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2014 Q2 8K


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): August 7, 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 August 7, 2014, Fannie Mae filed its quarterly report on Form 10-Q for the quarter ended June 30, 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 August 7, 2014, Fannie Mae posted to its Web site a 2014 Second 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: August 7, 2014




EXHIBIT INDEX
The following exhibits are submitted herewith:
 
 
 
 
Exhibit Number
  
Description of Exhibit
99.1

  
News release, dated August 7, 2014
99.2

  
2014 Second Quarter Credit Supplement presentation, dated August 7, 2014



2014 Q2 Press Release

Resource Center: 1-800-732-6643                                      Exhibit 99.1

Contact:     Pete Bakel
202-752-2034
Date:    August 7, 2014

Fannie Mae Reports Net Income of $3.7 Billion and Comprehensive Income of $3.7 Billion for Second Quarter 2014
•
Fannie Mae reported net income of $3.7 billion and comprehensive income of $3.7 billion for the second quarter of 2014.
•
Fannie Mae expects to pay Treasury $3.7 billion in dividends in September 2014. With the expected September dividend payment, Fannie Mae will have paid a total of $130.5 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 $4.2 trillion in liquidity since 2009, including approximately $96 billion in liquidity in the second quarter of 2014, enabling families to buy, refinance, or rent a home.
•
Fannie Mae has helped distressed families retain their homes or avoid foreclosure through more than 1.6 million workout solutions since 2009, including more than 43,000 in the second quarter of 2014.
WASHINGTON, DC — Fannie Mae (FNMA/OTC) reported net income of $3.7 billion for the second quarter of 2014 and comprehensive income of $3.7 billion. The company reported a positive net worth of $6.1 billion as of June 30, 2014 and expects to pay $3.7 billion to Treasury in September 2014 as a dividend on the senior preferred stock.
Fannie Mae reported a strong second quarter of 2014. The company’s net income of $3.7 billion and comprehensive income of $3.7 billion for the second quarter of 2014 compares to net income of $5.3 billion and comprehensive income of $5.7 billion for the first quarter of 2014. Net income in the second quarter of 2014 declined compared with the first quarter of 2014, due primarily to a decline in the amount of income recognized by the company from settlement agreements related to private-label mortgage-related securities sold to Fannie Mae. This decline was partially offset by an increase in the company’s benefit for credit losses due primarily to higher home prices in the second quarter of 2014.
Fannie Mae’s federal income tax rate was 32.3 percent in the second quarter of 2014, resulting in a provision for federal income taxes of $1.8 billion in the second quarter of 2014.

Second Quarter 2014 Results
 
1

SUMMARY OF SECOND QUARTER 2014 RESULTS
(Dollars in millions)
 
2Q14
 
1Q14
 
Variance
 
2Q14
 
2Q13
 
Variance
Net interest income
 
$
4,904

 
$
4,738

 
$
166

 
$
4,904

 
$
5,667

 
$
(763
)
Fee and other income
 
383

 
4,355

 
(3,972
)
 
383

 
485

 
(102
)
Net revenues
 
5,287

 
9,093

 
(3,806
)
 
5,287

 
6,152

 
(865
)
Investment gains, net
 
506

 
146

 
360

 
506

 
290

 
216

Fair value (losses) gains, net
 
(934
)
 
(1,190
)
 
256

 
(934
)
 
829

 
(1,763
)
Administrative expenses
 
(697
)
 
(672
)
 
(25
)
 
(697
)
 
(626
)
 
(71
)
Credit-related income
 
 
 
 
 
 
 
 
 
 
 
 
Benefit for credit losses
 
1,639

 
774

 
865

 
1,639

 
5,383

 
(3,744
)
Foreclosed property income
 
214

 
262

 
(48
)
 
214

 
332

 
(118
)
Total credit-related income
 
1,853

 
1,036

 
817

 
1,853

 
5,715

 
(3,862
)
Other non-interest expenses(1)
 
(596
)
 
(504
)
 
(92
)
 
(596
)
 
(280
)
 
(316
)
Net gains (losses) and income (expenses)
 
132

 
(1,184
)
 
1,316

 
132

 
5,928

 
(5,796
)
Income before federal income taxes
 
5,419

 
7,909

 
(2,490
)
 
5,419

 
12,080

 
(6,661
)
Provision for federal income taxes
 
(1,752
)
 
(2,584
)
 
832

 
(1,752
)
 
(1,985
)
 
233

Net income
 
3,667

 
5,325

 
(1,658
)
 
3,667

 
10,095

 
(6,428
)
Less: Net income attributable to noncontrolling interest
 
(1
)
 
—

 
(1
)
 
(1
)
 
(11
)
 
10

Net income attributable to Fannie Mae
 
$
3,666

 
$
5,325

 
$
(1,659
)
 
$
3,666

 
$
10,084

 
$
(6,418
)
Total comprehensive income attributable to Fannie Mae
 
$
3,711

 
$
5,697

 
$
(1,986
)
 
$
3,711

 
$
10,250

 
$
(6,539
)
Dividends distributed or available for distribution to senior preferred stockholder
 
$
(3,712
)
 
$
(5,692
)
 
$
1,980

 
$
(3,712
)
 
$
(10,243
)
 
$
6,531

(1)    Consists of net other-than-temporary impairments, debt extinguishments gains (losses), net, TCCA fees and other expenses, net.
Net Revenues, which consists of net interest income and fee and other income, were $5.3 billion for the second quarter of 2014, compared with $9.1 billion for the first quarter of 2014. The decline in net revenues was driven primarily by a decline in fee and other income. Fee and other income was $383 million for the second quarter of 2014, compared with $4.4 billion for the first quarter of 2014. The decrease was due primarily to a decline in the amount of income recognized by the company from settlement agreements related to private-label mortgage-related securities sold to Fannie Mae.
Net interest income, which includes guaranty fee revenue, was $4.9 billion for the second quarter of 2014, compared with $4.7 billion for the first quarter of 2014. The increase in net interest income compared with the first quarter of 2014 was due primarily to lower interest expense on funding debt, partially offset by a decline in the company’s retained mortgage portfolio. As a result of both the shrinking of the retained mortgage portfolio and the impact of guaranty fee increases, an increasing portion of Fannie Mae’s revenues in recent years has been derived from guaranty fees rather than from interest income earned on the company’s retained mortgage portfolio assets. The company recognizes almost all of its guaranty fee revenue in net interest income and the percentage of net interest income derived from guaranty fees on loans underlying Fannie Mae MBS increased to approximately half in the first half of 2014, compared with approximately one-third in the first half of 2013. The company expects that guaranty fees will continue to account for an increasing portion of its revenues.


Second Quarter 2014 Results
 
2


Credit-Related Income, which consists of a benefit for credit losses and foreclosed property income, was $1.9 billion in the second quarter of 2014, compared with $1.0 billion in the first quarter of 2014. The increase in credit-related income was due primarily to an increase in home prices in the second quarter of 2014.
Net Fair Value Losses were $934 million in the second quarter of 2014, compared with $1.2 billion in the first quarter of 2014. Second quarter 2014 fair value losses were driven primarily by losses on risk management derivatives as a result of a decrease in interest rates. The estimated fair value of the company’s derivatives and securities 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.

Second Quarter 2014 Results
 
3

SUMMARY OF SECOND QUARTER 2014 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.
(Dollars in millions)
 
2Q14
 
1Q14
 
Variance
 
2Q14
 
2Q13
 
Variance
Single-Family Segment:
 
 
 
 
 
 
 
 
 
 
 
 
Guaranty fee income
 
$
2,893

 
$
2,870

 
$
23

 
$
2,893

 
$
2,544

 
$
349

Credit-related income
 
1,781

 
1,002

 
779

 
1,781

 
5,681

 
(3,900
)
Other
 
(847
)
 
(836
)
 
(11
)
 
(847
)
 
(677
)
 
(170
)
Income before federal income taxes
 
3,827

 
3,036

 
791

 
3,827

 
7,548

 
(3,721
)
Provision for federal income taxes
 
(1,133
)
 
(927
)
 
(206
)
 
(1,133
)
 
(1,050
)
 
(83
)
Net income
 
$
2,694

 
$
2,109

 
$
585

 
$
2,694

 
$
6,498

 
$
(3,804
)
Multifamily Segment:
 
 
 
 
 
 
 
 
 
 
 
 
Guaranty fee income
 
$
317

 
$
311

 
$
6

 
$
317

 
$
300

 
$
17

Credit-related income
 
72

 
34

 
38

 
72

 
34

 
38

Other
 
(4
)
 
