Freddie Mac 2015 Annual Report Download - page 396

Glossary
Freddie Mac 2015 Form 10-K 394
Examples of credit enhancements include insurance, credit risk transfer transactions,
overcollateralization, indemnification agreements, and government guarantees.
Credit losses - Consists of charge-offs, net and REO operations (income) expense.
Credit-related (benefit) expenses (or credit-related expenses) - Consists of our provision (benefit) for
credit losses and REO operations (income) expense.
Credit score - Credit score data is based on FICO scores, a credit scoring system developed by Fair,
Isaac and Co. FICO scores are currently the most commonly used credit scores. FICO scores are ranked
on a scale of approximately 300 to 850 points with a higher value indicating a lower likelihood of credit
default. Although we obtain updated credit information on certain borrowers after the origination of a loan,
such as those borrowers seeking a modification, the scores presented in our reports represent the credit
score of the borrower at either the time of loan origination or our purchase and may not be indicative of
the current credit worthiness of the borrower.
CSS - Common Securitization Solutions, LLCSM
Current LTV Ratio or CLTV - The current LTV ratios are management estimates, which are updated on a
monthly basis. Current market values are estimated by adjusting the value of the property at origination
based on changes in the market value of homes in the same geographic area since that time. Changes in
market value are derived from our internal index, which measures price changes for repeat sales and
refinancing activity on the same properties using Freddie Mac and Fannie Mae single-family loan
acquisitions, including foreclosure sales. Estimates of the current LTV ratio exclude any secondary
financing by third parties.
Deed in lieu of foreclosure - An alternative to foreclosure in which the borrower voluntarily conveys title
to the property to the lender and the lender accepts such title (sometimes together with an additional
payment by the borrower) in full satisfaction of the mortgage indebtedness.
Delinquency - A failure to make timely payments of principal and/or interest on a loan. For single-family
loans, we generally report delinquency rate information based on the number of loans that are seriously
delinquent. For multifamily loans, we report delinquency rate information based on the UPB of loans that
are two monthly payments or more past due or in the process of foreclosure. Loans that have been
modified are not counted as delinquent as long as the borrower is not delinquent under the modified
terms.
Derivative - A financial instrument whose value depends upon the characteristics and value of an
underlying entity such as a financial asset or index. Examples include a security or commodity price,
interest or currency rates, and other financial indices.
Dodd-Frank Act - Dodd-Frank Wall Street Reform and Consumer Protection Act
Dollar roll transactions - Transactions whereby we enter into an agreement to sell and subsequently
repurchase (or purchase and subsequently resell) agency securities.
DSCR - Debt Service Coverage Ratio - An indicator of future credit performance for multifamily loans. The
DSCR estimates a multifamily borrower’s ability to service its mortgage obligation using the secured
property’s cash flow, after deducting non-mortgage expenses from income. The higher the DSCR, the
more likely a multifamily borrower will be able to continue servicing its loan obligation.