be exclusive of any other right 

which any person may have or hereafter acquire under any statute (including Freddie Mac’s 

enabling legislation), or any agreement, vote of stockholders or disinterested directors or 

otherwise.

5
13. Expenses to Enforce Agreement. In the event that Indemnitee is subject to or 

intervenes in any Proceeding in which the validity or enforceability of this Agreement is at issue 

or seeks an adjudication or award in arbitration to enforce Indemnitee’s rights under, or to 

recover damages for breach of, this Agreement, Indemnitee, if Indemnitee prevails in whole or in 

part in such action, shall be entitled to recover from Freddie Mac and shall be indemnified by 

Freddie Mac against any actual Expenses incurred by Indemnitee.

14. Effective Date and Continuation of Indemnity. This Agreement shall be 

[retroactive to and] effective as of [DATE]. All agreements and obligations of Freddie Mac 

contained herein (“Freddie Mac’s Obligations) shall commence on such effective date and 

continue during the period Indemnitee is an officer of Freddie Mac who reports directly (whether 

substantively or, in the case of the General Auditor, administratively) to the Chief Executive 

Officer or President, as applicable, of Freddie Mac (a “Senior Officer”). Freddie Mac’s 

Obligations shall terminate as of the date, if any, as of which Indemnitee is no longer a Senior 

Officer (the “Termination Date”) with respect to any possible claims relating entirely to any 

period beginning on or after the Termination Date; provided, however, that Freddie Mac’s 

Obligations shall continue after the Termination Date with respect to any possible claims that are 

based in whole or in part on the fact that prior to the Termination Date, Indemnitee was a 

director, officer employee or agent of Freddie Mac or was serving at the request of Freddie Mac 

as a director, officer, manager, partner, trustee, fiduciary, employee or agent of another 

corporation, limited liability company, partnership, joint venture, trust or other entity, including 

service with respect to an employee benefit plan. This Agreement shall be binding upon all 

successors and assigns of Freddie Mac (including any transferee of all or substantially all of its 

assets and any successor by merger or operation of law) and shall inure to the benefit of the heirs, 

personal representatives and estate of Indemnitee. The termination of Freddie Mac’s Obligations 

at the Termination Date notwithstanding, Indemnitee shall continue to have such 

indemnification, advancement and related rights as may be provided to Indemnitee at that time or 

thereafter under the Bylaws, Virginia law, Freddie Mac’s enabling legislation, any other 

agreement, vote of stockholders or disinterested directors or otherwise. 

15. Notification and Defense of Claim. Promptly after receipt by Indemnitee of 

notice of any Proceeding, Indemnitee will, if a claim in respect thereof is to be made against 

Freddie Mac under this Agreement, notify the Corporate Secretary of Freddie Mac in writing of 

the commencement thereof; but the omission so to notify Freddie Mac will not relieve it from 

any liability that it may have to Indemnitee. Notwithstanding any other provision of this 

Agreement, with respect to any such Proceeding of which Indemnitee notifies Freddie Mac:

a. Freddie Mac shall be entitled to participate therein at its own expense; and

b. Except as otherwise provided in this Section 15(b), to the extent that it may wish, 

Freddie Mac, jointly with any other indemnifying party similarly notified, shall be 

entitled to assume the defense thereof, with counsel satisfactory to Indemnitee. After 

notice from Freddie Mac to Indemnitee of its election so to assume the defense thereof, 

Freddie Mac shall not be liable to Indemnitee under this Agreement for any expenses of 

counsel subsequently incurred by Indemnitee in connection with the defense thereof 

except as otherwise provided below. Indemnitee shall have the right to employ 

6
Indemnitee’s own counsel in such Proceeding, but the fees and expenses of such counsel 

incurred after notice from Freddie Mac of its assumption of the defense thereof shall be at 

the expense of Indemnitee unless (i) the employment of counsel by Indemnitee has been 

authorized by Freddie Mac, (ii) Indemnitee shall have reasonably concluded that there 

may be a conflict of interest between Freddie Mac and Indemnitee in the conduct of the 

defense of such action or (iii) Freddie Mac shall not within 60 calendar days of receipt of 

notice from Indemnitee in fact have employed counsel to assume the defense of the 

action, in each of which cases the fees and expenses of Indemnitee’s counsel shall be at 

the expense of Freddie Mac. Freddie Mac shall not be entitled to assume the defense of 

any Proceeding brought by or on behalf of Freddie Mac or as to which Indemnitee shall 

have made the conclusion provided for in (ii) above; and

c. If Freddie Mac has assumed the defense of a Proceeding, Freddie Mac shall not be 

liable to indemnify Indemnitee under this Agreement for any amounts paid in settlement 

of any Proceeding effected without Freddie Mac’s written consent. Freddie Mac shall not 

settle any Proceeding in any manner that would impose any penalty or limitation on or 

disclosure obligation with respect to Indemnitee without Indemnitee’s written consent. 

Neither Freddie Mac nor Indemnitee will unreasonably withhold its consent to any 

proposed settlement.

16. Notices. All notices and other communications given or made pursuant to this 

Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery 

to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during 

normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) 

five (5) days after having been sent by registered or certified mail, return receipt requested, 

postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, 

specifying next-day delivery, with written verification of receipt. All communications shall be 

sent:

a. To Indemnitee at:

[NAME]

Federal Home Loan Mortgage Corporation

Attention: Corporate Secretary

8200 Jones Branch Drive

McLean, Virginia 22102

b. To Freddie Mac at:

Federal Home Loan Mortgage Corporation

Attention: Corporate Secretary

8200 Jones Branch Drive

McLean, Virginia 22102

Telephone: 703-903-3380

7
or to such other address as may have been furnished by a party hereto to the other party hereto, 

by like notice.