(24
)
 
20

 
(4
)
 
62

 
(66
)
Income before federal income taxes
 
385

 
321

 
64

 
385

 
396

 
(11
)
(Provision) benefit for federal income taxes
 
(9
)
 
9

 
(18
)
 
(9
)
 
(10
)
 
1

Net income
 
$
376

 
$
330

 
$
46

 
$
376

 
$
386

 
$
(10
)
Capital Markets Segment:
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
$
1,917

 
$
1,830

 
$
87

 
$
1,917

 
$
2,680

 
$
(763
)
Investment gains, net
 
1,648

 
1,336

 
312

 
1,648

 
898

 
750

Fair value (losses) gains, net
 
(1,098
)
 
(1,337
)
 
239

 
(1,098
)
 
841

 
(1,939
)
Other
 
(308
)
 
3,672

 
(3,980
)
 
(308
)
 
(179
)
 
(129
)
Income before federal income taxes
 
2,159

 
5,501

 
(3,342
)
 
2,159

 
4,240

 
(2,081
)
Provision for federal income taxes
 
(610
)
 
(1,666
)
 
1,056

 
(610
)
 
(925
)
 
315

Net income
 
$
1,549

 
$
3,835

 
$
(2,286
)
 
$
1,549

 
$
3,315

 
$
(1,766
)

Second Quarter 2014 Results
 
4

Single-Family Business
•
Single-Family net income was $2.7 billion in the second quarter of 2014, compared with $2.1 billion in the first quarter of 2014. Net income in the second quarter of 2014 was driven primarily by guaranty fee income and credit-related income.
•
Single-Family guaranty fee income was $2.9 billion for both the second quarter of 2014 and the first quarter of 2014. The Single-Family guaranty book of business was relatively flat at $2.86 trillion as of June 30, 2014, compared with $2.88 trillion as of March 31, 2014.
•
Single-Family credit-related income was $1.8 billion in the second quarter of 2014, compared with $1.0 billion in the first quarter of 2014. The increase was driven primarily by an increase in home prices in the second quarter of 2014.
Multifamily Business
•
Multifamily net income was $376 million in the second quarter of 2014, compared with $330 million in the first quarter of 2014. Net income in the second quarter of 2014 was driven primarily by guaranty fee income.
•
Multifamily guaranty fee income was $317 million for the second quarter of 2014, compared with $311 million for the first quarter of 2014.
•
Multifamily credit-related income was $72 million for the second quarter of 2014, compared with $34 million for the first quarter of 2014.
•
The Multifamily guaranty book of business was $197.6 billion as of June 30, 2014, compared with $199.0 billion as of March 31, 2014.
Capital Markets
•
Capital Markets net income was $1.5 billion in the second quarter of 2014, compared with $3.8 billion in the first quarter of 2014. Net income in the second quarter of 2014 was driven primarily by net interest income and net investment gains, partially offset by net fair value losses. Capital Markets net income in the second quarter of 2014 declined compared with the first quarter of 2014 due primarily to a decline in the amount of income recognized by the company from settlement agreements related to private-label mortgage-related securities sold to Fannie Mae.
•
Capital Markets net interest income was $1.9 billion for the second quarter of 2014, compared with $1.8 billion for the first quarter of 2014.
•
Capital Markets net investment gains were $1.6 billion in the second quarter of 2014, compared with $1.3 billion in the first quarter of 2014.
•
Capital Markets net fair value losses were $1.1 billion in the second quarter of 2014, compared with $1.3 billion in the first quarter of 2014.
•
Capital Markets retained mortgage portfolio balance decreased to $452.8 billion as of June 30, 2014, compared with $467.7 billion as of March 31, 2014, resulting from purchases of $40.9 billion and liquidations and sales of $55.8 billion during the second quarter of 2014.

Second Quarter 2014 Results
 
5

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, primarily through pursuing the strategic goals identified by its conservator, the Federal Housing Finance Agency (“FHFA”). These strategic goals are: maintain in a safe and sound manner foreclosure prevention activities and credit availability for new and refinanced mortgages to foster liquid, efficient, competitive, and resilient national housing finance markets; reduce taxpayer risk through increasing the role of private capital in the mortgage market; and build a new single-family securitization infrastructure for use by the Enterprises and adaptable for use by other participants in the secondary market in the future.
ABOUT FANNIE MAE’S CONSERVATORSHIP
Fannie Mae has operated under the conservatorship of 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 June 30, 2014, Fannie Mae has requested cumulative draws totaling $116.1 billion and paid $126.8 billion in dividends to Treasury. Under the senior preferred stock purchase agreement, the payment of dividends does not 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 does not offset prior Treasury draws.
(2) 
Fannie Mae expects to pay a dividend for the third quarter of 2014 calculated based on the company’s net worth of $6.1 billion as of June 30, 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.

Second Quarter 2014 Results
 
6

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.
CREDIT QUALITY
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 the 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 six months of 2014 had a weighted average borrower FICO credit score at origination of 743 and a weighted average original loan-to-value ratio of 77 percent.
As of June 30, 2014, 79 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.
Fannie Mae’s new book of business (loans purchased or guaranteed since 2009) was comprised of 26 percent of home purchase mortgages and 74 percent of loan refinancings as of June 30, 2014. 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 49 percent other refinancings (excluding Refi Plus refinancings). 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.

Second Quarter 2014 Results
 
7

Fannie Mae’s single-family serious delinquency rate has declined each quarter since the first quarter of 2010, and was 2.05 percent as of June 30, 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.
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 $42.1 billion as of June 30, 2014, compared with $45.3 billion as of March 31, 2014. The total loss reserve coverage to total nonaccrual loans was 59 percent as of June 30, 2014, compared with 60 percent as of March 31, 2014.

Second Quarter 2014 Results
 
8

PROVIDING LIQUIDITY AND SUPPORT TO THE MARKET
Liquidity
Fannie Mae has provided more than $4.2 trillion in liquidity to the mortgage market since January 1, 2009, including approximately $96 billion in liquidity in the second quarter of 2014, through its purchases and guarantees of loans, which resulted in:
•
12.8 million mortgage refinancings, including approximately 212,000 in the second quarter of 2014
•
4.1 million home purchases, including approximately 215,000 in the second quarter of 2014
•
2.3 million units of multifamily housing, including approximately 93,000 in the second quarter of 2014

The company expects that refinancings will continue to constitute a smaller portion of its single-family business volume in 2014 than in 2013.

Second Quarter 2014 Results
 
9

The company remained the largest single issuer of single-family mortgage-related securities in the secondary market in the second quarter of 2014, with an estimated market share of new single-family mortgage-related securities issuances of 39 percent in the second quarter of 2014, compared with 41 percent in the first quarter of 2014 and 45 percent in the second quarter of 2013.
Fannie Mae also remained a continuous source of liquidity in the multifamily market. As of March 31, 2014 (the latest date for which information is available), the company owned or guaranteed approximately 20 percent of the outstanding debt on multifamily properties.
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 77,000 loans in the second 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 second quarter of 2014 reduced borrowers’ monthly mortgage payments by an average of $150. The volume of Refi Plus refinancings continued to decrease through the second quarter of 2014 due primarily to an increase in interest rates since the first half of 2013.

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.


