FEDERAL

lenders against payment losses. It is the largest insurer
of mortgages in the world, insuring over 34 million
properties since its inception in 1934.
Foreclosure: A legal process used by a lender to
obtain possession of a mortgaged property.
Freddie Mac: A federally chartered corporation that
purchases residential mortgages, securitizes them, and
sells them to investors; thus, Freddie Mac provides
lenders with funds that can be used to make loans to
homebuyers.
Ginnie Mae: A government-owned corporation
within HUD. Ginnie Mae guarantees investors the
timely payment of principal and interest on privately
issued MBS backed by pools of government-insured
and -guaranteed mortgages.
Government-Sponsored Enterprises: Business
organizations chartered and sponsored by the federal
government.
Government-Sponsored Enterprise Mortgage-
Backed Securities Purchase Facility: The
function of the GSE MBS Purchase Facility was
to help improve the availability of mortgage credit
to American homebuyers and mitigate pressures
on mortgage rates. To promote the stability of
the mortgage market, Treasury purchased GSE
MBS in the secondary market. By purchasing
these guaranteed securities, Treasury sought to
broaden access to mortgage funding for current
and prospective homeowners, as well as to promote
market stability.
Guarantee: A pledge to investors that the guarantor
will bear the default risk on a pool of loans or other
collateral.
Hedging: The practice of taking an additional step,
such as buying or selling a derivative, to offset certain
risks associated with holding a particular investment,
such as MBS.
Held-to-Maturity Security: A debt security
(obligation or liability) that management intends to
hold to its maturity or payment date and whose cash
value is not needed until that date.
Housing and Economic Recovery Act: HERA,
enacted in 2008, establishes OIG and FHFA, which
oversee the GSEs’ operations. HERA also expanded
Treasury’s authority to provide financial support to
the GSEs.
Implied Guarantee: The assumption, prevalent in
the financial markets, that the federal government
will cover enterprise debt obligations.
Inspector General Act: Enacted in 1978, this
statute authorizes establishment of offices of
inspectors general, “independent and objective
units” within federal agencies, that: (1) conduct
and supervise audits and investigations relating
to the programs and operations of their agencies;
(2) provide leadership and coordination and
recommend policies for activities designed to
promote economy, efficiency, and effectiveness in the
administration of agency programs and to prevent
and detect fraud, waste, or abuse in such programs
and operations; and (3) provide a means for keeping
the head of the agency and Congress fully and
currently informed about problems and deficiencies
relating to the administration of such programs and
operations and the necessity for and progress of
corrective action.
Inspector General Reform Act: Enacted in 2008,
this statute amends the Inspector General Act to
enhance the independence of inspectors general and
to create the Council of the Inspectors General on
Integrity and Efficiency.
Insurance Company: A company whose primary
and predominant business activity is the writing
of insurance and issuing or underwriting “covered
products.”
74 Federal Housing Finance Agency Office of Inspector General