UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 8, 2014
Federal National Mortgage Association
(Exact name of registrant as specified in its charter)
Federally chartered corporation | 000-50231 | 52-0883107 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) | ||
3900 Wisconsin Avenue, NW Washington, DC | 20016 | |||
(Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code: 202-752-7000
(Former Name or Former Address, if Changed Since Last Report): ______________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
The information in this report, including information in the exhibits submitted herewith, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of Section 18, nor shall it be deemed incorporated by reference into any disclosure document relating to Fannie Mae (formally known as the Federal National Mortgage Association), except to the extent, if any, expressly incorporated by specific reference in that document.
Item 2.02 Results of Operations and Financial Condition.
On May 8, 2014, Fannie Mae filed its quarterly report on Form 10-Q for the quarter ended March 31, 2014 and issued a news release reporting its financial results for the periods covered by the Form 10-Q. The news release, a copy of which is furnished as Exhibit 99.1 to this report, is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On May 8, 2014, Fannie Mae posted to its Web site a 2014 First Quarter Credit Supplement presentation consisting primarily of information about Fannie Mae’s guaranty book of business. The presentation, a copy of which is furnished as Exhibit 99.2 to this report, is incorporated herein by reference. Fannie Mae’s Web site address is www.fanniemae.com. Information appearing on the company’s Web site is not incorporated into this report.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The exhibit index filed herewith is incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
FEDERAL NATIONAL MORTGAGE ASSOCIATION | ||
By | /s/ David C. Benson | |
David C. Benson | ||
Executive Vice President and Chief Financial Officer | ||
Date: May 8, 2014
EXHIBIT INDEX
The following exhibits are submitted herewith:
Exhibit Number | Description of Exhibit | ||
99.1 | News release, dated May 8, 2014 | ||
99.2 | 2014 First Quarter Credit Supplement presentation, dated May 8, 2014 | ||
Resource Center: 1-800-732-6643 Exhibit 99.1
Contact: Pete Bakel
202-752-2034
Date: May 8, 2014
Fannie Mae Reports Net Income of $5.3 Billion and Comprehensive Income of $5.7 Billion for First Quarter 2014
• | Fannie Mae reported net income of $5.3 billion, the company’s ninth consecutive quarterly profit, and comprehensive income of $5.7 billion for the first quarter of 2014. |
• | Fannie Mae’s financial results for the first quarter of 2014 included $4.1 billion in revenue from legal settlements relating to private-label securities lawsuits. |
• | Fannie Mae expects to pay Treasury $5.7 billion in dividends in June 2014. With the expected June dividend payment, Fannie Mae will have paid a total of $126.8 billion in dividends to Treasury in comparison to $116.1 billion in draw requests since 2008. Dividend payments do not offset prior Treasury draws. |
• | Fannie Mae has funded the mortgage market with more than $4.1 trillion in liquidity since 2009, enabling families to buy, refinance, or rent a home. |
• | Fannie Mae is supporting the housing recovery by providing access to affordable mortgages and by helping to build a safer, transparent, and sustainable housing finance system. |
WASHINGTON, DC — Fannie Mae (FNMA/OTC) reported net income of $5.3 billion for the first quarter of 2014 and comprehensive income of $5.7 billion. The company reported a positive net worth of $8.1 billion as of March 31, 2014 and expects to pay $5.7 billion to Treasury in June as a dividend on the senior preferred stock in the second quarter of 2014.
Fannie Mae reported the company’s ninth consecutive quarterly profit for the first quarter of 2014. Key financial drivers included stable revenues attributable to guaranty fees and declining revenues attributable to the company’s retained mortgage portfolio. Net revenues included $4.1 billion in revenue from settlement agreements in the first quarter of 2014 relating to private-label mortgage-related securities sold to Fannie Mae. In addition, the company benefited from $1.0 billion in credit-related income, offset by fair value losses of $1.2 billion as a result of a decrease in longer-term interest rates during the first quarter of 2014.
Fannie Mae’s net income of $5.3 billion and comprehensive income of $5.7 billion for the first quarter of 2014 compares to net income of $58.7 billion and comprehensive income of $59.3 billion for the first quarter of 2013, which reflected Fannie Mae’s release of a majority of the valuation allowance on its deferred tax assets. Fannie Mae’s first quarter 2014 comprehensive income includes a provision for federal income taxes of $2.6 billion resulting from the company’s estimated federal income tax expense for the first quarter 2014.
Fannie Mae expects to remain profitable for the foreseeable future. While the company expects its annual net income to remain strong over the next few years, the company expects its annual net income to be substantially lower than its net income for 2013. Net income may vary significantly from period to period.
First Quarter 2014 Results | 1 | |
ABOUT FANNIE MAE’S CONSERVATORSHIP
Fannie Mae has operated under the conservatorship of the Federal Housing Finance Agency (“FHFA”) since September 6, 2008. Fannie Mae has not received funds from Treasury since the first quarter of 2012. The funding the company has received under its senior preferred stock purchase agreement with Treasury has provided the company with the capital and liquidity needed to fulfill its mission of providing liquidity and support to the nation’s housing finance markets and to avoid a trigger of mandatory receivership under the Federal Housing Finance Regulatory Reform Act of 2008. For periods through March 31, 2014, Fannie Mae has requested cumulative draws totaling $116.1 billion and paid $121.1 billion in dividends to Treasury. Under the senior preferred stock purchase agreement, the payment of dividends cannot be used to offset prior draws. As a result, Treasury maintains a liquidation preference of $117.1 billion on the company’s senior preferred stock.
Treasury Draws and Dividend Payments
(1) | Treasury draw requests are shown in the period for which requested and do not include the initial $1.0 billion liquidation preference of Fannie Mae’s senior preferred stock, for which Fannie Mae did not receive any cash proceeds. The payment of dividends cannot be used to offset prior Treasury draws. |
(2) | Fannie Mae expects to pay a dividend for the second quarter of 2014 calculated based on the company’s net worth of $8.1 billion as of March 31, 2014 less a capital reserve amount of $2.4 billion. |
(3) | Amounts may not sum due to rounding. |
In August 2012, the terms governing the company’s dividend obligations on the senior preferred stock were amended. The amended senior preferred stock purchase agreement does not allow the company to build a capital reserve. Beginning in 2013, the required senior preferred stock dividends each quarter equal the amount, if any, by which the company’s net worth as of the end of the immediately preceding fiscal quarter exceeds an applicable capital reserve amount. The capital reserve amount is $2.4 billion for each quarter of 2014 and will be reduced by $600 million each year until it reaches zero in 2018.
The amount of remaining funding available to Fannie Mae under the senior preferred stock purchase agreement with Treasury is currently $117.6 billion.
Fannie Mae is not permitted to redeem the senior preferred stock prior to the termination of Treasury’s funding commitment under the senior preferred stock purchase agreement. The limited circumstances under which Treasury’s funding commitment will terminate are described in “Business—Conservatorship and Treasury Agreements” in the company’s annual report on Form 10-K for the year ended December 31, 2013.
First Quarter 2014 Results | 2 | |
PROVIDING LIQUIDITY AND SUPPORT TO THE MARKET
Fannie Mae provided more than $4.1 trillion in liquidity to the mortgage market from January 1, 2009 through March 31, 2014 through its purchases and guarantees of loans, which enabled borrowers to complete 12.5 million mortgage refinancings and 3.9 million home purchases, and provided financing for 2.3 million units of multifamily housing.
The company remained the largest single issuer of single-family mortgage-related securities in the secondary market in the first quarter of 2014, with an estimated market share of new single-family mortgage-related securities issuances of 41 percent in the first quarter of 2014, compared with 46 percent in the fourth quarter of 2013 and 48 percent in the first quarter of 2013.
Fannie Mae also remained a constant source of liquidity in the multifamily market. As of December 31, 2013 (the latest date for which information is available), the company owned or guaranteed approximately 20 percent of the outstanding debt on multifamily properties.
First Quarter 2014 Results | 3 | |
HELPING TO BUILD A SUSTAINABLE HOUSING FINANCE SYSTEM
In addition to continuing to provide liquidity and support to the mortgage market, Fannie Mae has devoted significant resources toward helping to build a sustainable housing finance system for the future, including pursuing the strategic goals identified by its conservator, FHFA. These strategic goals are: build a new infrastructure for the secondary mortgage market; gradually contract the company’s dominant presence in the marketplace while simplifying and shrinking its operations; and maintain foreclosure prevention activities and credit availability for new and refinanced mortgages.
CREDIT QUALITY
New Single-Family Book of Business: While continuing to make it possible for families to purchase, refinance, or rent a home, Fannie Mae has established responsible credit standards. Since 2009, Fannie Mae has seen the effect of actions it took, beginning in 2008, to significantly strengthen its underwriting and eligibility standards and change its pricing to promote sustainable homeownership and stability in the housing market. Single-family conventional loans acquired by Fannie Mae in the first three months of 2014 had a weighted average borrower FICO credit score at origination of 741 and a weighted average original loan-to-value (“LTV”) ratio of 77 percent.
As of March 31, 2014, 78 percent of Fannie Mae’s single-family conventional guaranty book of business consisted of loans it had purchased or guaranteed since the beginning of 2009. Given their strong credit risk profile and based on their performance so far, the company expects that in the aggregate these loans will be profitable over their lifetime, meaning the company’s guaranty fee income on these loans will exceed the company’s credit losses and administrative costs for them.
As of March 31, 2014, Fannie Mae’s new book of business (loans purchased or guaranteed since 2009) was comprised of 25 percent of home purchase mortgages and 75 percent of loan refinancings. Refinancings included 14 percent of loans acquired through the Home Affordable Refinance Program (“HARP”), 11 percent of loans through Fannie Mae’s Refi PlusTM initiative (excluding HARP), and 50 percent other refinancings (excluding Refi Plus refinancing). Our Refi Plus initiative, which started in April 2009 and includes HARP, provides expanded refinance opportunities for eligible Fannie Mae borrowers, and may involve the refinance of existing Fannie Mae loans with high loan-to-value ratios, including loans with loan-to-value ratios in excess of 100 percent.
First Quarter 2014 Results | 4 | |
REFINANCING INITIATIVES
Through the company’s Refi Plus initiative, which offers refinancing flexibility to eligible Fannie Mae borrowers and includes HARP, the company acquired approximately 97,000 loans in the first quarter of 2014. Some borrowers’ monthly payments increased as they took advantage of the ability to refinance through Refi Plus to reduce the term of their loan, to switch from an adjustable-rate mortgage to a fixed-rate mortgage, or to switch from an interest-only mortgage to a fully amortizing mortgage. Even taking these into account, refinancings delivered to Fannie Mae through Refi Plus in the first quarter of 2014 reduced borrowers’ monthly mortgage payments by an average of $157.
Fannie Mae’s single-family serious delinquency rate has declined each quarter since the first quarter of 2010, and was 2.19 percent as of March 31, 2014, compared with 5.47 percent as of March 31, 2010. This decrease is the result of home retention solutions, foreclosure alternatives, and completed foreclosures, as well as the company’s acquisition of loans with stronger credit profiles since the beginning of 2009.
First Quarter 2014 Results | 5 | |
HOME RETENTION SOLUTIONS AND FORECLOSURE ALTERNATIVES
To reduce the credit losses Fannie Mae ultimately incurs on its legacy book of business, the company has been focusing its efforts on several strategies, including reducing defaults by offering home retention solutions, such as loan modifications. Fannie Mae completed more than 36,000 loan modifications during the first quarter of 2014, bringing the total number of loan modifications the company has completed since January 1, 2009 to approximately 1.1 million.
Fannie Mae views foreclosure as a last resort. For homeowners and communities in need, the company offers alternatives to foreclosure. We provided approximately 1.6 million loan workouts from the beginning of 2009 through March 31, 2014, enabling borrowers to avoid foreclosure. In dealing with homeowners in distress, the company first seeks home retention solutions, which enable borrowers to stay in their homes, before turning to foreclosure alternatives. When there is no viable home retention solution or foreclosure alternative that can be applied, the company seeks to move to foreclosure expeditiously in an effort to minimize prolonged delinquencies that can hurt local home values and destabilize communities.