Second Quarter 2014 Results
 
10

 
For the Six Months Ended June 30,
 
2014
 
2013
 
Unpaid Principal Balance
 
Number of Loans
 
Unpaid Principal Balance
 
Number of Loans
 
(Dollars in millions)
Home retention strategies:
 
 
 
 
 
 
 
Modifications
$
11,584

 
68,054

 
$
15,130

 
83,511

Repayment plans and forbearances completed
511

 
3,884

 
1,030

 
7,906

Total home retention strategies
12,095

 
71,938

 
16,160

 
91,417

Foreclosure alternatives:
 
 
 
 
 
 
 
Short sales
2,760

 
13,347

 
5,452

 
25,642

Deeds-in-lieu of foreclosure
996

 
6,296

 
1,352

 
8,194

Total foreclosure alternatives
3,756

 
19,643

 
6,804

 
33,836

Total loan workouts
$
15,851

 
91,581

 
$
22,964

 
125,253

Loan workouts as a percentage of single-family guaranty book of business
1.11
%
 
1.05
%
 
1.62
%
 
1.43
%
Fannie Mae views foreclosure as a last resort. For homeowners and communities in need, the company offers alternatives to 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.
•
Fannie Mae provided more than 43,000 loan workouts during the second quarter of 2014 enabling borrowers to avoid foreclosure and contributing to the more than 1.6 million loan workouts completed from the beginning of 2009 through June 30, 2014.
•
Fannie Mae completed more than 32,000 loan modifications during the second quarter of 2014, bringing the total number of loan modifications the company has completed since January 1, 2009 to more than 1.1 million.
FORECLOSURES AND REO
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 Six Months Ended June 30,
 
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
63,574

 
74,823

 
Dispositions of REO
(70,007
)
 
(83,569
)
 
End of period inventory of single-family foreclosed properties (REO)
96,796

 
96,920

 
Carrying value of single-family foreclosed properties (dollars in millions)
$
10,347

 
$
9,075

 
Single-family foreclosure rate
0.73

%
0.86

%

Second Quarter 2014 Results
 
11

•
Fannie Mae acquired 31,678 single-family REO properties, primarily through foreclosure, in the second quarter of 2014, compared with 31,896 in the first quarter of 2014.
•
As of June 30, 2014, the company’s inventory of single-family REO properties was 96,796, compared with 102,398 as of March 31, 2014. The carrying value of the company’s single-family REO was $10.3 billion as of June 30, 2014.
•
The company’s single-family foreclosure rate was 0.73 percent for the first six 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.
Fannie Mae’s financial statements for the second quarter of 2014 are available in the accompanying Annex; however, investors and interested parties should read the company’s quarterly report on Form 10-Q for the quarter ended June 30, 2014 (the “Second 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 Second 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 Second Quarter Credit Supplement” at www.fanniemae.com.

# # #

In this release, the company has presented a number of estimates, forecasts, expectations, and other forward-looking statements, including statements regarding the company’s future dividend payments to Treasury; the future sources of its revenues; the portion of its future business volume that will consist of refinancings; the impact of the company’s actions to reduce credit losses; and the future fair value of the company’s 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, whether the company’s counterparties meet their obligations in full, effects from activities the company takes to support the mortgage market and help borrowers, the company’s future objectives and activities in support of those objectives, including actions the company may take to reach additional underserved creditworthy borrowers, actions the company may be required to take by FHFA, as its conservator or as its regulator, such as changes in the types of business the company does, 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 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 June 30, 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



Second Quarter 2014 Results
 
12

ANNEX
FANNIE MAE
(In conservatorship)
Condensed Consolidated Balance Sheets — (Unaudited)
(Dollars in millions, except share amounts)
 
As of
 
June 30,
 
December 31,
 
2014
 
2013
ASSETS
Cash and cash equivalents
 
$
20,847

 
 
 
$
19,228

 
Restricted cash (includes $25,401 and $23,982, respectively, related to consolidated trusts)
 
29,587

 
 
 
28,995

 
Federal funds sold and securities purchased under agreements to resell or similar arrangements
 
16,700

 
 
 
38,975

 
Investments in securities:
 
 
 
 
 
 
 
Trading, at fair value
 
26,630

 
 
 
30,768

 
Available-for-sale, at fair value (includes $561 and $998, respectively, related to consolidated trusts)
 
34,026

 
 
 
38,171

 
Total investments in securities
 
60,656

 
 
 
68,939

 
Mortgage loans:
 
 
 
 
 
 
 
Loans held for sale, at lower of cost or fair value (includes $25 and $31, respectively, related to consolidated trusts)
 
625

 
 
 
380

 
Loans held for investment, at amortized cost:
 
 
 
 
 
 
 
Of Fannie Mae
 
284,609

 
 
 
300,159

 
Of consolidated trusts (includes $15,116 and $14,268, respectively, at fair value and loans pledged as collateral that may be sold or repledged of $389 and $442, respectively)
 
2,758,619

 
 
 
2,769,547

 
Total loans held for investment
 
3,043,228

 
 
 
3,069,706

 
Allowance for loan losses
 
(39,067
)
 
 
 
(43,846
)
 
Total loans held for investment, net of allowance
 
3,004,161

 
 
 
3,025,860

 
Total mortgage loans
 
3,004,786

 
 
 
3,026,240

 
Accrued interest receivable, net (includes $7,470 and $7,271, respectively, related to consolidated trusts)
 
8,472

 
 
 
8,319

 
Acquired property, net
 
11,560

 
 
 
11,621

 
Deferred tax assets, net
 
44,809

 
 
 
47,560

 
Other assets (includes cash pledged as collateral of $1,821 and $1,590, respectively)
 
21,400

 
 
 
20,231

 
Total assets
 
$
3,218,817

 
 
 
$
3,270,108

 
LIABILITIES AND EQUITY
Liabilities:
 
 
 
 
 
 
 
Accrued interest payable (includes $8,213 and $8,276, respectively, related to consolidated trusts)
 
$
10,203

 
 
 
$
10,553

 
Debt:
 
 
 
 
 
 
 
Of Fannie Mae (includes $3,432 and $1,308, respectively, at fair value)
 
477,535

 
 
 
529,434

 
Of consolidated trusts (includes $16,420 and $14,976, respectively, at fair value)
 
2,712,010

 
 
 
2,705,089

 
Other liabilities (includes $453 and $488, respectively, related to consolidated trusts)
 
12,957

 
 
 
15,441

 
Total liabilities
 
3,212,705

 
 
 
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
 
(125,123
)
 
 
 
(121,227
)
 
Accumulated other comprehensive income
 
1,620

 
 
 
1,203

 
Treasury stock, at cost, 150,682,046 shares
 
(7,401
)
 
 
 
(7,401
)
 
Total Fannie Mae stockholders’ equity
 
6,062

 
 
 
9,541

 
Noncontrolling interest
 
50

 
 
 
50

 
Total equity
 
6,112

 
 
 
9,591

 
Total liabilities and equity
 
$
3,218,817

 
 
 
$
3,270,108

 

See Notes to Condensed Consolidated Financial Statements in the Second Quarter 2014 Form 10-Q

Second 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
 
 
For the Six Months
 
 
 
Ended June 30,
 
 
Ended June 30,
 
 
 
2014
 
 
2013
 
 
2014
 
 
2013
 
Interest income:
 
 
 
 
 
 
 
 
 
 
 
 
Trading securities
 
$
143

 
 
$
222

 
 
$
270

 
 
$
448

 
Available-for-sale securities
 
414

 
 
651

 
 
854

 
 
1,324

 
Mortgage loans (includes $25,533 and $24,847, respectively, for the three months ended and $51,487 and $50,241, respectively, for the six months ended related to consolidated trusts)
 
28,165

 
 
28,056

 
 
56,753

 
 
57,280

 
Other
 
24

 
 
49

 
 
48

 
 
106

 
Total interest income
 
28,746

 
 
28,978

 
 
57,925

 
 
59,158

 
Interest expense:
 
 
 
 
 
 
 
 
 
 
 
 
Short-term debt
 
21

 
 
37

 
 
41

 
 
80

 
Long-term debt (includes $21,692 and $20,722, respectively, for the three months ended and $43,768 and $41,880, respectively, for the six months ended related to consolidated trusts)
 
23,821

 
 
23,274

 
 
48,242

 
 
47,107

 
Total interest expense
 
23,842

 
 
23,311

 
 
48,283

 
 
47,187

 
Net interest income
 
4,904

 
 
5,667

 
 
9,642

 
 
11,971

 
Benefit for credit losses
 
1,639

 
 
5,383

 
 
2,413

 
 
6,340

 
Net interest income after benefit for credit losses
 
6,543

 
 
11,050

 
 
12,055

 
 
18,311

 
Investment gains, net
 
506

 
 
290

 
 
652

 
 
408

 
Net other-than-temporary impairments
 
(23
)
 
 
(6
)
 
 
(74
)
 
 
(15
)
 
Fair value (losses) gains, net
 
(934
)
 
 
829

 
 
(2,124
)
 
 
1,663

 
Debt extinguishment gains, net
 
38

 
 
27

 
 
38

 
 
4

 
Fee and other income
 
383

 
 
485

 
 
4,738

 
 
1,053

 
Non-interest (loss) income
 
(30
)
 
 
1,625

 
 
3,230

 
 
3,113

 
Administrative expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
319

 
 
304

 
 
644

 
 
621

 
Professional services
 
275

 
 
219

 
 
517

 
 
442

 
Occupancy expenses
 
47

 
 
47

 
 
97

 
 
93

 
Other administrative expenses
 
56

 
 
56

 
 
111

 
 
