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2014 Q3 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): November 6, 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 November 6, 2014, Fannie Mae filed its quarterly report on Form 10-Q for the quarter ended September 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 November 6, 2014, Fannie Mae posted to its Web site a 2014 Third 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: November 6, 2014




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

  
News release, dated November 6, 2014
99.2

  
2014 Third Quarter Credit Supplement presentation, dated November 6, 2014



2014 Q3 Press Release

Resource Center: 1-800-732-6643                                  
Exhibit 99.1
Contact:     Pete Bakel
202-752-2034
Date:    November 6, 2014

Fannie Mae Reports Net Income of $3.9 Billion and Comprehensive Income of $4.0 Billion for Third Quarter 2014
•
Fannie Mae reported net income of $3.9 billion and comprehensive income of $4.0 billion for the third quarter of 2014.
•
Fannie Mae expects to pay $4.0 billion in dividends to Treasury in December 2014. With the December dividend payment, Fannie Mae will have paid a total of $134.5 billion in dividends to Treasury in comparison to $116.1 billion in draw requests since 2008. Dividend payments do not reduce prior Treasury draws.
•
Fannie Mae has provided more than $4.3 trillion in liquidity to the mortgage market since 2009, including approximately $123 billion in liquidity in the third quarter of 2014, enabling families to buy, refinance, or rent homes.
•
Fannie Mae has helped distressed families retain their homes or avoid foreclosure through more than 1.6 million workout solutions since 2009, including approximately 39,000 in the third quarter of 2014.
WASHINGTON, DC — Fannie Mae (FNMA/OTC) reported net income of $3.9 billion for the third quarter of 2014 and comprehensive income of $4.0 billion. The company reported a positive net worth of $6.4 billion as of September 30, 2014 resulting in a dividend obligation to Treasury of $4.0 billion, which the company expects to pay in December 2014.
Fannie Mae’s net income of $3.9 billion and comprehensive income of $4.0 billion for the third quarter of 2014 compares to net income of $3.7 billion and comprehensive income of $3.7 billion for the second quarter of 2014. Net income in the third quarter of 2014 increased compared with the second quarter of 2014 due primarily to lower fair value losses and an increase in revenues. This increase was partially offset by a decline in credit-related income.
Fannie Mae recognized a provision for federal income taxes of $1.8 billion for the third quarter of 2014, which resulted in an effective tax rate of 31.4 percent.
“This was another solid quarter, with the company reporting strong financial results and continuing to provide much needed liquidity to the market,” said Timothy J. Mayopoulos, president and chief executive officer. “We continue to build a strong book of business based on appropriate standards. We are committed to being our customers’ most valued business partner and delivering the products, services, and tools our customers need to serve the entire market confidently, efficiently, and profitably.”





Third Quarter 2014 Results
 
1

SUMMARY OF THIRD QUARTER 2014 RESULTS
(Dollars in millions)
 
3Q14
 
2Q14
 
Variance
 
3Q14
 
3Q13
 
Variance
Net interest income
 
$
5,184

 
$
4,904

 
$
280

 
$
5,184

 
$
5,582

 
$
(398
)
Fee and other income
 
826

 
383

 
443

 
826

 
741

 
85

Net revenues
 
6,010

 
5,287

 
723

 
6,010

 
6,323

 
(313
)
Investment gains, net
 
177

 
506

 
(329
)
 
177

 
648

 
(471
)
Fair value (losses) gains, net
 
(207
)
 
(934
)
 
727

 
(207
)
 
335

 
(542
)
Administrative expenses
 
(706
)
 
(697
)
 
(9
)
 
(706
)
 
(646
)
 
(60
)
Credit-related income
 
 
 
 
 
 
 
 
 
 
 
 
Benefit for credit losses
 
1,085

 
1,639

 
(554
)
 
1,085

 
2,609

 
(1,524
)
Foreclosed property (expense) income
 
(249
)
 
214

 
(463
)
 
(249
)
 
1,165

 
(1,414
)
Total credit-related income
 
836

 
1,853

 
(1,017
)
 
836

 
3,774

 
(2,938
)
Other non-interest expenses(1)
 
(418
)
 
(596
)
 
178

 
(418
)
 
(335
)
 
(83
)
Net (losses) gains and (expenses) income
 
(318
)
 
132

 
(450
)
 
(318
)
 
3,776

 
(4,094
)
Income before federal income taxes
 
5,692

 
5,419

 
273

 
5,692

 
10,099

 
(4,407
)
Provision for federal income taxes
 
(1,787
)
 
(1,752
)
 
(35
)
 
(1,787
)
 
(1,355
)
 
(432
)
Net income
 
3,905

 
3,667

 
238

 
3,905

 
8,744

 
(4,839
)
Less: Net income attributable to noncontrolling interest
 
—

 
(1
)
 
1

 
—

 
(7
)
 
7

Net income attributable to Fannie Mae
 
$
3,905

 
$
3,666

 
$
239

 
$
3,905

 
$
8,737

 
$
(4,832
)
Total comprehensive income attributable to Fannie Mae
 
$
4,000

 
$
3,711

 
$
289

 
$
4,000

 
$
8,603

 
$
(4,603
)
Dividends distributed or available for distribution to senior preferred stockholder
 
$
(3,999
)
 
$
(3,712
)
 
$
(287
)
 
$
(3,999
)
 
$
(8,617
)
 
$
4,618

(1)    Consists of net other-than-temporary impairments, debt extinguishments gains, net, TCCA fees and other expenses, net.
Net Revenues, which consists of net interest income and fee and other income, were $6.0 billion for the third quarter of 2014, compared with $5.3 billion for the second quarter of 2014. Higher net revenues were driven primarily by an increase in income from settlement agreements related to Fannie Mae’s investments in private-label mortgage-related securities and an increase in net interest income.
Net interest income, which includes guaranty fee revenue, was $5.2 billion for the third quarter of 2014, compared with $4.9 billion for the second quarter of 2014. The increase in net interest income compared with the second quarter of 2014 was due primarily to higher amortization income from an increase in prepayments.
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. This is a result of both the shrinking of the retained mortgage portfolio and the impact of guaranty fee increases. 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 nine months of 2014, compared with approximately one-third in the first nine months of 2013. The company expects that guaranty fees will continue to account for an increasing portion of its revenues.