For the Three Months Ended | For the Year Ended December 31, | |||||||||||||||||||||||||||
March 31, 2014 | 2013 | 2012 | 2011 | |||||||||||||||||||||||||
Unpaid Principal Balance | Number of Loans | Unpaid Principal Balance | Number of Loans | Unpaid Principal Balance | Number of Loans | Unpaid Principal Balance | Number of Loans | |||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||
Home retention strategies: | ||||||||||||||||||||||||||||
Modifications | $ | 6,191 | 36,044 | $ | 28,801 | 160,007 | $ | 30,640 | 163,412 | $ | 42,793 | 213,340 | ||||||||||||||||
Repayment plans and forbearances completed | 296 | 2,255 | 1,594 | 12,022 | 3,298 | 23,329 | 5,042 | 35,318 | ||||||||||||||||||||
Total home retention strategies | 6,487 | 38,299 | 30,395 | 172,029 | 33,938 | 186,741 | 47,835 | 248,658 | ||||||||||||||||||||
Foreclosure alternatives: | ||||||||||||||||||||||||||||
Short sales | 1,374 | 6,804 | 9,786 | 46,570 | 15,916 | 73,528 | 15,412 | 70,275 | ||||||||||||||||||||
Deeds-in-lieu of foreclosure | 528 | 3,323 | 2,504 | 15,379 | 2,590 | 15,204 | 1,679 | 9,558 | ||||||||||||||||||||
Total foreclosure alternatives | 1,902 | 10,127 | 12,290 | 61,949 | 18,506 | 88,732 | 17,091 | 79,833 | ||||||||||||||||||||
Total loan workouts | $ | 8,389 | 48,426 | $ | 42,685 | 233,978 | $ | 52,444 | 275,473 | $ | 64,926 | 328,491 | ||||||||||||||||
Loan workouts as a percentage of single-family guaranty book of business | 1.17 | % | 1.10 | % | 1.48 | % | 1.33 | % | 1.85 | % | 1.57 | % | 2.29 | % | 1.85 | % | ||||||||||||
First Quarter 2014 Results | 6 | |
FORECLOSURES AND REO
Fannie Mae acquired 31,896 single-family REO properties, primarily through foreclosure, in the first quarter of 2014, compared with 32,208 in the fourth quarter of 2013. As of March 31, 2014, the company’s inventory of single-family REO properties was 102,398, compared with 103,229 as of December 31, 2013. The carrying value of the company’s single-family REO was $10.5 billion as of March 31, 2014.
The company’s single-family foreclosure rate was 0.73 percent for the first three months of 2014. This reflects the annualized total number of single-family properties acquired through foreclosure or deeds-in-lieu of foreclosure as a percentage of the total number of loans in Fannie Mae’s single-family guaranty book of business.
For the Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
Single-family foreclosed properties (number of properties): | |||||||||
Beginning of period inventory of single-family foreclosed properties (REO) | 103,229 | 105,666 | |||||||
Total properties acquired through foreclosure | 31,896 | 38,717 | |||||||
Dispositions of REO | (32,727 | ) | (42,934 | ) | |||||
End of period inventory of single-family foreclosed properties (REO) | 102,398 | 101,449 | |||||||
Carrying value of single-family foreclosed properties (dollars in millions) | $ | 10,492 | $ | 9,263 | |||||
Single-family foreclosure rate | 0.73 | % | 0.89 | % | |||||
Fannie Mae’s financial data for the first quarter of 2014 are available in the accompanying Appendix; however, investors and interested parties should read the company’s First Quarter 2014 Form 10-Q, which was filed today with the Securities and Exchange Commission and is available on Fannie Mae’s Web site, www.fanniemae.com. The company provides further discussion of its financial results and condition, credit performance, fair value balance sheets, and other matters in its First Quarter 2014 Form 10-Q. Additional information about the company’s credit performance, the characteristics of its guaranty book of business, its foreclosure-prevention efforts, and other measures is contained in the “2014 First Quarter Credit Supplement” at www.fanniemae.com.
# # #
In this release and the accompanying Appendix, the company has presented a number of estimates, forecasts, expectations, and other forward-looking statements regarding the company’s future income and other financial results, including its profitability; the company’s future revenues; the profitability of its loans; its future dividend payments to Treasury; the impact of the company’s actions to reduce credit losses; and the future fair value of the company’s trading securities and derivatives. These estimates, forecasts, expectations, and statements are forward looking statements based on the company’s current assumptions regarding numerous factors, including future home prices and the future performance of its loans. Actual results and future projections, could be materially different from what is set forth in the forward-looking statements as a result of home price changes, interest rate changes, unemployment rates, other macroeconomic and housing market variables, the company’s future serious delinquency rates, government policy, credit availability, borrower behavior, including increases in the number of underwater borrowers who strategically default on their mortgage loan, the volume of loans it modifies, the nature, volume and effectiveness of its loss mitigation strategies and activities, significant changes in modification and foreclosure activity, management of its real estate owned inventory and pursuit of contractual remedies, changes in the fair value of its assets and liabilities, impairments of its assets, future legislative or regulatory requirements that have a significant impact on the company’s business such as a requirement that the company implement a principal forgiveness program or the enactment of housing finance reform legislation, future updates to the company’s models relating to loss reserves, including the assumptions used by these models, changes in generally accepted accounting principles, changes to the company’s accounting policies, failures by its mortgage seller-servicers to fulfill their repurchase obligations to it, effects from activities the company takes to support the mortgage market and help borrowers, the conservatorship and its effect on the company’s business, the investment by Treasury and its effect on the company’s business, the uncertainty of the company’s future, the company’s future guaranty fee pricing and the impact of that pricing on the company’s competitive environment, challenges the company faces in retaining and hiring qualified employees, the deteriorated credit performance of many loans in the company’s guaranty book of business, a decrease in the company’s credit ratings, defaults by one or more institutional counterparties, resolution or settlement agreements the company may enter into with its counterparties, operational control weaknesses, changes in the fiscal and monetary policies of the Federal Reserve, including the effect of the tapering of its
First Quarter 2014 Results | 7 | |
program of purchasing mortgage-related securities and any future sales of such securities, changes in the structure and regulation of the financial services industry, the company’s ability to access the debt markets, disruptions in the housing, credit, and stock markets, government investigations and litigation, the performance of the company’s servicers, conditions in the foreclosure environment, natural or other disasters, and many other factors, including those discussed in the “Risk Factors” section of and elsewhere in the company’s annual report on Form 10-K for the year ended December 31, 2013 and the company’s quarterly report on Form 10-Q for the quarter ended March 31, 2014, and elsewhere in this release.
Fannie Mae provides Web site addresses in its news releases solely for readers’ information. Other content or information appearing on these Web sites is not part of this release.
Fannie Mae enables people to buy, refinance, or rent a home.
Visit us at www.fanniemae.com/progress
Follow us on Twitter: http://twitter.com/FannieMae
First Quarter 2014 Results | 8 | |
APPENDIX
SUMMARY OF FIRST QUARTER 2014 RESULTS
Fannie Mae reported net income of $5.3 billion for the first quarter of 2014, compared with net income of $58.7 billion for the first quarter of 2013. Fannie Mae reported comprehensive income of $5.7 billion for the first quarter of 2014, compared with comprehensive income of $59.3 billion for the first quarter of 2013.
(Dollars in millions) | 1Q14 | 4Q13 | Variance | 1Q14 | 1Q13 | Variance | ||||||||||||||||||
Net interest income | $ | 4,738 | $ | 4,851 | $ | (113 | ) | $ | 4,738 | $ | 6,304 | $ | (1,566 | ) | ||||||||||
Fee and other income | 4,355 | 2,136 | 2,219 | 4,355 | 568 | 3,787 | ||||||||||||||||||
Net revenues | 9,093 | 6,987 | 2,106 | 9,093 | 6,872 | 2,221 | ||||||||||||||||||
Investment gains, net | 146 | 135 | 11 | 146 | 118 | 28 | ||||||||||||||||||
Net other-than-temporary impairments | (51 | ) | (22 | ) | (29 | ) | (51 | ) | (9 | ) | (42 | ) | ||||||||||||
Fair value (losses) gains, net | (1,190 | ) | 961 | (2,151 | ) | (1,190 | ) | 834 | (2,024 | ) | ||||||||||||||
Administrative expenses | (672 | ) | (632 | ) | (40 | ) | (672 | ) | (641 | ) | (31 | ) | ||||||||||||
Credit-related income | ||||||||||||||||||||||||
Benefit for credit losses | 774 | — | 774 | 774 | 957 | (183 | ) | |||||||||||||||||
Foreclosed property income | 262 | 1,082 | (820 | ) | 262 | 260 | 2 | |||||||||||||||||
Total credit-related income | 1,036 | 1,082 | (46 | ) | 1,036 | 1,217 | (181 | ) | ||||||||||||||||
Other non-interest expenses(1) | (453 | ) | (237 | ) | (216 | ) | (453 | ) | (277 | ) | (176 | ) | ||||||||||||
Net (losses) gains and (expenses) income | (1,184 | ) | 1,287 | (2,471 | ) | (1,184 | ) | 1,242 | (2,426 | ) | ||||||||||||||
Income before federal income taxes | 7,909 | 8,274 | (365 | ) | 7,909 | 8,114 | (205 | ) | ||||||||||||||||
(Provision) benefit for federal income taxes | (2,584 | ) | (1,816 | ) | (768 | ) | (2,584 | ) | 50,571 | (53,155 | ) | |||||||||||||
Net income | 5,325 | 6,458 | (1,133 | ) | 5,325 | 58,685 | (53,360 | ) | ||||||||||||||||
Less: Net income attributable to noncontrolling interest | — | (1 | ) | 1 | — | — | — | |||||||||||||||||
Net income attributable to Fannie Mae | $ | 5,325 | $ | 6,457 | $ | (1,132 | ) | $ | 5,325 | $ | 58,685 | $ | (53,360 | ) | ||||||||||
Total comprehensive income attributable to Fannie Mae | $ | 5,697 | $ | 6,590 | $ | (893 | ) | $ | 5,697 | $ | 59,339 | $ | (53,642 | ) | ||||||||||
Dividends available for distribution to senior preferred stockholder | $ | (5,692 | ) | $ | (7,191 | ) | $ | 1,499 | $ | (5,692 | ) | $ | (59,368 | ) | $ | 53,676 | ||||||||
(1) Consists of debt extinguishments (losses) gains, net, TCCA fees and other expenses, net.
Net Revenues were $9.1 billion for the first quarter of 2014, compared with $7.0 billion for the fourth quarter of 2013. Net interest income, which includes guaranty fee revenue, was $4.7 billion for the first quarter of 2014, compared with $4.9 billion for the fourth quarter of 2013. The increase in net revenues compared with the fourth quarter of 2013 was driven primarily by an increase in income from settlement agreements resolving certain lawsuits relating to private-label mortgage-related securities sold to Fannie Mae. The decrease in net interest income compared with the fourth quarter of 2013 was due to lower interest income from portfolio assets due to a decline in the company’s retained portfolio, partially offset by lower interest expense on funding debt and higher guaranty fees. As Fannie Mae reduces the size of its retained mortgage portfolio in compliance with the terms of the senior preferred stock purchase agreement, revenues generated by its retained mortgage portfolio assets also will decrease. As a result of both the shrinking of the company’s retained mortgage portfolio and the impact of guaranty fee increases, Fannie Mae expects that, in the near future, guaranty fees will become the primary source of the company’s revenues.
First Quarter 2014 Results | 9 | |
Credit-Related Income, which consists of recognition of a benefit for credit losses and foreclosed property income, was $1.0 billion in the first quarter of 2014, compared with $1.1 billion in the fourth quarter of 2013.
Total Loss Reserves, which reflect the company’s estimate of the probable losses the company has incurred in its guaranty book of business, including concessions it granted borrowers upon modification of their loans, were $45.3 billion as of March 31, 2014, compared with $47.3 billion as of December 31, 2013. The total loss reserve coverage to total nonaccrual loans was 60 percent as of March 31, 2014, compared with 57 percent as of December 31, 2013.
