Freddie Mac 2014 Annual Report Download - page 292

287 Freddie Mac
single-family credit guarantee portfolio as either prime or subprime, we monitor the amount of loans we have guaranteed with
characteristics that indicate a higher degree of credit risk. Notwithstanding our historical characterizations of the single family
credit guarantee portfolio, certain security collateral underlying our Other Guarantee Transactions has been identified as
subprime based on information provided to Freddie Mac when the transactions were entered into. We also categorize our
investments in non-agency mortgage-related securities as subprime if they were identified as such based on information
provided to us when we entered into these transactions.
SVP — Senior Vice President
Swaption — An option contract to enter into an interest-rate swap. In exchange for an option premium, a buyer obtains the
right but not the obligation to enter into a specified swap agreement with the issuer on a specified future date.
Target TDC — Target total direct compensation
TBA — To be announced
TCLFP — Temporary Credit and Liquidity Facility Program is a component of the HFA initiative in which we and Fannie Mae
issued credit and liquidity guarantees to holders of variable-rate demand obligations issued by various state and local HFAs.
Treasury is obligated to absorb any losses under the program up to a certain level before we are exposed to any losses. The
program was scheduled to expire on December 31, 2012. However, Treasury gave participants the option to extend their
individual TCLFP facilities to December 31, 2015. Certain participants elected to extend their TCLFP facilities to
December 2015.
TDR — Troubled debt restructuring — A restructuring of a debt constitutes a TDR if the creditor for economic or legal reasons
related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider.
Thrift/401(k) Plan — The Federal Home Loan Mortgage Corporation Thrift/401(k) Savings Plan
Total other comprehensive income (loss) (or other comprehensive income (loss)) — Consists of the after-tax changes in:
(a) the unrealized gains and losses on available-for-sale securities; (b) the effective portion of derivatives accounted for as cash
flow hedge relationships; and (c) defined benefit plans.
Total mortgage portfolio — Includes mortgage loans and mortgage-related securities held on our consolidated balance sheets
as well as the balances of our non-consolidated issued and guaranteed single-class and multiclass securities, and other
mortgage-related financial guarantees issued to third parties.
Transitional Plan — The Federal Home Loan Mortgage Corporation Transitional Retirement Savings Plan
Treasury — U.S. Department of the Treasury
UPB — Unpaid principal balance
USDA — U.S. Department of Agriculture
VA — U.S. Department of Veterans Affairs
Variation margin — Payments we make to or receive from a derivatives clearinghouse based on the change in fair value of a
derivative instrument. Variation margin is typically transferred within one business day.
VIE — Variable Interest Entity — A VIE is an entity: (a) that has a total equity investment at risk that is not sufficient to
finance its activities without additional subordinated financial support provided by another party; or (b) where the group of
equity holders does not have: (i) the ability to make significant decisions about the entity’s activities; (ii) the obligation to
absorb the entity’s expected losses; or (iii) the right to receive the entity’s expected residual returns.
Warrant — Refers to the warrant we issued to Treasury on September 7, 2008 pursuant to the Purchase Agreement. The
warrant provides Treasury the ability to purchase, for a nominal price, shares of our common stock equal to 79.9% of the total
number of shares of Freddie Mac common stock outstanding on a fully diluted basis on the date of exercise.
Workout, or loan workout — A workout is either: (a) a home retention action, which is either a loan modification, repayment
plan, or forbearance agreement; or (b) a foreclosure alternative, which is either a short sale or a deed in lieu of foreclosure.
XBRL — eXtensible Business Reporting Language
Yield curve — A graphical display of the relationship between yields and maturity dates for bonds of the same credit quality.
The slope of the yield curve is an important factor in determining the level of net interest yield on a new mortgage asset, both
initially and over time. For example, if a mortgage asset is purchased when the yield curve is inverted (i.e., short-term interest
rates higher than long-term interest rates), our net interest yield on the asset will tend to be lower initially and then increase
over time. Likewise, if a mortgage asset is purchased when the yield curve is steep (i.e., short-term interest rates lower than
long-term interest rates), our net interest yield on the asset will tend to be higher initially and then decrease over time.
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