Third Quarter 2014 Results
 
2

Credit-Related Income, which consists of a benefit for credit losses and foreclosed property expense or income, was $836 million in the third quarter of 2014, compared with $1.9 billion in the second quarter of 2014. The decrease in credit-related income was driven primarily by a decline in the company’s benefit for credit losses due primarily to a slower rate of home price appreciation compared with the second quarter of 2014, partially offset by an incremental benefit for credit losses for the third quarter due to updates made in the quarter to the company’s model and assumptions used to estimate its allowance for loan losses. Also contributing to the decrease in credit-related income was foreclosed property expense in the third quarter of 2014, compared with foreclosed property income in the second quarter of 2014. Net Fair Value Losses were $207 million in the third quarter of 2014, compared with $934 million in the second quarter of 2014. Fair value losses in the third quarter of 2014 were due primarily to increases in shorter-term interest rates impacting the value of the company’s risk management derivatives. The estimated fair value of the company’s derivatives and securities may fluctuate substantially from period to period because of changes in interest rates, the yield curve, mortgage spreads, implied volatility, and activity related to these financial instruments.

Third Quarter 2014 Results
 
3

VARIABILITY OF FINANCIAL RESULTS
Fannie Mae expects to remain profitable for the foreseeable future. The company’s financial results will be affected by a number of factors, including: changes in interest rates and home prices, the company’s guaranty fee rates, the volume of single-family mortgage originations in the future, the size, composition, and quality of the company’s retained mortgage portfolio and guaranty book of business, and economic and housing market conditions. Some of these factors could result in significant variability in the company’s financial results from quarter to quarter or year to year. For additional information on factors that affect the company’s financial results, please refer to “Executive Summary” in the company’s quarterly report on Form 10-Q for the quarter ended September 30, 2014 (the “Third Quarter 2014 Form 10-Q”).
SUMMARY OF THIRD 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 goals of providing liquidity to the market, expanding access to credit, and helping the U.S. housing market recover.
(Dollars in millions)
 
3Q14
 
2Q14
 
Variance
 
3Q14
 
3Q13
 
Variance
Single-Family Segment:
 
 
 
 
 
 
 
 
 
 
 
 
Guaranty fee income
 
$
2,945

 
$
2,893

 
$
52

 
$
2,945

 
$
2,719

 
$
226

Credit-related income
 
748

 
1,781

 
(1,033
)
 
748

 
3,642

 
(2,894
)
Other
 
(794
)
 
(847
)
 
53

 
(794
)
 
(865
)
 
71

Income before federal income taxes
 
2,899

 
3,827

 
(928
)
 
2,899

 
5,496

 
(2,597
)
Provision for federal income taxes
 
(837
)
 
(1,133
)
 
296

 
(837
)
 
(751
)
 
(86
)
Net income
 
$
2,062

 
$
2,694

 
$
(632
)
 
$
2,062

 
$
4,745

 
$
(2,683
)
Multifamily Segment:
 
 
 
 
 
 
 
 
 
 
 
 
Guaranty fee income
 
$
332

 
$
317

 
$
15

 
$
332

 
$
311

 
$
21

Credit-related income
 
88

 
72

 
16

 
88

 
132

 
(44
)
Other
 
1

 
(4
)
 
5

 
1

 
43

 
(42
)
Income before federal income taxes
 
421

 
385

 
36

 
421

 
486

 
(65
)
Provision for federal income taxes
 
(37
)
 
(9
)
 
(28
)
 
(37
)
 
(8
)
 
(29
)
Net income
 
$
384

 
$
376

 
$
8

 
$
384

 
$
478

 
$
(94
)
Capital Markets Segment:
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
$
1,845

 
$
1,917

 
$
(72
)
 
$
1,845

 
$
2,311

 
$
(466
)
Investment gains, net
 
1,516

 
1,648

 
(132
)
 
1,516

 
1,590

 
(74
)
Fair value (losses) gains, net
 
(335
)
 
(1,098
)
 
763

 
(335
)
 
371

 
(706
)
Other
 
169

 
(308
)
 
477

 
169

 
123

 
46

Income before federal income taxes
 
3,195

 
2,159

 
1,036

 
3,195

 
4,395

 
(1,200
)
Provision for federal income taxes
 
(913
)
 
(610
)
 
(303
)
 
(913
)
 
(596
)
 
(317
)
Net income
 
$
2,282

 
$
1,549

 
$
733

 
$
2,282

 
$
3,799

 
$
(1,517
)

Third Quarter 2014 Results
 
4

Single-Family Business
•
Single-Family net income was $2.1 billion in the third quarter of 2014, compared with $2.7 billion in the second quarter of 2014. Net income in the third 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 third quarter of 2014 and the second quarter of 2014. The Single-Family guaranty book of business was $2.85 trillion as of September 30, 2014, compared with $2.86 trillion as of June 30, 2014.
•
Single-Family credit-related income was $748 million in the third quarter of 2014, compared with $1.8 billion in the second quarter of 2014.
Multifamily Business
•
Multifamily net income was $384 million in the third quarter of 2014, compared with $376 million in the second quarter of 2014. Net income in the third quarter of 2014 was driven primarily by guaranty fee income.
•
Multifamily guaranty fee income was $332 million for the third quarter of 2014, compared with $317 million for the second quarter of 2014. The Multifamily guaranty book of business was $200.2 billion as of September 30, 2014, compared with $197.6 billion as of June 30, 2014.
•
Multifamily credit-related income was $88 million for the third quarter of 2014, compared with $72 million for the second quarter of 2014.
Capital Markets
•
Capital Markets net income was $2.3 billion in the third quarter of 2014, compared with $1.5 billion in the second quarter of 2014. Net income in the third quarter of 2014 was driven primarily by net interest income and net investment gains, partially offset by net fair value losses.
•
Capital Markets net interest income was $1.8 billion for the third quarter of 2014, compared with $1.9 billion for the second quarter of 2014.
•
Capital Markets net investment gains were $1.5 billion in the third quarter of 2014, compared with $1.6 billion in the second quarter of 2014.
•
Capital Markets net fair value losses were $335 million in the third quarter of 2014, compared with $1.1 billion in the second quarter of 2014.
•
Capital Markets retained mortgage portfolio balance decreased to $438.1 billion as of September 30, 2014, compared with $452.8 billion as of June 30, 2014, resulting from purchases of $50.8 billion and sales and liquidations of $65.5 billion during the third quarter of 2014.
BUILDING 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. The company is 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.

Third Quarter 2014 Results
 
5

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 September 30, 2014, Fannie Mae has requested cumulative draws totaling $116.1 billion and paid $130.5 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 fourth quarter of 2014 calculated based on the company’s net worth of $6.4 billion as of September 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.
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.

Third Quarter 2014 Results
 
6

CREDIT QUALITY
While continuing to make it possible for families to purchase, refinance, or rent a home, Fannie Mae has maintained 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 nine 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 September 30, 2014, 80 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 28 percent of home purchase mortgages and 72 percent of loan refinancings as of September 30, 2014. Refinancings included 14 percent of loans acquired through the Home Affordable Refinance Program (“HARP®”), 10 percent of loans through Fannie Mae’s Refi PlusTM initiative (excluding HARP), and 48 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.