First Quarter 2014 Results | 10 | |
Net Fair Value Losses were $1.2 billion in the first quarter of 2014, compared with gains of $1.0 billion in the fourth quarter of 2013. First quarter 2014 fair value losses were driven primarily by losses on risk management derivatives as a result of a decrease in longer-term interest rates compared with fair value gains in the fourth quarter of 2013, which were driven by gains on risk management derivatives as a result of an increase in longer-term interest rates. The estimated fair value of the company’s trading securities and derivatives may fluctuate substantially from period to period because of changes in interest rates, credit spreads, and interest rate volatility, as well as activity related to these financial instruments.
BUSINESS SEGMENT RESULTS
The business groups running Fannie Mae’s three reporting segments – its Single-Family business, its Multifamily business, and its Capital Markets group – engage in complementary business activities in pursuing the company’s mission of providing liquidity, stability, and affordability to the U.S. housing market. The company’s Single-Family and Multifamily businesses work with Fannie Mae’s lender customers, who deliver mortgage loans that the company acquires and securitizes into Fannie Mae MBS. The Capital Markets group manages the company’s investment activity in mortgage-related assets and other interest-earning non-mortgage investments, funding investments in mortgage-related assets primarily with proceeds received from the issuance of Fannie Mae debt securities in the domestic and international capital markets. The Capital Markets group also provides liquidity to the mortgage market through short-term financing and other activities.
Single-Family business had net income of $2.1 billion in the first quarter of 2014, similar to $2.1 billion in net income reported in the fourth quarter of 2013. Single-Family net income for the first quarter of 2014 was driven primarily by guaranty fee income. The Single-Family guaranty book of business was $2.88 trillion as of March 31, 2014 and $2.89 trillion as of December 31, 2013. Single-Family guaranty fee income was $2.9 billion in the first quarter of 2014 and $2.8 billion in the fourth quarter of 2013.
Multifamily business had net income of $330 million in the first quarter of 2014, compared with $706 million in the fourth quarter of 2013. The decrease in net income in the first quarter of 2014 compared with the fourth quarter of 2013 was due primarily to a decrease in credit-related income and a decrease in gains on the sale of partnership investments. Multifamily recorded credit-related income of $34 million in the first quarter of 2014, compared with credit-related income of $234 million in the fourth quarter of
First Quarter 2014 Results | 11 | |
2013. This decline was driven by greater improvement in property valuations in the fourth quarter of 2013 compared with the first quarter of 2014. The Multifamily guaranty book of business was $199.0 billion as of March 31, 2014, compared with $200.6 billion as of December 31, 2013. Multifamily guaranty fee income was $311 million for the first quarter of 2014 and $315 million for the fourth quarter of 2013.
Capital Markets group had net income of $3.8 billion in the first quarter of 2014, compared with $4.5 billion in the fourth quarter of 2013. The decrease in net income in the first quarter of 2014 compared with the fourth quarter of 2013 was due primarily to fair value losses, offset by an increase in fee and other income as a result of settlement agreements related to private-label mortgage-related securities. Fair value losses for the first quarter of 2014 were $1.3 billion, compared with gains of $1.1 billion in the fourth quarter of 2013. Capital Markets’ net interest income for the first quarter of 2014 was $1.8 billion, compared with $2.0 billion in the fourth quarter of 2013. The Capital Markets retained mortgage portfolio balance decreased to $467.7 billion as of March 31, 2014, compared with $490.7 billion as of December 31, 2013, resulting from purchases of $34.4 billion and liquidations and sales of $57.4 billion during the quarter.
(Dollars in millions) | 1Q14 | 4Q13 | Variance | 1Q14 | 1Q13 | Variance | ||||||||||||||||||
Single-Family Segment: | ||||||||||||||||||||||||
Guaranty fee income | $ | 2,870 | $ | 2,830 | $ | 40 | $ | 2,870 | $ | 2,375 | $ | 495 | ||||||||||||
Credit-related income | 1,002 | 848 | 154 | 1,002 | 1,034 | (32 | ) | |||||||||||||||||
Other | (836 | ) | (877 | ) | 41 | (836 | ) | (88 | ) | (748 | ) | |||||||||||||
Income before federal income taxes | 3,036 | 2,801 | 235 | 3,036 | 3,321 | (285 | ) | |||||||||||||||||
(Provision) benefit for federal income taxes | (927 | ) | (667 | ) | (260 | ) | (927 | ) | 31,578 | (32,505 | ) | |||||||||||||
Net income | $ | 2,109 | $ | 2,134 | $ | (25 | ) | $ | 2,109 | $ | 34,899 | $ | (32,790 | ) | ||||||||||
Multifamily Segment: | ||||||||||||||||||||||||
Guaranty fee income | $ | 311 | $ | 315 | $ | (4 | ) | $ | 311 | $ | 291 | $ | 20 | |||||||||||
Credit-related income | 34 | 234 | (200 | ) | 34 | 183 | (149 | ) | ||||||||||||||||
Other | (24 | ) | 203 | (227 | ) | (24 | ) | 37 | (61 | ) | ||||||||||||||
Income before federal income taxes | 321 | 752 | (431 | ) | 321 | 511 | (190 | ) | ||||||||||||||||
Benefit (provision) for federal income taxes | 9 | (46 | ) | 55 | 9 | 7,988 | (7,979 | ) | ||||||||||||||||
Net income | $ | 330 | $ | 706 | $ | (376 | ) | $ | 330 | $ | 8,499 | $ | (8,169 | ) | ||||||||||
Capital Markets Segment: | ||||||||||||||||||||||||
Net interest income | $ | 1,830 | $ | 2,031 | $ | (201 | ) | $ | 1,830 | $ | 2,742 | $ | (912 | ) | ||||||||||
Investment gains, net | 1,336 | 1,074 | 262 | 1,336 | 1,349 | (13 | ) | |||||||||||||||||
Fair value (losses) gains, net | (1,337 | ) | 1,061 | (2,398 | ) | (1,337 | ) | 875 | (2,212 | ) | ||||||||||||||
Other | 3,672 | 1,461 | 2,211 | 3,672 | (86 | ) | 3,758 | |||||||||||||||||
Income before federal income taxes | 5,501 | 5,627 | (126 | ) | 5,501 | 4,880 | 621 | |||||||||||||||||
(Provision) benefit for federal income taxes | (1,666 | ) | (1,103 | ) | (563 | ) | (1,666 | ) | 11,005 | (12,671 | ) | |||||||||||||
Net income | $ | 3,835 | $ | 4,524 | $ | (689 | ) | $ | 3,835 | $ | 15,885 | $ | (12,050 | ) | ||||||||||
First Quarter 2014 Results | 12 | |
ANNEX I
FANNIE MAE
(In conservatorship)
Condensed Consolidated Balance Sheets — (Unaudited)
(Dollars in millions, except share amounts)
As of | |||||||||||
March 31, 2014 | December 31, 2013 | ||||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | 14,056 | $ | 19,228 | |||||||
Restricted cash (includes $20,550 and $23,982, respectively, related to consolidated trusts) | 24,583 | 28,995 | |||||||||
Federal funds sold and securities purchased under agreements to resell or similar arrangements | 12,750 | 38,975 | |||||||||
Investments in securities: | |||||||||||
Trading, at fair value | 31,795 | 30,768 | |||||||||
Available-for-sale, at fair value (includes $949 and $998, respectively, related to consolidated trusts) | 37,128 | 38,171 | |||||||||
Total investments in securities | 68,923 | 68,939 | |||||||||
Mortgage loans: | |||||||||||
Loans held for sale, at lower of cost or fair value (includes $201 and $31, respectively, related to consolidated trusts) | 1,494 | 380 | |||||||||
Loans held for investment, at amortized cost: | |||||||||||
Of Fannie Mae | 290,903 | 300,159 | |||||||||
Of consolidated trusts (includes $14,637 and $14,268 respectively, at fair value and loans pledged as collateral that may be sold or repledged of $415 and $442, respectively) | 2,767,530 | 2,769,547 | |||||||||
Total loans held for investment | 3,058,433 | 3,069,706 | |||||||||
Allowance for loan losses | (41,911 | ) | (43,846 | ) | |||||||
Total loans held for investment, net of allowance | 3,016,522 | 3,025,860 | |||||||||
Total mortgage loans | 3,018,016 | 3,026,240 | |||||||||
Accrued interest receivable, net (includes $7,463 and $7,271, respectively, related to consolidated trusts) | 8,459 | 8,319 | |||||||||
Acquired property, net | 11,960 | 11,621 | |||||||||
Deferred tax assets, net | 45,366 | 47,560 | |||||||||
Other assets (includes cash pledged as collateral of $1,291 and $1,590, respectively) | 22,392 | 20,231 | |||||||||
Total assets | $ | 3,226,505 | $ | 3,270,108 | |||||||
LIABILITIES AND EQUITY | |||||||||||
Liabilities: | |||||||||||
Accrued interest payable (includes $8,262 and $8,276, respectively, related to consolidated trusts) | $ | 10,681 | $ | 10,553 | |||||||
Federal funds purchased and securities sold under agreements to repurchase | 25 | — | |||||||||
Debt: | |||||||||||
Of Fannie Mae (includes $1,775 and $1,308, respectively, at fair value) | 481,853 | 529,434 | |||||||||
Of consolidated trusts (includes $15,373 and $14,976, respectively, at fair value) | 2,712,842 | 2,705,089 | |||||||||
Other liabilities (includes $444 and $488, respectively, related to consolidated trusts) | 13,012 | 15,441 | |||||||||
Total liabilities | 3,218,413 | 3,260,517 | |||||||||
Commitments and contingencies | — | — | |||||||||
Fannie Mae stockholders’ equity: | |||||||||||
Senior preferred stock, 1,000,000 shares issued and outstanding | 117,149 | 117,149 | |||||||||
Preferred stock, 700,000,000 shares are authorized—555,374,922 shares issued and outstanding | 19,130 | 19,130 | |||||||||
Common stock, no par value, no maximum authorization—1,308,762,703 shares issued and 1,158,080,657 shares outstanding | 687 | 687 | |||||||||
Accumulated deficit | (123,098 | ) | (121,227 | ) | |||||||
Accumulated other comprehensive income | 1,575 | 1,203 | |||||||||
Treasury stock, at cost, 150,682,046 shares | (7,401 | ) | (7,401 | ) | |||||||
Total Fannie Mae stockholders’ equity | 8,042 | 9,541 | |||||||||
Noncontrolling interest | 50 | 50 | |||||||||
Total equity | 8,092 | 9,591 | |||||||||
Total liabilities and equity | $ | 3,226,505 | $ | 3,270,108 | |||||||
See Notes to Condensed Consolidated Financial Statements in the First Quarter 2014 Form 10-Q
First Quarter 2014 Results | 13 | |
FANNIE MAE
(In conservatorship)