17. Advancement of Expenses. Indemnitee shall have the right to have the Expenses 

reasonably incurred or suffered in defending any Proceeding in advance of its final disposition or 

in the circumstances described in Section 7 paid by Freddie Mac (hereinafter, an “advancement 

of expenses”); provided, however, that an advancement of expenses shall be made (i) only upon 

delivery to Freddie Mac of a written statement by Indemnitee of Indemnitee’s good faith belief 

that Indemnitee has met the standard of conduct set forth in the applicable Section of this 

Agreement, and (ii) only if Indemnitee furnishes to Freddie Mac a written undertaking, executed 

by or on behalf of Indemnitee, to repay any funds advanced if Indemnitee is not entitled to 

mandatory indemnification under Section 5 and it is ultimately determined that Indemnitee is not 

entitled to indemnification. The undertaking required above shall be an unlimited general 

obligation of Indemnitee but need not be secured and shall be accepted without reference to the 

financial ability of Indemnitee to make repayment.

18. Severability; Prior Indemnification Agreements. If any provision or provisions of 

this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever (a) 

the validity, legality and enforceability of the remaining provisions of this Agreement (including 

without limitation, all portions of any paragraphs of this Agreement containing any such 

provision held to be invalid, illegal or unenforceable, that are not by themselves invalid, illegal 

or unenforceable) shall not in any way be affected or impaired thereby, and (b) to the fullest 

extent possible, the provisions of this Agreement (including, without limitation, all portions of 

any paragraph of this Agreement containing any such provision held to be invalid, illegal or 

unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as 

to give effect to the intent of the parties that Freddie Mac provide protection to Indemnitee to the 

fullest enforceable extent. This Agreement shall supersede and replace any prior indemnification 

agreements entered into by and between Freddie Mac and Indemnitee and any such prior 

agreements shall be terminated upon execution of this Agreement.

19. Headings; References. The headings of the sections of this Agreement are 

inserted for convenience only and shall not be deemed to constitute part of this Agreement or to 

affect the construction thereof References herein to section numbers are to sections of this 

Agreement. 

20. Definitions. For purposes of this Agreement:

a. “Expenses” includes, without limitation, expenses incurred in connection with the 

defense or settlement of any and all investigations, judicial or administrative proceedings 

or appeals, attorneys’ fees, witness fees and expenses, fees and expenses of accountants 

and other advisors, retainers and disbursements and advances thereon, the premium, 

security for, and other costs relating to any bond (including cost bonds, appraisal bonds 

or their equivalents), and any expenses of establishing a right to indemnification under 

Sections 8, 11 and 13 above but shall not include the amount of judgments, fines or 

penalties actually levied against Indemnitee and shall include only amounts reasonably 

and actually incurred by Indemnitee.

8
b. “Liabilities” means the obligation to pay a judgment, settlement, penalty, fine, 

including any excise tax assessed with respect to an employee benefit plan, or reasonable 

expenses incurred with respect to a Proceeding.

c. “Special Legal Counsel” means a law firm or a member of a law firm that neither 

is presently nor in the past five years has been retained to represent: (i) Freddie Mac or 

Indemnitee in any matter material to either such party, provided, however, that it shall be 

permissible for Special Legal Counsel to have been previously engaged by Freddie Mac, 

its Board of Directors or committee thereof to make determinations with respect to 

indemnification or advancement of expenses, or (ii) any other party to the Proceeding 

giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the 

term “Special Legal Counsel” shall not include any person who, under the applicable 

standards of professional conduct then prevailing, would have a conflict of interest in 

representing either Freddie Mac or Indemnitee in an action to determine Indemnitee’s 

right to indemnification under this Agreement.

d. “Proceeding” includes any threatened, pending or completed investigation (other 

than internal investigations of the conduct of Freddie Mac employees), action, suit or 

other proceeding, whether brought in the name of Freddie Mac or otherwise, against 

Indemnitee, for which indemnification is not prohibited under Section 2 above and 

whether of a civil, criminal, administrative, arbitrative or investigative and whether 

formal or informal, including, but not limited to, actions, suits or proceedings in which 

Indemnitee may be or may have been involved as a party or otherwise, by reason of the 

fact that Indemnitee is or was a director, officer, employee or agent of Freddie Mac, or is 

or was serving, at the request of Freddie Mac, as a director, officer, manager, partner, 

trustee, fiduciary, employee or agent of another corporation, limited liability company, 

partnership, joint venture, trust or other entity, including service with respect to an 

employee benefit plan, whether or not Indemnitee is serving in such capacity at the time 

any Liability or Expense is incurred for which indemnification or reimbursement can be 

provided under this Agreement.

21. Other Provisions.

a. This Agreement shall be interpreted and enforced in accordance with the laws of 

Virginia, without regard to its conflict of laws rules.

b. This Agreement may be executed in one or more counterparts, each of which shall 

for all purposes be deemed to be an original but all of which together shall constitute one 

and the same Agreement. Only one such counterpart signed by the party against whom 

enforceability is sought needs to be produced as evidence of the existence of this 

Agreement.

c. This Agreement shall not be deemed an employment contract between Freddie 

Mac and Indemnitee, and Indemnitee specifically acknowledges that Indemnitee may be 

discharged at any time for any reason, with or without cause, and with or without 

9
severance compensation, except as may be otherwise provided in a separate written 

contract between Indemnitee and Freddie Mac.

d. Upon a payment to Indemnitee under this Agreement, Freddie Mac shall be 

subrogated to the extent of such payment to all of the rights of Indemnitee to recover 

against any person for such liability, and Indemnitee shall execute all documents and 

instruments required and shall take such other actions as may be necessary to secure such 

rights, including the execution of such documents as may be necessary for Freddie Mac 

to bring suit to enforce such rights.

