Company: FMCCN
Filing Date: 2025-02-13
Form Type: 10-K
Source: 0001026214-25-000040
Chunk: 64

Company: FEDERAL HOME LOAN MORTGAGE CORP
Filing Date: 2025-02-13
Form: 10-K
Item: Item 15
Chunk 64
---
 collateral for the loan, expressed as a percentage•Measures ability of the underlying property to cover our exposure on the loan•Higher LTV ratios indicate higher risk, as proceeds from sale of the property may not cover our exposure on the loan•Lower LTV ratios indicate borrowers are more likely to repayCredit score(1)Statistically-derived number that may indicate a borrower's likelihood to repay debt •Borrowers with higher credit scores are generally more likely to repay or have the ability to refinance their loans than those with lower scoresLoan purposeIndicates how the borrower intends to use the proceeds from a loan (i.e., purchase, cash-out refinance, or other refinance)•Cash-out refinancings, which increase the LTV ratios, generally have a higher risk of default than loans originated in purchase or other refinance transactionsProperty typeIndicates whether the property is a detached single-family house, townhouse, condominium, or co-op•Condominiums historically have experienced greater volatility in house prices than detached single-family houses, which may expose us to more risk•Condominiums are subject to additional risks, typically managed by the condominium association, including but not limited to the associations' financial stability and the physical condition of buildings and common areasOccupancy typeIndicates whether the borrower intends to use the property as a primary residence, second home, or investment property•Loans on primary residence properties tend to have lower credit risk than loans on second homes or investment propertiesProduct typeIndicates the type of loan based on key loan terms, such as the contractual maturity, type of interest rate, and payment characteristics of the loan•Loan products that contain terms which result in scheduled changes in monthly payments may result in higher risk•Shorter loan terms result in faster repayment of principal and may indicate lower riskDTI ratio(1)Debt-to-income ratio. The ratio of borrowers' total monthly debt payments to gross monthly income •Borrowers with lower DTI ratios are generally more likely to repay their loans than those with higher DTI ratios, holding all other factors equal•DTI ratios are at the time of origination and may not be indicative of borrowers' current creditworthinessGeographic concentrationIndicates whether our mortgage portfolio is diversified geographically•Geographic concentrations may increase the exposure of our mortgage portfolio to credit risk, as regional economic conditions may affect a borrower's ability to repay and the underlying property value•Geographic diversification reduces the credit risk impact of an economic downturn in or a catastrophic event that disproportionately affects a