Freddie Mac 2015 Annual Report Download - page 227

Financial Statements Notes to the Consolidated Financial Statements | Note 3
Freddie Mac 2015 Form 10-K 225
(in millions) December 31, 2015 December 31, 2014
Consolidated Balance Sheet Line Item
Assets:
Cash and cash equivalents $ — $ 2
Restricted cash and cash equivalents 14,529 8,532
Securities purchased under agreements to resell 14,840 13,500
Mortgage loans held-for-sale 1,403 —
Mortgage loans held-for-investment 1,625,184 1,558,094
Accrued interest receivable 5,305 5,124
Real estate owned, net 40 44
Other assets 2,591 2,596
Total assets of consolidated VIEs $ 1,663,892 $1,587,892
Liabilities:
Accrued interest payable $ 4,763 $4,702
Debt, net 1,556,121 1,479,473
Other liabilities 6 1
Total liabilities of consolidated VIEs $ 1,560,890 $1,484,176
SECURITIZATION ACTIVITIES
PCs
Single-family PCs are pass-through debt securities that represent undivided beneficial interests in a pool
of loans held by a securitization trust. We serve as both administrator and guarantor for all of our single-
family PC trusts. As administrator, we have the right to establish servicing terms and direct loss mitigation
activities for the loans held by the PC trusts. As guarantor, we guarantee the payment of principal and
interest on our single-family PCs in exchange for a management and guarantee fee, and we have the
right to purchase delinquent loans from the PC trust to help improve the economic performance of the
trust. We absorb all credit losses of the PC trusts through our guarantee of the principal and interest
payments.
The economic performance of our single-family PC trusts is most significantly affected by the
performance of the underlying loans. Our rights as administrator and guarantor provide us with the power
to direct the activities that most significantly affect the performance of the underlying loans. We also have
the obligation to absorb losses of our single-family PC trusts that could potentially be significant through
our guarantee of principal and interest payments. Accordingly, we concluded that we are the primary
beneficiary of our single-family PC trusts and, therefore, consolidate those trusts.
Loans held by our single-family PC trusts are recognized on our consolidated balance sheets as
mortgage loans held-for-investment. The corresponding single-family PCs held by third parties are
recognized on our consolidated balance sheets as debt, net. We extinguish the outstanding debt
securities of the related consolidated trust and recognize gains or losses on debt extinguishment for the
difference between the consideration paid and the debt carrying value when we purchase single-family
PCs as investments in our mortgage-related investments portfolio. Sales of single-family PCs previously
held as investments in our mortgage-related investments portfolio are accounted for as debt issuances.