e. No supplement, modification or amendment of this Agreement shall be binding 

unless executed in writing by both parties hereto. No waiver of any of the provisions of 

this Agreement shall be deemed or shall constitute a waiver of any other provisions 

hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. Any 

subsequent supplement, modification or amendment of this Agreement shall not diminish 

Indemnitee’s rights under this Agreement with respect to any act or omission occurring 

before such supplement, modification or amendment.

f. Nothing in this Agreement shall be construed to permit indemnification expressly 

prohibited by 12 U.S.C. §4636.

g. Notwithstanding any provision to the contrary in this Agreement, indemnification 

for actions instituted by FHFA will be governed by the standards set forth in FHFA’s 

Rule on Golden Parachute and Indemnification Payments at 12 CFR Part 1231.

h. Nothing in this Agreement is intended to, or shall be construed to, create in any 

way any liability or obligation on the part of the United States or any department or 

agency thereof under or in any provision of this Agreement, it being the intention of 

Freddie Mac and Indemnitee that the obligations undertaken by Freddie Mac hereunder 

are the sole and exclusive responsibility of Freddie Mac.

i. In the event conservatorship is terminated, this Agreement shall remain in full 

force and effect.

10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the 

date set forth in Section 14.

FEDERAL HOME LOAN MORTGAGE CORPORATION

By: 

[NAME], Chief Executive Officer

Date: 

[NAME], Indemnitee

Date: 

11
Exhibit 1

UNDERTAKING TO REPAY INDEMNIFICATION EXPENSES

I, ___________________, agree to reimburse Federal Home Loan Mortgage Corporation 

(“Freddie Mac”) for all expenses paid to me by Freddie Mac pursuant to Section 17 of the 

Indemnification Agreement effective as of [DATE], for my defense in any civil or criminal 

action, suit, or proceeding, in the event, and to the extent that it shall ultimately be determined 

that I am not entitled to retain such amounts. I believe in good faith good that I have met the 

standard of conduct set forth in the Indemnification Agreement effective as of [DATE].

Signature 

Typed Name 

Office 

STATE OF 

COUNTY OF 

Before me _____________________, on this day personally appeared ____________________, 

known to me to be the person whose name is subscribed to the foregoing instrument, and who, 

after being duly sworn, stated that the contents of said instrument is to the best of his/her 

knowledge and belief true and correct and who acknowledged that he/she executed the same for 

the purpose and consideration therein expressed.

GIVEN under my hand and official seal on this _____ day of 20___.

 

Notary Public

My commission expires:

12
Exhibit 10.28

INDEMNIFICATION AGREEMENT (“Agreement”)

between

FEDERAL HOME LOAN MORTGAGE CORPORATION (“Freddie Mac”) 

and [NAME] (“Indemnitee”)

WHEREAS, the inability to attract and retain qualified persons as directors and officers is 

detrimental to the best interests of Freddie Mac’s stockholders and Freddie Mac should act to 

assure such persons that there will be adequate certainty of protection through insurance and 

indemnification against risks of claims and actions against them arising out of their service to 

and activities on behalf of Freddie Mac; and

WHEREAS, Freddie Mac has adopted provisions in its bylaws (the “Bylaws”) providing 

for indemnification of its officers and directors against all liabilities reasonably incurred in 

connection with proceedings in which they are involved as a result of their service to Freddie 

Mac, except such liabilities as are incurred because of the indemnitee’s willful misconduct, 

knowing violation of criminal law or receipt of an improper personal benefit, and Freddie Mac 

wishes to clarify and enhance the rights and obligations of Freddie Mac and Indemnitee with 

respect to indemnification; and

WHEREAS, Freddie Mac has elected to follow the corporate governance practices and 

procedures of the law of the Commonwealth of Virginia, including without limitation the 

Virginia Stock Corporation Act, as the same may be amended from time to time; and

WHEREAS, in order to induce and encourage highly experienced and capable persons 

such as Indemnitee to serve and continue to serve as directors and officers of Freddie Mac and in 

any other capacity with respect to Freddie Mac, and to otherwise promote the desirable end that 

such persons will resist what they consider unjustified lawsuits and claims made against them in 

connection with the performance of their duties to Freddie Mac, with the knowledge that certain 

costs, judgments, penalties, fines, liabilities and expenses incurred by them in their defense of 

such litigation are to be borne by Freddie Mac and they will receive the maximum protection 

against such risks and liabilities as may be afforded under the Bylaws and applicable law; and

WHEREAS, Freddie Mac desires to have Indemnitee serve or continue to serve as a 

director or officer of Freddie Mac and in such other capacity with respect to Freddie Mac as 

Freddie Mac may request, as the case may be, free from undue concern for unpredictable, 

inappropriate or unreasonable legal risks and personal liabilities by reason of Indemnitee acting 

in accordance with the standards of the Bylaws in the performance of Indemnitee’s duties at 

Freddie Mac; and Indemnitee desires so to serve or to continue so to serve Freddie Mac, 

provided, and on the express condition, that such Indemnitee is furnished with the indemnity set 

forth hereinafter;

WHEREAS, the Federal Housing Finance Agency (“FHFA”) was appointed conservator 

of Freddie Mac on September 6, 2008;
Now, therefore, in consideration of Indemnitee’s service or continued service as a 

director or officer of Freddie Mac, the parties hereto agree as follows:

1. Service by Indemnitee. Indemnitee will serve or continue to serve as a director or 

officer of Freddie Mac in good faith so long as Indemnitee is duly elected or appointed and until 

such time as Indemnitee is removed as permitted by law or tenders a resignation in writing.