111

 
Total administrative expenses
 
697

 
 
626

 
 
1,369

 
 
1,267

 
Foreclosed property income
 
(214
)
 
 
(332
)
 
 
(476
)
 
 
(592
)
 
Temporary Payroll Tax Cut Continuation Act of 2011 (“TCCA”) fees
 
335

 
 
233

 
 
657

 
 
419

 
Other expenses, net
 
276

 
 
68

 
 
407

 
 
136

 
Total expenses
 
1,094

 
 
595

 
 
1,957

 
 
1,230

 
Income before federal income taxes
 
5,419

 
 
12,080

 
 
13,328

 
 
20,194

 
(Provision) benefit for federal income taxes
 
(1,752
)
 
 
(1,985
)
 
 
(4,336
)
 
 
48,586

 
Net income
 
3,667

 
 
10,095

 
 
8,992

 
 
68,780

 
Other comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
Changes in unrealized gains on available-for-sale securities, net of reclassification adjustments and taxes
 
45

 
 
17

 
 
417

 
 
665

 
Other
 
—

 
 
149

 
 
—

 
 
155

 
Total other comprehensive income
 
45

 
 
166

 
 
417

 
 
820

 
Total comprehensive income
 
3,712

 
 
10,261

 
 
9,409

 
 
69,600

 
Less: Comprehensive income attributable to noncontrolling interest
 
(1
)
 
 
(11
)
 
 
(1
)
 
 
(11
)
 
Total comprehensive income attributable to Fannie Mae
 
$
3,711

 
 
$
10,250

 
 
$
9,408

 
 
$
69,589

 
Net income
 
$
3,667

 
 
$
10,095

 
 
$
8,992

 
 
$
68,780

 
Less: Net income attributable to noncontrolling interest
 
(1
)
 
 
(11
)
 
 
(1
)
 
 
(11
)
 
Net income attributable to Fannie Mae
 
3,666

 
 
10,084

 
 
8,991

 
 
68,769

 
Dividends distributed or available for distribution to senior preferred stockholder
 
(3,712
)
 
 
(10,243
)
 
 
(9,404
)
 
 
(69,611
)
 
Net loss attributable to common stockholders
 
$
(46
)
 
 
$
(159
)
 
 
$
(413
)
 
 
$
(842
)
 
Loss per share: basic and diluted
 
$
(0.01
)
 
 
$
(0.03
)
 
 
$
(0.07
)
 
 
$
(0.15
)
 
Weighted-average common shares outstanding: basic and diluted
 
5,762

 
 
5,762

 
 
5,762

 
 
5,762

 
See Notes to Condensed Consolidated Financial Statements in the Second Quarter 2014 Form 10-Q

Second Quarter 2014 Results
 
14


FANNIE MAE
(In conservatorship)
Condensed Consolidated Statements of Cash Flows— (Unaudited)
(Dollars in millions)
 
For the Six Months Ended June 30,
 
2014
 
2013
Net cash provided by operating activities
$
3,420

 
$
4,802

Cash flows provided by investing activities:
 
 
 
Purchases of trading securities held for investment
—

 
(3,985
)
Proceeds from maturities and paydowns of trading securities held for investment
681

 
1,293

Proceeds from sales of trading securities held for investment
1,188

 
4,469

Proceeds from maturities and paydowns of available-for-sale securities
3,022

 
5,861

Proceeds from sales of available-for-sale securities
1,740

 
2,021

Purchases of loans held for investment
(55,843
)
 
(119,122
)
Proceeds from repayments and sales of loans acquired as held for investment of Fannie Mae
12,840

 
28,762

Proceeds from repayments and sales of loans acquired as held for investment of consolidated trusts
177,527

 
394,972

Net change in restricted cash
(592
)
 
13,989

Advances to lenders
(42,545
)
 
(76,435
)
Proceeds from disposition of acquired property and preforeclosure sales
13,471

 
22,466

Net change in federal funds sold and securities purchased under agreements to resell or similar arrangements
22,275

 
(5,300
)
Other, net
(349
)
 
170

Net cash provided by investing activities
133,415

 
269,161

Cash flows used in financing activities:
 
 
 
Proceeds from issuance of debt of Fannie Mae
165,337

 
248,901

Payments to redeem debt of Fannie Mae
(217,988
)
 
(261,959
)
Proceeds from issuance of debt of consolidated trusts
113,448

 
235,835

Payments to redeem debt of consolidated trusts
(183,124
)
 
(429,545
)
Payments of cash dividends on senior preferred stock to Treasury
(12,882
)
 
(63,592
)
Other, net
(7
)
 
(2
)
Net cash used in financing activities
(135,216
)
 
(270,362
)
Net increase in cash and cash equivalents
1,619

 
3,601

Cash and cash equivalents at beginning of period
19,228

 
21,117

Cash and cash equivalents at end of period
$
20,847

 
$
24,718

Cash paid during the period for:
 
 
 
Interest
$
53,594

 
$
55,455

Income taxes
2,475

 
1,016


See Notes to Condensed Consolidated Financial Statements in the Second Quarter 2014 Form 10-Q

Second Quarter 2014 Results
 
15
exhibit992final
August 7, 2014 Fannie Mae 2014 Second 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 June 30, 2014, the “2014 Q2 Form 10-Q.” Some of the terms used in these materials are defined and discussed more fully in the 2014 Q2 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 Q2 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 June 30, 2014 or for the first six 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 Q2 4 Home Price Change From 2006 Q3 Through 2014 Q2 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 7.6% 10.6% 11.3% 2.7% -3.5% -9.1% -4.8% -4.3% -3.6% 4.1% 8.3% 3.7% -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 Q2 2014. Estimate based on purchase transactions in Fannie-Freddie acquisition and public deed data available through the end of June 2014. Including subsequent data may lead to materially different results. **Year-to-date as of Q1-2014. As comparison, Fannie Mae’s index for the same period is 1.0%. Based on our home price index, we estimate that home prices on a national basis increased by 2.7% in the second quarter of 2014 and by 3.7% in the first half of 2014, following increases of 8.3% in 2013 and 4.1% in 2012. Despite the recent increases in home prices, we estimate that, through June 30, 2014, home prices on a national basis remained 10.7% 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. ** * 10.7% 14.6% 14.7% -0.3% -8.4% -18.4% -2.5% -3.8% -3.7% 7.2% 11.3% 0.2%S&P/Case-Shiller Index

 
4 0% to 5% 5% to 10% 10% and above *Source: Fannie Mae. Home price estimates are based on purchase transactions in Fannie-Freddie acquisition and public deed data available through the end of June 2014. UPB estimates are based on data available through the end of June 2014. Including subsequent data may lead to materially different results. One Year Home Price Change as of 2014 Q2* United States 5.9% State Growth Rate State: NM Growth Rate: 1.7% UPB %: 0.5% Example A K 2 . 1 % 0 . 2 % H I 8 . 7 % 0 . 8 % T X 5 . 9 % 5 . 5 % M T 3 . 6 % 0 . 3 % C A 1 5 . 3 % 1 9 . 7 % N M 1 . 7 % 0 . 5 % C O 7 . 6 % 2 . 7 % W Y 3 . 2 % 0 . 2 % O R 8 . 6 % 1 . 7 % A Z 1 0 . 0 % 2 . 4 % N V 1 6 . 4 % 1 . 0 % U T 4 . 7 % 1 . 1 % M N 4 . 7 % 1 . 9 % I D 4 . 8 % 0 . 5 % K S 2 . 2 % 0 . 5 % N E 3 . 9 % 0 . 4 % S D 4 . 5 % 0 . 2 % N D 6 . 6 % 0 . 1 % O K 2 . 2 % 0 . 6 % M O 2 . 5 % 1 . 3 % W A 7 . 6 % 3 . 5 % G A 9 . 1 % 2 . 7 % I L 5 . 3 % 4 . 1 % I A 2 . 0 % 0 . 7 % W I 2 . 3 % 1 . 8 % A R 1 . 4 % 0 . 5 % A L 2 . 2 % 1 . 0 % N C 2 . 5 % 2 . 4 % N Y 3 . 6 % 5 . 6 % P A 1 . 8 % 3 . 0 %O H 2 . 3 % 2 . 1 % M S - 0 . 6 % 0 . 4 % I N 1 . 7 % 1 . 2 % L A 2 . 0 % 0 . 9 % F L 1 2 . 4 % 5. 6 % T N 3 . 5 % 1 . 3 % M I 8 . 2 % 2 . 4 % K Y 2 . 3 % 0 . 6 % V A 2 . 8 % 3 . 5 % M E 3 . 1 % 0 . 3 % S C 3 . 9 % 1 . 2 % W V 3 . 3 % 0 . 2 % M D 4 . 5 % 2 . 8 % V T 2 . 3 % 0 . 2 % N H 5 . 7 % 0 . 5 % M A 4 . 7 % 3 . 0 % N J 2 . 2 % 4 . 0 % C T 0 . 4 % 1 . 4 % D E 1 . 3 % 0 . 4 % R I 5 . 0 % 0 . 3 % D C 7 . 8 % 0 . 4 %