Condensed Consolidated Statements of Operations and Comprehensive Income — (Unaudited)
(Dollars and shares in millions, except per share amounts)
For the Three Months | ||||||||||
Ended March 31, | ||||||||||
2014 | 2013 | |||||||||
Interest income: | ||||||||||
Trading securities | $ | 127 | $ | 226 | ||||||
Available-for-sale securities | 440 | 673 | ||||||||
Mortgage loans (includes $25,954 and $25,394, respectively, related to consolidated trusts) | 28,588 | 29,224 | ||||||||
Other | 24 | 57 | ||||||||
Total interest income | 29,179 | 30,180 | ||||||||
Interest expense: | ||||||||||
Short-term debt | 20 | 43 | ||||||||
Long-term debt (includes $22,076 and $21,158, respectively, related to consolidated trusts) | 24,421 | 23,833 | ||||||||
Total interest expense | 24,441 | 23,876 | ||||||||
Net interest income | 4,738 | 6,304 | ||||||||
Benefit for credit losses | 774 | 957 | ||||||||
Net interest income after benefit for credit losses | 5,512 | 7,261 | ||||||||
Investment gains, net | 146 | 118 | ||||||||
Net other-than-temporary impairments | (51 | ) | (9 | ) | ||||||
Fair value (losses) gains, net | (1,190 | ) | 834 | |||||||
Debt extinguishment losses, net | — | (23 | ) | |||||||
Fee and other income | 4,355 | 568 | ||||||||
Non-interest income | 3,260 | 1,488 | ||||||||
Administrative expenses: | ||||||||||
Salaries and employee benefits | 325 | 317 | ||||||||
Professional services | 242 | 223 | ||||||||
Occupancy expenses | 50 | 46 | ||||||||
Other administrative expenses | 55 | 55 | ||||||||
Total administrative expenses | 672 | 641 | ||||||||
Foreclosed property income | (262 | ) | (260 | ) | ||||||
Temporary Payroll Tax Cut Continuation Act of 2011 (“TCCA”) fees | 322 | 186 | ||||||||
Other expenses, net | 131 | 68 | ||||||||
Total expenses | 863 | 635 | ||||||||
Income before federal income taxes | 7,909 | 8,114 | ||||||||
(Provision) benefit for federal income taxes | (2,584 | ) | 50,571 | |||||||
Net income | 5,325 | 58,685 | ||||||||
Other comprehensive income: | ||||||||||
Changes in unrealized gains on available-for-sale securities, net of reclassification adjustments and taxes | 372 | 648 | ||||||||
Other | — | 6 | ||||||||
Total other comprehensive income | 372 | 654 | ||||||||
Total comprehensive income attributable to Fannie Mae | $ | 5,697 | $ | 59,339 | ||||||
Net income attributable to Fannie Mae | 5,325 | 58,685 | ||||||||
Dividends available for distribution to senior preferred stockholder | (5,692 | ) | (59,368 | ) | ||||||
Net loss attributable to common stockholders | $ | (367 | ) | $ | (683 | ) | ||||
Loss per share: basic and diluted | $ | (0.06 | ) | $ | (0.12 | ) | ||||
Weighted-average common shares outstanding: basic and diluted | 5,762 | 5,762 | ||||||||
See Notes to Condensed Consolidated Financial Statements in the First Quarter 2014 Form 10-Q
First Quarter 2014 Results | 14 | |
FANNIE MAE
(In conservatorship)
Condensed Consolidated Statements of Cash Flows— (Unaudited)
(Dollars in millions)
For the Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Net cash used in operating activities | $ | (1,321 | ) | $ | (6,420 | ) | |
Cash flows provided by investing activities: | |||||||
Purchases of trading securities held for investment | — | (2,021 | ) | ||||
Proceeds from maturities and paydowns of trading securities held for investment | 333 | 659 | |||||
Proceeds from sales of trading securities held for investment | 486 | 781 | |||||
Proceeds from maturities and paydowns of available-for-sale securities | 1,446 | 2,689 | |||||
Proceeds from sales of available-for-sale securities | 35 | 270 | |||||
Purchases of loans held for investment | (24,486 | ) | (60,504 | ) | |||
Proceeds from repayments and sales of loans acquired as held for investment of Fannie Mae | 6,217 | 18,470 | |||||
Proceeds from repayments and sales of loans acquired as held for investment of consolidated trusts | 80,610 | 201,345 | |||||
Net change in restricted cash | 4,412 | 10,688 | |||||
Advances to lenders | (20,501 | ) | (38,471 | ) | |||
Proceeds from disposition of acquired property and preforeclosure sales | 6,329 | 13,057 | |||||
Net change in federal funds sold and securities purchased under agreements to resell or similar arrangements | 26,225 | (46,850 | ) | ||||
Other, net | (385 | ) | 7 | ||||
Net cash provided by investing activities | 80,721 | 100,120 | |||||
Cash flows used in financing activities: | |||||||
Proceeds from issuance of debt of Fannie Mae | 69,086 | 155,561 | |||||
Payments to redeem debt of Fannie Mae | (117,058 | ) | (141,422 | ) | |||
Proceeds from issuance of debt of consolidated trusts | 58,216 | 122,408 | |||||
Payments to redeem debt of consolidated trusts | (87,643 | ) | (223,943 | ) | |||
Payments of cash dividends on senior preferred stock to Treasury | (7,191 | ) | (4,224 | ) | |||
Other, net | 18 | 216 | |||||
Net cash used in financing activities | (84,572 | ) | (91,404 | ) | |||
Net (decrease) increase in cash and cash equivalents | (5,172 | ) | 2,296 | ||||
Cash and cash equivalents at beginning of period | 19,228 | 21,117 | |||||
Cash and cash equivalents at end of period | $ | 14,056 | $ | 23,413 | |||
Cash paid during the period for: | |||||||
Interest | $ | 26,567 | $ | 27,824 | |||
Income taxes | 425 | — | |||||
See Notes to Condensed Consolidated Financial Statements in the First Quarter 2014 Form 10-Q
First Quarter 2014 Results | 15 | |
May 8, 2014 Fannie Mae 2014 First Quarter Credit Supplement Exhibit 99.2
This presentation includes information about Fannie Mae, including information contained in Fannie Mae’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, the “2014 Q1 Form 10-Q.” Some of the terms used in these materials are defined and discussed more fully in the 2014 Q1 Form 10-Q and in Fannie Mae’s Form 10-K for the year ended December 31, 2013, the “2013 Form 10-K.” These materials should be reviewed together with the 2014 Q1 Form 10-Q and the 2013 Form 10-K, copies of which are available on the “SEC Filings” page in the “Investor Relations” section of Fannie Mae’s web site at www.fanniemae.com. Some of the information in this presentation is based upon information that we received from third-party sources such as sellers and servicers of mortgage loans. Although we generally consider this information reliable, we do not independently verify all reported information. Due to rounding, amounts reported in this presentation may not add to totals indicated (or 100%). A dash indicates less than 0.05% or a null value. Unless otherwise indicated data labeled as “YTD 2014” is as of March 31, 2014 or for the first three months of 2014.
2 Table of Contents Home Prices Home Price Growth/Decline Rates in the U.S. 3 One Year Home Price Change as of 2014 Q1 4 Home Price Change From 2006 Q3 Through 2014 Q1 5 Credit Profile of Fannie Mae Single-Family Loans Credit Characteristics of Single-Family Business Acquisitions 6 Certain Credit Characteristics of Single-Family Business Acquisitions: 2003 - 2014 7 Single-Family Business Acquisitions by Loan Purpose 8 Credit Characteristics of Single-Family Conventional Guaranty Book of Business by Origination Year 9 Credit Characteristics of Single-Family Conventional Guaranty Book of Business by Certain Product Features 10 Geographic Credit Profile of Fannie Mae Single-Family Loans and Foreclosed Properties (REO) Credit Characteristics of Single-Family Conventional Guaranty Book of Business and Single-Family Real Estate Owned (REO) in Select States 11 Seriously Delinquent Loan and REO Ending Inventory Share by Select States 12 Single-Family Short Sales and REO Sales Price / UPB of Mortgage Loans 13 Workouts of Fannie Mae Single-Family Loans Single-Family Loan Workouts 14 Re-performance Rates of Modified Single-Family Loans 15 Additional Credit Information for Fannie Mae Single-Family Loans Credit Loss Concentration of Single-Family Conventional Guaranty Book of Business 16 Cumulative Default Rates of Single-Family Conventional Guaranty Book of Business by Origination Year 17 Credit Profile of Fannie Mae Multifamily Loans Multifamily Credit Profile by Loan Attributes 18 Multifamily Credit Profile by Acquisition Year 19 Multifamily Credit Profile 20 Multifamily YTD 2014 Credit Losses by State 21
3 10.7% 14.6% 14.7% -0.3% -8.4% -18.4% -2.5% -3.8% -3.7% 7.2% 11.3% 7.6% 10.6% 11.3% 2.7% -3.5% -9.1% -4.8% -4.3% -3.6% 4.2% 8.5% 0.4% -15% -10% -5% 0% 5% 10% 15% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Home Price Growth/Decline Rates in the U.S. Fannie Mae Home Price Index *Year-to-date as of Q1 2014. Estimate based on purchase transactions in Fannie-Freddie acquisition and public deed data available through the end of March 2014. Including subsequent data may lead to materially different results. S&P/Case-Shiller Index Based on our home price index, we estimate that home prices on a national basis increased by 0.4% in the first quarter of 2014, following an increase of 8.5% in 2013 and 4.2% in 2012. Despite the recent increases in home prices, we estimate that, through March 31, 2014, home prices on a national basis remained 13.4% below their peak in the third quarter of 2006. Our home price estimates are based on preliminary data and are subject to change as additional data become available. *
4 Below 0% 0% to 5% 5% to 10% 10% and above T X 6 . 4 % 5 . 5 % M T 3 . 2 % 0 . 3 % C A 2 0 . 2 % 1 9 . 6 % N M 2 . 0 % 0 . 5 % C O 8 . 7 % 2 . 7 % W Y 5 . 8 % 0 . 2 % O R 9 . 8 % 1 . 7 % A Z 1 3 . 4 % 2 . 4 % N V 2 2 . 7 % 1 . 0 % U T 7 . 0 % 1 . 1 % M N 5 . 3 % 1 . 9 % I D 5 . 7 % 0 . 5 % K S 1 . 0 % 0 . 5 % N E 3 . 8 % 0 . 4 % S D 4 . 0 % 0 . 2 % N D 8 . 7 % 0 . 1 % O K 2 . 8 % 0 . 6 % M O 2 . 5 % 1 . 3 % W A 9 . 8 % 3 . 5 % I L 4 . 6 % 4 . 1 % I A 2 . 7 % 0 . 7 % W I 2 . 4 % 1 . 8 % A R 1 . 4 % 0 . 5 % A L 1 . 2 % 1 . 0 % N C 2 . 7 % 2 . 5 % M S 0 . 9 % 0 . 4 % N Y 5 . 8 % 5 . 6 % G A 1 2 . 8 % 2 . 7 % P A 2 . 4 % 3 . 1 %O H 2 . 6 % 2 . 1 % I N 3 . 5 % 1 . 2 % L A 2 . 0 % 0 . 9 % F L 1 4 . 8 % 5 . 6 % T N 3 . 4 % 1 . 3 % M I 9 . 6 % 2 . 4 % K Y 2 . 7 % 0 . 6 % V A 4 . 0 % 3 . 6 % M E 0 . 0 % 0 . 3 % S C 3 . 9 % 1 . 2 % W V 2 . 9 % 0 . 2 % M D 6 . 5 % 2 . 8 % V T 3 . 4 % 0 . 2 % N H 3 . 4 % 0 . 5 % M A 6 . 3 % 3 . 1 % N J 4 . 1 % 4 . 0 % C T 2 . 5 % 1 . 4 % D E 1 . 0 % 0 . 4 % R I 6 . 3 % 0 . 3 % D C 5 . 2 % 0 . 4 % *Source: Fannie Mae. Home price estimates are based on purchase transactions in Fannie-Freddie acquisition and public deed data available through the end of March 2014. UPB estimates are based on data available through the end of March 2014. Including subsequent data may lead to materially different results. One Year Home Price Change as of 2014 Q1* United States 7.3% State Growth Rate State: NM Growth Rate: 2.0% UPB %: 0.5% Example A K - 1 . 7 % 0 . 2 % H I 11 . 0 % 0 . 8 %
