Freddie Mac 2015 Annual Report Download - page 36

Management's Discussion and Analysis Our Business Segments | Single-Family Guarantee
Freddie Mac 2015 Form 10-K 34
As part of our Single-family Guarantee business, we issue the types of guarantee and securitization
products described below. In these securitization products, Freddie Mac functions in its capacity as
depositor, guarantor, administrator, and trustee.
• PCs - our primary single-family mortgage securitization and guarantee process involves our issuance
of single-class PCs, which are pass-through securities that represent undivided beneficial interests in
trusts that hold pools of loans. For our fixed-rate PCs, we guarantee the timely payment of principal
and interest. For our ARM PCs, we guarantee the timely payment of the weighted average coupon
interest rate for the underlying loans. We also guarantee the full and final payment of principal, but
not the timely payment of principal, on ARM PCs.
• Guarantor Swap PCs - we issue most of our PCs in guarantor swap transactions in which our
customers provide us with loans in exchange for PCs, as shown in the diagram below:
• Cash PCs - we also issue PCs in transactions in which we purchase performing loans (which we
sometimes refer to as a securitization pipeline) and securitize them for retention in our mortgage-
related investments portfolio or for sale to third parties, as shown in the diagram below. We also use
this process to securitize reperforming loans.