 
5 H I - 6 . 9 % 0 . 8 % T X 1 5 . 6 % 5 . 5 % M T 6 . 0 % 0 . 3 % C A - 2 3 . 7 % 1 9 . 7 % C O 6 . 6 % 2 . 7 % N M - 9 . 9 % 0 . 5 % W Y 9 . 4 % 0 . 2 % U T 0 . 6 % 1 . 1 % K S 3 . 6 % 0 . 5 % A Z - 3 1 . 7 % 2 . 4 % N E 5 . 9 % 0 . 4 %N V - 4 0 . 4 % 1 . 0 % O K 9 . 5 % 0 . 6 % OR - 1 1 . 4 % 1 . 7 % S D 1 4 . 9 % 0 . 2 % M O - 4 . 9 % 1 . 3 % M N - 1 0 . 8 % 1 . 9 %I D - 1 3 . 9 % 0 . 5 % I A 6 . 2 % 0 . 7 % N D 3 9 . 8 % 0 . 1 % A R 0 . 2 % 0 . 5 % W I - 7 . 1 % 1 . 8 % W A - 1 1 . 0 % 3 . 5 % A L - 4 . 3 % 1 . 0 % N C - 2 . 9 % 2 . 4 % G A - 1 3 . 5 % 2 . 7 % M S - 4 . 4 % 0 . 4 % N Y - 7 . 2 % 5 . 6 % P A - 0 . 9 % 3 . 0 % I N 0 . 4 % 1 . 2 % O H - 8 . 1 % 2 . 1 % L A 7 . 6 % 0 . 9 % K Y 2 . 5 % 0 . 6 % I L - 1 6 . 7 % 4 . 1 % F L - 3 5 . 7 % 5 . 6 % T N - 0 . 7 % 1 . 3 % M I - 1 7 . 4 % 2 . 4 % V A - 1 2 . 1 % 3 . 5 % M E - 7 . 2 % 0 . 3 % S C - 5 . 7 % 1 . 2 % W V 3 . 1 % 0 . 2 % V T - 5 . 0 % 0 . 2 % M A - 8 . 2 % 3 . 0 % M D - 2 0 . 6 % 2 . 8 % N H - 1 3 . 7 % 0 . 5 % N J - 2 2 . 1 % 4 . 0 % C T - 1 8 . 7 % 1 . 4 % D E - 1 7 . 5 % 0 . 4 % R I - 2 5 . 7 % 0 . 3 % D C 2 0 . 8 % 0 . 4 % A K 7 . 4 % 0 . 2 % United States -10.7% *Source: Fannie Mae. Home price estimates are based on purchase transactions in Fannie-Freddie acquisition and public deed data available through the end of June 2014. UPB estimates are based on data available through the end of June 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 Q2* Below -30% -30% to -15% -15% to -5% -5% to 0% 0% to 5% 5% and Above State Growth Rate State: NM Growth Rate: -9.9% UPB %: 0.5% Example

 
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) $85.2 $73.9 $76.4 $61.8 $728.4 $564.5 $115.7 $94.8 $183.0 $145.6 $210.3 $159.8 Weighted Average Origination Note Rate 4.37% 4.35% 4.41% 4.37% 3.78% 3.73% 4.40% 4.37% 3.91% 3.88% 3.61% 3.54% Origination Loan-to-Value (LTV) Ratio <= 60% 15.8% 14.8% 16.9% 16.5% 22.0% 23.5% 17.0% 16.8% 19.8% 20.5% 23.1% 25.0% 60.01% to 70% 11.7% 11.6% 12.5% 12.8% 13.9% 15.3% 12.0% 12.3% 13.0% 13.9% 14.4% 16.0% 70.01% to 80% 40.6% 44.1% 38.8% 44.0% 34.9% 41.2% 38.5% 43.7% 36.0% 41.8% 34.2% 40.9% 80.01% to 90% 13.0% 12.4% 12.3% 11.3% 10.5% 9.2% 12.1% 11.0% 11.4% 10.2% 10.3% 8.8% 90.01% to 100% 16.6% 17.1% 15.3% 15.4% 11.5% 10.8% 15.9% 16.2% 13.9% 13.6% 10.5% 9.4% > 100% 2.3%  4.2%  7.1%  4.5%  6.0%  7.6%  Weighted Average Origination LTV Ratio 76.8% 76.3% 76.8% 75.2% 75.7% 71.4% 77.2% 75.3% 76.4% 73.2% 75.2% 70.5% FICO Credit Scores (3) < 620 1.3%  1.8%  1.4%  1.6%  1.4%  1.3%  620 to < 660 5.3% 4.1% 5.7% 4.1% 3.4% 1.9% 4.8% 3.3% 3.7% 2.2% 3.1% 1.6% 660 to < 700 13.3% 12.3% 13.9% 12.6% 9.7% 7.8% 12.4% 11.1% 10.5% 8.8% 8.9% 6.9% 700 to < 740 20.8% 21.1% 21.3% 21.5% 18.2% 17.7% 20.8% 20.9% 19.2% 18.9% 17.7% 17.0% >=740 59.3% 62.5% 57.3% 61.7% 67.3% 72.5% 60.3% 64.7% 65.2% 70.1% 68.8% 74.5% Weighted Average FICO Credit Score 744 749 741 748 753 760 745 751 750 757 754 762 Product Distribution Fixed-rate 95.1% 94.6% 94.6% 93.8% 97.6% 97.0% 96.7% 96.2% 96.9% 96.2% 97.9% 97.4% Adjustable-rate 4.9% 5.4% 5.4% 6.2% 2.4% 3.0% 3.3% 3.8% 3.1% 3.8% 2.1% 2.6% Alt-A (4) 0.8%  1.3%  1.3%  1.3%  1.3%  1.2%  Subprime (5)             Interest Only   0.1% 0.1% 0.2% 0.3% 0.1% 0.1% 0.2% 0.3% 0.2% 0.3% Negative Amortizing             Investor 9.0% 7.7% 11.2% 9.1% 9.3% 7.0% 10.1% 8.0% 9.5% 7.1% 9.4% 7.0% Condo/Co-op 10.6% 10.7% 10.7% 10.8% 10.4% 10.1% 10.8% 10.7% 10.4% 10.0% 10.7% 10.4% Refinance 45.6% 37.3% 54.9% 44.3% 70.2% 61.5% 51.5% 40.8% 61.7% 51.8% 74.9% 67.0% Loan Purpose Purchase 54.4% 62.7% 45.1% 55.7% 29.8% 38.5% 48.5% 59.2% 38.3% 48.2% 25.1% 33.0% Cash-out refinance 14.9% 17.2% 16.0% 19.8% 14.6% 18.8% 14.8% 18.0% 14.3% 17.9% 14.6% 19.2% Other refinance 30.7% 20.2% 38.9% 24.5% 55.6% 42.7% 36.7% 22.7% 47.4% 33.9% 60.3% 47.8% Top 3 Geographic Concentration California 20.9% California 21.2% California 23.7% California 21.2% California 21.9% California 25.4% Texas 8.2% Texas 7.4% Texas 5.8% Texas 7.0% Texas 6.5% Texas 5.6% Florida 5.4% Florida 5.6% Florida 4.7% Florida 5.2% Florida 4.9% Florida 4.6% Single-Family Acquisitions Single-Family Acquisitions Single-Family Acquisitions Single-Family Acquisitions Single-Family Acquisitions Q2 2013 Single-Family Acquisitions Acquisition Period Q1 2014 Q4 2013 Q3 2013Full Year 2013Q2 2014 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 Q2 Form 10-Q. (5) For a description of our subprime loan classification criteria, refer to Fannie Mae’s 2014 Q2 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 20 6 20 7 2008 2009 201 2011 201 2013 2 14* 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 June 30, 2014.

