Federal Home Loan Mortgage Corporation (Freddie Mac) operates in the secondary mortgage market in the United States. The company purchases residential mortgage loans originated by lenders. In most instances, it packages these loans into mortgage-related securities, which are guaranteed by it and sold in the capital markets worldwide. It also invests in mortgage loans and mortgage-related securities. Segments The company operates through three segments, including Single-family Guarantee, Multifamily, and Investments. Single-Family Guarantee segment This segment purchases, securitizes, and guarantees single-family loans originated by lenders and manages single-family mortgage credit risk. In a typical loan securitization, the company purchases loans that lenders originate and then pool these loans into mortgage-related securities that can be sold in the capital markets. As part of its Single-family Guarantee business, the company issues the types of guarantee and securitization products, including participation certificates (PCs), Guarantor Swap PCs, and Cash PCs. PCs: The company’s primary single-family mortgage securitization and guarantee process involves its issuance of single-class PCs, which are pass-through securities that represent undivided beneficial interests in trusts that hold pools of loans. For its fixed-rate PCs, the company guarantees the timely payment of principal and interest. For its ARM PCs, the company guarantees the timely payment of the weighted average coupon interest rate for the underlying loans. It also guarantees the full and final payment of principal, but not the timely payment of principal, on ARM PCs. Guarantor Swap PCs: The company issues most of its PCs in guarantor swap transactions in which its customers provide it with loans in exchange for PCs. Cash PCs: The company also issues PCs in transactions in which it purchases performing loans and securitizes them for retention in its mortgage-related investments portfolio or for sale to third parties. The company also uses this process to securitize reperforming loans. Resecuritization Products The company’s resecuritization products represent beneficial interests in pools of PCs and certain other types of mortgage assets. The company creates these securities primarily by using PCs or its previously issued resecuritization products as the underlying collateral. In majority of its resecuritization transactions, securities dealers or investors deliver mortgage assets in exchange for the resecuritization product. In certain cases, the company might also exchange its own mortgage assets for the resecuritization product. Giant PCs: Giant PCs are resecuritizations of previously issued PCs or Giant PCs. Giant PCs are single-class securities that involve the straight pass through of all of the cash flows of the underlying collateral to holders of the beneficial interests. Stripped Giant PCs: Stripped Giant PCs are multiclass securities that are formed by resecuritizing previously issued PCs or Giant PCs and issuing principal-only and interest-only securities backed by the cash flows from the underlying collateral. REMICs: REMICs are resecuritizations of previously issued PCs, Giant PCs, Stripped Giant PCs, or REMICs. REMICs are multiclass securities that divide all of the cash flows of the underlying collateral into two or more classes with varying maturities, payment priorities and coupons. Other securitization products: The company issues guaranteed mortgage-related securities collateralized by non-Freddie Mac mortgage-related securities. Customers The company’s customers in the Single-family Guarantee segment are predominantly lenders that originate loans for new or existing homeowners and sell them to it, and financial institutions that service these loans for it. These companies include mortgage banking companies, commercial banks, community banks, credit unions, other non-depository financial institutions, HFAs, and thrift institutions. In addition, its customers include investors and dealers in its guaranteed mortgage-related securities and investors and counterparties in credit risk transfe
freddie mac (FMCC:OTC US)
8200 Jones Branch Drive
McLean, VA 22102
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