2. Indemnification. Freddie Mac shall indemnify Indemnitee to the fullest extent 

permitted by the Bylaws and Virginia law in effect on the date hereof or as the Bylaws or such 

law may from time to time be amended (but, in the case of any such amendment, only to the 

extent that such amendment permits Freddie Mac to provide broader indemnification rights than 

the Bylaws or said law permitted Freddie Mac to provide prior to such amendment). Without 

diminishing the scope of the indemnification provided by this Section, the rights of indemnification of Indemnitee provided hereunder shall include but shall not be limited to those rights 

hereinafter set forth, except that no indemnification shall be paid to Indemnitee:

a. to the extent expressly prohibited by Virginia law;

b. for which payment is actually made to Indemnitee or for Indemnitee’s benefit 

under a valid and collectible insurance policy or under a valid and enforceable indemnity 

clause, bylaw or agreement of Freddie Mac or any other entity that Indemnitee serves at 

the request of Freddie Mac, except in respect of any indemnity exceeding the payment 

under such insurance, clause, bylaw or agreement;

c. in connection with a Proceeding (or part thereof) initiated by Indemnitee unless 

such Proceeding (or part thereof) was authorized by the Board of Directors. 

3. Action or Proceedings Other than an Action by or in the Right of Freddie Mac. 

Except as limited by Section 2 above, Indemnitee shall be entitled to the indemnification rights 

provided in this Section if Indemnitee is a party or is threatened to be made a party to any 

Proceeding (other than an action by or in the name of Freddie Mac) by reason of the fact that 

Indemnitee is or was a director, officer, employee or agent of Freddie Mac, or is or was serving 

at the request of Freddie Mac as a director, officer, manager, partner, trustee, fiduciary, employee 

or agent of another corporation, limited liability company, partnership, joint venture, trust or 

other entity, including service with respect to an employee benefit plan. Pursuant to this Section, 

Indemnitee shall be indemnified against all Liabilities and Expenses actually and reasonably 

incurred by Indemnitee in connection with such Proceeding, except such Liabilities and 

Expenses as are incurred because of Indemnitee’s willful misconduct or knowing violation of 

criminal law; provided, however, that Freddie Mac may not indemnify Indemnitee in connection 

with any Proceeding charging improper personal benefit to Indemnitee, whether or not involving 

action in Indemnitee’s official capacity, to the extent Indemnitee was adjudged liable on the basis 

that personal benefit was improperly received by Indemnitee.

4. Indemnity in Proceedings by or in the Name of Freddie Mac. Except as limited 

by Section 2 above, Indemnitee shall be entitled to the indemnification rights provided in this 

Section if Indemnitee was or is a party or is threatened to be made a party to any Proceeding 

brought by or in the name of Freddie Mac to procure a judgment in its favor by reason of the fact 

2
that Indemnitee is or was a director, officer, employee or agent of Freddie Mac. Pursuant to this 

Section, Indemnitee shall be indemnified against all Liabilities and Expenses actually and 

reasonably incurred by Indemnitee in connection with such Proceeding, except such Liabilities 

and Expenses as are incurred because of Indemnitee’s willful misconduct or knowing violation 

of criminal law or of any federal or state securities law, including, without limitation, any claim 

of unlawful insider trading or the manipulation of the market for any security; provided, 

however, that Freddie Mac may not indemnify Indemnitee in connection with any Proceeding 

charging improper personal benefit to Indemnitee, whether or not involving action in 

Indemnitee’s official capacity, to the extent Indemnitee was adjudged liable on the basis that 

personal benefit was improperly received by Indemnitee.

5. Indemnification for Costs, Charges and Expenses of Successful Party. Notwithstanding the limitations of Sections 3 and 4 above, Freddie Mac shall indemnify Indemnitee who 

entirely prevails, on the merits or otherwise, in the defense of any Proceeding to which 

Indemnitee was a party because Indemnitee is or was director, officer, employee or agent of 

Freddie Mac or was serving at the request of Freddie Mac as a director, officer, manager, partner, 

trustee, fiduciary, employee or agent of another corporation, limited liability company, 

partnership, joint venture, trust or other entity, including service with respect to an employee 

benefit plan, against Expenses incurred by Indemnitee in connection with the Proceeding.

6. Partial Indemnification. If Indemnitee is entitled under any provision of this 

Agreement to indemnification by Freddie Mac for some or a portion of the Liabilities or 

Expenses actually and reasonably incurred in connection with any action, suit or proceeding 

(including an action, suit or proceeding brought by or on behalf of Freddie Mac), but not, 

however, for all of the total amount thereof, Freddie Mac shall nevertheless indemnify 

Indemnitee for the portion of such Liabilities and Expenses actually and reasonably incurred to 

which Indemnitee is entitled.

7. Indemnification for Expenses of a Witness. Notwithstanding any other provision 

of this Agreement, to the maximum extent permitted by applicable law, Indemnitee shall be 

entitled to indemnification against all Expenses actually and reasonably incurred or suffered by 

Indemnitee or on Indemnitee’s behalf if Indemnitee appears as a witness or otherwise incurs 

legal expenses as a result of or related to Indemnitee’s service as a director, officer, employee or 

agent of Freddie Mac, in any threatened, pending or completed Proceeding to which Indemnitee 

neither is, nor is threatened to be made, a party; provided, however, that no such indemnification 

will be provided with respect to Expenses incurred in obtaining legal advice regarding 

Indemnitee’s willful misconduct, knowing violation of criminal law or receipt of improper 

personal benefits.