 
8 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 $13.1 $12.7 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% 4.67% 4.44% 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%  72.0%  105.01% to 125% 0.9% 5.6% 11.9% 22.1% 21.5% 17.1% >125%       20.7  20.1  10.8  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% 102.4% 61.2% 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% 24.4% 19.9% 660 to < 740 31.9% 23.0% 33.1% 23.9% 32.6% 25.6% 33.8% 26.0% 38.7 31.9 41.4 37.3 >=740 64.4 74.5 61.2 72.3 61.5 70.0 56.6 66.9 45.1% 55.8% 34.2% 42.8% Weighted Average FICO Credit Score 749 762 746 760 746 758 738 753 722 737 705 718 2012 2013 2014* Acquisition Year 2009 2010 2011 4.1% 9.8% 9.9% 15.6% 13.7% 8.1% 6.5% 13.6% 14.4% 8.9% 8.8% 7.9% 69.4% 54.0% 52.2% 55.0% 47.7% 34.0% 20.1% 22.6% 23.5% 20.6% 29.8% 50.0% 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 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 June 30, 2014.

 
9 As of June 30, 2014 Overall Book 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 and Earlier Unpaid Principal Balance (billions) (1) $2,795.4 $125.1 $619.7 $696.1 $299.6 $259.3 $191.1 $71.6 $124.1 $89.2 $319.7 Share of Single-Family Conventional Guaranty Book 100.0% 4.5% 22.2% 24.9% 10.7% 9.3% 6.8% 2.6% 4.4% 3.2% 11.4% Average Unpaid Principal Balance (1) $160,031 $195,097 $195,535 $195,801 $167,622 $166,484 $160,877 $149,861 $162,837 $147,026 $85,864 Serious Delinquency Rate 2.05%  0.12% 0.21% 0.36% 0.54% 0.95% 6.27% 11.08% 10.11% 3.88% Weighted Average Origination Loan-to-Value Ratio 74.4% 76.8% 76.3% 76.1% 71.4% 71.3% 69.9% 74.7% 78.3% 75.2% 72.4% Origination Loan-to-Value Ratio > 90% (2) 15.5% 19.1% 19.7% 18.8% 12.7% 10.4% 6.6% 12.5% 20.8% 12.5% 10.5% Weighted Average Mark-to-Market Loan-to-Value Ratio 64.1% 74.7% 67.5% 61.0% 56.3% 57.7% 59.7% 73.9% 90.4% 88.1% 56.0% Mark-to-Market Loan-to-Value Ratio > 100% and <= 125% 4.1% 1.8% 3.1% 3.0% 0.5% 0.8% 0.9% 9.2% 21.8% 20.5% 4.3% Mark-to-Market Loan-to-Value Ratio > 125% 1.6% 0.7% 1.2% 1.0%   0.1% 2.0% 10.3% 10.0% 1.4% Weighted Average FICO (3) 744 742 751 759 758 757 754 717 693 698 708 FICO < 620 (3) 2.6% 1.5% 1.5% 1.0% 0.7% 0.7% 0.7% 5.6% 11.0% 8.8% 7.2% Interest Only 2.7%  0.2% 0.3% 0.6% 0.9% 1.0% 7.8% 18.5% 20.5% 5.9% Negative Amortizing 0.2%        0.1% 1.6% 1.3% Fixed-rate 91.7% 95.1% 97.5% 97.4% 94.7% 95.6% 97.3% 76.3% 66.0% 65.0% 78.2% Primary Residence 88.1% 85.8% 86.4% 88.7% 87.3% 89.4% 90.8% 87.2% 89.4% 87.3% 89.1% Condo/Co-op 9.5% 10.4% 10.4% 9.1% 8.8% 8.5% 8.9% 11.1% 9.9% 10.8% 8.8% Credit Enhanced (4) 15.4% 26.2% 19.9% 14.7% 9.8% 7.1% 6.4% 25.6% 30.7% 19.6% 11.5% Cumulative Default Rate (5)    0.1% 0.2% 0.4% 0.6% 4.3% 13.3% 12.1%  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 June 30, 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 As of June 30, 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) $74.7 $72.0 $152.8 $433.8 $20.9 $123.4 $547.7 $1,017.7 $2,795.4 Share of Single-Family Conventional Guaranty Book 2.7% 2.6% 5.5% 15.5% 0.7% 4.4% 19.6% 36.4% 100.0% Average Unpaid Principal Balance (4) $233,794 $119,310 $131,487 $171,618 $132,054 $151,102 $164,851 $155,143 $160,031 Serious Delinquency Rate 10.28% 8.75% 6.31% 2.90% 9.34% 8.37% 0.61% 3.57% 2.05% Acquisition Years 2005 - 2008 80.9% 45.3% 38.3% 13.0% 35.1% 62.6%  21.2% 13.8% Weighted Average Origination Loan-to-Value Ratio 74.0% 81.1% 79.4% 105.1% 107.4% 77.5% 86.8% 84.8% 74.4% Origination Loan-to-Value Ratio > 90% 7.9% 29.0% 23.5% 100.0% 100.0% 13.9% 39.9% 42.6% 15.5% Weighted Average Mark-to-Market Loan-to-Value Ratio 87.5% 76.9% 74.1% 91.2% 99.3% 79.7% 71.9% 75.6% 64.1% Mark-to-Market Loan-to-Value Ratio > 100% and <= 125% 21.3% 12.7% 10.6% 15.2% 26.4% 15.9% 8.5% 9.4% 4.1% Mark-to-Market Loan-to-Value Ratio > 125% 10.1% 5.8% 4.8% 6.3% 13.9% 7.5% 2.9% 3.8% 1.6% Weighted Average FICO (2) 724 584 642 728 584 713 739 719 744 FICO < 620 (2) 1.5% 100.0%  4.8% 100.0% 2.2% 4.1% 7.1% 2.6% Fixed-rate 24.1% 82.0% 84.1% 94.6% 86.5% 65.0% 98.7% 88.0% 91.7% Primary Residence 85.3% 94.9% 93.0% 91.0% 94.9% 76.9% 85.2% 88.7% 88.1% Condo/Co-op 15.1% 4.8% 6.2% 10.3% 5.9% 10.0% 9.5% 9.1% 9.5% Credit Enhanced (5) 14.0% 24.4% 21.4% 57.7% 59.0% 12.0% 12.5% 27.8% 15.4% Categories Not Mutually Exclusive (1) (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 June 30, 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

 
11 UPB ($ in Billions) % of Total Weighted Average Mark-to- Market LTV Mark-to-Market LTV > 100% Seriously Delinquent Loan Share (2) SDQ Rate (2) Q2 2014 Acquisitions (# of Properties) Q2 2014 Dispositions (# of Properties) REO Ending Inventory as of June 30, 2014 (3) Average Days to Foreclosure (3) Select States (5) California $549.5 19.7% 54.2% 4.1% 5.2% 0.77% 1,796 2,155 4,290 679 -5.5% Florida $157.1 5.6% 75.1% 20.0% 17.3% 5.46% 7,342 7,439 21,389 1,332 36.8% New York $155.4 5.6% 59.6% 4.1% 9.7% 4.24% 561 391 1,557 1,371 4.9% Texas $153.6 5.5% 60.7% 0.2% 2.8% 0.89% 1,049 1,067 2,157 696 -0.6% Illinois $114.4 4.1% 72.2% 11.7% 5.7% 2.60% 2,017 2,863 10,264 894 12.0% New Jersey $111.8 4.0% 68.5% 9.1% 9.4% 5.94% 771 485 2,358 1,304 6.8% Virginia $99.0 3.5% 63.4% 3.8% 1.4% 0.98% 673 649 1,569 623 1.6% Washington $98.9 3.5% 64.8% 4.6% 2.4% 1.61% 1,110 1,147 2,687 1,065 3.9% Pennsylvania $85.2 3.0% 65.8% 3.1% 4.4% 2.50% 1,118 1,286 3,106 977 4.3% Massachusetts $85.1 3.0% 60.8% 2.4% 2.8% 2.34% 350 301 1,083 1,046 0.8% Region (6) Midwest $416.4 14.9% 69.1% 6.1% 15.6% 1.69% 7,002 10,143 27,270 696 22.7% Northeast $532.7 19.1% 64.1% 5.1% 31.2% 3.65% 3,951 3,567 11,814 1,117 23.3% Southeast $618.9 22.1% 68.8% 8.8% 32.2% 2.74% 12,879 13,822 37,793 1,060 50.8% Southwest $447.1 16.0% 64.0% 2.8% 9.2% 1.03% 3,872 5,014 9,493 642 2.3% West $780.4 27.9% 57.6% 4.7% 11.8% 1.13% 3,974 4,734 10,426 889 0.9% Total $2,795.4 100.0% 64.1% 5.6% 100.0% 2.05% 31,678 37,280 96,796 918 100.0% SF Conventional Guaranty Book of Business as of June 30, 2014 (1) Seriously Delinquent Loans as of June 30, 2014 (2) Real Estate Owned (REO) % of YTD 2014 Credit Losses (4) 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 conventional guaranty book of business as of June 30, 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 June 30, 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 six 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 Q2 Form 10Q. (5) Select states represent the top ten states in UPB of the single-family conventional guaranty book of business as of June 30, 2014. (6) For information on which states are included in each region, refer to Fannie Mae’s 2014 Q2 Form 10-Q.