5 TX 1 2 . 1 % 5 . 5 % M T 3 . 3 % 0 . 3 % C A - 2 6 . 5 % 1 9 . 6 % C O 2 . 9 % 2 . 7 % W Y 8 . 1 % 0 . 2 % N M - 11 . 7 % 0 . 5 % K S 0 . 4 % 0 . 5 % A Z - 3 2 . 7 % 2 . 4 % N E 3 . 6 % 0 . 4 %N V - 4 2 . 2 % 1 . 0 % U T - 2 . 7 % 1 . 1 % O K 7 . 2 % 0 . 6 % O R - 1 4 . 9 % 1 . 7 % S D 1 2 . 1 % 0 . 2 % M O - 8 . 0 % 1 . 3 % I A 4 . 5 % 0 . 7 % N D 3 8 . 6 % 0 . 1 % WA - 1 3 . 9 % 3 . 5 % A R - 1 . 7 % 0 . 5 % A L - 7 . 1 % 1 . 0 % M N - 1 4 . 0 % 1 . 9 %I D - 1 7 . 5 % 0 . 5 % L A 5 . 5 % 0 . 9 % N C - 4 . 6 % 2 . 5 % G A - 1 5 . 8 % 2 . 7 % M S - 4 . 6 % 0 . 4 % N Y - 8 . 3 % 5 . 6 % I L - 2 1 . 7 % 4 . 1 % WI - 1 0 . 3 % 1 . 8 % F L - 3 7 . 9 % 5 . 6 % PA - 3 . 3 % 3 . 1 % TN - 3 . 4 % 1 .3 % K Y - 0 . 2 % 0 . 6 % I N - 0 . 7 % 1 . 2 % O H - 1 1 . 2 % 2 . 1 % M I - 2 1 . 0 % 2 . 4 % VA - 1 4 . 6 % 3 . 6 % S C - 7 . 9 % 1 . 2 % W V 2 . 9 % 0 . 2 % M E - 1 2 . 7 % 0 . 3 % V T - 6 . 8 % 0 .2 % M D - 2 3 . 1 % 2 . 8 % M A - 1 1 . 4 % 3 . 1 % N H - 1 8 . 2 % 0 . 5 % N J - 2 3 . 6 % 4 . 0 % C T - 2 0 . 7 % 1 . 4 % D E - 1 9 . 0 % 0 . 4 % R I - 2 7 . 9 % 0 . 3 % D C 9 . 6 % 0 . 4 % United States -13.4% *Source: Fannie Mae. Home price estimates are based on purchase transactions in Fannie-Freddie acquisition and public deed data available through the end of March 2014. UPB estimates are based on data available through the end of March 2014. Including subsequent data may lead to materially different results. Note: Home prices on a national basis reached a peak in the third quarter of 2006. Home Price Change From 2006 Q3 Through 2014 Q1* Below -30% -30% to -15% -15% to -5% -5% to 0% 0% to 5% 5% and Above State Growth Rate State: NM Growth Rate: -11.7% UPB %: 0.5% Example A K 0 . 8 % 0 . 2 % H I - 7 . 9 % 0 . 8 %
6 Single-Family Acquisitions Excl. Refi Plus (2) Single-Family Acquisitions Excl. Refi Plus (2) Single-Family Acquisitions Excl. Refi Plus (2) Single-Family Acquisitions Excl. Refi Plus (2) Single-Family Acquisitions Excl. Refi Plus (2) Single-Family Acquisitions Excl. Refi Plus (2) Unpaid Principal Balance (billions) $76.4 $61.8 $728.4 $564.5 $115.7 $94.8 $183.0 $145.6 $210.3 $159.8 $219.5 $164.3 Weighted Average Origination Note Rate 4.41% 4.37% 3.78% 3.73% 4.40% 4.37% 3.91% 3.88% 3.61% 3.54% 3.48% 3.39% Origination Loan-to-Value (LTV) Ratio <= 60% 16.9% 16.5% 22.0% 23.5% 17.0% 16.8% 19.8% 20.5% 23.1% 25.0% 25.5% 28.5% 60.01% to 70% 12.5% 12.8% 13.9% 15.3% 12.0% 12.3% 13.0% 13.9% 14.4% 16.0% 15.2% 17.4% 70.01% to 80% 38.8% 44.0% 34.9% 41.2% 38.5% 43.7% 36.0% 41.8% 34.2% 40.9% 32.9% 39.7% 80.01% to 90% 12.3% 11.3% 10.5% 9.2% 12.1% 11.0% 11.4% 10.2% 10.3% 8.8% 9.2% 7.8% 90.01% to 100% 15.3% 15.4% 11.5% 10.8% 15.9% 16.2% 13.9% 13.6% 10.5% 9.4% 8.2% 6.6% > 100% 4.2% 7.1% 4.5% 6.0% 7.6% 8.9% Weighted Average Origination LTV Ratio 76.8% 75.2% 75.7% 71.4% 77.2% 75.3% 76.4% 73.2% 75.2% 70.5% 74.7% 68.5% FICO Credit Scores (3) < 620 1.8% 1.4% 1.6% 1.4% 1.3% 1.3% 620 to < 660 5.7% 4.1% 3.4% 1.9% 4.8% 3.3% 3.7% 2.2% 3.1% 1.6% 2.8% 1.3% 660 to < 700 13.9% 12.6% 9.7% 7.8% 12.4% 11.1% 10.5% 8.8% 8.9% 6.9% 8.2% 6.0% 700 to < 740 21.3% 21.5% 18.2% 17.7% 20.8% 20.9% 19.2% 18.9% 17.7% 17.0% 16.5% 15.3% >=740 57.3% 61.7% 67.3% 72.5% 60.3% 64.7% 65.2% 70.1% 68.8% 74.5% 71.3% 77.3% Weighted Average FICO Credit Score 741 748 753 760 745 751 750 757 754 762 757 765 Product Distribution Fixed-rate 94.6% 93.8% 97.6% 97.0% 96.7% 96.2% 96.9% 96.2% 97.9% 97.4% 98.2% 97.8% Adjustable-rate 5.4% 6.2% 2.4% 3.0% 3.3% 3.8% 3.1% 3.8% 2.1% 2.6% 1.8% 2.2% Alt-A (4) 1.3% 1.3% 1.3% 1.3% 1.2% 1.4% Subprime (5) Interest Only 0.1% 0.1% 0.2% 0.3% 0.1% 0.1% 0.2% 0.3% 0.2% 0.3% 0.2% 0.3% Negative Amortizing Investor 11.2% 9.1% 9.3% 7.0% 10.1% 8.0% 9.5% 7.1% 9.4% 7.0% 8.5% 6.4% Condo/Co-op 10.7% 10.8% 10.4% 10.1% 10.8% 10.7% 10.4% 10.0% 10.7% 10.4% 9.9% 9.4% Refinance 54.9% 44.3% 70.2% 61.5% 51.5% 40.8% 61.7% 51.8% 74.9% 67.0% 82.6% 76.8% Loan Purpose Purchase 45.1% 55.7% 29.8% 38.5% 48.5% 59.2% 38.3% 48.2% 25.1% 33.0% 17.4% 23.2% Cash-out refinance 16.0% 19.8% 14.6% 18.8% 14.8% 18.0% 14.3% 17.9% 14.6% 19.2% 14.7% 19.6% Other refinance 38.9% 24.5% 55.6% 42.7% 36.7% 22.7% 47.4% 33.9% 60.3% 47.8% 68.0% 57.2% Top 3 Geographic Concentration California 21.2% California 23.7% California 21.2% California 21.9% California 25.4% California 24.8% Texas 7.4% Texas 5.8% Texas 7.0% Texas 6.5% Texas 5.6% Texas 4.9% Florida 5.6% Florida 4.7% Florida 5.2% Florida 4.9% Florida 4.6% Florida 4.4% Acquisition Period Q1 2014 Q4 2013 Q3 2013Full Year 2013 Q1 2013 Single-Family Acquisitions Single-Family Acquisitions Single-Family Acquisitions Single-Family Acquisitions Single-Family Acquisitions Q2 2013 Single-Family Acquisitions Credit Characteristics of Single-Family Business Acquisitions (1) (1) Percentage calculated based on unpaid principal balance of loans at time of acquisition. Single-family business acquisitions refer to single-family mortgage loans we acquire through purchase or securitization transactions. (2) Single-family business acquisitions for the applicable period excluding loans acquired under our Refi Plus initiative, which includes the Home Affordable Refinance Program (“HARP”). Our Refi Plus initiative provides expanded refinance opportunities for eligible Fannie Mae borrowers, and may involve the refinance of existing Fannie Mae loans with high loan-to-value ratios, including loans with loan-to-value ratios in excess of 100%. (3) FICO credit score is as of loan origination, as reported by the seller of the mortgage loan. (4) Newly originated Alt-A loans acquired after 2008 consist of the refinance of existing loans under our Refi Plus initiative. For a description of our Alt-A loan classification criteria, refer to Fannie Mae’s 2014 Q1 Form 10-Q. (5) For a description of our subprime loan classification criteria, refer to Fannie Mae’s 2014 Q1 Form 10-Q.
7 0% 20% 40% 60% 80% 100% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* Share of Single-Family Business Acquisitions: Loan Purpose - Purchase 0% 20% 40% 60% 80% 100% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* Share of Single-Family Business Acquisitions: Fixed Rate Product 0% 5% 10% 15% 20% 660 680 700 720 740 760 780 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* Weighted Average FICO Credit Score (Left Axis) FICO Credit Score < 620 (Right Axis) 0% 5% 10% 15% 20% 40 60% 80% 100% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* Weighted Average Origination LTV Ratio (Left Axis) Weighted Average Origination LTV Ratio Excluding HARP (Left Axis) Origination LTV > 90% (Right Axis) Certain Credit Characteristics of Single-Family Business Acquisitions: 2003 – 2014*(1) (1) Percentage calculated based on unpaid principal balance of loans at time of acquisition. Single-family business acquisitions refer to single-family mortgage loans we acquire through purchase or securitization transactions. (2) The refinance of loans under the Home Affordable Refinance Program (“HARP”), which started in April 2009, resulted in an increase in our acquisition of loans with high loan-to-value ratios, including our acquisition of loans with loan-to-value ratios in excess of 100%. (3) FICO credit score is as of loan origination, as reported by the seller of the mortgage loan. Loans acquired after 2009 with FICO credit scores below 620 primarily consist of the refinance of existing loans under our Refi Plus initiative. FICO Credit Score (3) Origination Loan-to-Value Ratio (2) Product Feature * Year-to-date through March 31, 2014.
8 4.1% 9.8% 9.9% 15.6% 13.7% 10.1% 6.5% 13.6% 14.4% 8.9% 8.8% 8.9% 69.4% 54.0% 52.2% 55.0% 47.7% 35.8% 20.1% 22.6% 23.5% 20.6% 29.8% 45.1% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% 2009 2010 2011 2012 2013 2014* % o f Si ngl e-F am ily Bus ine ss A cqu isit ion s HARP Acquisitions Refi Plus Acquisitions (Excluding HARP) Refinance Acquisitions (Excluding Refi Plus) Purchase Acquisitions HARP (1) Refi Plus (Excluding HARP) (1) HARP (1) Refi Plus (Excluding HARP) (1) HARP (1) Refi Plus (Excluding HARP) (1) HARP (1) Refi Plus (Excluding HARP) (1) HARP (1) Refi Plus (Excluding HARP) (1) HARP (1) Refi Plus (Excluding HARP) (1) Unpaid Principal Balance (billions) $27.9 $44.7 $59.0 $80.5 $55.6 $81.2 $129.9 $73.8 $99.5 $64.4 $7.7 $6.8 Weighted Average Origination Note Rate 5.05% 4.85% 5.00% 4.68% 4.78% 4.44% 4.14% 3.89% 4.04% 3.80% 4.68% 4.45% Origination Loan-to-Value Ratio: <=80% 100% 100% 100% 100% 100% 100% 80.01 to 105% 99.1% 94.4% 88.1% 57.2% 58.4% 70.1% 105.01% to 125% 0.9% 5.6% 11.9% 22.1% 21.5% 17.8% >125% 20.7 20.1 12.1 Weighted Average Origination Loan-to-Value Ratio 90.7% 63.3% 92.2% 62.3% 94.3% 60.2% 111.0% 61.1% 109.8% 60.2% 103.6% 61.4% FICO Credit Scores (2) < 660 3.7% 2.5% 5.7% 3.8% 5.8% 4.5% 9.6% 7.1% 16.2% 12.2% 23.8% 19.7% 660 to < 740 31.9% 23.0% 33.1% 23.9% 32.6% 25.6% 33.8% 26.0% 38.7 31.9 41.3 37.4 >=740 64.4 74.5 61.2 72.3 61.5 70.0 56.6 66.9 45.1% 55.8% 34.9% 42.9% Weighted Average FICO Credit Score 749 762 746 760 746 758 738 753 722 737 706 718 2012 2013 2014* Acquisition Year 2009 2010 2011 Single-Family Business Acquisitions by Loan Purpose (1) Our Refi Plus initiative, which started in April 2009, includes the Home Affordable Refinance Program (“HARP”). Our Refi Plus initiative provides expanded refinance opportunities for eligible Fannie Mae borrowers, and may involve the refinance of existing Fannie Mae loans with high loan-to-value ratios, including loans with loan-to-value ratios in excess of 100%. (2) FICO credit score is as of loan origination, as reported by the seller of the mortgage loan. * Year-to-date through March 31, 2014.
