Freddie Mac 2012 Annual Report Download - page 379

LIBOR — London Interbank Offered Rate
LIHTC partnerships — Low-income housing tax credit partnerships — Prior to 2008, we invested as a limited partner in
LIHTC partnerships, which are formed for the purpose of providing funding for affordable multifamily rental properties.
These LIHTC partnerships invest directly in limited partnerships that own and operate multifamily rental properties that
generate federal income tax credits and deductible operating losses.
Liquidation preference — Generally refers to an amount that holders of preferred securities are entitled to receive out of
available assets, upon liquidation of a company. The initial liquidation preference of our senior preferred stock was
$1.0 billion. The aggregate liquidation preference of our senior preferred stock includes the initial liquidation preference plus
amounts funded by Treasury under the Purchase Agreement. In addition, dividends and periodic commitment fees not paid in
cash are added to the liquidation preference of the senior preferred stock. We may make payments to reduce the liquidation
preference of the senior preferred stock only in limited circumstances.
LTV ratio — Loan-to-value ratio — The ratio of the unpaid principal amount of a mortgage loan to the value of the property
that serves as collateral for the loan, expressed as a percentage. Loans with high LTV ratios generally tend to have a higher
risk of default and, if a default occurs, a greater risk that the amount of the gross loss will be high compared to loans with
lower LTV ratios. We report LTV ratios based solely on the amount of the loan purchased or guaranteed by us, generally
excluding any second-lien mortgages (unless we own or guarantee the second lien).
MD&A — Management’s Discussion and Analysis of Financial Condition and Results of Operations
MHA Program — Making Home Affordable Program — Formerly known as the Housing Affordability and Stability Plan,
the MHA Program was announced by the Administration in February 2009. The MHA Program is designed to help in the
housing recovery, promote liquidity and housing affordability, expand foreclosure prevention efforts and set market
standards. The MHA Program includes HARP and HAMP.
Mortgage assets — Refers to both mortgage loans and the mortgage-related securities we hold in our mortgage-related
investments portfolio.
Mortgage-related investments portfolio — Our investment portfolio, which consists principally of mortgage-related
securities and single-family and multifamily mortgage loans. The size of our mortgage-related investments portfolio under
the Purchase Agreement is determined without giving effect to the January 1, 2010 change in accounting guidance related to
transfers of financial assets and consolidation of VIEs. Accordingly, for purposes of the portfolio limit, when PCs and certain
Other Guarantee Transactions are purchased into the mortgage-related investments portfolio, this is considered the
acquisition of assets rather than the reduction of debt.
Mortgage-to-debt OAS — The net OAS between the mortgage and agency debt sectors. This is an important factor in
determining the expected level of net interest yield on a new mortgage asset. Higher mortgage-to-debt OAS means that a
newly purchased mortgage asset is expected to provide a greater return relative to the cost of the debt issued to fund the
purchase of the asset and, therefore, a higher net interest yield. Mortgage-to-debt OAS tends to be higher when there is weak
demand for mortgage assets and lower when there is strong demand for mortgage assets.
Multifamily mortgage — A mortgage loan secured by a property with five or more residential rental units.
Multifamily mortgage portfolio — Consists of multifamily mortgage loans held by us on our consolidated balance sheets as
well as our guarantee of non-consolidated Freddie Mac mortgage-related securities, and other guarantee commitments, but
excluding those underlying our guarantees of HFA bonds under the HFA initiative.
Net worth (deficit) — The amount by which our total assets exceed (or are less than) our total liabilities as reflected on our
consolidated balance sheets prepared in conformity with GAAP.
Net worth sweep dividend and Net Worth Amount — For each quarter from January 1, 2013 through and including
December 31, 2017, the dividend payment on the senior preferred stock will be the amount, if any, by which our Net Worth
Amount at the end of the immediately preceding fiscal quarter, less the applicable capital reserve amount, exceeds zero. The
term Net Worth Amount is defined as: (a) the total assets of Freddie Mac (excluding Treasury’s commitment and any
unfunded amounts thereof, less; (b) our total liabilities (excluding any obligation in respect of capital stock), in each case as
reflected on our consolidated balance sheets prepared in accordance with GAAP. If the calculation of the dividend payment
for a quarter does not exceed zero, then no dividend shall accrue or be payable for that quarter. The applicable capital reserve
374 Freddie Mac