 
12 114 97 9.1% 22.1% 0.5% 1.6% 0.6% 2.4% 7.8% 10.6%10.3% 4.4% 0 20 40 60 80 100 120 0% 5% 10% 15% 20% 25% 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 RE O E nd ing In ve nt or y ( Th ou sa nd s) REO Ending Inventory Florida New York New Jersey Illinois California 651 357 21.7% 17.3% 5.8% 9.7% 5.8% 9.4% 6.6% 5.7% 8.1% 5.2% 0 100 200 300 400 500 600 700 0% 5% 10% 15% 20% 25% 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 SD Q V olu m e ( Th ou sa nd s) SDQ Volume 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 June 30, 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 a number of 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 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Florida 68.8% 71.3% 73.6% 75.6% 76.3% California 75.5% 78.7% 81.4% 82.4% 83.8% Illinois 68.6% 70.5% 72.7% 71.7% 74.2% New Jersey 69.4% 72.2% 73.0% 70.6% 74.8% Nevada 67.1% 70.1% 73.6% 72.1% 75.7% Washington 80.5% 81.4% 82.9% 84.4% 85.0% New York 74.9% 78.6% 76.0% 77.1% 77.4% Arizona 76.5% 78.2% 79.2% 80.6% 80.3% Maryland 74.4% 73.3% 74.7% 74.0% 76.8% Georgia 74.0% 76.6% 79.5% 80.4% 78.7% REO Gross Sales Price / UPB Q2 2013 Q3 2013 Q4 2013 Q 2014 Q2 2014 Florida 67.8% 70.7% 72.0% 70.1% 72.5% Illinois 61.9% 63.2% 64.5% 64.8% 67.1% Michigan 65.1% 67.8% 66.7% 66.1% 69.2% Ohio 62.4% 64.6% 61.9% 59.4% 61.2% California 85.3% 86.7% 86.8% 86.3% 88.2% Georgia 76.4% 77.3% 75.3% 76.1% 80.6% Pennsylvania 68.6% 70.1% 67.8% 65.9% 66.3% Washington 80.8% 83.5% 79.7% 83.5% 84.6% Arizona 79.8% 80.0% 79.7% 79.8% 79.6% North Carolina 80.8% 80.6% 79.2% 79.2% 82.3% 65.6% 66.6% 68.1% 70.4% 71.7% 74.3% 76.2% 78.0% 78.6% 79.7% 58.5% 59.9% 61.0% 63.3% 64.5% 66.6% 68.2% 69.9% 70.6% 71.7% 50.0% 55.0% 60.0% 65.0% 70.0% 75.0% 80.0% 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 Short Sales Gross Sales / UPB Short Sales Net Sales / UPB 61.9% 65.0% 67.2% 68.5% 70.6% 74.6% 74.8% 74.2% 73.8% 75.7% 56.3% 59.2% 61.1% 62.3% 64.6% 68.4% 68.5% 67.9% 67.6% 6 .2% 50.0% 55.0% 60.0% 65.0% 70.0% 75.0% 80.0% 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 REO Gross ales / UPB REO Net Sales / UPB 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 six 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)

 
14 19 20 20 15 12 14 12 9 7 7 4 4 4 4 4 4 3 4 3 3 22 24 23 19 16 18 15 13 10 10 0 10 20 30 40 50 60 70 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 # o f L oa ns (T ho us an ds ) Short Sales Deeds-in-Lieu 47 35 42 40 43 40 37 39 36 32 9 6 4 4 4 3 2 2 2 2 56 41 46 44 48 44 40 41 38 34 0 10 20 30 40 50 60 70 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 # o f L oa ns (T ho us an ds ) Modif ications Repayment Plans and Forbearances Completed 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 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 Modifications (2) 50,336 60,025 51,936 46,671 35,332 41,697 39,712 43,153 40,358 37,337 39,159 36,044 % Current or Paid Off 3 months post modification 84% 83% 84% 85% 84% 84% 85% 86% 83% 83% 84% 83% 6 months post modification 79% 79% 79% 78% 77% 80% 82% 79% 77% 79% 79% n/a 9 months post modification 77% 76% 74% 73% 76% 78% 78% 76% 75% 76% n/a n/a 12 months post modification 75% 72% 71% 73% 75% 76% 76% 75% 74% n/a n/a n/a 15 months post modification 72% 70% 71% 73% 74% 74% 75% 74% n/a n/a n/a n/a 18 months post modification 71% 70% 71% 72% 73% 75% 75% n/a n/a n/a n/a n/a 21 months post modification 72% 71% 71% 72% 74% 75% n/a n/a n/a n/a n/a n/a 24 months post modification 73% 71% 71% 73% 75% 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% 0.7% 0.8% 0.5% 1.2% 1.9% 2.0% Interest Only Loans 2.7% 2.9% 3.7% 4.7% 5.6% 6.6% -0.4% 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% 12.4% 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% 16.9% 15.7% 14.2% 14.7% 15.1% 15.5% Loans with Origination LTV Ratio > 90% 15.5% 15.1% 12.8% 10.0% 9.4% 9.4% 5.7% 20.8% 16.8% 14.0% 15.9% 19.2% Loans with FICO < 620 and Origination LTV Ratio > 90% (4) 0.7% 0.7% 0.7% 0.7% 0.8% 0.9% 2.1% 2.0% 2.3% 2.2% 2.7% 3.4% Alt-A Loans (5) 4.4% 4.7% 5.6% 6.6% 7.6% 8.9% 10.1% 26.0% 23.7% 27.3% 33.2% 39.6% Subprime Loans 0.1% 0.1% 0.2% 0.2% 0.2% 0.3% 1.2% -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% 11.8% 7.4% 3.5% 1.4% 0.1%  Vintages 2009 - 2014 78.4% 76.2% 65.3% 51.6% 39.0% 22.0% 15.2% 10.0% 5.1% 2.4% 0.4%  2005 - 2008 13.4% 14.7% 21.7% 30.4% 38.0% 48.7% 73.5% 77.6% 81.8% 82.9% 87.9% 88.1% 2004 & Prior 8.2% 9.1% 13.1% 18.0% 23.0% 29.2% 11.3% 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% 36.8% 28.9% 21.4% 11.0% 17.5% 15.5% Illinois 4.1% 4.1% 4.2% 4.3% 4.3% 4.3% 12.0% 12.9% 9.6% 3.5% 4.3% 4.2% New Jersey 4.0% 4.0% 4.0% 4.0% 4.0% 3.9% 6.8% 3.7% 2.0% 0.8% 1.2% 1.2% Maryland 2.8% 2.8% 2.8% 2.9% 2.8% 2.8% 5.9% 3.1% 1.8% 0.6% 1.9% 2.0% New York 5.6% 5.6% 5.6% 5.6% 5.5% 5.3% 4.9% 1.9% 0.9% 0.6% 0.8% 0.8% Ohio 2.1% 2.1% 2.2% 2.3% 2.4% 2.6% 4.7% 4.1% 3.3% 2.1% 2.2% 2.2% Pennsylvania 3.0% 3.1% 3.1% 3.0% 3.0% 3.0% 4.3% 3.0% 1.6% 0.8% 0.8% 0.8% Washington 3.5% 3.5% 3.5% 3.5% 3.5% 3.4% 3.9% 3.7% 2.5% 3.2% 1.5% 1.1% Connecticut 1.4% 1.4% 1.4% 1.4% 1.4% 1.4% 3.2% 1.4% 0.9% 0.3% 0.4% 0.4% Michigan 2.4% 2.4% 2.5% 2.5% 2.6% 2.7% 1.8% 3.2% 4.5% 5.8% 6.3% 7.4% All Other States 65.5% 65.4% 64.7% 64.2% 63.9% 63.6% 15.8% 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 June 30, 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 June 30, 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 six months ended June 30, 2014. Credit Loss Concentration of Single-Family Conventional Guaranty Book of Business

