Freddie Mac 2015 Annual Report Download - page 403

Glossary
Freddie Mac 2015 Form 10-K 401
Short sale - 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 loan
indebtedness in full satisfaction of the loan.
Short-term debt - Other debt due within one year based on the original contractual maturity of the debt
instrument. Our short-term debt issuances include discount notes and Reference Bills® securities.
Single-family credit guarantee portfolio - Consists of unsecuritized single-family loans, single-family
loans held by consolidated trusts, single-family loans underlying non-consolidated resecuritization
products, and single-family loans covered by long-term standby commitments. Excludes our
resecuritizations of 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 loan - A 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 debt note - Structured Agency Credit Risk debt note - A debt security where the principal balance
is subject to the performance of a reference pool of loans owned or guaranteed by Freddie Mac.
Step-rate modified loan - A term that we generally use to refer to our HAMP loans that have provisions
for reduced interest rates that remain fixed for the first five years and then increase over a period of time
to a market rate.
Stripped Giant PCs - Multiclass securities that are formed by resecuritizing previously issued PCs or
Giant PCs and issuing principal-only and interest-only securities backed by the cash flows from the
underlying collateral.
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 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. Certain security collateral underlying our other securitization products 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