Freddie Mac 2014 Annual Report Download - page 289

284 Freddie Mac
MHA Program — Making Home Affordable Program — Formerly known as the Housing Affordability and Stability Plan, the
MHA Program was announced by the Administration in February 2009. The MHA Program is designed to help in the housing
recovery, promote liquidity and housing affordability, expand foreclosure prevention efforts and set market standards. The
MHA Program includes HARP and HAMP.
Mortgage assets — Refers to both mortgage loans and the mortgage-related securities we hold in our mortgage-related
investments portfolio.
Mortgage-related investments portfolio — Our investment portfolio, which consists of mortgage-related securities and
single-family and multifamily mortgage loans. The size of our mortgage-related investments portfolio under the Purchase
Agreement is determined without giving effect to the January 1, 2010 change in accounting guidance related to transfers of
financial assets and consolidation of VIEs. Accordingly, for purposes of the portfolio limit, when PCs and certain Other
Guarantee Transactions are purchased into the mortgage-related investments portfolio, this is considered the acquisition of
assets rather than the reduction of debt.
Mortgage-to-debt OAS — The net OAS between the mortgage and agency debt sectors. This is an important factor in
determining the expected level of net interest yield on a new mortgage asset. Higher mortgage-to-debt OAS means that a newly
purchased mortgage asset is expected to provide a greater return relative to the cost of the debt issued to fund the purchase of
the asset and, therefore, a higher net interest yield. Mortgage-to-debt OAS tends to be higher when there is weak demand for
mortgage assets and lower when there is strong demand for mortgage assets.
Multifamily mortgage — A mortgage loan secured by a property with five or more residential rental units and manufactured
housing loans.
Multifamily mortgage portfolio — Consists of multifamily mortgage loans held by us on our consolidated balance sheets as
well as our guarantee of non-consolidated Freddie Mac mortgage-related securities, and other guarantee commitments, but
excluding those underlying our guarantees of HFA bonds under the HFA initiative.
Multifamily new business activity — Represents loan purchases and issuances of other guarantee commitments and Other
Structured Securities by the Multifamily segment. Excludes Other Guarantee Transactions.
Net worth (deficit) — The amount by which our total assets exceed (or are less than) our total liabilities as reflected on our
consolidated balance sheets prepared in conformity with GAAP.
Net worth sweep dividend, Net Worth Amount, and Capital Reserve Amount — For each quarter from January 1, 2013
through and including December 31, 2017, the dividend payment on the senior preferred stock will be the amount, if any, by
which our Net Worth Amount at the end of the immediately preceding fiscal quarter, less the applicable Capital Reserve
Amount, exceeds zero. The term Net Worth Amount is defined as: (a) the total assets of Freddie Mac (excluding Treasury’s
commitment and any unfunded amounts thereof), less; (b) our total liabilities (excluding any obligation in respect of capital
stock), in each case as reflected on our consolidated balance sheets prepared in accordance with GAAP. If the calculation of the
dividend payment for a quarter does not exceed zero, then no dividend shall accrue or be payable for that quarter. The
applicable Capital Reserve Amount was $2.4 billion for 2014, is $1.8 billion for 2015, and will be reduced by $600 million
each year thereafter until it reaches zero on January 1, 2018. For each quarter beginning January 1, 2018, the dividend payment
will be the amount, if any, by which our Net Worth Amount at the end of the immediately preceding fiscal quarter exceeds zero.
New single-family book — Consists of mortgage loans in our single-family credit guarantee portfolio that were originated
from 2009 to 2014, excluding HARP and other relief refinance mortgages. We do not include relief refinance mortgages,
including HARP loans, in this book as underwriting procedures for relief refinance mortgages are limited, and, in many cases,
do not include all of the changes in underwriting standards we have implemented since 2008.
NIBP — New Issue Bond Program is a component of the HFA initiative in which we and Fannie Mae issued partially-
guaranteed pass-through securities to Treasury that are backed by bonds issued by various state and local HFAs. The program
provides financing for HFAs to issue new housing bonds. Treasury is obligated to absorb any losses under the program up to a
certain level before we are exposed to any losses.
Non-accrual loan — A loan for which we are not accruing interest income. We place mortgage loans on non-accrual status
when we believe collectability of principal and interest in full is not reasonably assured, which generally occurs when a loan is
three monthly payments past due, unless the loan is well secured and in the process of collection based upon an individual loan
assessment.
NPV — Net present value
NYSE — New York Stock Exchange
OAS — Option-adjusted spread — An estimate of the incremental yield spread between a particular financial instrument (e.g.,
a security, loan or derivative contract) and a benchmark yield curve (e.g., LIBOR or agency or U.S. Treasury securities). This
includes consideration of potential variability in the instrument’s cash flows resulting from any options embedded in the
instrument, such as prepayment options. When the OAS on a given asset widens, the fair value of that asset will typically
decline, all other market factors being equal. The opposite is true when the OAS on a given asset tightens.
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