8. Determination of Entitlement to Indemnification. Upon written request by 

Indemnitee for indemnification pursuant to Sections 3, 4, 5, 6 or 7, the entitlement of Indemnitee 

to indemnification, to the extent not provided pursuant to the terms of this Agreement, shall be 

determined by the following person or persons who shall be empowered to make such 

determination: (i) by the Board of Directors by a majority vote of a quorum consisting of 

directors not at the time parties to the proceeding; (ii) by a majority vote of a committee duly 

designated by the Board of Directors (in which designation directors who are parties may 

3
participate), consisting solely of two or more directors not at the time parties to the proceeding; 

(iii) by Special Legal Counsel (as defined below) (1) selected by the Board of Directors or its 

committee in a manner prescribed in subsection (i) or (ii) hereof, or (2) if a quorum of the Board 

of Directors cannot be obtained under subsection (i) hereof and a committee cannot be 

designated under subsection (ii) hereof, selected by a majority vote of the full Board of Directors 

(in which selection directors who are parties may participate); or (iv) by the stockholders, 

provided, however, that shares owned by or voted under the control of directors who are at the 

time parties to the proceeding may not be voted on the determination. Upon failure of the Board 

of Directors or committee designated by the Board of Directors, as applicable, so to select such 

Special Legal Counsel, or upon failure of Indemnitee so to approve, such Special Legal Counsel 

shall be selected upon application to a court of competent jurisdiction. Authorization of 

indemnification and evaluation as to reasonableness of Expenses shall be made in the same 

manner as the determination that indemnification is permissible, as provided in this Section 8, 

provided however, that, if the determination is made by Special Legal Counsel, authorization of 

indemnification and evaluation as to the reasonableness of Expenses shall be made by those 

entitled under subsection (iii) hereof to select such Special Legal Counsel.

Such determination of entitlement to indemnification shall be made not later than 90 

calendar days after receipt by Freddie Mac of a written request for indemnification. Such request 

shall include documentation or information which is necessary for such determination and which 

is reasonably available to Indemnitee. Any Expenses incurred by Indemnitee in connection with 

a request for indemnification or payment of Expenses hereunder, under any other agreement, any 

provision of the Bylaws or any directors’ and officers’ liability insurance, shall be borne by 

Freddie Mac. Freddie Mac hereby indemnifies Indemnitee for any such Expense and agrees to 

hold Indemnitee harmless therefrom irrespective of the outcome of the determination of 

Indemnitee’s entitlement to indemnification. If the person making such determination shall 

determine that Indemnitee is entitled to indemnification as to part (but not all) of the application 

for indemnification, such person shall reasonably prorate such partial indemnification among the 

claims, issues or matters at issue at the time of the determination.

9. Presumptions and Effect of Certain Proceedings. The Corporate Secretary of 

Freddie Mac shall, promptly upon receipt of Indemnitee’s request for indemnification, advise in 

writing the Board of Directors or such other person or persons empowered to make the 

determination as provided in Section 8 that Indemnitee has made such request for 

indemnification. The Corporate Secretary of Freddie Mac shall also promptly notify the 

Conservator that such a request has been made. Upon making such request for indemnification, 

Indemnitee shall be presumed to be entitled to indemnification hereunder and Freddie Mac shall 

have the burden of proof in making any determination contrary to such presumption. The 

termination of any Proceeding described in Sections 3 or 4 by judgment, order, settlement or 

conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself be 

determinative that the Indemnitee did not meet the relevant standard of conduct.

10. Remedies of Indemnitee in Cases where Claim is not Paid in Full in a Timely 

Manner. If a claim under this Agreement is not paid in full by Freddie Mac within 90 days after 

a written claim has been received by Freddie Mac, except in the case of a claim for an 

advancement of expenses, in which case the applicable period shall be 20 days, Indemnitee may 

4
at any time thereafter apply to either the United States District Court for the district within which 

Freddie Mac’s principal office is located or to the court where the Proceeding is pending, if any, 

for an order directing Freddie Mac to make an advancement of expenses or to provide 

indemnification. The court shall order Freddie Mac to make an advancement of expenses or to 

provide indem-nification, as the case may be, if it determines that Indemnitee is entitled under 

this Agreement to such an advancement of expenses or indemnification, and in such event shall 

order Freddie Mac to pay Indemnitee’s reasonable expenses (including attorneys’ fees) to obtain 

the order. Neither the failure of Freddie Mac (including its Board of Directors, committee, 

Special Legal Counsel or its stockholders) to have made a determination, as provided in Section 

8, prior to the commencement of such action permitted by this Section, that Indemnitee is 

entitled to receive an advancement of expenses or indemnification, nor the determination by 

Freddie Mac (including its Board of Directors, committee, Special Legal Counsel or its 

stockholders) that Indemnitee is not entitled to an advancement of expenses or indemnification, 

shall create a presumption to that effect or otherwise itself be a defense to Indemnitee’s 

application for an advancement of expenses or indemnification.

11. Remedies of Indemnitee in Cases of Determination not to Indemnify or to Pay 

Expenses. In the event that a determination is made that Indemnitee is not entitled to 

indemnification hereunder or if payment has not been timely made following a determination of 

entitlement to indemnification pursuant to Sections 8 and 9, or if Expenses are not paid pursuant 

to Section 17, Indemnitee shall be entitled to final adjudication in a court of competent 

jurisdiction of entitlement to such indemnification or payment from Freddie Mac. Alternatively, 

Indemnitee at Indemnitee’s option may seek an award in an arbitration to be conducted by a 

single arbitrator pursuant to the rules of the American Arbitration Association, such award to be 

made within 60 days following the filing of the demand for arbitration. Freddie Mac shall not 

oppose Indemnitee’s right to seek any such adjudication or award in arbitration or any other 

claim. The determination in any such judicial proceeding or arbitration shall be made de novo

and Indemnitee shall not be prejudiced by reason of a determination (if so made) pursuant to 

Sections 8 or 9 that Indemnitee is not entitled to indemnification. If a determination is made or 

deemed to have been made pursuant to the terms of Section 8 or 9 that Indemnitee is entitled to 

indemnification, Freddie Mac shall be bound by such determination and is precluded from 

asserting that such determination has not been made or that the procedure by which such 

determination was made is not valid, binding and enforceable. Freddie Mac further agrees to 

stipulate in any such court or before any such arbitrator that Freddie Mac is bound by all the 

provisions of this Agreement and is precluded from making any assertions to the contrary. If the 

court or arbitrator shall determine that Indemnitee is entitled to any indemnification or payment 

of Expenses hereunder, Freddie Mac shall pay all Expenses actually and reasonably incurred by 

Indemnitee in connection with such adjudication or award in arbitration (including, but not 

limited to, any appellate Proceedings).

