Freddie Mac 2014 Annual Report Download - page 171

166 Freddie Mac
Mortgage-Related Security Trusts
Freddie Mac Securities
Freddie Mac securities related to our variable interests in non-consolidated VIEs primarily consist of our REMICs and
Other Structured Securities and Other Guarantee Transactions. At both December 31, 2014 and 2013, our involvement with
most of our REMICS and Other Structured Securities as well as certain Other Guarantee Transactions does not provide us with
the power to direct the activities that most significantly impact the economic performance of these VIEs. As a result, we hold a
variable interest in, but are not the primary beneficiary of those securitization trusts. For non-consolidated REMICs and Other
Structured Securities and Other Guarantee Transactions, our investments are primarily included in either available-for-sale
securities or trading securities on our consolidated balance sheets. Our investments in these trusts are funded through the
issuance of unsecured debt, which is recorded as other debt on our consolidated balance sheets.
Non-Freddie Mac Securities
We invest in a variety of mortgage-related securities issued by third-parties, including non-Freddie Mac agency
securities, CMBS, other private-label securities backed by various mortgage-related assets, and obligations of states and
political subdivisions. These investments typically represent interests in trusts that consist of a pool of mortgage-related assets
and act as vehicles to allow originators to securitize those assets. Securities are structured from the underlying pool of assets to
provide for varying degrees of risk, including potential loss from the credit risk and interest-rate risk of the assets. The
originators of the financial assets or the underwriters of the securities offering create the trusts and typically own the residual
interest in the trust assets. See “NOTE 7: INVESTMENTS IN SECURITIES” for additional information regarding our non-
Freddie Mac securities.
We are not generally the primary beneficiary of non-Freddie Mac securities trusts because our investments are passive in
nature and do not provide us with the power to direct the activities of the trusts that most significantly impact their economic
performance. We were not the primary beneficiary of any significant non-Freddie Mac securities trusts as of December 31,
2014 or 2013. At both December 31, 2014 and 2013, our exposure was limited to the amount of our investment. Our
investments in these trusts are funded through the issuance of unsecured debt, which is recorded as other debt on our
consolidated balance sheets.
Unsecuritized Multifamily Loans
We purchase loans made to various multifamily real estate entities. We primarily purchase such loans for securitization.
The loans we acquire usually are, at origination, equal to 80% or less of the value of the related underlying property. The
remaining 20% of value is typically funded through equity contributions by the partners or members of the borrower entity. In a
few cases, the 20% not funded through the loan we acquire also includes subordinate loans or mezzanine financing from third-
party lenders.
We held more than 4,400 and 5,000 unsecuritized multifamily loans at December 31, 2014 and 2013, respectively. The
UPB of our investments in these loans was $53.0 billion and $59.2 billion as of December 31, 2014 and 2013, respectively, and
was included in unsecuritized held-for-investment mortgage loans, at amortized cost, and held-for-sale mortgage loans at fair
value on our consolidated balance sheets. We are not generally the primary beneficiary of the multifamily real estate borrowing
entities because the loans we acquire are passive in nature and do not provide us with the power to direct the activities of these
entities that most significantly impact their economic performance. However, when a multifamily loan becomes delinquent, we
may become the primary beneficiary of the borrowing entity depending upon the structure of this entity and the rights granted
to us under the governing legal documents. At both December 31, 2014 and 2013, the amount of unsecuritized multifamily
loans for which we could be considered the primary beneficiary of the underlying borrowing entity was not material. See
“NOTE 4: MORTGAGE LOANS AND LOAN LOSS RESERVES” for more information.
Other
Our involvement with other VIEs primarily includes certain of our other mortgage-related guarantees and other guarantee
commitments that we account for as derivatives.
At December 31, 2014 and 2013, we were the primary beneficiary of zero and one, respectively, real estate entities that
invest in multifamily property, related to credit-enhanced multifamily housing revenue bonds that were not deemed to be
material. We were not the primary beneficiary of the remainder of other VIEs because our involvement in these VIEs is passive
in nature and does not provide us with the power to direct the activities of the VIEs that most significantly impact their
economic performance. See “Table 3.1 — Variable Interests in VIEs for which We are not the Primary Beneficiary” for the
carrying amounts and classification of the assets and liabilities recorded on our consolidated balance sheets related to our other
variable interests in non-consolidated VIEs, as well as our maximum exposure to loss as a result of our involvement with these
VIEs.
Non-Cash Investing and Financing Activities
We consolidate certain of our multiclass REMIC and Other Structured Securities trusts when we hold substantially all of
the beneficial interests issued by the trust. Upon consolidation of a multiclass REMIC and Other Structured Securities trust, we
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