Freddie Mac 2014 Annual Report Download - page 286

281 Freddie Mac
Charter — The Federal Home Loan Mortgage Corporation Act, as amended, 12 U.S.C. § 1451 et seq.
CMBS — Commercial mortgage-backed security — A security backed by mortgages on commercial property (often including
multifamily rental properties) rather than one-to-four family residential real estate. Although the mortgage pools underlying
CMBS can include mortgages financing multifamily properties and commercial properties, such as office buildings and hotels,
the classes of CMBS that we hold receive distributions of scheduled cash flows only from multifamily properties. Military
housing revenue bonds are included as CMBS within investments-related disclosures. We have not identified CMBS as either
subprime or Alt-A securities.
Comprehensive income (loss) — Consists of net income (loss) plus total other comprehensive income (loss).
Conforming loan/Conforming jumbo loan/Conforming loan limit — A conventional single-family mortgage loan with an
original principal balance that is equal to or less than the applicable statutory conforming loan limit, which is a dollar amount
cap on the size of the original principal balance of single-family mortgage loans we are permitted by law to purchase or
securitize. The conforming loan limit is determined annually based on changes in FHFA’s housing price index. Any decreases
in the housing price index are accumulated and used to offset any future increases in the housing price index so that statutory
conforming loan limits do not decrease from year-to-year. Since 2006, the base conforming loan limit for a one-family
residence has been set at $417,000, and higher limits have been established in certain “high-cost” areas (currently, up to
$625,500 for a one-family residence). Higher limits also apply to two- to four-family residences, and for mortgages secured by
properties in Alaska, Guam, Hawaii and the U.S. Virgin Islands.
Actual high-cost area loan limits are set by FHFA for each county (or equivalent), and the loan limit for specific high-cost
areas may be lower than the maximum amounts. We refer to loans that we have purchased with UPB exceeding the base
conforming loan limit (i.e., $417,000) as conforming jumbo loans.
Beginning in 2008, pursuant to a series of laws, our loan limits in certain high-cost areas were increased temporarily
above the limits that otherwise would have been applicable (up to $729,750 for a one-family residence). The latest of these
increases expired on September 30, 2011.
Conservator — The Federal Housing Finance Agency, acting in its capacity as Conservator of Freddie Mac.
Convexity — A measure of how much a financial instrument’s duration changes as interest rates change.
Covered Officer — Those executives in the following positions, each of whom are compensated pursuant to the Executive
Management Compensation Program: (a) Chief Executive Officer; (b) Chief Operating Officer; (c) Chief Financial Officer;
(d) all Executive Vice Presidents; and (e) all Senior Vice Presidents. Each of the Named Executive Officers is a Covered
Officer.
Credit score — Credit score data is based on FICO scores, a credit scoring system developed by Fair, Isaac and Co. FICO
scores are currently the most commonly used credit scores. FICO scores are ranked on a scale of approximately 300 to 850
points with a higher value indicating a lower likelihood of credit default. Although we obtain updated credit information on
certain borrowers after the origination of a mortgage, such as those borrowers seeking a modification, the scores presented in
our reports represent the credit score of the borrower at the time of loan origination or our purchase and may not be indicative
of the current credit worthiness of the borrower.
Credit enhancement — Any number of different financial arrangements that are designed to reduce credit risk by partially or
fully compensating an investor in the event of certain financial losses. Examples of credit enhancements include mortgage
insurance, overcollateralization, indemnification agreements, credit risk transfer transactions, and government guarantees.
Credit losses — Consists of charge-offs, net and REO operations expense.
Credit-related (benefit) expense (or credit-related expense) — Consists of our provision (benefit) for credit losses and REO
operations expense.
Deed in lieu of foreclosure — An alternative to foreclosure in which the borrower voluntarily conveys title to the property to
the lender and the lender accepts such title (sometimes together with an additional payment by the borrower) in full satisfaction
of the mortgage indebtedness.
Delinquency — A failure to make timely payments of principal or interest on a mortgage loan. For single-family mortgage
loans, we generally report delinquency rate information based on the number of loans that are seriously delinquent. For
multifamily loans, we report delinquency rate information based on the UPB of loans that are two monthly payments or more
past due or in the process of foreclosure. Mortgage loans that have been modified are not counted as delinquent as long as the
borrower is not delinquent under the modified terms.
Derivative — A financial instrument whose value depends upon the characteristics and value of an underlying financial asset
or index, such as a security or commodity price, interest or currency rates, or other financial indices.
Directors’ Plan — 1995 Directors’ Stock Compensation Plan, as amended and restated
Dodd-Frank Act — Dodd-Frank Wall Street Reform and Consumer Protection Act.
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