Freddie Mac 2014 Annual Report Download - page 290

285 Freddie Mac
OFHEO — Office of Federal Housing Enterprise Oversight, the predecessor to FHFA.
Option ARM loan — Mortgage loans that permit a variety of repayment options, including minimum, interest-only, fully
amortizing 30-year and fully amortizing 15-year payments. The minimum payment alternative for option ARM loans allows the
borrower to make monthly payments that may be less than the interest accrued for the period. The unpaid interest, known as
negative amortization, is added to the principal balance of the loan, which increases the outstanding loan balance. For our non-
agency mortgage-related securities that are backed by option ARM loans, we categorize securities as option ARM if the
securities were identified as such based on information provided to us when we entered into these transactions. We have not
identified option ARM securities as either subprime or Alt-A securities.
Original LTV Ratio — A credit measure for mortgage loans, calculated as the UPB of the mortgage we guarantee including
any credit-enhanced portion, divided by the lesser of the appraised value of the property at the time of mortgage origination or
the mortgage borrower’s purchase price. Second liens not owned or guaranteed by us are excluded from the LTV ratio
calculation. The existence of a second-lien mortgage reduces the borrower’s equity in the home and, therefore, can increase the
risk of default and the amount of the gross loss if a default occurs.
OTC — Over-the-counter
OTCQB — A marketplace, operated by the OTC Markets Group Inc., for OTC-traded U.S. companies that are registered and
current in their reporting with the SEC or a U.S. banking or insurance regulator.
Other guarantee commitments — Mortgage-related assets held by third parties for which we provide our guarantee without
our securitization of the related assets.
Other Guarantee Transactions — Transactions in which third parties transfer non-Freddie Mac mortgage-related securities to
trusts specifically created for the purpose of issuing mortgage-related securities, or certificates. See "K Certificates" for more
information. We exclude our securitizations of Ginnie Mae securities and tax-exempt multifamily housing revenue bonds from
this classification.
PCs — Participation Certificates — Securities that we issue as part of a securitization transaction. Typically we purchase
mortgage loans from parties who sell mortgage loans, place a pool of loans into a PC trust and issue PCs from that trust. The
PCs are generally transferred to the seller of the mortgage loans in consideration of the loans or are sold to third-party investors
if we purchased the mortgage loans for cash.
Pension Plan — Employees’ Pension Plan
Pension SERP Benefit — The component of the SERP that relates to the Pension Plan.
Performing Loan — A mortgage loan where the borrower is less than three monthly payments past due, but not in the process
of foreclosure. Conversely, a non-performing loan is one where the borrower is three months or more past due or is in the
process of foreclosure. A reperforming loan is a mortgage loan that was previously classified as non-performing, but the
borrower subsequently made payments such that the loan returns to less than three months past due.
PMVS — Portfolio Market Value Sensitivity — One of our primary interest-rate risk measures. PMVS measures are estimates
of the amount of average potential pre-tax loss in the market value of our net assets due to parallel (PMVS-L) and non-parallel
(PMVS-YC) changes in LIBOR.
Pre-2005 Legacy single-family book — Consists of mortgage loans in our single-family credit guarantee portfolio that were
originated in 2004 and prior.
Primary mortgage market — The market where lenders originate mortgage loans and lend funds to borrowers. We do not
lend money directly to homeowners and do not participate in this market.
Purchase Agreement / Senior Preferred Stock Purchase Agreement — An agreement the Conservator, acting on our behalf,
entered into with Treasury on September 7, 2008, relating to Treasury's purchase of senior preferred stock, which was
subsequently amended and restated on September 26, 2008 and further amended on May 6, 2009, December 24, 2009, and
August 17, 2012.
Recorded Investment — The dollar amount of a loan recorded on our consolidated balance sheets, excluding any valuation
allowance, such as the allowance for loan losses, but which does reflect direct write-downs of the investment. Recorded
investment excludes accrued interest income.
Recoveries of charge-offs — Recoveries of charge-offs primarily result from foreclosure alternatives and REO acquisitions on
loans where: (a) a share of default risk has been assumed by mortgage insurers, servicers, or third parties through certain credit
enhancements; or (b) we received a reimbursement of our losses from a seller/servicer associated with a repurchase request on
a loan that experienced a foreclosure transfer or a foreclosure alternatives.
Reform Act — The Federal Housing Finance Regulatory Reform Act of 2008, which, among other things, amended the GSE
Act by establishing a single regulator, FHFA, for Freddie Mac, Fannie Mae, and the FHLBs.
REIT — Real estate investment trust
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