Third Quarter 2014 Results
 
7

The single-family serious delinquency rate for Fannie Mae’s book of business has declined each quarter since the first quarter of 2010, and was 1.96 percent as of September 30, 2014, compared with 5.47 percent as of March 31, 2010. This decline 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. Although Fannie Mae’s single-family serious delinquency rate has declined, the pace of declines has slowed in recent months and the company expects this trend to continue. The company’s single-family serious delinquency 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. Other factors such as the pace of loan modifications, changes in home prices, unemployment levels, and other macroeconomic conditions also influence serious delinquency rates.


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 $39.7 billion as of September 30, 2014, compared with $42.1 billion as of June 30, 2014. The total loss reserve coverage to total nonaccrual loans was 58 percent as of September 30, 2014, compared with 59 percent as of June 30, 2014.



Third Quarter 2014 Results
 
8


PROVIDING LIQUIDITY AND SUPPORT TO THE MARKET
Liquidity
Fannie Mae has provided more than $4.3 trillion in liquidity to the mortgage market since January 1, 2009, including approximately $123 billion in liquidity in the third quarter of 2014, through its purchases and guarantees of loans, which resulted in:
•
13.0 million mortgage refinancings, including approximately 228,000 in the third quarter of 2014
•
4.3 million home purchases, including approximately 265,000 in the third quarter of 2014
•
2.5 million units of multifamily housing, including approximately 124,000 in the third quarter of 2014

The company expects that refinancings will constitute a smaller portion of its single-family business volume in 2014 than in 2013.
The company remained the largest single issuer of single-family mortgage-related securities in the secondary market in the third quarter of 2014, with an estimated market share of new single-family mortgage-related securities issuances of 38 percent in the third quarter of 2014, compared with 39 percent in the second quarter of 2014 and 48 percent in the third quarter of 2013.
Fannie Mae also remained a continuous source of liquidity in the multifamily market. As of June 30, 2014 (the latest date for which information is available), the company owned or guaranteed approximately 19 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 over 68,000 loans in the third 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,

Third Quarter 2014 Results
 
9

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 third quarter of 2014 reduced borrowers’ monthly mortgage payments by an average of $159. The company expects the volume of refinancings under HARP to continue to decline, due to the increase in interest rates since the first half of 2013 and a decrease in the population of borrowers with loans that have high LTV ratios who are willing to refinance and would benefit from refinancing.
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.

 
For the Nine Months Ended September 30,
 
2014
 
2013
 
Unpaid Principal Balance
 
Number of Loans
 
Unpaid Principal Balance
 
Number of Loans
 
(Dollars in millions)
Home retention strategies:
 
 
 
 
 
 
 
Modifications
$
16,425

 
96,915

 
$
21,822

 
120,848

Repayment plans and forbearances completed
752

 
5,607

 
1,331

 
10,128

Total home retention strategies
17,177

 
102,522

 
23,153

 
130,976

Foreclosure alternatives:
 
 
 
 
 
 
 
Short sales
3,866

 
18,691

 
7,860

 
37,247

Deeds-in-lieu of foreclosure
1,414

 
8,944

 
1,917

 
11,681

Total foreclosure alternatives
5,280

 
27,635

 
9,777

 
48,928

Total loan workouts
$
22,457

 
130,157

 
$
32,930

 
179,904

Loan workouts as a percentage of single-family guaranty book of business
1.05
%
 
0.99
%
 
1.53
%
 
1.36
%




Third Quarter 2014 Results
 
10

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 approximately 39,000 loan workouts during the third 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 September 30, 2014.
•
Fannie Mae completed approximately 29,000 loan modifications during the third 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 Nine Months Ended September 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
91,372

 
112,176

 
Dispositions of REO
(102,215
)
 
(116,901
)
 
End of period inventory of single-family foreclosed properties (REO)
92,386

 
100,941

 
Carrying value of single-family foreclosed properties (dollars in millions)
$
10,209

 
$
10,036

 
Single-family foreclosure rate
0.70

%
0.85

%
•
Fannie Mae acquired 27,798 single-family REO properties, primarily through foreclosure, in the third quarter of 2014, compared with 31,678 in the second quarter of 2014.
•
As of September 30, 2014, the company’s inventory of single-family REO properties was 92,386, compared with 96,796 as of June 30, 2014. The carrying value of the company’s single-family REO was $10.2 billion as of September 30, 2014.
•
The company’s single-family foreclosure rate was 0.70 percent for the first nine 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 third quarter of 2014 are available in the accompanying Annex; however, investors and interested parties should read the company’s Third 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 Third 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 Third Quarter Credit Supplement” at www.fanniemae.com.


Third Quarter 2014 Results
 
11


# # #

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 company’s future profitability; the company’s future single-family serious delinquency rates; the portion of its future business volume that will consist of refinancings; the future volume of its HARP 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 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, the company’s reliance on and 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 any change in the Federal Reserve’s policy toward the reinvestment of principal payments of mortgage-backed securities or 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, the company’s reliance on and the performance of the company’s servicers, global political risk, natural disasters, terrorist attacks, pandemics or other major disruptive events, information security breaches, 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 September 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



Third Quarter 2014 Results
 
12

ANNEX
FANNIE MAE
(In conservatorship)
Condensed Consolidated Balance Sheets — (Unaudited)
(Dollars in millions, except share amounts)
 
As of
 
September 30,
 
December 31,
 
2014
 
2013
ASSETS
Cash and cash equivalents
 
$
16,329

 
 
 
$
19,228

 
Restricted cash (includes $24,106 and $23,982, respectively, related to consolidated trusts)
 
28,518

 
 
 
28,995

 
Federal funds sold and securities purchased under agreements to resell or similar arrangements
 
29,450

 
 
 
38,975

 
Investments in securities:
 
 
 
 
 
 
 
Trading, at fair value
 
30,844

 
 
 
30,768

 
Available-for-sale, at fair value (includes $699 and $998, respectively, related to consolidated trusts)
 
32,099

 
 
 
38,171

 
Total investments in securities
 
62,943

 
 
 
68,939

 
Mortgage loans:
 
 
 
 
 
 
 
Loans held for sale, at lower of cost or fair value
 
368

 
 
 
380

 
Loans held for investment, at amortized cost:
 
 
 
 
 
 
 
Of Fannie Mae
 
278,961

 
 
 
300,159

 
Of consolidated trusts (includes $15,262 and $14,268, respectively, at fair value and loans pledged as collateral that may be sold or repledged of $0 and $442, respectively)
 
2,767,805

 
 
 
2,769,547

 
Total loans held for investment
 
3,046,766

 
 
 
3,069,706

 
Allowance for loan losses
 
(36,931
)
 
