Freddie Mac 2012 Annual Report Download - page 380

amount will be $3 billion for 2013 and will be reduced by $600 million each year thereafter until it reaches zero on
January 1, 2018. For each quarter beginning January 1, 2018, the dividend payment will be the amount, if any, by which our
Net Worth Amount at the end of the immediately preceding fiscal quarter exceeds zero.
NIBP — New Issue Bond Program is a component of the HFA initiative in which we and Fannie Mae issued partially-
guaranteed pass-through securities to Treasury that are backed by bonds issued by various state and local HFAs. The
program provides financing for HFAs to issue new housing bonds. Treasury is obligated to absorb any losses under the
program up to a certain level before we are exposed to any losses.
NPV — Net present value
NYSE — New York Stock Exchange
OAS — Option-adjusted spread — An estimate of the incremental yield spread between a particular financial instrument
(e.g., a security, loan or derivative contract) and a benchmark yield curve (e.g., LIBOR or agency or U.S. Treasury
securities). This includes consideration of potential variability in the instrument’s cash flows resulting from any options
embedded in the instrument, such as prepayment options.
OFHEO — Office of Federal Housing Enterprise Oversight, the predecessor to FHFA.
Option ARM loan — Mortgage loans that permit a variety of repayment options, including minimum, interest-only, fully
amortizing 30-year and fully amortizing 15-year payments. The minimum payment alternative for option ARM loans allows
the borrower to make monthly payments that may be less than the interest accrued for the period. The unpaid interest, known
as negative amortization, is added to the principal balance of the loan, which increases the outstanding loan balance. For our
non-agency mortgage-related securities that are backed by option ARM loans, we categorize securities as option ARM if the
securities were identified as such based on information provided to us when we entered into these transactions. We have not
identified option ARM securities as either subprime or Alt-A securities.
OTC — Over-the-counter
OTCQB — is a marketplace, operated by the OTC Markets Group Inc., for OTC-traded U.S. companies that are registered
and current in their reporting with the SEC or a U.S. banking or insurance regulator.
Other guarantee commitments — Mortgage-related assets held by third parties for which we provide our guarantee without
our securitization of the related assets.
Other Guarantee Transactions — Transactions in which third parties transfer non-Freddie Mac mortgage-related securities
to trusts specifically created for the purpose of issuing mortgage-related securities, or certificates, in the Other Guarantee
Transactions. In the securities market, our non-HFA related multifamily Other Guarantee Transactions are known as “K
Certificates.”
PCs — Participation Certificates — Securities that we issue as part of a securitization transaction. Typically we purchase
mortgage loans from parties who sell mortgage loans, place a pool of loans into a PC trust and issue PCs from that trust. The
PCs are generally transferred to the seller of the mortgage loans in consideration of the loans or are sold to third-party
investors if we purchased the mortgage loans for cash.
Pension Plan — Employees’ Pension Plan
Pension SERP Benefit — The component of the SERP that relates to the Pension Plan.
PMVS — Portfolio Market Value Sensitivity — One of our primary interest-rate risk measures. PMVS measures are
estimates of the amount of average potential pre-tax loss in the market value of our net assets due to parallel (PMVS-L) and
non-parallel (PMVS-YC) changes in LIBOR.
Primary mortgage market — The market where lenders originate mortgage loans and lend funds to borrowers. We do not
lend money directly to homeowners, and do not participate in this market.
Purchase Agreement / Senior Preferred Stock Purchase Agreement — An agreement the Conservator, acting on our
behalf, entered into with Treasury on September 7, 2008, which was subsequently amended and restated on September 26,
2008 and further amended on May 6, 2009, December 24, 2009, and August 17, 2012.
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