Supporting the Nation's Housing Recovery

During one of the worst housing and financial crises in decades, Freddie Mac is working to support the housing market and answer the nation's call to assist with its economic recovery. We are deploying taxpayer-backed capital responsibly to maintain a liquid and stable mortgage market that provides America's families with affordable financing and refinancing options, and helps distressed borrowers avoid foreclosure.

Mortgage Landscape

Delinquency rates are at historically high levels. At the end of March 2010, the U.S. had more than 5.2 million seriously delinquent mortgages. Freddie Mac holds ten percent of these. So while we own approximately a quarter of all outstanding first home loans, we hold a disproportionately small percentage of seriously delinquent mortgages.

Freddie Mac Holds a Disproportionately Small Percentage of the Nation's Seriously Delinquent Loans

Sources: FDIC, Freddie Mac, Fannie Mae, Mortgage Bankers Association, HUD, First American CoreLogic (LoanPerformance), Federal Reserve. Note: Data as of March 31, 2010. Seriously Delinquent loans were at least 90 days delinquent or in foreclosure. Components may not sum to 100% because of rounding. Freddie Mac and Fannie Mae figures include whole loans held in portfolio and in guaranteed securities outstanding.

Providing Essential Liquidity

Throughout the downturn, Freddie Mac has continued to support the market by helping to ensure a stable source of home mortgage funding. Together, Freddie Mac and Fannie Mae provide most of the liquidity to the housing market – purchasing or guaranteeing approximately 3 out of every 5 home loans originated in the first half of 2010.

Since the beginning of 2009, Freddie Mac has purchased or guaranteed $727 billion in mortgage loans and mortgage-related securities – helping 3.3 million families own or rent a home. This includes $501 billion in refinanced home loans that created an estimated aggregate savings of $5.6 billion for more than 2.3 million families. More than 365,000 of these loans were refinanced through the Freddie Mac Relief Refinance mortgage.

In addition, we are providing affordable housing credit by supporting the Administration's Housing Finance Agency initiative for state and local finance agencies. The company has delivered approximately $12 billion in affordable housing credit to local markets across the country – providing affordable mortgages for working families and enabling the development and rehabilitation of affordable rental properties.

Freddie Mac Has Helped More Than 2.3 Million Borrowers Refinance into Lower Rates since 2009

Relief Refinance volumes with CLTV >80% are Home Affordable Refinance Program (HARP) loans under the MHA Program. Annual savings represents the estimated reduction of interest paid by the borrower during the first year of refinance (rate reduction multiplied by new mortgage balance). Calculated based on Freddie Mac Relief Refinance Mortgages and other refinance mortgages.

Helping Struggling Borrowers Avoid Foreclosure

Another important focus for Freddie Mac is helping distressed borrowers avoid foreclosure. Since the beginning of 2009, the company has helped more than 350,000 borrowers stay in their homes or sell their properties through its long-standing foreclosure avoidance programs and the Administration's Home Affordable Modification program (HAMP).

Keeping People in Their Homes is a Priority at Freddie Mac

Based on the number of modifications offered by the company's servicers and accepted, or acknowledged by the company and the borrower during the period. Includes completed loan modifications under HAMP; however, the number of such completions differs from that reported by the MHA Program administrator in part due to differences in the timing of recognizing the completions by the company and the administrator. HAMP data as reported by the MHA Program Administrator.

In June 2010, Freddie Mac initiated another component of the Making Home Affordable program – the Home Affordable Foreclosure Alternatives (HAFA). Through short sales and deeds-in-lieu of foreclosure, this option allows borrowers to transition to more affordable housing and avoid foreclosure when keeping their home is not a realistic option.

The company also recently introduced additional temporary streamlined loan modification processes for borrowers who complete an existing trial period but do not qualify for a permanent modification under HAMP. These non-HAMP backup modifications are intended to minimize the need for certain additional documentation, enabling borrowers to receive a modification even if they did not qualify for a modification under HAMP.

Freddie Mac continues to find innovative and effective ways to help borrowers avoid foreclosure. From opening Borrower Help Centers in four cities to participating in hundreds of foreclosure workshops nationwide, we are deeply committed to helping troubled homeowners keep their homes.

Restoring Excellence through Responsible Lending

Together with our lenders, we are building a strong foundation of responsible lending practices to produce better quality loans. This will mean more sustainable homeownership for families, fewer unexpected costs for lenders, less need for taxpayer funding and better loan performance for Freddie Mac.

The cornerstone of our responsible lending efforts is ensuring that loans have a combination of strong loan attributes. By strengthening credit standards and ending our purchases of certain types of non-traditional mortgages, we have seen notable improvements in the quality of loans we finance. In fact, compared with 2007 new-loan purchases – excluding loans refinanced through the Freddie Mac Relief Refinance mortgage – our credit scores have gone up, original loan-to-value (LTV) ratios have gone down, and debt-to-income ratios have become more manageable for borrowers.

Single-family loans we financed
	2007	2009	Jan – Jun 30 2010
Average credit score on mortgages by book year *	710	756	751
Original LTV of these mortgages (percent) *	76	67	70
Percentage of borrowers with low credit scores (<620) and original LTVs > 90% **	7	1	1

* Based on holdings as of June 30, 2010
** As of period end

These are significant changes and we will continue working to improve the integrity and quality of loans we purchase. This will strengthen sustainable homeownership for U.S. families and help restore confidence in the U.S. housing finance system.