 
 
(43,846
)
 
Total loans held for investment, net of allowance
 
3,009,835

 
 
 
3,025,860

 
Total mortgage loans
 
3,010,203

 
 
 
3,026,240

 
Accrued interest receivable, net (includes $7,506 and $7,271, respectively, related to consolidated trusts)
 
8,566

 
 
 
8,319

 
Acquired property, net
 
11,339

 
 
 
11,621

 
Deferred tax assets, net
 
42,757

 
 
 
47,560

 
Other assets (includes cash pledged as collateral of $1,677 and $1,590, respectively)
 
20,211

 
 
 
20,231

 
Total assets
 
$
3,230,316

 
 
 
$
3,270,108

 
LIABILITIES AND EQUITY
Liabilities:
 
 
 
 
 
 
 
Accrued interest payable (includes $8,215 and $8,276, respectively, related to consolidated trusts)
 
$
10,492

 
 
 
$
10,553

 
Debt:
 
 
 
 
 
 
 
Of Fannie Mae (includes $5,204 and $1,308, respectively, at fair value)
 
474,952

 
 
 
529,434

 
Of consolidated trusts (includes $16,598 and $14,976, respectively, at fair value)
 
2,726,528

 
 
 
2,705,089

 
Other liabilities (includes $466 and $488, respectively, related to consolidated trusts)
 
11,945

 
 
 
15,441

 
Total liabilities
 
3,223,917

 
 
 
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 1,158,082,750 and 1,158,080,657 shares outstanding, respectively
 
687

 
 
 
687

 
Accumulated deficit
 
(124,931
)
 
 
 
(121,227
)
 
Accumulated other comprehensive income
 
1,715

 
 
 
1,203

 
Treasury stock, at cost, 150,679,953 and 150,682,046 shares, respectively
 
(7,401
)
 
 
 
(7,401
)
 
Total Fannie Mae stockholders’ equity
 
6,349

 
 
 
9,541

 
Noncontrolling interest
 
50

 
 
 
50

 
Total equity
 
6,399

 
 
 
9,591

 
Total liabilities and equity
 
$
3,230,316

 
 
 
$
3,270,108

 

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

Third 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 Nine Months
 
 
 
Ended September 30,
 
 
Ended September 30,
 
 
 
2014
 
 
2013
 
 
2014
 
 
2013
 
Interest income:
 
 
 
 
 
 
 
 
 
 
 
 
Trading securities
 
$
151

 
 
$
185

 
 
$
421

 
 
$
633

 
Available-for-sale securities
 
395

 
 
546

 
 
1,249

 
 
1,870

 
Mortgage loans (includes $25,217 and $25,351, respectively, for the three months ended and $76,704 and $75,592, respectively, for the nine months ended related to consolidated trusts)
 
27,779

 
 
28,299

 
 
84,532

 
 
85,579

 
Other
 
29

 
 
37

 
 
77

 
 
143

 
Total interest income
 
28,354

 
 
29,067

 
 
86,279

 
 
88,225

 
Interest expense:
 
 
 
 
 
 
 
 
 
 
 
 
Short-term debt
 
26

 
 
29

 
 
67

 
 
109

 
Long-term debt (includes $21,094 and $20,905, respectively, for the three months ended and $64,862 and $62,785, respectively, for the nine months ended related to consolidated trusts)
 
23,144

 
 
23,456

 
 
71,386

 
 
70,563

 
Total interest expense
 
23,170

 
 
23,485

 
 
71,453

 
 
70,672

 
Net interest income
 
5,184

 
 
5,582

 
 
14,826

 
 
17,553

 
Benefit for credit losses
 
1,085

 
 
2,609

 
 
3,498

 
 
8,949

 
Net interest income after benefit for credit losses
 
6,269

 
 
8,191

 
 
18,324

 
 
26,502

 
Investment gains, net
 
177

 
 
648

 
 
829

 
 
1,056

 
Net other-than-temporary impairments
 
(6
)
 
 
(27
)
 
 
(80
)
 
 
(42
)
 
Fair value (losses) gains, net
 
(207
)
 
 
335

 
 
(2,331
)
 
 
1,998

 
Debt extinguishment gains, net
 
11

 
 
92

 
 
49

 
 
96

 
Fee and other income
 
826

 
 
741

 
 
5,564

 
 
1,794

 
Non-interest income
 
801

 
 
1,789

 
 
4,031

 
 
4,902

 
Administrative expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
337

 
 
307

 
 
981

 
 
928

 
Professional services
 
263

 
 
236

 
 
780

 
 
678

 
Occupancy expenses
 
47

 
 
48

 
 
144

 
 
141

 
Other administrative expenses
 
59

 
 
55

 
 
170

 
 
166

 
Total administrative expenses
 
706

 
 
646

 
 
2,075

 
 
1,913

 
Foreclosed property expense (income)
 
249

 
 
(1,165
)
 
 
(227
)
 
 
(1,757
)
 
Temporary Payroll Tax Cut Continuation Act of 2011 (“TCCA”) fees
 
351

 
 
276

 
 
1,008

 
 
695

 
Other expenses, net
 
72

 
 
124

 
 
479

 
 
260

 
Total expenses (income)
 
1,378

 
 
(119
)
 
 
3,335

 
 
1,111

 
Income before federal income taxes
 
5,692

 
 
10,099

 
 
19,020

 
 
30,293

 
(Provision) benefit for federal income taxes
 
(1,787
)
 
 
(1,355
)
 
 
(6,123
)
 
 
47,231

 
Net income
 
3,905

 
 
8,744

 
 
12,897

 
 
77,524

 
Other comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
Changes in unrealized gains on available-for-sale securities, net of reclassification adjustments and taxes
 
63

 
 
(133
)
 
 
480

 
 
532

 
Other
 
32

 
 
(1
)
 
 
32

 
 
154

 
Total other comprehensive income (loss)
 
95

 
 
(134
)
 
 
512

 
 
686

 
Total comprehensive income
 
4,000

 
 
8,610

 
 
13,409

 
 
78,210

 
Less: Comprehensive income attributable to noncontrolling interest
 
—

 
 
(7
)
 
 
(1
)
 
 
(18
)
 
Total comprehensive income attributable to Fannie Mae
 
$
4,000

 
 
$
8,603

 
 
$
13,408

 
 
$
78,192

 
Net income
 
$
3,905

 
 
$
8,744

 
 
$
12,897

 
 
$
77,524

 
Less: Net income attributable to noncontrolling interest
 
—

 
 
(7
)
 
 
(1
)
 
 
(18
)
 
Net income attributable to Fannie Mae
 
3,905

 
 
8,737

 
 
12,896

 
 
77,506

 
Dividends distributed or available for distribution to senior preferred stockholder
 
