Freddie Mac 2014 Annual Report Download - page 287

282 Freddie Mac
Dollar roll transactions — Transactions whereby we enter into an agreement to sell and subsequently repurchase (or purchase
and subsequently resell) agency securities.
DSCR — Debt Service Coverage Ratio — An indicator of future credit performance for multifamily loans. The DSCR
estimates a multifamily borrower’s ability to service its mortgage obligation using the secured property’s cash flow, after
deducting non-mortgage expenses from income. The higher the DSCR, the more likely a multifamily borrower will be able to
continue servicing its mortgage obligation.
Duration — Duration is a measure of a financial instrument’s price sensitivity to changes in interest rates.
Duration gap — One of our primary interest-rate risk measures. Duration gap is a measure of the difference between the
estimated durations of our interest rate sensitive assets and liabilities. We present the duration gap of our financial instruments
in units expressed as months. A duration gap of zero implies that the change in value of our interest rate sensitive assets from an
instantaneous change in interest rates would be expected to be accompanied by an equal and offsetting change in the value of
our debt and derivatives, thus leaving the net fair value of equity unchanged.
ESPP — Employee Stock Purchase Plan
EVP — Executive Vice President
Exchange Act — Securities and Exchange Act of 1934, as amended
Executive Compensation Program — Executive Management Compensation Program, as amended and restated
Fannie Mae — Federal National Mortgage Association
FASB — Financial Accounting Standards Board
FDIC — Federal Deposit Insurance Corporation
Federal Reserve — Board of Governors of the Federal Reserve System
FHA — Federal Housing Administration
FHFA — Federal Housing Finance Agency — An independent agency of the U.S. government with responsibility for
regulating Freddie Mac, Fannie Mae, and the FHLBs.
FHLB — Federal Home Loan Bank
Fixed-rate mortgage — Refers to a mortgage originated at a specific rate of interest that remains constant over the life of the
loan. For purposes of presentation in this report and elsewhere in our reporting, we have categorized a number of modified
loans as fixed-rate loans (instead of as adjustable rate loans), even though the modified loans have rate adjustment provisions.
In these cases, while the terms of the modified loans provide for the interest rate to adjust in the future, such future rates are
determined at the time of the modification rather than at a subsequent date.
Foreclosure alternative — A workout option pursued when a home retention action is not successful or not possible. A
foreclosure alternative is either a short sale or deed in lieu of foreclosure.
Foreclosure or foreclosure transfer — Refers to our completion of a transaction provided for by the foreclosure laws of the
applicable state, in which a delinquent borrower’s ownership interest in a mortgaged property is terminated and title to the
property is transferred to us or to a third party. State foreclosure laws commonly refer to such transactions as foreclosure sales,
sheriff’s sales, or trustee’s sales, among other terms. When we, as mortgage holder, acquire a property in this manner, we pay
for it by extinguishing some or all of the mortgage debt.
Freddie Mac mortgage-related securities — Securities we issue and guarantee, including PCs, REMICs and Other Structured
Securities, and Other Guarantee Transactions.
GAAP — Generally accepted accounting principles in the United States of America.
Ginnie Mae — Government National Mortgage Association, which guarantees the timely payment of principal and interest on
mortgage-related securities backed by federally insured or guaranteed loans, primarily those insured by FHA or guaranteed by
the VA.
GSE Act — The Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended by the Reform Act.
GSEs — Government sponsored enterprises — Refers to certain legal entities created by the U.S. government, including
Freddie Mac, Fannie Mae, and the FHLBs.
Guarantee fee — The fee that we receive for guaranteeing the payment of principal and interest to mortgage security investors,
which consists primarily of a combination of management and guarantee fees paid on a monthly basis, as a percentage of the
UPB of the underlying loans, and initial upfront payments, such as delivery fees.
Guidelines — Corporate Governance Guidelines, as revised
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