12. Other Rights to Indemnification. The rights to indemnification and to the 

advance-ment of expenses conferred in this Agreement shall not be exclusive of any other right 

which any person may have or hereafter acquire under any statute (including Freddie Mac’s 

enabling legislation), or any agreement, vote of stockholders or disinterested directors or 

otherwise.

5
13. Expenses to Enforce Agreement. In the event that Indemnitee is subject to or 

intervenes in any Proceeding in which the validity or enforceability of this Agreement is at issue 

or seeks an adjudication or award in arbitration to enforce Indemnitee’s rights under, or to 

recover damages for breach of, this Agreement, Indemnitee, if Indemnitee prevails in whole or in 

part in such action, shall be entitled to recover from Freddie Mac and shall be indemnified by 

Freddie Mac against any actual Expenses incurred by Indemnitee.

14. Effective Date and Continuation of Indemnity. This Agreement shall be 

[retroactive to and] effective as of [DATE]. All agreements and obligations of Freddie Mac 

contained herein shall continue during the period Indemnitee is a director, officer, employee or 

agent of Freddie Mac or is serving at the request of Freddie Mac as a director, officer, manager, 

partner, trustee, fiduciary, employee or agent of another corporation, limited liability company, 

partnership, joint venture, trust or other entity, including service with respect to an employee 

benefit plan and shall continue thereafter with respect to any possible claims based on the fact 

that Indemnitee was a director, officer employee or agent of Freddie Mac or was serving at the 

request of Freddie Mac as a director, officer, manager, partner, trustee, fiduciary, employee or 

agent of another corporation, limited liability company, partnership, joint venture, trust or other 

entity, including service with respect to an employee benefit plan. This Agreement shall be 

binding upon all successors and assigns of Freddie Mac (including any transferee of all or 

substantially all of its assets and any successor by merger or operation of law) and shall inure to 

the benefit of the heirs, personal representatives and estate of Indemnitee.

15. Notification and Defense of Claim. Promptly after receipt by Indemnitee of 

notice of any Proceeding, Indemnitee will, if a claim in respect thereof is to be made against 

Freddie Mac under this Agreement, notify the Corporate Secretary of Freddie Mac in writing of 

the commencement thereof; but the omission so to notify Freddie Mac will not relieve it from 

any liability that it may have to Indemnitee. Notwithstanding any other provision of this 

Agreement, with respect to any such Proceeding of which Indemnitee notifies Freddie Mac:

a. Freddie Mac shall be entitled to participate therein at its own expense; and

b. Except as otherwise provided in this Section 15(b), to the extent that it may wish, 

Freddie Mac, jointly with any other indemnifying party similarly notified, shall be 

entitled to assume the defense thereof, with counsel satisfactory to Indemnitee. After 

notice from Freddie Mac to Indemnitee of its election so to assume the defense thereof, 

Freddie Mac shall not be liable to Indemnitee under this Agreement for any expenses of 

counsel subsequently incurred by Indemnitee in connection with the defense thereof 

except as otherwise provided below. Indemnitee shall have the right to employ 

Indemnitee’s own counsel in such Proceeding, but the fees and expenses of such counsel 

incurred after notice from Freddie Mac of its assumption of the defense thereof shall be at 

the expense of Indemnitee unless (i) the employment of counsel by Indemnitee has been 

authorized by Freddie Mac, (ii) Indemnitee shall have reasonably concluded that there 

may be a conflict of interest between Freddie Mac and Indemnitee in the conduct of the 

defense of such action or (iii) Freddie Mac shall not within 60 calendar days of receipt of 

notice from Indemnitee in fact have employed counsel to assume the defense of the 

action, in each of which cases the fees and expenses of Indemnitee’s counsel shall be at 

6
the expense of Freddie Mac. Freddie Mac shall not be entitled to assume the defense of 

any Proceeding brought by or on behalf of Freddie Mac or as to which Indemnitee shall 

have made the conclusion provided for in (ii) above; and

c. If Freddie Mac has assumed the defense of a Proceeding, Freddie Mac shall not be 

liable to indemnify Indemnitee under this Agreement for any amounts paid in settlement 

of any Proceeding effected without Freddie Mac’s written consent. Freddie Mac shall not 

settle any Proceeding in any manner that would impose any penalty or limitation on or 

disclosure obligation with respect to Indemnitee without Indemnitee’s written consent. 

Neither Freddie Mac nor Indemnitee will unreasonably withhold its consent to any 

proposed settlement.

16. Notices. All notices and other communications given or made pursuant to this 

Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery 

to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during 

normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) 

five (5) days after having been sent by registered or certified mail, return receipt requested, 

postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, 

specifying next-day delivery, with written verification of receipt. All communications shall be 

sent:

a. To Indemnitee at:

[NAME]

Federal Home Loan Mortgage Corporation

Attention: Corporate Secretary

8200 Jones Branch Drive

McLean, Virginia 22102

b. To Freddie Mac at:

Federal Home Loan Mortgage Corporation

Attention: Corporate Secretary

8200 Jones Branch Drive

McLean, Virginia 22102

Telephone: 703-903-3380

or to such other address as may have been furnished by a party hereto to the other party hereto, 

by like notice.

