Freddie Mac 2014 Annual Report Download - page 291

286 Freddie Mac
Relief refinance mortgage — A single-family mortgage loan delivered to us for purchase or guarantee that meets the criteria
of the Freddie Mac Relief Refinance Mortgagesm initiative. Part of this initiative is our implementation of HARP for our loans,
and relief refinance options are also available for certain non-HARP loans. Although HARP is targeted at borrowers with
current LTV ratios above 80%, our initiative also allows borrowers with LTV ratios of 80% and below to participate.
REMIC — Real Estate Mortgage Investment Conduit — A type of multiclass mortgage-related security that divides the cash
flows (principal and interest) of the underlying mortgage-related assets into two or more classes that meet the investment
criteria and portfolio needs of different investors.
REMICs and Other Structured Securities (or in the case of Multifamily securities, Other Structured Securities) — Single-
and multiclass securities issued by Freddie Mac that represent beneficial interests in pools of PCs and certain other types of
mortgage-related assets. REMICs and Other Structured Securities that are single-class securities pass through the cash flows
(principal and interest) on the underlying mortgage-related assets. REMICs and Other Structured Securities that are multiclass
securities divide the cash flows of the underlying mortgage-related assets into two or more classes designed to meet the
investment criteria and portfolio needs of different investors. Our principal multiclass securities qualify for tax treatment as
REMICs. We include our securitizations of Ginnie Mae securities and tax-exempt multifamily housing revenue bonds in this
classification.
REO — Real estate owned — Real estate which we have acquired through foreclosure or through a deed in lieu of foreclosure.
RSU — Restricted stock unit
S&P — Standard & Poor’s
SEC — Securities and Exchange Commission
Secondary mortgage market — A market consisting of institutions engaged in buying and selling mortgages in the form of
whole loans (i.e., mortgages that have not been securitized) and mortgage-related securities. We participate in the secondary
mortgage market by issuing guaranteed mortgage-related securities, principally PCs, and by purchasing mortgage loans and
mortgage-related securities for investment.
Senior preferred stock — The shares of Variable Liquidation Preference Senior Preferred Stock issued to Treasury under the
Purchase Agreement.
Seriously delinquent — Single-family mortgage loans that are three monthly payments or more past due or in the process of
foreclosure as reported to us by our servicers.
SERP — Supplemental Executive Retirement Plan
SERP II — The Federal Home Loan Mortgage Corporation Supplemental Executive Retirement Plan II
Short sale — Typically an alternative to foreclosure consisting of a sale of a mortgaged property in which the homeowner sells
the home at market value and the lender accepts proceeds (sometimes together with an additional payment or promissory note
from the borrower) that are less than the outstanding mortgage indebtedness in full satisfaction of the loan.
Single-family credit guarantee portfolio — Consists of unsecuritized single-family loans, single-family loans held by
consolidated trusts, and single-family loans underlying non-consolidated Other Guarantee Transactions and loans covered by
other guarantee commitments. Excludes our REMICs and Other Structured Securities that are backed by Ginnie Mae
Certificates and our guarantees under the HFA initiative because these guarantees do not expose us to meaningful amounts of
credit risk due to the credit enhancement provided on them by the U.S. government.
Single-family mortgage — A mortgage loan secured by a property containing four or fewer residential dwelling units.
Spread — The difference between the yields of two debt securities, or the difference between the yield of a debt security and a
benchmark yield, such as LIBOR.
STACR — Structured Agency Credit Risk transaction, in which we issue and sell debt securities, the principal balance of
which is subject to the performance of a reference pool of single-family mortgage loans owned or guaranteed by Freddie Mac.
Strips — Mortgage pass-through securities created by separating the principal and interest payments on a pool of mortgage
loans. A principal-only strip entitles the security holder to principal cash flows, but no interest cash flows, from the underlying
mortgages. An interest-only strip entitles the security holder to interest cash flows, but no principal cash flows, from the
underlying mortgages.
Subprime — Participants in the mortgage market may characterize single-family loans based upon their overall credit quality
at the time of origination, generally considering them to be prime or subprime. Subprime generally refers to the credit risk
classification of a loan. There is no universally accepted definition of subprime. The subprime segment of the mortgage market
primarily serves borrowers with poorer credit payment histories and such loans typically have a mix of credit characteristics
that indicate a higher likelihood of default and higher loss severities than prime loans. Such characteristics might include,
among other factors, a combination of high LTV ratios, low credit scores or originations using lower underwriting standards,
such as limited or no documentation of a borrower’s income. While we have not historically characterized the loans in our
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