Thank you, Bob [Levy].

It is indeed a pleasure to be here to celebrate the 20th anniversary of this conference with you. This conference is a great forum for Freddie Mac to meet with our customers. We have a great team from Freddie Mac here. I hope you will take a moment to speak with them, possibly during our reception tonight or at our exhibit booth this afternoon or tomorrow morning.

As Bob said, I joined Freddie Mac in the fall of 1982, and in the spring of 1983 I attended my first Northeast Regional MBA conference. At that time mortgage rates were at record highs - well into the double digits. There was a financial crisis in the savings and loan industry, which was the dominant mortgage lender in the country. The secondary mortgage market was in its infancy.

A lot has changed over these 20 years.

Today, mortgage rates are at record lows. Mortgage banking dominates when it comes to financing America's homebuyers, and the secondary market provides a reliable source of mortgage financing. This financing has evolved to include many different types of securities: mortgage-backed securities, multiclass securities and debt.

Freddie Mac has developed deep and liquid markets for our securities. We have attracted investors in the United States and we are attracting investors abroad - in Asia and Europe - to finance housing in America. More than one-third of our long-term debt financing comes from overseas, including over 60 central banks of foreign governments.

Perhaps the biggest change over the past 20 years has been for America's homebuyers. Today, homebuyers have many more choices of mortgage loans; they have lower costs and fees; terms are more flexible; and the mortgage process is faster, easier and fairer than it has ever been. As a result, the demand for homeownership in America - as a place for family to gather and as a valuable investment - is stronger than ever.

This morning, I would like to focus my remarks on two areas. First, I would like to talk a little more about the mortgage market - where it stands today and some trends shaping the future. Then I would like to talk about what Freddie Mac is doing to help you finance homes for more families in the years ahead.

The theme of this year's conference is "Mortgage Mardi Gras: Let the Good Times Roll." Looking at the housing and mortgage markets last year, that theme certainly is appropriate. As you all know, 2002 was a remarkable year for housing in America, following a remarkable year in 2001. I believe 2002 should be remembered as the "Year of the Homeowner."

More than 7.5 million families purchased homes last year - that's one out of every 12 homes in the United States. One and a half million of those families were first-time homebuyers. In addition, more than 11 million homeowners refinanced their homes, enabling them to save millions of dollars in interest costs.

Many of those families also converted some of their home equity into cash - enabling them to finance education and improve their homes. In fact, they drew out a record $90 billion. This helped fuel consumer spending, debt consolidation and investment - supporting a weak economy and making housing truly a bright spot in the nation's economy.

All told, mortgage originations totaled nearly $2.5 trillion - a record for the second year in a row.

The unprecedented success and remarkable development of America's housing finance system did not happen by accident. It happened because the primary mortgage market and the secondary mortgage market have worked jointly to find better ways to finance housing over the years.

Freddie Mac links the global capital markets to lenders in communities across the nation. All of you - America's lenders - find ways to make that money available to millions of families. Together, we financed a home every 1.5 seconds during 2002, helping more than 4.5 million families buy or refinance homes. Freddie Mac purchased $600 billion in mortgage loans last year, setting a new record.

The facts confirm that we have built the strongest housing finance system in the world. When I travel to other parts of the world, I realize the stark differences between what is available to homebuyers here and what is available elsewhere. A 30-year fixed-rate mortgage that can be prepaid anytime is not the typical mortgage in other countries. It is a great product for the consumer.

In 2003, Freddie Mac is committed to working with you to ensure that "The Good Times" continue to roll for America's homebuyers, not withstanding the uncertainty that exists in the economy.

Earlier this month, mortgage rates hit their lowest level in more than 40 years - about 5.6 percent. Housing continues to be one of the few bright spots in the current economy. Freddie Mac expects housing to remain a source of strength for the nation and the economy throughout 2003. Mortgage rates should average just below 6 percent for the rest of the year. We expect home sales and construction to meet or possibly exceed the levels set in 2002.