(3,999
)
 
 
(8,617
)
 
 
(13,403
)
 
 
(78,228
)
 
Net (loss) income attributable to common stockholders
 
$
(94
)
 
 
$
120

 
 
$
(507
)
 
 
$
(722
)
 
(Loss) earnings per share: basic and diluted
 
$
(0.02
)
 
 
$
0.02

 
 
$
(0.09
)
 
 
$
(0.13
)
 
Weighted-average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
5,762

 
 
5,762

 
 
5,762

 
 
5,762

 
Diluted
 
5,762

 
 
5,893

 
 
5,762

 
 
5,762

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

Third Quarter 2014 Results
 
14


FANNIE MAE
(In conservatorship)
Condensed Consolidated Statements of Cash Flows— (Unaudited)
(Dollars in millions)
 
For the Nine Months Ended September 30,
 
2014
 
2013
Net cash provided by operating activities
$
960

 
$
11,518

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

 
(5,855
)
Proceeds from maturities and paydowns of trading securities held for investment
1,046

 
2,036

Proceeds from sales of trading securities held for investment
1,241

 
11,118

Proceeds from maturities and paydowns of available-for-sale securities
4,505

 
8,265

Proceeds from sales of available-for-sale securities
2,461

 
14,312

Purchases of loans held for investment
(93,029
)
 
(161,737
)
Proceeds from repayments and sales of loans acquired as held for investment of Fannie Mae
19,765

 
38,427

Proceeds from repayments and sales of loans acquired as held for investment of consolidated trusts
281,787

 
532,411

Net change in restricted cash
477

 
36,394

Advances to lenders
(71,268
)
 
(114,584
)
Proceeds from disposition of acquired property and preforeclosure sales
19,533

 
29,688

Net change in federal funds sold and securities purchased under agreements to resell or similar arrangements
9,525

 
(7,800
)
Other, net
(178
)
 
619

Net cash provided by investing activities
175,865

 
383,294

Cash flows used in financing activities:
 
 
 
Proceeds from issuance of debt of Fannie Mae
284,266

 
326,036

Payments to redeem debt of Fannie Mae
(339,528
)
 
(377,514
)
Proceeds from issuance of debt of consolidated trusts
188,719

 
339,687

Payments to redeem debt of consolidated trusts
(296,612
)
 
(599,519
)
Payments of cash dividends on senior preferred stock to Treasury
(16,594
)
 
(73,835
)
Other, net
25

 
—

Net cash used in financing activities
(179,724
)
 
(385,145
)
Net (decrease) increase in cash and cash equivalents
(2,899
)
 
9,667

Cash and cash equivalents at beginning of period
19,228

 
21,117

Cash and cash equivalents at end of period
$
16,329

 
$
30,784

Cash paid during the period for:
 
 
 
Interest
$
81,947

 
$
82,086

Income taxes
2,475

 
1,876


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

Third Quarter 2014 Results
 
15
a2014q3creditsupplementf
November 6, 2014 Fannie Mae 2014 Third 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 September 30, 2014, the “2014 Q3 Form 10-Q.” Some of the terms used in these materials are defined and discussed more fully in the 2014 Q3 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 Q3 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 September 30, 2014 or for the first nine 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 Q3 4 Home Price Change From 2006 Q3 Through 2014 Q3 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 S&P/Case-Shiller Index (1) 9.8% 13.6% 13.5% 1.7% -5.4% -12.0% -3.8% -4.1% -3.9% 6.5% 10.8% 4.4% 7.6% 10.6% 11.3% 2.7% -3.5% -9.1% -4.8% -4.3% -3.5% 4.1% 8.2% 5.3% -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 Q3 2014. Estimate based on purchase transactions in Fannie-Freddie acquisition and public deed data available through the end of September 2014. Including subsequent data may lead to materially different results. **Year-to-date as of June 2014. As comparison, Fannie Mae’s index for the same period is 4.1%. Based on our home price index, we estimate that home prices on a national basis increased by 1.2% in the third quarter of 2014 and by 5.3% in the first nine months of 2014, following increases of 8.2% in 2013 and 4.1% in 2012. Despite the recent increases in home prices, we estimate that, through September 30, 2014, home prices on a national basis remained 9.5% 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. ** * (1) In August 2014, the quarterly S&P/Case-Shiller US National Home Price Index was discontinued and replaced with a monthly index, which resulted in revisions in the yearly growth rates listed in this slide. The historical S&P/Case-Shiller Index growth rates provided in this slide have been updated to reflect these revisions.

 
4 T X 6 . 2 % 5 . 5 % M T 4 . 0 % 0 . 3 % C A 1 1 . 0 % 1 9 . 6 % N M 0 . 4 % 0 . 5 % A Z 7 . 6 % 2 . 4 % C O 7 . 9 % 2 . 7 % W Y 3 . 6 % 0 . 2 % O R 7 . 6 % 1 . 7 % N V 11 . 7 % 1 . 0 % U T 3 . 9 % 1 . 1 % M N 4 . 0 % 1 . 9 % I D 3 . 6 % 0 . 5 % K S 3 . 0 % 0 . 5 % N E 3 . 7 % 0 . 4 % S D 2 . 0 % 0 . 2 % N D 8 . 2 % 0 . 1 % OK 2 . 5 % 0 . 6 % M O 2 . 4 % 1 . 3 % W A 6 . 0 % 3 . 5 % G A 7 . 4 % 2 . 7 % I L 4 . 8 % 4 . 1 % I A 2 . 4 % 0 . 7 % W I 2 . 2 % 1 . 8 % A R 1 . 2 % 0 . 5 % A L 1 . 5 % 1 . 0 % N C 2 . 4 % 2 . 4 % M S 2 . 1 % 0 . 4 % N Y 2 . 8 % 5 . 5 % PA 2 . 0 % 3 . 0 %O H 3 . 7 % 2 . 1 % I N 2 . 0 % 1 . 2 % L A 2 . 4 % 0 . 9 % F L 1 0 . 8 % 5 . 6 % T N 4 . 1 % 1 . 3 % M I 7 . 5 % 2 . 4 % K Y 3 . 1 % 0 . 6 % V A 2 . 5 % 3 . 5 % M E 2 . 9 % 0 . 3 % S C 3 . 4 % 1 . 2 % W V 3 . 9 % 0 . 2 % M D 4 . 3 % 2 . 8 % V T 0 . 7 % 0 . 2 % N H 4 . 1 % 0 . 5 % M A 4 . 3 % 3 . 0 % N J 2 . 9 % 4 . 0 % C T 1 . 4 % 1 . 3 % D E 1 . 3 % 0 . 4 % R I 5 . 1 % 0 . 3 % D C 1 . 7 % 0 . 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 September 2014. UPB estimates are based on data available through the end of September 2014. Including subsequent data may lead to materially different results. One Year Home Price Change as of 2014 Q3* United States 5.2% State Growth Rate State: NM Growth Rate: 0.4% UPB %: 0.5% Example A K 3 . 4 % 0 . 2 % H I 9 . 4 % 0 . 8 %

