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Petitioner was chartered by Congress on July 24, 1970, by
the Emergency Home Financing Act of 1970, Pub. L. 91-351, title
III (Federal Home Loan Mortgage Corporation Act), 84 Stat. 450.
Petitioner was originally exempt from Federal income taxation.
However, Congress repealed petitioner’s Federal income tax
exemption status in the Deficit Reduction Act of 1984 (DEFRA),
Pub. L. 98-369, sec. 177, 98 Stat. 709. Pursuant to this act,
petitioner became subject to Federal income taxation, effective
January 1, 1985.
Petitioner held mortgages in its retained mortgage portfolio
or as collateral for issuances of collateralized mortgage
obligations (CMOs). In other cases, petitioner, as guarantor of
participation certificates (PCs)2 it issued, would reacquire
mortgages placed in a PC pool that became delinquent.3
Petitioner routinely acquired real estate by foreclosure when
mortgages that it owned became delinquent. In some cases,
mortgages that petitioner held, and had never sold, became
delinquent.
In a number of cases, the ownership of mortgages, which were
in default, was transferred to petitioner before January 1, 1985.
2PCs are securities representing beneficial ownership of the
principal and interest payments on a pool of mortgages.
3Regardless of the manner in which petitioner acquired the
delinquent mortgages, all real estate that petitioner acquired
through foreclosure of delinquent mortgages is known as “real
estate owned”.
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Last modified: May 25, 2011