9 As of March 31, 2014 Overall Book 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 and Earlier Unpaid Principal Balance (billions) (1) $2,811.3 $42.5 $633.2 $714.3 $311.4 $270.8 $200.9 $75.9 $130.4 $93.8 $338.0 Share of Single-Family Conventional Guaranty Book 100.0% 1.5% 22.5% 25.4% 11.1% 9.6% 7.1% 2.7% 4.6% 3.3% 12.0% Average Unpaid Principal Balance (1) $160,174 $191,077 $197,487 $197,632 $169,600 $168,488 $162,659 $150,989 $163,133 $147,552 $86,852 Serious Delinquency Rate 2.19% 0.07% 0.19% 0.35% 0.55% 0.95% 6.40% 11.53% 10.58% 4.01% Weighted Average Origination Loan-to-Value Ratio 74.3% 76.7% 76.3% 76.0% 71.4% 71.2% 69.9% 74.7% 78.3% 75.2% 72.3% Origination Loan-to-Value Ratio > 90% (2) 15.3% 19.1% 19.5% 18.7% 12.7% 10.4% 6.6% 12.6% 20.9% 12.5% 10.4% Weighted Average Mark-to-Market Loan-to-Value Ratio 66.4% 76.5% 70.4% 63.7% 58.8% 60.2% 62.2% 76.8% 93.8% 91.5% 58.3% Mark-to-Market Loan-to-Value Ratio > 100% and <= 125% 5.0% 2.9% 3.7% 3.6% 0.9% 1.3% 1.6% 11.8% 24.1% 22.5% 5.3% Mark-to-Market Loan-to-Value Ratio > 125% 2.1% 1.1% 1.6% 1.4% 0.1% 0.1% 2.7% 12.9% 12.6% 1.9% Weighted Average FICO (3) 744 740 751 759 758 757 754 717 694 698 708 FICO < 620 (3) 2.6% 1.8% 1.5% 1.0% 0.7% 0.7% 0.7% 5.5% 10.9% 8.7% 7.1% Interest Only 2.8% 0.2% 0.3% 0.6% 1.0% 1.0% 7.6% 18.3% 20.3% 5.8% Negative Amortizing 0.2% 0.1% 1.6% 1.3% Fixed-rate 91.6% 95.1% 97.5% 97.4% 94.5% 95.5% 97.2% 77.0% 66.9% 65.8% 78.7% Primary Residence 88.1% 84.4% 86.4% 88.7% 87.3% 89.4% 90.8% 87.1% 89.3% 87.2% 89.1% Condo/Co-op 9.5% 10.1% 10.4% 9.2% 8.8% 8.6% 9.0% 11.2% 10.0% 10.9% 8.8% Credit Enhanced (4) 15.2% 24.4% 20.1% 14.9% 10.0% 7.2% 6.7% 25.9% 30.8% 19.8% 11.8% Cumulative Default Rate (5) 0.1% 0.2% 0.4% 0.6% 4.2% 13.0% 11.9% Origination Year Credit Characteristics of Single-Family Conventional Guaranty Book of Business by Origination Year (1) Excludes non-Fannie Mae securities held in portfolio and those Alt-A and subprime wraps for which Fannie Mae does not have loan-level information. Fannie Mae had access to detailed loan-level information for approximately 99% of its single-family conventional guaranty book of business as of March 31, 2014. (2) The increase after 2009 is the result of the Home Affordable Refinance Program (“HARP”), which involves the refinance of existing Fannie Mae loans with high loan-to-value ratios, including loans with loan-to-value ratios in excess of 100%. (3) FICO credit score is as of loan origination, as reported by the seller of the mortgage loan. (4) Unpaid principal balance of all loans with credit enhancement as a percentage of unpaid principal balance of single-family conventional guaranty book of business for which Fannie Mae has access to loan-level information. (5) Defaults include loan liquidations other than through voluntary pay-off or repurchase by lenders and include loan foreclosures, short sales, sales to third parties and deeds-in-lieu of foreclosure. Cumulative Default Rate is the total number of single-family conventional loans in the guaranty book of business originated in the identified year that have defaulted, divided by the total number of single-family conventional loans in the guaranty book of business originated in the identified year. For 2003, 2004 and 2005 cumulative default rates, refer to slide 17.
10 (1) Loans with multiple product features are included in all applicable categories. The subtotal is calculated by counting a loan only once even if it is included in multiple categories. (2) FICO credit score is as of loan origination, as reported by the seller of the mortgage loan. (3) Our Refi Plus initiative, which started in April 2009, includes the Home Affordable Refinance Program (“HARP”). Our Refi Plus initiative provides expanded refinance opportunities for eligible Fannie Mae borrowers, and may involve the refinance of existing Fannie Mae loans with high loan-to-value ratios, including loans with loan-to-value ratios in excess of 100%. (4) Excludes non-Fannie Mae securities held in portfolio and those Alt-A and subprime wraps for which Fannie Mae does not have loan-level information. Fannie Mae had access to detailed loan-level information for approximately 99% of its single-family conventional guaranty book of business as of March 31, 2014. (5) Unpaid principal balance of all loans with credit enhancement as a percentage of unpaid principal balance of single-family conventional guaranty book of business for which Fannie Mae had access to loan-level information. Credit Characteristics of Single-Family Conventional Guaranty Book of Business by Certain Product Features As of March 31, 2014 Interest Only Loans Loans with FICO < 620 (2) Loans with FICO ≥ 620 and < 660 (2) Loans with Origination LTV Ratio > 90% Loans with FICO < 620 and Origination LTV Ratio > 90% Alt-A Loans Refi Plus Including HARP (3) Subtotal of Certain Product Features (1) Overall Book Unpaid Principal Balance (billions) (4) $77.8 $73.3 $153.9 $430.2 $21.1 $127.5 $551.8 $1,025.1 $2,811.3 Share of Single-Family Conventional Guaranty Book 2.8% 2.6% 5.5% 15.3% 0.8% 4.5% 19.6% 36.5% 100.0% Average Unpaid Principal Balance (4) $234,362 $119,524 $131,360 $171,638 $131,864 $151,700 $166,875 $155,768 $160,174 Serious Delinquency Rate 10.91% 9.15% 6.69% 3.13% 9.84% 8.72% 0.59% 3.81% 2.19% Acquisition Years 2005 - 2008 80.7% 46.3% 39.7% 13.8% 36.3% 63.2% 22.0% 14.5% Weighted Average Origination Loan-to-Value Ratio 74.0% 81.0% 79.3% 105.2% 107.2% 77.3% 86.7% 84.6% 74.3% Origination Loan-to-Value Ratio > 90% 7.9% 28.8% 23.5% 100.0% 100.0% 13.6% 39.9% 42.0% 15.3% Weighted Average Mark-to-Market Loan-to-Value Ratio 90.9% 79.8% 77.0% 94.8% 103.2% 82.7% 74.9% 78.5% 66.4% Mark-to-Market Loan-to-Value Ratio > 100% and <= 125% 23.4% 14.7% 12.3% 18.6% 29.7% 17.6% 10.4% 11.2% 5.0% Mark-to-Market Loan-to-Value Ratio > 125% 12.7% 7.3% 6.2% 8.3% 17.2% 9.5% 3.8% 4.9% 2.1% Weighted Average FICO (2) 724 584 642 728 584 713 740 719 744 FICO < 620 (2) 1.5% 100.0% 4.9% 100.0% 2.1% 4.0% 7.2% 2.6% Fixed-rate 24.3% 81.8% 83.8% 94.4% 86.1% 65.1% 98.7% 87.7% 91.6% Primary Residence 85.2% 95.0% 93.1% 90.9% 95.0% 76.9% 85.3% 88.7% 88.1% Condo/Co-op 15.2% 4.8% 6.2% 10.4% 5.9% 10.1% 9.6% 9.1% 9.5% Credit Enhanced (5) 14.2% 24.8% 21.7% 57.4% 60.1% 12.4% 12.4% 27.4% 15.2% Categories Not Mutually Exclusive (1)
11 Credit Characteristics of Single-Family Conventional Guaranty Book of Business and Single-Family Real Estate Owned (REO) in Select States (1) Based on the unpaid principal balance (UPB) of the single-family guaranty book of business as of March 31, 2014. Excludes non-Fannie Mae securities held in portfolio and those Alt-A and subprime wraps for which Fannie Mae does not have loan-level information. Fannie Mae had access to detailed loan-level information for approximately 99% of its single-family conventional guaranty book of business as of March 31, 2014. (2) “Seriously delinquent loans” refers to single-family conventional loans that are 90 days or more past due or in the foreclosure process. “Seriously delinquent loan share” refers to the percentage of our single-family seriously delinquent loan population in the applicable state or region. “SDQ rate” refers to the number of single-family conventional loans that were seriously delinquent in the applicable state or region, divided by the number of loans in our single-family conventional guaranty book of business in that state or region. (3) Measured from the borrowers’ last paid installment on their mortgages to when the related properties were added to our REO inventory for foreclosures completed during the first three months of 2014. Fannie Mae incurs additional costs associated with property taxes, hazard insurance, and legal fees while a delinquent loan remains in the foreclosure process. Additionally, the longer a loan remains in the foreclosure process, the longer it remains in our guaranty book of business as a seriously delinquent loan. Home Equity Conversion Mortgages (HECMs) insured by HUD are excluded from this calculation. (4) Expressed as a percentage of credit losses for the single-family guaranty book of business. Credit losses consist of (a) charge-offs, net of recoveries and (b) foreclosed property income, adjusted to exclude the impact of fair value losses resulting from credit-impaired loans acquired from MBS trusts. Negative values are the result of recoveries on previously recognized credit losses. For information on total credit losses, refer to Fannie Mae’s 2014 Q1 Form 10Q. (5) Select states represent the top ten states in UPB of the single-family conventional guaranty book of business as of March 31, 2014. (6) For information on which states are included in each region, refer to Fannie Mae’s 2014 Q1 Form 10-Q. UPB (billions) % of Total Weighted Average Mark-to- Market LTV Mark-to-Market LTV > 100% Seriously Delinquent Loan Share (2) SDQ Rate (2) Q1 2014 Acquisitions (# of Properties) Q1 2014 Dispositions (# of Properties) REO Ending Inventory as of March 31, 2014 Average Days to Foreclosure (3) Select States (5) California $551.3 19.6% 56.2% 5.0% 5.4% 0.86% 1,438 1,720 4,649 643 -8.8% Florida $158.7 5.6% 78.2% 23.2% 18.3% 6.12% 7,837 6,227 21,486 1,308 34.3% New York $156.6 5.6% 60.8% 4.8% 9.2% 4.31% 486 265 1,387 1,332 4.1% Texas $153.4 5.5% 62.9% 0.4% 2.8% 0.95% 968 948 2,175 564 0.6% Illinois $115.5 4.1% 76.9% 15.8% 5.7% 2.79% 2,522 2,676 11,110 862 13.3% New Jersey $112.6 4.0% 70.4% 10.5% 9.0% 6.08% 588 357 2,072 1,222 5.5% Virginia $99.8 3.6% 65.5% 4.9% 1.4% 1.05% 612 582 1,545 571 1.8% Washington $99.2 3.5% 67.5% 6.2% 2.5% 1.82% 739 1,100 2,723 885 4.1% Pennsylvania $85.9 3.1% 67.5% 3.9% 4.3% 2.60% 1,140 1,130 3,275 958 4.7% Massachusetts $85.9 3.1% 63.5% 3.5% 2.7% 2.40% 100 305 1,034 783 0.5% Region (6) Mi west $419.7 14.9% 72.6% 8.6% 15.6% 1.81% 7,542 9,325 30,411 684 25.9% Northeast $537.3 19.1% 66.0% 6.2% 30.0% 3.74% 3,417 2,956 11,430 1,060 20.5% Southeast $624.1 22.2% 71.3% 10.7% 33.0% 3.00% 13,524 12,003 38,736 1,028 50.8% Southwest $447.4 15.9% 66.0% 3.4% 9.2% 1.11% 4,097 4,547 10,635 577 4.5% West $782.9 27.8% 59.8% 5.9% 12.2% 1.25% 3,316 3,896 11,186 776 -1.8% Total $2,811.3 100.0% 66.4% 7.0% 100.0% 2.19% 31,896 32,727 102,398 869 100.0% SF Conventional Guaranty Book of Business as of March 31, 2014 (1) Seriously Delinquent Loans as of March 31, 2014 (2) Real Estate Owned (REO) % of YTD 2014 Credit Losses (4)
12 691 384 21.4% 18.3% 5.6% 9.2% 5.4% 9.0% 6.7% 5.7% 8.2% 5.4% 0 100 200 300 400 500 600 700 0% 5% 10% 15% 20% 25% 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 SD Q Vo lum e (T ho us an ds ) SDQ Volume Florida New York New Jersey Illinois California 119 102 7.3% 21.0% 0.5% 1.4% 0.6% 2.0% 6.4% 10.8% 11.9% 4.5% 0 20 40 60 80 100 120 0% 5% 10% 15% 20% 25% 201 Q4 2012 Q1 2012 Q2 2 3 2 4 2013 1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 RE O En di ng In ve nt or y (T ho us an ds ) REO Ending Inventory Florida New York New Jersey Illinois California Seriously Delinquent Loan and REO Ending Inventory Share by Select States (1) Seriously Delinquent Loan Share by Select States (2) REO Ending Inventory Share by Select States (3) (1) Based on states with the largest volume of seriously delinquent loans in our single-family conventional guaranty book of business as of March 31, 2014. (2) “Seriously delinquent loan share” refers to the percentage of our single-family seriously delinquent loan population in the applicable state. (3) Share of REO ending inventory calculated as the number of properties in the single-family REO ending inventory for the state divided by the total number of single-family properties in the REO ending inventory for the specified time period. Although our serious delinquency rate has decreased, this rate and the period of time that loans remain seriously delinquent continue to be negatively impacted by the length of time required to complete a foreclosure. High levels of foreclosures, changes in state foreclosure laws, new federal and state servicing requirements imposed by regulatory actions and legal settlements, and the need for servicers to adapt to these changes have lengthened the time it takes to foreclose on a mortgage loan in many states. Longer foreclosure timelines result in these loans remaining in our book of business for a longer time, which has caused our serious delinquency rate to decrease more slowly in the last few years than it would have if the pace of foreclosures had been faster.