Looking beyond this year and out to the rest of this decade, we see a shift in the mortgage market. Today's refinance-driven market will become a purchase-money market. Homebuyers have refinanced into record low mortgage rate loans, and they are likely to hold onto those loans for a long time. We are all going to be challenged to improve our businesses and reach out to new borrowers looking to buy homes.

To help you compete in this market, Freddie Mac provides you with technology that helps you handle business more efficiently and simplify the mortgage process. Think about how difficult it would have been just 10 years ago to process more than $2 trillion in originations, two years in a row. Automated underwriting and other technology innovations have made it possible.

Freddie Mac's Loan Prospector® has been a large part of this. It can evaluate a loan for purchase in a matter of seconds - about the time it takes to sign a traditional loan application. In addition to speed, Loan Prospector's increased predictive power helps lenders approve the vast majority of applications. In fact, in 2002 a record 8 million loans were evaluated through the system.

Our Website, loanprospector.com, which we launched last December, automates even more of the origination process. This new business-to-business Website makes it even easier for lenders to access automated underwriting, as well as order additional closing services - including appraisals, flood and title services. It provides an online credit counseling tool and training and support materials as well.

Freddie Mac also is working to enhance our technology to make it even easier for you to sell loans to Freddie Mac. Our new Web-based selling system automates loan pricing, delivery and funding. It gives customers the flexibility to conduct business anywhere and choose their own commitment and funding dates. This system is now available when you sell loans for cash with mandatory delivery, and retain the servicing. In the future it will be available for all types of business.

Freddie Mac also is providing you with the tools to serve a more diverse generation of homebuyers. It's well known that families entering the market are more diverse than ever, and we expect more minority borrowers to enter the market every day. To put this trend in perspective, consider some statistics: 15 million first-time homebuyers are expected to enter the market this decade - 20 percent more than entered last decade; 9 million of these first-time homebuyers will be minority families; and nearly a third of new households in this decade will be of Hispanic background.

These demographic trends increase the opportunities to serve the market, and challenge us to find new ways to serve the market.

Last year, President Bush launched his Blueprint for the American Dream, calling on America's housing industry to help 5.5 million minority families becomes homeowners this decade. It's a big goal; it's an important goal.

Freddie Mac immediately responded to the President's call with a comprehensive set of initiatives that target the entire homebuying process. We call our initiatives Catch the Dream - Catch the Dream of homeownership. Catch the Dream represents a joint effort with the entire housing industry - mortgage lenders, community-based nonprofit organizations, home builders and real estate professionals.

Our Catch the Dream initiatives are designed to help address the remaining barriers to homeownership that many families face - whether it's the need for greater knowledge about the homebuying process, the need for more flexible loan products, or the need for better tools and technology for lenders to reach out and serve diverse homebuyer needs.

In December, I joined HUD Secretary Mel Martinez and several of Freddie Mac's public and private partners to launch one of our initiatives in the Catch the Dream program - an initiative called CreditSmart Español. CreditSmart Español is a Spanish-language consumer credit education initiative, created in partnership with seven leading Hispanic organizations. It builds on our successful CreditSmart curriculum, which was introduced a couple of years ago and was developed with five Historically Black Colleges and Universities.

CreditSmart is currently being distributed nationwide through several partners, including lender partners as well as the National Urban League and the U.S. Coast Guard. It is designed to help families in communities across America build and maintain strong credit - a key to future homeownership.

Freddie Mac's goal is to build on our strong history of expanding homeownership opportunities for underserved families. We must do it one family at a time, and we need to work with you.

In 2002, Freddie Mac financed a record number of homes for low- and moderate-income and minority families. More families own homes today than ever before. Still there is more we can do to expand homeownership opportunities.

Over this decade, America's homebuyers will need an additional $6 trillion in mortgage financing - effectively doubling mortgage debt outstanding to $12 trillion. Freddie Mac will continue to attract capital from all over the world to provide you with the financing to serve America's homebuyers. We will continue to provide you with the tools you need to be more efficient in a competitive market. We will continue to offer products that enable you to finance a more diverse generation of families.

I am certain we can make the best housing finance system in the world even better in the years ahead. Thank you.