 
5 T X 1 7 . 3 % 5 . 5 % M T 7 . 3 % 0 . 3 % C A - 2 2 . 7 % 1 9 . 6 % C O 8 . 6 % 2 . 7 % N M - 9 . 8 % 0 . 5 % U T 1 . 2 % 1 . 1 % K S 5 . 3 % 0 . 5 % O R - 9 . 9 % 1 . 7 % W Y 1 1 . 1 % 0 . 2 % A Z - 3 0 . 9 % 2 . 4 % N E 6 . 9 % 0 . 4 %N V - 3 9 . 1 % 1 . 0 % M N - 9 . 2 % 1 . 9 % S D 1 4 . 3 % 0 . 2 % M O - 4 . 0 % 1 . 3 % I D - 1 3 . 0 % 0 . 5 % I A 7 . 5 % 0 . 7 % N D 4 5 . 8 % 0 . 1 % O K 1 0 . 5 % 0 . 6 % W I - 6 . 2 % 1 . 8 % W A - 1 0 . 1 % 3 . 5 % P A 0 . 0 % 3 . 0 % A R - 0 . 0 % 0 . 5 % A L - 4 . 2 % 1 . 0 % N C - 2 . 3 % 2 . 4 % G A - 1 2 . 4 % 2 . 7 % M S - 2 . 5 % 0 . 4 % N Y - 5 . 8 % 5 . 5 % I N 1 . 9 % 1 . 2 % O H - 6 . 3 % 2 . 1 % L A 8 . 7 % 0 . 9 % T N 0 . 8 % 1 . 3 % K Y 4 . 3 % 0 . 6 % I L - 1 5 . 4 % 4 . 1 % F L - 3 4 . 4 % 5 . 6 % M I - 1 4 . 7 % 2 . 4 % V A - 1 2 . 1 % 3 . 5 % M E - 6 . 5 % 0 . 3 % S C - 4 . 9 % 1 . 2 % W V 4 . 9 % 0 . 2 % V T - 4 . 4 % 0 . 2 % M A - 6 . 7 % 3 . 0 % M D - 1 9 . 9 % 2 . 8 % N H - 1 2 . 2 % 0 . 5 % N J - 2 0 . 4 % 4 . 0 % C T - 1 7 . 0 % 1 . 3 % D E - 1 6 . 6 % 0 . 4 % R I - 2 5 . 0 % 0 . 3 % D C 1 4 . 9 % 0 . 4 % United States -9.5% *Source: Fannie Mae. Home price estimates are based on purchase transactions in Fannie-Freddie acquisition and public deed data available through the end of September 2014. UPB estimates are based on data available through the end of September 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 Q3* Below -30% -30% to -15% -15% to -5% -5% to 0% 0% to 5% 5% and Above State Growth Rate State: NM Growth Rate: -9.8% UPB %: 0.5% Example A K 8 . 4 % 0 . 2 % H I - 4 . 5 % 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) $102.3 $92.2 $85.2 $73.9 $76.4 $61.8 $728.4 $564.5 $115.7 $94.8 $183.0 $145.6 Weighted Average Origination Note Rate 4.28% 4.26% 4.37% 4.35% 4.41% 4.37% 3.78% 3.73% 4.40% 4.37% 3.91% 3.88% Origination Loan-to-Value (LTV) Ratio <= 60% 14.7% 13.9% 15.8% 14.8% 16.9% 16.5% 22.0% 23.5% 17.0% 16.8% 19.8% 20.5% 60.01% to 70% 11.7% 11.5% 11.7% 11.6% 12.5% 12.8% 13.9% 15.3% 12.0% 12.3% 13.0% 13.9% 70.01% to 80% 41.0% 43.5% 40.6% 44.1% 38.8% 44.0% 34.9% 41.2% 38.5% 43.7% 36.0% 41.8% 80.01% to 90% 13.8% 13.6% 13.0% 12.4% 12.3% 11.3% 10.5% 9.2% 12.1% 11.0% 11.4% 10.2% 90.01% to 100% 17.1% 17.5% 16.6% 17.1% 15.3% 15.4% 11.5% 10.8% 15.9% 16.2% 13.9% 13.6% > 100% 1.7%  2.3%  4.2%  7.1%  4.5%  6.0%  Weighted Average Origination LTV Ratio 77.1% 76.8% 76.8% 76.3% 76.8% 75.2% 75.7% 71.4% 77.2% 75.3% 76.4% 73.2% FICO Credit Scores (3) < 620 1.1%  1.3%  1.8%  1.4%  1.6%  1.4%  620 to < 660 5.4% 4.6% 5.3% 4.1% 5.7% 4.1% 3.4% 1.9% 4.8% 3.3% 3.7% 2.2% 660 to < 700 13.4% 12.7% 13.3% 12.3% 13.9% 12.6% 9.7% 7.8% 12.4% 11.1% 10.5% 8.8% 700 to < 740 21.1% 21.3% 20.8% 21.1% 21.3% 21.5% 18.2% 17.7% 20.8% 20.9% 19.2% 18.9% >=740 59.0% 61.4% 59.3% 62.5% 57.3% 61.7% 67.3% 72.5% 60.3% 64.7% 65.2% 70.1% Weighted Average FICO Credit Score 744 748 744 749 741 748 753 760 745 751 750 757 Product Distribution Fixed-rate 95.2% 94.9% 95.1% 94.6% 94.6% 93.8% 97.6% 97.0% 96.7% 96.2% 96.9% 96.2% Adjustable-rate 4.8% 5.1% 4.9% 5.4% 5.4% 6.2% 2.4% 3.0% 3.3% 3.8% 3.1% 3.8% Alt-A (4) 0.8%  0.8%  1.3%  1.3%  1.3%  1.3%  Subprime (5)             Interest Only     0.1% 0.1% 0.2% 0.3% 0.1% 0.1% 0.2% 0.3% Negative Amortizing             Investor 8.1% 7.1% 9.0% 7.7% 11.2% 9.1% 9.3% 7.0% 10.1% 8.0% 9.5% 7.1% Condo/Co-op 10.1% 10.1% 10.6% 10.7% 10.7% 10.8% 10.4% 10.1% 10.8% 10.7% 10.4% 10.0% Refinance 43.4% 37.2% 45.6% 37.3% 54.9% 44.3% 70.2% 61.5% 51.5% 40.8% 61.7% 51.8% Loan Purpose Purchase 56.6% 62.8% 54.4% 62.7% 45.1% 55.7% 29.8% 38.5% 48.5% 59.2% 38.3% 48.2% Cash-out refinance 14.9% 16.5% 14.9% 17.2% 16.0% 19.8% 14.6% 18.8% 14.8% 18.0% 14.3% 17.9% Other refinance 28.5% 20.6% 30.7% 20.2% 38.9% 24.5% 55.6% 42.7% 36.7% 22.7% 47.4% 33.9% Top 3 Geographic Concentration California 20.5% California 20.9% California 21.2% California 23.7% California 21.2% California 21.9% Texas 8.0% Texas 8.2% Texas 7.4% Texas 5.8% Texas 7.0% Texas 6.5% Florida 5.2% Florida 5.4% Florida 5.6% Florida 4.7% Florida 5.2% Florida 4.9% Single-Family AcquisitionsSingle-Family Acquisitions Single-Family Acquisitions Single-Family Acquisitions Single-Family AcquisitionsSingle-Family Acquisitions Q3 2013Full Year 2013 Acquisition Period Q1 2014 Q4 2013Q2 2014Q3 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 Q3 Form 10-Q. (5) For a description of our subprime loan classification criteria, refer to Fannie Mae’s 2014 Q3 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 20 7 20 8 2009 201 2011 2012 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, contributed to an increase in our acquisition of loans with high loan-to-value ratios. (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 September 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 $17.8 $18.2 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% 4.65% 4.42% 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%  72.6%  105.01% to 125% 0.9% 5.6% 11.9% 22.1% 21.5% 17.1% >125%       20.7  20.1  10.3  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% 101.9% 61.3% 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% 24.9% 20.4% 660 to < 740 31.9% 23.0% 33.1% 23.9% 32.6% 25.6% 33.8% 26.0% 38.7 31.9 41.2 37.0 >=740 64.4 74.5 61.2 72.3 61.5 70.0 56.6 66.9 45.1% 55.8% 33.9% 42.7% Weighted Average FICO Credit Score 749 762 746 760 746 758 738 753 722 737 704 717 2012 2013 2014* Acquisition Year 2009 2010 2011 4.1% 9.8% 9.9% 15.6% 13.7% 6.7% 6.5% 13.6% 14.4% 8.9% 8.8% 6.9% 69.4% 54.0% 52.2% 55.0% 47.7% 33.8% 20.1% 22.6% 23.5% 20.6% 29.8% 52.5% 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 September 30, 2014.