13 Short Sales Gross Sales Price / UPB Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Florida 65.8% 68.8% 71.3% 73.6% 75.6% California 72.2% 75.5% 78.7% 81.4% 82.4% Illinois 66.7% 68.6% 70.5% 72.7% 71.7% Nevada 63.0% 67.1% 70.1% 73.6% 72.1% New Jersey 71.2% 69.4% 72.2% 73.0% 70.6% Washington 76.9% 80.5% 81.4% 82.9% 84.4% New York 75.5% 74.9% 78.6% 76.0% 77.1% Arizona 73.1% 76.5% 78.2% 79.2% 80.6% Michigan 66.1% 66.8% 71.6% 74.7% 73.5% Georgia 71.3% 74.0% 76.6% 79.5% 80.4% REO Gross Sales Price / UPB Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q 2014 Florida 64.5% 67.8% 70.7% 72.0% 70.1% Illinois 57.2% 61.9% 63.2% 64.5% 64.8% Michigan 59.9% 65.1% 67.8% 66.7% 66.1% Ohio 61.7% 62.4% 64.6% 61.9% 59.4% California 78.0% 85.3% 86.7% 86.8% 86.3% Georgia 72.7% 76.4% 77.3% 75.3% 76.1% Pennsylvania 67.4% 68.6% 70.1% 67.8% 65.9% Washington 77.3% 80.8% 83.5% 79.7% 83.5% Arizona 75.1% 79.8% 80.0% 79.7% 79.8% North Carolina 76.9% 80.8% 80.6% 79.2% 79.2% Single-Family Short Sales and REO Sales Price / UPB of Mortgage Loans (1) Includes REO properties that have been sold to a third party (excluding properties that have been repurchased by the seller/servicer, acquired by a mortgage insurance company, redeemed by a borrower, or sold through the FHFA Rental Pilot). (2) Sales Price / UPB is calculated as the sum of sales proceeds received divided by the aggregate unpaid principal balance (UPB) of the related loans. Gross sales price represents the contract sale price. Net sales price represents the contract sale price less charges/credits paid by or due to the seller or other parties at closing. (3) The states shown had the greatest volume of properties sold in the first three months of 2014 in each respective category. REO (1) Direct Sale Dispositions: Sales Price / UPB (2) Short Sales: Sales Price / UPB (2) Gross Sales Price/UPB Trends for Top 10 States (3) 61.5% 61.9% 65.0% 67.2% 68.5% 70.6% 74.6% 74.8% 74.2% 73.8% 55.4% 56.3% 59.2% 61.1% 62.3% 64.6% 68.4% 68.5% 67.9% 67.6% 50.0% 55.0% 60.0% 65.0% 70.0% 75.0% 80.0% 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 REO Gross Sales / UPB REO Net Sales / UPB 64.6% 65.6 66.6 68.1 70.4% 71.7 74.3% 76.2% 78.0% 78.6% 58.1 58.5 59.9 61.0% 63.3% 64.5% 66.6 68.2% 69.9% 70.6% 50.0% 55.0% 60.0% 65.0% 70.0% 75.0% 80.0% 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 hort Sales Gross Sales / UPB Short Sales Net Sales / UPB
14 52 47 35 42 40 43 40 37 39 36 9 9 6 4 4 4 3 2 2 2 60 56 41 46 44 48 44 40 41 38 0 10 20 30 40 50 60 70 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 # o f L oa ns (T ho us an ds ) Modif ications Repayment Plans and Forbearances Completed 19 19 20 20 15 12 14 12 9 7 3 4 4 4 4 4 4 3 4 3 22 22 24 23 19 16 18 15 13 10 0 10 20 30 40 50 60 70 201 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 # o f L oa ns (T ho us an ds ) Short Sales Deeds-in-Lieu Single-Family Loan Workouts Foreclosure Alternatives (2) Home Retention Strategies (1) (1) Consists of (a) modifications, which do not include trial modifications, loans to certain borrowers who have received bankruptcy relief that are classified as TDRs, or repayment plans or forbearances that have been initiated but not completed and (b) repayment plans and forbearances completed. (2) Consists of (a) short sales, in which the borrower, working with the servicer and Fannie Mae, sells the home prior to foreclosure for less than the amount owed to pay off the loan, accrued interest and other expenses from the sale proceeds and (b) deeds-in-lieu of foreclosure, which involve the borrower’s voluntarily signing over title to the property.
15 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 Modifications (2) 51,043 50,336 60,025 51,936 46,671 35,332 41,697 39,712 43,153 40,358 37,337 39,159 % Current or Paid Off 3 months post modification 84% 84% 83% 84% 85% 84% 84% 85% 86% 83% 83% 84% 6 months post modification 78% 79% 79% 79% 78% 77% 80% 82% 79% 77% 79% n/a 9 months post modification 75% 77% 76% 74% 73% 76% 78% 78% 76% 75% n/a n/a 12 months post modification 74% 75% 72% 71% 73% 75% 76% 76% 75% n/a n/a n/a 15 months post modification 73% 72% 70% 71% 73% 74% 74% 75% n/a n/a n/a n/a 18 months post modification 71% 71% 70% 71% 72% 73% 75% n/a n/a n/a n/a n/a 21 months post modification 70% 72% 71% 71% 72% 74% n/a n/a n/a n/a n/a n/a 24 months post modification 71% 73% 71% 71% 73% n/a n/a n/a n/a n/a n/a n/a Re-performance Rates of Modified Single-Family Loans (1) (1) Excludes loans that were classified as subprime adjustable rate mortgages that were modified into fixed rate mortgages. Modifications include permanent modifications, but do not reflect loans currently in trial modifications. (2) Defined as total number of completed modifications for the time periods noted.
16 2014 2013 2012 2011 2010 2009 2014 2013 2012 2011 2010 2009 Certain Product Features (3) Negative Amortizing Loans 0.2% 0.2% 0.3% 0.3% 0.4% 0.5% 1.3% 0.8% 0.5% 1.2% 1.9% 2.0% Interest Only Loans 2.8% 2.9% 3.7% 4.7% 5.6% 6.6% -7.5% 18.7% 21.8% 25.8% 28.6% 32.6% Loans with FICO < 620 (4) 2.6% 2.6% 2.9% 3.2% 3.5% 3.9% 13.8% 7.0% 7.8% 7.9% 8.0% 8.8% Loans with FICO ≥ 620 and < 660 (4) 5.5% 5.5% 6.0% 6.7% 7.4% 8.2% 19.0% 15.7% 14.2% 14.7% 15.1% 15.5% Loans with Origination LTV Ratio > 90% 15.3% 15.1% 12.8% 10.0% 9.4% 9.4% 11.0% 20.8% 16.8% 14.0% 15.9% 19.2% Loans with FICO < 620 and Origination LTV Ratio > 90% (4) 0.8% 0.7% 0.7% 0.7% 0.8% 0.9% 3.6% 2.0% 2.3% 2.2% 2.7% 3.4% Alt-A Loans (5) 4.5% 4.7% 5.6% 6.6% 7.6% 8.9% -2.4% 26.0% 23.7% 27.3% 33.2% 39.6% Subprime Loans 0.1% 0.1% 0.2% 0.2% 0.2% 0.3% 1.4% -0.2% 1.1% 0.6% 1.1% 1.5% Refi Plus Including HARP 19.6% 19.5% 16.5% 11.2% 7.1% 2.5% 10.8% 7.4% 3.5% 1.4% 0.1% Vintages 2009 - 2014 77.3% 76.2% 65.3% 51.6% 39.0% 22.0% 14.7% 10.0% 5.1% 2.4% 0.4% 2005 - 2008 14.1% 14.7% 21.7% 30.4% 38.0% 48.7% 70.6% 77.6% 81.8% 82.9% 87.9% 88.1% 2004 & Prior 8.6% 9.1% 13.1% 18.0% 23.0% 29.2% 14.7% 12.4% 13.1% 14.8% 11.7% 11.9% Select States (6) Florida 5.6% 5.7% 6.0% 6.3% 6.6% 7.0% 34.3% 28.9% 21.4% 11.0% 17.5% 15.5% Illinois 4.1% 4.1% 4.2% 4.3% 4.3% 4.3% 13.3% 12.9% 9.6% 3.5% 4.3% 4.2% New Jersey 4.0% 4.0% 4.0% 4.0% 4.0% 3.9% 5.5% 3.7% 2.0% 0.8% 1.2% 1.2% Maryland 2.8% 2.8% 2.8% 2.9% 2.8% 2.8% 5.4% 3.1% 1.8% 0.6% 1.9% 2.0% Pennsylvania 3.1% 3.1% 3.1% 3.0% 3.0% 3.0% 4.7% 3.0% 1.6% 0.8% 0.8% 0.8% Ohio 2.1% 2.1% 2.2% 2.3% 2.4% 2.6% 4.5% 4.1% 3.3% 2.1% 2.2% 2.2% New York 5.6% 5.6% 5.6% 5.6% 5.5% 5.3% 4.1% 1.9% 0.9% 0.6% 0.8% 0.8% Washington 3.5% 3.5% 3.5% 3.5% 3.5% 3.4% 4.1% 3.7% 2.5% 3.2% 1.5% 1.1% Michigan 2.4% 2.4% 2.5% 2.5% 2.6% 2.7% 2.8% 3.2% 4.5% 5.8% 6.3% 7.4% Connecticut 1.4% 1.4% 1.4% 1.4% 1.4% 1.4% 2.6% 1.4% 0.9% 0.3% 0.4% 0.4% All Other States 65.4% 65.4% 64.7% 64.2% 63.9% 63.6% 18.7% 34.2% 51.7% 71.2% 63.1% 64.4% % of Single-Family Conventional Guaranty Book of Business (1) % of Single-Family Credit Losses (2) (1) Based on the unpaid principal balance (UPB) of the single-family conventional guaranty book of business as of December 31 for the time periods noted, with the exception of 2014 which is as of March 31, 2014. (2) Based on the single-family credit losses for the year ended December 31 for the time periods noted, with the exception of 2014 which is through March 31, 2014. Credit losses consist of (a) charge-offs, net of recoveries and (b) foreclosed property income, adjusted to exclude the impact of fair value losses resulting from credit-impaired loans acquired from MBS trusts. Does not reflect the impact of recoveries that have not been allocated to specific loans. Negative values are the result of recoveries on previously recognized credit losses. (3) Loans with multiple product features are included in all applicable categories. Categories are not mutually exclusive. (4) FICO credit score is as of loan origination, as reported by the seller of the mortgage loan. (5) Newly originated Alt-A loans acquired after 2008 consist of the refinance of existing loans under our Refi Plus Initiative. (6) Select states represent the top ten states with the highest percentage of single-family credit losses for the three months ended March 31, 2014. Credit Loss Concentration of Single-Family Conventional Guaranty Book of Business
17 2003 2004 2005 20062007 2008 200920102013 20112012 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% Yr1-Q1 Yr2-Q1 Yr3-Q1 Yr4-Q1 Yr5-Q1 Yr6-Q1 Yr7-Q1 Yr8-Q1 Yr9-Q1 Yr10-Q1 Yr11-Q1 Yr12-Q1 Cu mu lat ive D efa ult R ate Time Since Beginning of Origination Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: Defaults consist of loan liquidations other than through voluntary pay-off or repurchase by lenders and include loan foreclosures, short sales, sales to third parties and deeds-in-lieu of foreclosure. Cumulative Default Rate is the total number of single-family conventional loans in the guaranty book of business originated in the identified year that have defaulted, divided by the total number of single-family conventional loans in the guaranty book of business originated in the identified year. Data as of March 31, 2014 is not necessarily indicative of the ultimate performance of the loans and performance is likely to change, perhaps materially, in future periods. Cumulative Default Rates of Single-Family Conventional Guaranty Book of Business by Origination Year
