UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 8, 2008
FEDERAL HOME LOAN MORTGAGE CORPORATION
(Exact name of registrant as specified in its charter)
Freddie Mac
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Federally chartered
corporation
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000-53330
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52-0904874
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(State or other jurisdiction of
incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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8200 Jones Branch Drive
McLean, Virginia
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22102
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code:
(703) 903-2000
Not applicable
(Former name or former address, if changed since last
report)
Check the appropriate box below if the
Form 8-K
filing is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o Written
communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
o Soliciting
material pursuant to
Rule 14a-12
under the Exchange Act
(17 CFR 240.14a-12)
o Pre-commencement
communications pursuant to
Rule 14d-2(b)
under the Exchange Act
(17 CFR 240.14d-2(b))
o Pre-commencement
communications pursuant to
Rule 13e-4(c)
under the Exchange Act
(17 CFR 240.13e-4(c))
Item 5.02. Departure
of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
Freddie Mac (formally known as the Federal Home Loan Mortgage
Corporation) sponsors the Federal Home Loan Mortgage Corporation
Executive Deferred Compensation Plan (the “Plan”). On
October 8, 2008, Freddie Mac approved certain changes to
the Plan.
The Plan, as changed, will permit participants to make a
one-time election by October 31, 2008 to change the timing
and form of the in-service distribution of their existing
non-equity balances in the Plan (“Deferrals”).
Employee participants may (and, in the case of those
participants who deferred payment until retirement, will be
required under Internal Revenue Code Section 409A to)
change their outstanding Deferral elections, and choose one of
the following: (1) distribution of Deferrals in three
installments on March 15, 2009 (30%), December 15,
2009 (approximately 30%) and May 15, 2010 (the remaining
balance, including interest); or (2) distribution of
Deferrals after a fixed number of years (but no earlier than
5 years after the one-time election), paid out in either a
lump sum or 5, 10 or 15 annual installments. If an employee
leaves the company for any reason after electing to receive
in-service distributions in accordance with the above changes to
the Plan, distributions subsequent to the separation date will
be made in accordance with existing provisions of the Plan. As
of October 7, 2008, Michael C. May, senior vice
president — Multifamily, has a balance of $2,548,442
in the Plan and David B. Kellerman, interim chief financial
officer, has a balance of $120,472 in the Plan.
Item 8.01. Other
Events.
On October 9, 2008, the Federal Housing Finance Agency
(“FHFA”) issued a press release announcing several
capital-related decisions, including the following:
Suspension
of Capital Classifications During Conservatorship
The Director of FHFA has suspended capital classifications of
Freddie Mac during the conservatorship, in light of the United
States Treasury’s Senior Preferred Stock Purchase
Agreement. The existing statutory and FHFA-directed regulatory
capital requirements will not be binding during the
conservatorship.
Management
During Conservatorship
FHFA, as conservator, has directed Freddie Mac to focus on
managing to a positive stockholder’s equity.
Disclosure
of Capital Positions During Conservatorship
During the conservatorship, FHFA will not issue quarterly
capital classifications of Freddie Mac. Freddie Mac will
continue to submit capital reports to FHFA during the
conservatorship and relevant capital figures (minimum capital
requirement, core capital, and GAAP net worth) will be available
in Freddie Mac’s quarterly
10-Q
filings, as well as on FHFA’s website. FHFA does not intend
to publish critical capital, risk-based capital, or subordinated
debt levels during the
conservatorship. In light of its new authority under the Housing
and Economic Recovery Act of 2008, FHFA will be revising the
minimum capital and risk-based capital requirements.
Second
Quarter Capital Classification
The Director of FHFA has classified Freddie Mac as
undercapitalized as of June 30, 2008, using FHFA’s
discretionary authority as provided in the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992, as
amended. FHFA stated that, although Freddie Mac’s capital
calculations for June 30, 2008 reflect that it met the
FHFA-directed and statutory requirements for capital, the
continued market downturn during late July and August raised
significant questions about the sufficiency of its capital. The
Director cited the following factors, which led to the need for
conservatorship, in support of his decision to downgrade the
classification to undercapitalized:
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Accelerating safety and soundness weaknesses, especially with
regard to credit risk, earnings outlook, and capitalization;
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Continued and substantial deterioration in equity, debt, and MBS
market conditions;
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The current and projected financial performance and condition of
the company as reflected in its second quarter financial report
and FHFA’s ongoing examinations;
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The inability of the company to raise capital or to issue debt
according to normal practices and prices;
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The critical importance of the company in supporting the
country’s residential mortgage market; and
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Concerns that a growing proportion of the company’s
statutory core capital consisted of intangible assets.
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