17. Advancement of Expenses. Indemnitee shall have the right to have the Expenses 

reasonably incurred or suffered in defending any Proceeding in advance of its final disposition or 

in the circumstances described in Section 7 paid by Freddie Mac (hereinafter, an “advancement 

of expenses”); provided, however, that an advancement of expenses shall be made (i) only upon 

delivery to Freddie Mac of a written statement by Indemnitee of Indemnitee’s good faith belief 

that Indemnitee has met the standard of conduct set forth in the applicable Section of this 

7
Agreement, and (ii) only if Indemnitee furnishes to Freddie Mac a written undertaking, executed 

by or on behalf of Indemnitee, to repay any funds advanced if Indemnitee is not entitled to 

mandatory indemnification under Section 5 and it is ultimately determined that Indemnitee is not 

entitled to indemnification. The undertaking required above shall be an unlimited general 

obligation of Indemnitee but need not be secured and shall be accepted without reference to the 

financial ability of Indemnitee to make repayment.

18. Severability; Prior Indemnification Agreements. If any provision or provisions of 

this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever (a) 

the validity, legality and enforceability of the remaining provisions of this Agreement (including 

without limitation, all portions of any paragraphs of this Agreement containing any such 

provision held to be invalid, illegal or unenforceable, that are not by themselves invalid, illegal 

or unenforceable) shall not in any way be affected or impaired thereby, and (b) to the fullest 

extent possible, the provisions of this Agreement (including, without limitation, all portions of 

any paragraph of this Agreement containing any such provision held to be invalid, illegal or 

unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as 

to give effect to the intent of the parties that Freddie Mac provide protection to Indemnitee to the 

fullest enforceable extent. This Agreement shall supersede and replace any prior indemnification 

agreements entered into by and between Freddie Mac and Indemnitee and any such prior 

agreements shall be terminated upon execution of this Agreement.

19. Headings; References. The headings of the sections of this Agreement are 

inserted for convenience only and shall not be deemed to constitute part of this Agreement or to 

affect the construction thereof References herein to section numbers are to sections of this 

Agreement. 

20. Definitions. For purposes of this Agreement:

a. “Expenses” includes, without limitation, expenses incurred in connection with the 

defense or settlement of any and all investigations, judicial or administrative proceedings 

or appeals, attorneys’ fees, witness fees and expenses, fees and expenses of accountants 

and other advisors, retainers and disbursements and advances thereon, the premium, 

security for, and other costs relating to any bond (including cost bonds, appraisal bonds 

or their equivalents), and any expenses of establishing a right to indemnification under 

Sections 8, 11 and 13 above but shall not include the amount of judgments, fines or 

penalties actually levied against Indemnitee and shall include only amounts reasonably 

and actually incurred by Indemnitee.

b. “Liabilities” means the obligation to pay a judgment, settlement, penalty, fine, 

including any excise tax assessed with respect to an employee benefit plan, or reasonable 

expenses incurred with respect to a Proceeding.

c. “Special Legal Counsel” means a law firm or a member of a law firm that neither 

is presently nor in the past five years has been retained to represent: (i) Freddie Mac or 

Indemnitee in any matter material to either such party, provided, however, that it shall be 

permissible for Special Legal Counsel to have been previously engaged by Freddie Mac, 

8
its Board of Directors or committee thereof to make determinations with respect to 

indemnification or advancement of expenses, or (ii) any other party to the Proceeding 

giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the 

term “Special Legal Counsel” shall not include any person who, under the applicable 

standards of professional conduct then prevailing, would have a conflict of interest in 

representing either Freddie Mac or Indemnitee in an action to determine Indemnitee’s 

right to indemnification under this Agreement.

d. “Proceeding” includes any threatened, pending or completed investigation (other 

than internal investigations of the conduct of Freddie Mac employees), action, suit or 

other proceeding, whether brought in the name of Freddie Mac or otherwise, against 

Indemnitee, for which indemnification is not prohibited under Section 2 above and 

whether of a civil, criminal, administrative, arbitrative or investigative and whether 

formal or informal, including, but not limited to, actions, suits or proceedings in which 

Indemnitee may be or may have been involved as a party or otherwise, by reason of the 

fact that Indemnitee is or was a director, officer, employee or agent of Freddie Mac, or is 

or was serving, at the request of Freddie Mac, as a director, officer, manager, partner, 

trustee, fiduciary, employee or agent of another corporation, limited liability company, 

partnership, joint venture, trust or other entity, including service with respect to an 

employee benefit plan, whether or not Indemnitee is serving in such capacity at the time 

any Liability or Expense is incurred for which indemnification or reimbursement can be 

provided under this Agreement.

21. Other Provisions.

a. This Agreement shall be interpreted and enforced in accordance with the laws of 

Virginia, without regard to its conflict of laws rules.

b. This Agreement may be executed in one or more counterparts, each of which shall 

for all purposes be deemed to be an original but all of which together shall constitute one 

and the same Agreement. Only one such counterpart signed by the party against whom 

enforceability is sought needs to be produced as evidence of the existence of this 

Agreement.

c. This Agreement shall not be deemed an employment contract between Freddie 

Mac and Indemnitee, and Indemnitee specifically acknowledges that Indemnitee may be 

discharged at any time for any reason, with or without cause, and with or without 

severance compensation, except as may be otherwise provided in a separate written 

contract between Indemnitee and Freddie Mac.

d. Upon a payment to Indemnitee under this Agreement, Freddie Mac shall be 

subrogated to the extent of such payment to all of the rights of Indemnitee to recover 

against any person for such liability, and Indemnitee shall execute all documents and 

instruments required and shall take such other actions as may be necessary to secure such 

rights, including the execution of such documents as may be necessary for Freddie Mac 

to bring suit to enforce such rights.