 
9 As of September 30, 2014 Overall Book 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 and Earlier Unpaid Principal Balance (billions) (1) $2,789.8 $222.9 $603.0 $676.6 $286.9 $247.1 $180.8 $67.6 $118.1 $84.9 $301.9 Share of Single-Family Conventional Guaranty Book 100.0% 8.0% 21.6% 24.3% 10.3% 8.9% 6.5% 2.4% 4.2% 3.0% 10.8% Average Unpaid Principal Balance (1) $160,070 $198,753 $193,399 $193,940 $165,498 $164,268 $158,885 $148,768 $162,447 $146,486 $84,716 Serious Delinquency Rate 1.96% 0.02% 0.16% 0.24% 0.39% 0.56% 0.98% 6.22% 10.91% 9.81% 3.83% Weighted Average Origination Loan-to-Value Ratio 74.6% 77.0% 76.4% 76.1% 71.4% 71.2% 69.8% 74.7% 78.3% 75.3% 72.5% Origination Loan-to-Value Ratio > 90% (2) 15.8% 19.2% 19.8% 18.8% 12.7% 10.4% 6.6% 12.5% 20.8% 12.5% 10.6% Weighted Average Mark-to-Market Loan-to-Value Ratio 63.4% 74.4% 66.3% 59.9% 55.2% 56.6% 58.6% 72.7% 88.9% 86.6% 55.1% Mark-to-Market Loan-to-Value Ratio > 100% and <= 125% 3.7% 1.4% 2.9% 2.8% 0.4% 0.6% 0.7% 8.3% 20.9% 19.6% 3.9% Mark-to-Market Loan-to-Value Ratio > 125% 1.3% 0.5% 1.1% 0.9%    1.6% 9.2% 8.9% 1.1% Weighted Average FICO (3) 744 743 751 759 758 757 754 716 693 697 708 FICO < 620 (3) 2.5% 1.3% 1.5% 1.0% 0.7% 0.7% 0.8% 5.7% 11.1% 8.9% 7.3% Interest Only 2.6%  0.2% 0.3% 0.6% 0.9% 1.0% 7.9% 18.7% 20.8% 6.0% Negative Amortizing 0.2%         1.5% 1.2% Fixed-rate 91.9% 95.3% 97.5% 97.5% 94.8% 95.8% 97.4% 75.6% 65.2% 64.3% 77.9% Primary Residence 88.1% 86.7% 86.4% 88.7% 87.3% 89.4% 90.8% 87.3% 89.6% 87.4% 89.1% Condo/Co-op 9.4% 10.3% 10.4% 9.1% 8.7% 8.4% 8.8% 11.0% 9.8% 10.7% 8.8% Credit Enhanced (4) 15.7% 27.6% 20.0% 14.5% 9.6% 6.9% 6.2% 25.4% 30.4% 19.4% 11.1% Cumulative Default Rate (5)    0.1% 0.2% 0.4% 0.6% 4.4% 13.5% 12.3%  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 September 30, 2014. (2) The increase after 2009 is primarily 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 2004 and 2005 cumulative default rates, refer to slide 17.

