Qc 10 08 2008 Final Final

FREDDIE MAC QUALITY CONTROL BUISNESS STRATEGY DISCUSSION October 2008 Providing Strategic Business Development Services, and Strategic Business and Technology Consulting Services to the Financial Services Industry

The Capital Financial Solutions (CFS) Executive Team ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Bringing CFS Assets to Bare ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Capital Financial Solutions Overview & Approach Solutions Broad and deep assessment & triaging of business problems – FAST! Triage the Problem Objectively Explore Solution Options Solve The Problem as Quickly & Cost Effectively as Possible Is it better that I try to solve the problem with help, or are there existing full/partial solutions in the market?

CFS’ Human & Strategic Assets Strategic Partnerships Expertise & Human Capital ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

How important is Quality Control? Fitch review of 2005/2006 subprime loans. More than one finding per loan in some cases: ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Fitch selected a sample of 45 subprime loans, targeting high CLTV, stated documentation loans, including many with early missed payments. In particular, we selected loans that were primarily purchase transactions having a higher range of FICO scores (650 to 770), because high FICO scores and purchase transactions are historically attributes which generally reduce the risk of default. Fitch’s analysts conducted an independent analysis of these files with the benefit of the full origination and servicing files. The result of the analysis was disconcerting at best, as there was the appearance of fraud or misrepresentation in almost every file.

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Quality Control & Loss Mitigation Considerations & Observations ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Next Steps ,[object Object],[object Object],[object Object],[object Object]

Appendix - Other Strategic Suggestions ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Illustration of a Loss Mitigation Triage Model - Phase I Freddie Mac Responsibilities One Illustrative Example of How CFS Assets Can Be Deployed CFS Servicer Management Organization Loss Mitigation Proxy for FRE ,[object Object],[object Object],[object Object],[object Object],FRE Servicers ,[object Object],[object Object],[object Object],[object Object],[object Object]

Illustration of a Loss Mitigation Triage Model - Phase II Audit/Assessment ,[object Object],[object Object],[object Object],Servicers Fail Fail Early Resolution Success Loss Mitigation Proxy ER Fail REO Manage Asset Servicers ,[object Object],[object Object],[object Object],[object Object],Loss Mitigation Capacity/Capability Audit/Assessment Dispatch servicing specialist(s) for onsite visit and support Fail Over Mechanism ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Get Well Plan Resolution Returns Responsibility Back to Servicer When Loan is Remediated

Qc 10 08 2008 Final Final

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Qc 10 08 2008 Final Final