9
e. No supplement, modification or amendment of this Agreement shall be binding 

unless executed in writing by both parties hereto. No waiver of any of the provisions of 

this Agreement shall be deemed or shall constitute a waiver of any other provisions 

hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. Any 

subsequent supplement, modification or amendment of this Agreement shall not diminish 

Indemnitee’s rights under this Agreement with respect to any act or omission occurring 

before such supplement, modification or amendment.

f. Nothing in this Agreement shall be construed to permit indemnification expressly 

prohibited by 12 U.S.C. §4636.

g. Notwithstanding any provision to the contrary in this Agreement, indemnification 

for actions instituted by FHFA will be governed by the standards set forth in FHFA’s 

Rule on Golden Parachute and Indemnification Payments at 12 CFR Part 1231.

h. Nothing in this Agreement is intended to, or shall be construed to, create in any 

way any liability or obligation on the part of the United States or any department or 

agency thereof under or in any provision of this Agreement, it being the intention of 

Freddie Mac and Indemnitee that the obligations undertaken by Freddie Mac hereunder 

are the sole and exclusive responsibility of Freddie Mac.

i. In the event conservatorship is terminated, this Agreement shall remain in full 

force and effect.

10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the 

date set forth in Section 14.

FEDERAL HOME LOAN MORTGAGE CORPORATION

By: 

[NAME], Chief Executive Officer

Date: 

[NAME], Indemnitee

Date: 

11
Exhibit 1

UNDERTAKING TO REPAY INDEMNIFICATION EXPENSES

I, ____________________, agree to reimburse Federal Home Loan Mortgage 

Corporation (“Freddie Mac”) for all expenses paid to me by Freddie Mac pursuant to Section 17 

of the Indemnification Agreement effective as of [DATE], for my defense in any civil or 

criminal action, suit, or proceeding, in the event, and to the extent that it shall ultimately be 

determined that I am not entitled to retain such amounts. I believe in good faith good that I have 

met the standard of conduct set forth in the Indemnification Agreement effective as of [DATE].

Signature 

Typed Name 

Office 

STATE OF 

COUNTY OF 

Before me _____________________, on this day personally appeared ____________________, 

known to me to be the person whose name is subscribed to the foregoing instrument, and who, 

after being duly sworn, stated that the contents of said instrument is to the best of his/her 

knowledge and belief true and correct and who acknowledged that he/she executed the same for 

the purpose and consideration therein expressed.

GIVEN under my hand and official seal on this _____ day of 20___.

 

Notary Public

My commission expires:

12
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 Michael J. 

DeVito, Christian M. Lown, Jerry Weiss, Alicia S. Myara, and Prabha Sipi Bhandari, 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, 2021 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 8, 2021.

/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 Michael J. 

DeVito, Christian M. Lown, Jerry Weiss, Alicia S. Myara, and Prabha Sipi Bhandari, 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, 2021 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 7, 2021

/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 Michael J. 

DeVito, Christian M. Lown, Jerry Weiss, Alicia S. Myara, and Prabha Sipi Bhandari, 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, 2021 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 11, 2022

 /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 Michael J. 

DeVito, Christian M. Lown, Jerry Weiss, Alicia S. Myara, and Prabha Sipi Bhandari, 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, 2021 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 8, 2021

 /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 Michael J. 

DeVito, Christian M. Lown, Jerry Weiss, Alicia S. Myara, and Prabha Sipi Bhandari, 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, 2021 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 8, 2021.

 /s/ Mark B. Grier 

Mark B. Grier
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 Michael J. 

DeVito, Christian M. Lown, Jerry Weiss, Alicia S. Myara, and Prabha Sipi Bhandari, 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, 2021 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 8, 2021.

 /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 Michael J. 

DeVito, Christian M. Lown, Jerry Weiss, Alicia S. Myara, and Prabha Sipi Bhandari, 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, 2021 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 8, 2021.

 /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 Michael J. 

DeVito, Christian M. Lown, Jerry Weiss, Alicia S. Myara, and Prabha Sipi Bhandari, 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, 2021 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 7, 2021

 /s/ S. Sara Mathew 

 S. Sara Mathew
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 Michael J. 

DeVito, Christian M. Lown, Jerry Weiss, Alicia S. Myara, and Prabha Sipi Bhandari, 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, 2021 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 8, 2021.

 /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 Michael J. 

DeVito, Christian M. Lown, Jerry Weiss, Alicia S. Myara, and Prabha Sipi Bhandari, 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, 2021 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 7, 2021.

 /s/ Alberto G. Musalem 

Alberto G. Musalem
Exhibit 31.1

CERTIFICATION

PURSUANT TO SECURITIES EXCHANGE ACT RULE 13a-14(a)

I, Michael J. DeVito, certify that:

1. I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2021 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 10, 2022

/s/ Michael J. DeVito

Michael J. DeVito

Chief Executive Officer
Exhibit 31.2

CERTIFICATION

PURSUANT TO SECURITIES EXCHANGE ACT RULE 13a-14(a)

I, Christian M. Lown, certify that:

1. I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2021 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 10, 2022

/s/ Christian M. Lown

Christian M. Lown

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, 2021 of the Federal Home Loan Mortgage 

Corporation (the "Company"), as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, 

Michael J. DeVito, 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 10, 2022

/s/ Michael J. DeVito

Michael J. DeVito

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, 2021 of the Federal Home Loan Mortgage 

Corporation (the "Company"), as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, 

Christian M. Lown, 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 10, 2022

/s/ Christian M. Lown

Christian M. Lown

Executive Vice President and Chief Financial Officer