 
17 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 June 30, 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 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 De fau lt R ate Time Since Beginning of Origination Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

 
18 Total Multifamily Guaranty Book of Business 33,714 $195.8 100% 0.10% 100% 100% 100% 100% Credit Enhanced Loans: Credit Enhanced 30,836 $179.9 92% 0.10% 108% 1% 73% 83% Non-Credit Enhanced 2,878 $15.9 8% 0.13% -8% 99% 27% 17% Origination loan-to-value ratio: (4) Less than or equal to 70% 21,646 $108.6 55% 0.04% 23% 46% 14% 18% Greater than 70% and less than or equal to 80% 9,905 $80.8 41% 0.19% 77% 35% 71% 70% Greater than 80% 2,163 $6.5 3% 0.17% 0% 18% 15% 12% Delegated Underwriting and Servicing (DUS ®) Loans: (5) DUS ® - Small Balance Loans (6) 8,631 $16.2 8% 0.22% -41% 5% 7% 9% DUS ® - Non Small Balance Loans 12,557 $162.0 83% 0.07% 174% -26% 71% 72% DUS ® - Total 21,188 $178.3 91% 0.08% 133% -21% 78% 81% Non-DUS - Small Balance Loans (6) 11,918 $8.6 4% 0.45% -21% 43% 16% 12% Non-DUS - Non Small Balance Loans 608 $8.9 5% 0.15% -12% 78% 6% 7% Non-DUS - Total 12,526 $17.5 9% 0.30% -33% 121% 22% 19% Maturity Dates: Loans maturing in 2014 507 $2.9 1% 0.75% -3% -16% 12% 5% Loans maturing in 2015 2,309 $11.3 6% 0.02% 12% -2% 8% 6% Loans maturing in 2016 2,447 $12.9 7% 0.12% -15% 33% 12% 8% Loans maturing in 2017 3,521 $17.4 9% 0.37% 0% 81% 33% 21% Loans maturing in 2018 3,034 $17.3 9% 0.17% 16% 1% 14% 21% Other maturities 21,896 $134.1 69% 0.05% 91% 3% 22% 39% Loan Size Distribution: Less than or equal to $750K 8,104 $2.3 1% 0.55% -13% 13% 5% 5% Greater than $750K and less than or equal to $3M 11,419 $17.2 9% 0.32% -56% 62% 17% 16% Greater than $3M and less than or equal to $5M 4,409 $16.2 8% 0.29% 69% 4% 12% 11% Greater than $5M and less than or equal to $25M 8,419 $86.8 44% 0.10% 80% -34% 55% 50% Greater than $25M 1,363 $73.4 37%  20% 55% 11% 18% % of 2012 Multifamily Credit Losses % of 2011 Multifamily Credit Losses As of June 30, 2014 Loan Counts Unpaid Principal Balance (Billions) % of Multifamily Guaranty Book of Business (UPB) % Seriously Delinquent (1) % of 2013 Multifamily Credit Losses (3) % 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) Year-to-date 2014 credit losses resulted in credit-related income due to recoveries on previously charged-off amounts; therefore positive values reflect credit-related income and negative values reflect credit losses. The reverse is true in prior years. (3) Negative values are the result of recoveries on previously recognized credit losses. Due to increased recoveries in 2013, credit losses percentages for certain populations could be greater than 100. (4) Weighted Average Origination loan-to-value ratio is 66% as of June 30, 2014. (5) 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 most loans without our pre-review. (6) 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 June 30, 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 (3) % of 2012 Multifamily Credit Losses % of 2011 Multifamily Credit Losses $195.8 100% 0.10% 92 100% 100% 100% 100% By Acquisition Year: 2014 $8.2 4%       2013 $28.8 15%       2012 $32.4 17%   0% 0%   2011 $21.8 11%   -1% -2%   2010 $15.5 8% 0.01% 1 2% 96% 0%  2009 $15.1 8% 0.06% 3 13% -27% 7% 6% 2008 $18.0 9% 0.29% 30 11% -12% 23% 31% 2007 $21.9 11% 0.36% 31 24% 13% 48% 33% 2006 $12.8 7% 0.09% 8 -43% 45% 10% 7% Prior to 2006 $21.2 11% 0.24% 19 95% -13% 13% 23% 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 Year 10 Cum ulati ve D efau lt Ra te 2005 20 6 007 2008 2009 2010 2011 2012 2013 2014 2005 2007 2008 2006 2012 20112013 2014 20052006 2007 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 SDQ (%) 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) Year-to-date 2014 credit losses resulted in credit-related income due to recoveries on previously charged-off amounts; therefore positive values reflect credit-related income and negative values reflect credit losses. The reverse is true in prior years. (3) Negative values are the result of recoveries on previously recognized credit losses. Due to increased recoveries in 2013, credit losses percentages for certain populations could be greater than 100. Multifamily Credit Profile by Acquisition Year Multifamily SDQ Rate by Acquisition Year Cumulative Defaults by Acquisition Year

 
20 Total Multifamily Guaranty Book of Business $195.8 100% 0.10% 100% 100% 100% 100% Region: (4) Midwest $17.3 9% 0.15% 11% -38% 15% 23% Northeast $37.4 19% 0.09% -7% -8% 10% 3% Southeast $42.8 22% 0.14% 22% 12% 53% 42% Southwest $38.1 19% 0.16% 81% -32% 8% 26% West $60.3 31% 0.04% -7% 166% 14% 6% Top Five States by UPB: California $46.5 24% 0.02% 10% 8% 1% 1% New York $22.2 11% 0.09% -2% 2% 3% 0% Texas $20.0 10% 0.18% 91% -16% 2% 19% Florida $10.5 5% 0.12% -11% 23% 36% 10% Washington $7.2 4% 0.03%  1% 0% 0% Asset Class: (5) Conventional/Co-op $174.7 89% 0.12% 71% 99% 94% 96% Seniors Housing $12.5 6%      Manufactured Housing $5.4 3% 0.01% 11% 0% 3% 0% Student Housing $3.3 2%  18% 1% 3% 4% Targeted Affordable Segment: Privately Owned with Subsidy (6) $29.0 15% 0.07% 20% -15% 3% 14% DUS & Non-DUS Lenders/Servicers: DUS: Bank (Direct, Owned Entity, or Subsidiary) $69.0 35% 0.05% 60% 7% 21% 29% DUS: Non-Bank Financial Institution $118.3 60% 0.13% 57% 79% 70% 68% Non-DUS: Bank (Direct, Owned Entity, or Subsidiary) $7.4 4% 0.20% -2% 4% 6% 1% Non-DUS: Non-Bank Financial Institution $1.0 0% 0.27% -14% 10% 2% 1% Non-DUS: Public Agency/Non Profit $0.2 0%    0% 0% % of 2011 Multifamily Credit Losses As of June 30, 2014 Unpaid Principal Balance (Billions) % of Multifamily Guaranty Book of Business (UPB) % Seriously Delinquent (1) % of 2013 Multifamily Credit Losses (3) % 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) Year-to-date 2014 credit losses resulted in credit-related income due to recoveries on previously charged-off amounts; therefore positive values reflect credit-related income and negative values reflect credit losses. The reverse is true in prior years. (3) Negative values are the result of recoveries on previously recognized credit losses. Due to increased recoveries in 2013, credit losses percentages for certain populations could be greater than 100. (4) For information on which states are included in each region, refer to Fannie Mae’s 2013 Form 10-K. (5) Conventional Multifamily/Cooperative Housing/Affordable Housing: Conventional Multifamily is a loan secured by a residential property comprising five or more dwellings that 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. (6) The Multifamily Affordable Business Channel focuses on financing properties that are under regulatory agreements providing for long-term affordability, such as properties with rent subsidies or income restrictions. Multifamily Credit Profile

 
21 Example: UPB in OH is $3B and 2014 Credit Losses are $5M Multifamily YTD 2014 Credit Losses by State ($ Millions) (1) Numbers: Represent YTD 2014 credit-related (income)/losses for each state, which totaled $22M in income as of June 30, 2014. States with no numbers had less than $500K in credit losses or less than $500K in credit-related income YTD 2014. Shading: Represent Unpaid Principal Balance (UPB) for each state, which totaled $195.8B as of June 30, 2014. Portfolio UPB Concentration by State as of 06/30/2014 (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.