Item 1.01. Entry into a Material Definitive Agreement.
On January 14, 2021, Freddie Mac (formally known as the Federal Home Loan
Mortgage Corporation), acting through the Federal Housing Finance Agency (FHFA)
as its Conservator, and the U.S. Department of the Treasury (Treasury) entered
into a letter agreement (Letter Agreement) (i) to further 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 30, 2019 (Senior Preferred Stock Certificate), or to
issue a replacement Senior Preferred Stock Certificate, to modify the dividend
and liquidation preference provisions of the senior preferred stock effective as
of December 31, 2020 and (ii) to further amend the Amended and Restated Senior
Preferred Stock Purchase Agreement dated as of September 26, 2008, between
Treasury and Freddie Mac, acting through FHFA, as amended (Purchase Agreement).
A copy of the Letter Agreement is filed as Exhibit 10.1 to this Current Report
on Form 8-K and is incorporated herein by reference.
The principal modifications to be made to the Senior Preferred Stock Certificate
and Purchase Agreement pursuant to the Letter Agreement are summarized below:
•Extend Capital Retention: The net worth sweep dividend requirement has been
revised to permit Freddie Mac to continue to retain earnings.
•Freddie Mac will not be required to pay a dividend to Treasury on the senior
preferred stock until we have achieved our regulatory minimum capital, including
buffers, pursuant to FHFA's final rule on Enterprise Regulatory Capital
Framework, published in the Federal Register on December 17, 2020. As
compensation to Treasury, the aggregate liquidation preference of the senior
preferred stock will be increased by the increase in the Net Worth Amount (as
defined in the Purchase Agreement) during this period.
•Upon the Capital Reserve End Date (as defined in the Letter Agreement), we will
resume quarterly cash dividend payments of the lesser of (i) 10% of the
liquidation preference of the senior preferred stock and (ii) the increase in
the Net Worth Amount, if any, during the prior quarter. If at any time we fail
to pay a required cash dividend, the dividend amount will be 12% of the
liquidation preference of the senior preferred stock.
•Before the Capital Reserve End Date, Treasury and Freddie Mac will set a
periodic commitment fee for Treasury's remaining funding commitment, with
payment of such fee commencing after the Capital Reserve End Date.
•Allow for Common Stock Issuance at Appropriate Time: Treasury will not allow
Freddie Mac to issue common stock until: (i) Treasury has exercised in full its
warrant to acquire 79.9% of our common stock and (ii) all currently pending
material litigation relating to the conservatorship and/or the Purchase
Agreement has been resolved or settled. Treasury will allow up to $70 billion of
the proceeds of such a stock issuance to be used to build capital.
•Establish Additional Requirements To Exit Conservatorship: FHFA agrees that it
will not, without the prior written consent of Treasury, terminate our
conservatorship (other than in connection with receivership) before (i) all
currently pending material litigation relating to the conservatorship and/or the
Purchase Agreement has been resolved or settled and (ii) Freddie Mac for two or
more consecutive quarters has and maintains "common equity tier 1 capital" of at
least 3% of its "adjusted total assets" (both as defined in the Enterprise
Regulatory Capital Framework).
•Limit Future Increases to the Retained Mortgage Portfolio: The Purchase
Agreement cap on our retained mortgage portfolio will be lowered from $250
billion currently to $225 billion at the end of 2022, and the calculation of
Mortgage Assets subject to the cap will include 10% of the notional value of
interest-only securities.
•Provide Small Lender Protections: Freddie Mac is required to purchase loans for
cash consideration; operate this cash window with non-discriminatory pricing;
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 comply with directives, regulations, restrictions, or other requirements
prescribed by FHFA related to equitable secondary market access by community
lenders.

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•Memorialize FHFA Multifamily Lending Caps: Freddie Mac is required to cap
multifamily loan purchases at $80 billion in any 52-week period, and at least
50% of these acquisitions in any calendar year must be mission-driven, as
defined by FHFA.
•Increase Restrictions on Single-Family Loan Acquisitions: Freddie Mac is
required to limit the acquisition of higher-risk single-family mortgage loans.
•A maximum of 6% of purchase money mortgages and 3% of refinance mortgages over
the trailing 52-week period can have two or more of the following higher-risk
characteristics at origination: combined loan-to-value (LTV) ratio greater than
90%; debt-to-income ratio greater than 45%; and FICO or equivalent credit score
less than 680.
•Acquisitions of single-family mortgage loans secured by either second homes or
investment properties will be limited to 7% of the single-family mortgage loan
acquisitions over the preceding 52-week period.
•Subject to such exceptions as FHFA may prescribe to permit us to acquire
single-family mortgage loans that are currently eligible for acquisition,
Freddie Mac will be required to implement by July 1, 2021 a program reasonably
designed to ensure that each single-family mortgage loan acquired is: (i) a
qualified mortgage; (ii) exempt from the CFPB's ability-to-repay requirements;
(iii) secured by an investment property, subject to the restrictions above; (iv)
a refinancing with streamlined underwriting for high LTV ratios; (v) a loan with
temporary underwriting flexibilities due to exigent circumstances, as determined
in consultation with FHFA; or (vi) secured by manufactured housing.
•Require Compliance with Enterprise Regulatory Capital Framework: For purposes
of the Purchase Agreement Capital Covenant, Freddie Mac is required to comply
with the Enterprise Regulatory Capital Framework as currently in effect (i.e.,
disregarding any subsequent amendment or other modifications to that rule).
•Commit to Develop Proposal to Resolve Conservatorship: Treasury and Freddie Mac
commit to work to restructure Treasury's investment and dividend amount in a
manner that facilitates our orderly exit from conservatorship, ensures Treasury
is appropriately compensated, and permits us to raise third-party capital and
make distributions as appropriate.
As a result of our previous issuance to Treasury of a 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. For a discussion of our relationship and transactions with
Treasury, see "Introduction - About Freddie Mac - Conservatorship and Government
Support for Our Business," "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Conservatorship and Related Matters -
Purchase Agreement, Warrant, and Senior Preferred Stock," and "Note 2:
Conservatorship and Related Matters - Related Parties as a Result of
Conservatorship" in our Annual Report on Form 10-K filed on February 13, 2020.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The exhibits listed in the Exhibit Index below are being filed as part of this
Current Report on Form 8-K.
Exhibit Number                Description of Exhibit

         10.1                   Letter     Agreement dated January 14, 2021 between the United States
                              Department of the Treasury and the Federal Home Loa    n Mortgage
                              Corporat    ion, acting thro    ugh the

Federal Housing Finance Agency as


                              its Conservator
         104                  Cover Page Interactive Data File (embedded

within the Inline XBRL document)

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Freddie Mac Form 8-K

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