Freddie Mac 2010 Annual Report Download - page 344

Treasury — U.S. Department of the Treasury
UPB — Unpaid principal balance
USDA — U.S. Department of Agriculture
VA — U.S. Department of Veteran Affairs
VIE — Variable Interest Entity — A VIE is an entity: (a) that has a total equity investment at risk that is not sufficient to
finance its activities without additional subordinated financial support provided by another party; or (b) where the group of
equity holders does not have: (i) the ability to make significant decisions about the entity’s activities; (ii) the obligation to
absorb the entity’s expected losses; or (iii) the right to receive the entity’s expected residual returns.
Warrant — Refers to the warrant we issued to Treasury on September 8, 2008 pursuant to the Purchase Agreement. The
warrant provides Treasury the ability to purchase shares of our common stock equal to 79.9% of the total number of shares
of Freddie Mac common stock outstanding on a fully diluted basis on the date of exercise.
Workout, or loan workout — A workout is either: (a) a home retention action, which is either a loan modification,
repayment plan, or forbearance agreement; or (b) a foreclosure alternative, which is either a short sale or a deed in lieu of
foreclosure.
Yield curve — A graphical display of the relationship between yields and maturity dates for bonds of the same credit
quality. The slope of the yield curve is an important factor in determining the level of net interest yield on a new mortgage
asset, both initially and over time. For example, if a mortgage asset is purchased when the yield curve is inverted, with short-
term rates higher than long-term rates, our net interest yield on the asset will tend to be lower initially and then increase over
time. Likewise, if a mortgage asset is purchased when the yield curve is steep, with short-term rates lower than long-term
rates, our net interest yield on the asset will tend to be higher initially and then decrease over time.
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