Freddie Mac 2015 Annual Report Download - page 230

Financial Statements Notes to the Consolidated Financial Statements | Note 3
Freddie Mac 2015 Form 10-K 228
Other Securitization Products
We consolidate certain of our other securitization trusts because we have the ability to direct the loss
mitigation activities of the underlying loans and we have the obligation to absorb credit losses through our
guarantee of the issued securities. As a result, we are the primary beneficiary of single-family other
securitization trusts with underlying assets totaling $5.8 billion and $7.4 billion at December 31, 2015 and
2014, respectively. We do not consolidate the other securitization trusts that do not meet these conditions.
For those products, we account for our guarantee to the unconsolidated VIE.
OTHER GUARANTEE ACTIVITIES
Other Mortgage-related Guarantees
In certain circumstances, we provide a guarantee of mortgage-related assets held by third parties, in
exchange for a management and guarantee fee, without securitizing those assets. These guarantees
consist of the following:
• Long-term standby commitments of single-family loans which obligate us to purchase the covered
loans when they become seriously delinquent. Periodically, certain of our customers seek to
terminate long-term standby commitments and simultaneously enter into guarantor swap transactions
to obtain our PCs backed by many of the same loans. During 2015 and 2014, we guaranteed $4.0
billion and $2.6 billion, respectively, of loans under long-term standby commitments;
• Guarantees of multifamily housing revenue bonds that were issued by HFAs, including guarantees
that require us to advance funds to enable others to repurchase any tendered tax-exempt and related
taxable bonds that are unable to be marketed. No advances under these guarantees were
outstanding at December 31, 2015 and 2014.
• Guarantees under the TCLFP on securities backed by HFA bonds; however, we no longer had any of
these issued guarantees outstanding at December 31, 2015.
Under these arrangements, we account for our guarantee to the counterparty to the transaction but do not
recognize the underlying assets on our consolidated balance sheets.
Derivative Instruments
Derivative instruments include written options and written swaptions, and other instruments accounted for
as credit derivatives.
We also issued certain REMICs with stated final maturities that are shorter than the stated maturity of the
underlying loans. If the underlying loans to these securities have not been purchased by a third party or
fully matured as of the stated final maturity date of such securities, we will sponsor an auction of the
underlying assets. To the extent that purchase or auction proceeds are insufficient to cover unpaid
principal amounts due to investors, we are obligated to fund such principal. Our maximum exposure on
these derivative guarantees represents the outstanding UPB of the issued securities.