Freddie Mac 2015 Annual Report Download - page 37

Management's Discussion and Analysis Our Business Segments | Single-Family Guarantee
Freddie Mac 2015 Form 10-K 35
Resecuritization Products - our resecuritization products represent beneficial interests in pools of PCs
and certain other types of mortgage assets. We create these securities primarily by using PCs or our
previously issued resecuritization products as the underlying collateral. We believe our issuance of these
securities expands the range of investors in our mortgage-related securities to include those seeking
specific security attributes. Similar to our PCs, we guarantee the payment of principal and interest to the
investors in our resecuritization products. We do not charge a management and guarantee fee for these
securities if the underlying collateral is already guaranteed by us since no additional credit risk is
introduced, although we typically receive a transaction fee as compensation for creating the security and
future administrative responsibilities. All of the cash flows from the collateral underlying our
resecuritization products are generally passed through to investors in these securities. We do not issue
resecuritization products that have concentrations of credit risk beyond those embedded in the underlying
assets. In many of our resecuritization transactions, securities dealers or investors deliver mortgage
assets in exchange for the resecuritization product. In certain cases, we may also exchange our own
mortgage assets for the resecuritization product. The following diagram provides a general example of
how we create resecuritization products: