Freddie Mac · OTC:FMCC

Freddie Mac — Investor Day (April 2023)

12 slides from Freddie Mac's investor day presentation, Apr 20, 2023

  1. Slide 1: Single-Family Credit Risk Management Overview

    Single-Family Credit Risk Management Overview Public Prepared by Freddie Mac © Freddie Mac

  2. Slide 2: Today's Speaker

    Today’s Speaker Terri Merlino Senior Vice President & Chief Credit Officer, Single-Family Business As chief credit officer for the past three years, Terri Merlino leveraged her broad-based knowledge of mortgage operations, sales, processing, underwriting, quality control and secondary marketing acti

  3. Slide 3: Our Agenda

    Our 1. Remaining Mission & Risk Management Agenda Focused for 2023 2. Single-Family Credit Risk Management 3. The Three Cs 4. Notable Policy Actions 5. Affordable Program Concentration & Risk in 2023 Public Document Title & Date Goes Here Prepared by Freddie Mac © Freddie Mac

  4. Slide 4: Remaining Mission & Risk Management Focused for 2023

    Remaining Mission & Risk Management Focused for 2023 • A key strategic priority is delivering on our mission by providing sustainable and equitable access to affordable housing • One area of focus in supporting our mission is to practice risk management excellence; we must meet our affordable goals

  5. Slide 5: Single-Family Credit Risk Management

    Single-Family Credit Risk Management Automated Analytics, Seller / Servicer Credit Policy Underwriting Risk Reporting & Oversight Assessment Technology • Define, implement and • Use automation, • Provide single point of • Establish benchmarks for manage credit policy, insights and accountability for

  6. Slide 6: The Three Cs and the Platform

    The Cs The Platform Automated Underwriting Risk Assessment Pre-Qual/ Processing/ Credit refers to a borrower’s willingness to repay Pre-Closing Closing the loan, in this context. Factors that determine Application Underwriting Credit credit include: • Credit score • Risk Assessment • Foreclosures &

  7. Slide 7: Funding Mix Shifted; but Quality Remains Strong

    Funding Mix Shifted; but Quality Remains Strong • Rising rates in 2022 shifted the market toward purchases and refinances with lower origination volumes. Purchases made up 80% of Q4 and 58% of all 2022 funding, while 2022 volume was down nearly 60% from 2021. • Average TLTV increased during the year

  8. Slide 8: Notable Policy Actions

    Notable Policy Actions Credit Underwriting Affordable Refinance Mortgages: Accessory Dwelling Unit (ADU): • Added a requirement that when there is a change in borrowers between the new Expanded to allow the following flexibilities and clarifications: mortgage and the mortgage being refinanced, the n

  9. Slide 9: Notable Policy Actions cont.

    Notable Policy Actions cont. COVID-19 Related Underwriting Requirement Added in Seller/Servicer Guide Desktop Appraisals: • Due to success of desktop appraisals permitted for COVID-19, effective for new Loan Product Advisor submissions or resubmissions on or after March 6, 2022, Sellers were offered

  10. Slide 10: Affordable Program Concentration & Risk to Increase in 2023

    Affordable Program Concentration & Risk to Increase in 2023 • Affordable Program loans have higher concentration of risk tails and layered risks than non- Affordable Program loans. Borrowers are also much more likely to be first-time home buyers, qualifying on one borrower’s income, and below 80% of

  11. Slide 11: Questions?

    Questions? Public Prepared by Freddie Mac © Freddie Mac

  12. Slide 12: Thank You

    Thank You Public Prepared by Freddie Mac © Freddie Mac

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