18 Total Multifamily Guaranty Book of Business 34,656 $197.3 100% 0.10% 100% 100% 100% 100% Credit Enhanced Loans: Credit Enhanced 31,354 $179.8 91% 0.09% 109% 1% 73% 83% Non-Credit Enhanced 3,302 $17.4 9% 0.12% -9% 99% 27% 17% Origination loan-to-value ratio: (3) Less than or equal to 70% 22,189 $109.1 55% 0.04% -18% 46% 14% 18% Greater than 70% and less than or equal to 80% 10,191 $81.5 41% 0.17% 78% 35% 71% 70% Greater than 80% 2,276 $6.6 3% 0.16% 40% 18% 15% 12% Delegated Underwriting and Servicing (DUS ®) Loans: (4) DUS ® - Small Balance Loans(5) 8,702 $16.4 8% 0.23% 116% 5% 7% 9% DUS ® - Non Small Balance Loans 12,541 $162.0 82% 0.05% -87% -26% 71% 72% DUS ® - Total 21,243 $178.4 90% 0.06% 29% -21% 78% 81% Non-DUS - Small Balance Loans(5) 12,735 $9.4 5% 0.56% 49% 43% 16% 12% Non-DUS - Non Small Balance Loans 678 $9.5 5% 0.24% 22% 78% 6% 7% Non-DUS - Total 13,413 $18.9 10% 0.40% 71% 121% 22% 19% Maturity Dates: Loans maturing in 2014 981 $4.7 2% 0.28% 40% -16% 12% 5% Loans maturing in 2015 2,469 $12.4 6% 0.08% -1% -2% 8% 6% Loans maturing in 2016 2,534 $13.6 7% 0.15% 43% 33% 12% 8% Loans maturing in 2017 3,631 $18.0 9% 0.26% 26% 81% 33% 21% Loans maturing in 2018 3,084 $17.4 9% 0.16% 37% 1% 14% 21% Other maturities 21,957 $131.2 66% 0.05% -46% 3% 22% 39% Loan Size Distribution: Less than or equal to $750K 8,510 $2.4 1% 0.54% 22% 13% 5% 5% Greater than $750K and less than or equal to $3M 11,838 $17.8 9% 0.38% 149% 62% 17% 16% Greater than $3M and less than or equal to $5M 4,461 $16.3 8% 0.26% -60% 4% 12% 11% Greater than $5M and less than or equal to $25M 8,490 $87.4 44% 0.07% 54% -34% 55% 50% Greater than $25M 1,357 $73.3 37% -65% 55% 11% 18% % of 2012 Multifamily Credit Losses % of 2011 Multifamily Credit Losses As of March 31, 2014 Loan Counts Unpaid Principal Balance (Billions) % of Multifamily Guaranty Book of Business (UPB) % Seriously Delinquent (1) % of 2013 Multifamily Credit Losses (2) % of YTD 2014 Multifamily Credit Losses (2) (1) We classify multifamily loans as seriously delinquent when payment is 60 days or more past due. (2) Negative values are the result of recoveries on previously recognized credit losses. Due to increased recoveries in 2013-14, credit losses for certain populations will appear greater than 100%. (3) Weighted average origination loan-to-value ratio is 66% as of March 31, 2014. (4) Under the Delegated Underwriting and Servicing, or DUS ®, product line, Fannie Mae acquires individual, newly originated mortgages from specially approved DUS lenders using DUS underwriting standards and/or DUS loan documents. Because DUS lenders generally share the risk of loss with Fannie Mae, they are able to originate, underwrite, close and service certain loans without our pre-review. (5) Multifamily loans with an original unpaid balance of up to $3 million nationwide or up to $5 million in high cost markets. Multifamily Credit Profile by Loan Attributes
19 As of March 31, 2014 Unpaid Principal Balance (Billions) % of Multifamily Guaranty Book of Business (UPB) % Seriously Delinquent (1) # of Seriously Delinquent loans (1) % of YTD 2014 Multifamily Credit Losses (2) % of 2013 Multifamily Credit Losses (2) % of 2012 Multifamily Credit Losses % of 2011 Multifamily Credit Losses Total Multifamily Guaranty Book of Business $197.3 100% 0.10% 104 100% 100% 100% 100% By Acquisition Year: 2014 $3.5 2% 2013 $29.0 15% 2012 $32.8 17% 0% 0% 2011 $22.3 11% 8% -2% 2010 $16.0 8% -6% 96% 0% 2009 $15.4 8% 0.03% 3 -48% -27% 7% 6% 2008 $18.8 10% 0.25% 32 80% -12% 23% 31% 2007 $23.0 12% 0.26% 32 6% 13% 48% 33% 2006 $13.3 7% 0.15% 12 143% 45% 10% 7% Prior to 2006 $23.3 12% 0.25% 25 -83% -13% 13% 23% 2005 20062007 2008 20092011 2010 2012 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 SD Q (% ) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20132014 (1) We classify multifamily loans as seriously delinquent when payment is 60 days or more past due. (2) Negative values are the result of recoveries on previously recognized credit losses. Due to increased recoveries in 2013-14, credit losses for certain populations will appear greater than 100%. Multifamily Credit Profile by Acquisition Year Multifamily SDQ Rate by Acquisition Year Cumulative Defaults by Acquisition Year 2010 2009 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Cu m ula tiv e De fa ult R at e 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2005 2007 2008 2006 2012 20112013 2014
20 Total Multifamily Guaranty Book of Business $197.3 100% 0.10% 100% 100% 100% 100% Region: (3) Midwest $17.4 9% 0.18% -21% -38% 15% 23% Northeast $38.2 19% 0.11% 23% -8% 10% 3% Southeast $42.9 22% 0.11% -4% 12% 53% 42% Southwest $37.7 19% 0.10% 133% -32% 8% 26% Western $61.1 31% 0.05% -30% 166% 14% 6% Top Five States by UPB: California $47.3 24% 0.04% -57% 8% 1% 1% New York $22.5 11% 0.08% 5% 2% 3% 0% Texas $19.5 10% 0.07% -18% -16% 2% 19% Florida $10.6 5% 0.09% 36% 23% 36% 10% Washington $7.2 4% 0.04% 0% 1% 0% 0% Asset Class: (4) Conventional/Co-op $176.1 89% 0.11% 155% 99% 94% 96% Seniors Housing $12.7 6% Manufactured Housing $5.4 3% 0.01% -4% 0% 3% 0% Student Housing $3.1 2% -52% 1% 3% 4% Targeted Affordable Segment: Privately Owned with Subsidy (5) $29.2 15% 0.04% 11% -15% 3% 14% DUS & Non-DUS Lenders/Servicers: DUS: Bank (Direct, Owned Entity, or Subsidiary) $69.9 35% 0.09% -42% 7% 21% 29% DUS: Non-Bank Financial Institution $118.4 60% 0.09% 118% 79% 70% 68% Non-DUS: Bank (Direct, Owned Entity, or Subsidiary) $7.7 4% 0.18% 2% 4% 6% 1% Non-DUS: Non-Bank Financial Institution $1.1 1% 0.33% 23% 10% 2% 1% Non-DUS: Public Agency/Non Profit $0.2 0% 0% 0% % of 2011 Multifamily Credit Losses As of March 31, 2014 Unpaid Principal Balance (Billions) % of Multifamily Guaranty Book of Business (UPB) % Seriously Delinquent (1) % of 2013 Multifamily Credit Losses (2) % of 2012 Multifamily Credit Losses % of YTD 2014 Multifamily Credit Losses (2) (1) We classify multifamily loans as seriously delinquent when payment is 60 days or more past due. (2) Negative values are the result of recoveries from previously recognized credit losses. Due to increased recoveries in 2013-14, credit losses for certain populations will appear greater than 100%. (3) For information on which states are included in each region, refer to Fannie Mae’s 2014 Q1 Form 10-Q. (4) Conventional Multifamily/Cooperative Housing/Affordable Housing: Conventional Multifamily is a loan secured by a residential property comprised of five or more dwellings which offers market rental rates (i.e., not subsidized or subject to rent restrictions). Cooperative Housing is a multifamily loan made to a cooperative housing corporation and secured by a first or subordinated lien on a cooperative multifamily housing project that contains five or more units. Affordable Housing is a multifamily loan on a mortgaged property encumbered by a regulatory agreement or recorded restriction that limits rents, imposes income restrictions on tenants or places other restrictions on the use of the property. Manufactured Housing Communities: A multifamily loan secured by a residential development that consists of sites for manufactured homes and includes utilities, roads and other infrastructure. In some cases, landscaping and various other amenities such as a clubhouse, swimming pool, and tennis and/or sports courts are also included. Seniors Housing: A multifamily loan secured by a mortgaged property that is intended to be used for residents for whom the owner or operator provides special services that are typically associated with either “independent living” or “assisted living.” Some Alzheimer’s and skilled nursing capabilities are permitted. Dedicated Student Housing: Multifamily loans secured by residential properties in which college or graduate students make up at least 80% of the tenants. Dormitories are not included. (5) The Multifamily Affordable Business Channel focuses on financing properties that are under a regulatory agreement that provides long-term affordability, such as properties with rent subsidies or income restrictions. Multifamily Credit Profile
21 Multifamily YTD 2014 Credit Losses by State ($ Millions) (1) Numbers: Represent YTD 2014 credit losses for each state which totaled $6M as of March 31, 2014. States with no numbers had less than $500K in credit losses or less than $500K in credit-related income in the first quarter of 2014. Shading: Represent Unpaid Principal Balance (UPB) for each state which totaled $197.3B as of March 31, 2014. Portfolio UPB Concentration by State as of 03/31/2014 Example: UPB in OH is $3B and YTD 2014 Credit Losses are $4M (1) Total state credit losses will not tie to total YTD 2014 credit losses due to rounding. Negative values are the result of recoveries on previously recognized credit losses.