 
10 As of September 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) $71.7 $70.5 $152.5 $439.5 $20.7 $119.6 $540.9 $1,011.7 $2,789.8 Share of Single-Family Conventional Guaranty Book 2.6% 2.5% 5.5% 15.8% 0.7% 4.3% 19.4% 36.3% 100.0% Average Unpaid Principal Balance (4) $233,146 $118,995 $131,807 $171,720 $132,280 $150,502 $162,858 $154,621 $160,070 Serious Delinquency Rate 9.80% 8.68% 6.10% 2.79% 9.34% 8.03% 0.65% 3.43% 1.96% Acquisition Years 2005 - 2008 81.1% 44.3% 36.7% 12.2% 33.9% 62.1%  20.4% 13.2% Weighted Average Origination Loan-to-Value Ratio 74.0% 81.3% 79.4% 104.8% 107.5% 77.7% 86.8% 85.0% 74.6% Origination Loan-to-Value Ratio > 90% 7.9% 29.3% 23.5% 100.0% 100.0% 14.2% 39.9% 43.4% 15.8% Weighted Average Mark-to-Market Loan-to-Value Ratio 86.1% 75.7% 73.0% 89.8% 97.7% 78.3% 70.8% 74.6% 63.4% Mark-to-Market Loan-to-Value Ratio > 100% and <= 125% 20.5% 12.0% 9.8% 13.8% 25.4% 15.1% 7.9% 8.6% 3.7% Mark-to-Market Loan-to-Value Ratio > 125% 8.9% 5.2% 4.1% 5.4% 12.5% 6.6% 2.6% 3.3% 1.3% Weighted Average FICO (2) 723 584 642 728 584 713 738 719 744 FICO < 620 (2) 1.5% 100.0%  4.7% 100.0% 2.3% 4.3% 7.0% 2.5% Fixed-rate 23.9% 82.4% 84.5% 94.9% 86.9% 64.9% 98.7% 88.3% 91.9% Primary Residence 85.3% 94.8% 93.0% 91.2% 94.7% 76.9% 85.0% 88.8% 88.1% Condo/Co-op 15.0% 4.8% 6.1% 10.2% 5.9% 9.9% 9.5% 9.1% 9.4% Credit Enhanced (5) 13.7% 23.9% 21.2% 58.8% 57.9% 11.6% 12.5% 28.6% 15.7% 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 September 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) Q3 2014 Acquisitions (# of Properties) Q3 2014 Dispositions (# of Properties) REO Ending Inventory as of September 30, 2014 Average Days to Foreclosure (3) Select States (5) California $548.1 19.6% 54.1% 3.6% 5.1% 0.73% 1,156 1,565 3,881 761 -1.3% Florida $156.1 5.6% 73.7% 18.3% 16.1% 4.87% 6,778 7,551 20,616 1,366 33.7% Texas $154.8 5.5% 60.3% 0.2% 2.9% 0.87% 694 936 1,915 648  New York $154.3 5.5% 58.4% 3.5% 10.0% 4.20% 650 377 1,830 1,381 4.6% Illinois $113.8 4.1% 70.7% 10.1% 5.6% 2.46% 2,024 2,341 9,947 899 10.9% New Jersey $111.3 4.0% 67.4% 8.1% 9.7% 5.83% 893 506 2,745 1,346 6.7% Washington $98.8 3.5% 63.7% 3.7% 2.2% 1.43% 935 976 2,646 1,045 3.6% Virginia $98.7 3.5% 63.5% 3.4% 1.5% 1.00% 487 583 1,473 622 1.7% Pennsylvania $84.9 3.0% 65.4% 2.9% 4.5% 2.46% 1,153 1,108 3,151 958 4.1% Massachusetts $84.7 3.0% 59.8% 1.9% 2.9% 2.29% 339 220 1,202 1,050 0.9% Region (6) Midwest $415.6 14.9% 68.1% 5.2% 15.7% 1.63% 6,125 7,917 25,478 709 21.1% Northeast $529.9 19.0% 63.1% 4.4% 32.0% 3.58% 4,070 3,241 12,643 1,138 22.2% Southeast $616.5 22.1% 68.2% 8.0% 31.2% 2.55% 11,553 13,225 36,121 1,102 47.5% Southwest $449.1 16.1% 63.7% 2.6% 9.6% 1.02% 2,911 4,140 8,264 637 4.1% West $778.7 27.9% 57.2% 4.2% 11.5% 1.05% 3,139 3,685 9,880 944 5.1% Total $2,789.8 100.0% 63.4% 5.0% 100.0% 1.96% 27,798 32,208 92,386 955 100.0% SF Conventional Guaranty Book of Business as of September 30, 2014 (1) Seriously Delinquent Loans as of September 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 September 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 September 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 nine 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 Q3 Form 10-Q. (5) Select states represent the top ten states in UPB of the single-family conventional guaranty book of business as of September 30, 2014. (6) For information on which states are included in each region, refer to Fannie Mae’s 2014 Q3 Form 10-Q.

 
12 109 92 10.8% 22.3% 0.6% 2.0%0.7% 3.0% 8.7% 10.8% 9.2% 4.2% 0 20 40 60 80 100 120 0% 5% 10% 15% 20% 25% 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 RE O En din g I nv en tor y ( Th ou sa nd s) REO Ending Inventory Florida New York New Jersey Illinois California 622 341 21.6% 16.1% 6.0% 10.0% 6.1% 9.7% 6.6% 5.6% 7.8% 5.1% 0 100 200 300 400 500 600 700 0% 5% 10% 15% 20% 25% 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 SD Q Vo lum 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 September 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. Our single-family serious delinquency 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 REO Gross Sales Price / UPB Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Florida 70.7% 72.0% 70.1% 72.5% 74.2% Illinois 63.2% 64.5% 64.8% 67.1% 67.6% Michigan 67.8% 66.7% 66.1% 69.2% 66.2% Ohio 64.6% 61.9% 59.4% 61.2% 63.5% California 86.7% 86.8% 86.3% 88.2% 87.7% Georgia 77.3% 75.3% 76.1% 80.6% 82.2% Pennsylvania 70.1% 67.8% 65.9% 66.3% 66.3% Washington 83.5% 79.7% 83.5% 84.6% 86.3% North Carolina 80.6% 79.2% 79.2% 82.3% 81.7% Arizona 80.0% 79.7% 79.8% 79.6% 80.4% 66.6% 68.1% 70.4% 71.7% 74.3% 76.2% 78.0% 78.6% 79.7% 80.4% 59.9% 61.0% 63.3% 64.5% 66.6% 68.2% 69.9% 70.6% 71.7% 72.2% 50.0% 55.0% 60.0% 65.0% 70.0% 75.0% 80.0% 85.0% 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 Short Sales Gross Sales / UPB Short Sales Net Sales / UPB 65.0% 67.2% 68.5% 70.6% 74.6% 74.8% 74.2% 73.8% 75.7% 75.9% 59.2% 61.1% 62.3% 64.6% 68.4% 68.5% 67.9% 67.6% 69.2% 69.3% 50.0% 55.0% 60.0% 65.0% 70.0% 75.0% 80.0% 85.0% 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 REO Gross ales / UPB REO Net Sales / UPB Short Sales Gross Sales Price / UPB Q3 20 3 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Florida 71.3% 73.6% 75.6% 76.3% 77.1% California 78.7% 81.4% 82.4% 83.8% 84.3% Illinois 70.5% 72.7% 71.7% 74.2% 75.6% New Jersey 72.2% 73.0% 70.6% 74.8% 73.9% Nevada 70.1% 73.6% 72.1% 75.7% 76.4% Washington 81.4% 82.9% 84.4% 85.0% 86.7% New York 78.6% 76.0% 77.1% 77.4% 79.1% Maryland 73.3% 74.7% 74.0% 76.8% 77.9% Arizona 78.2% 79.2% 80.6% 80.3% 82.1% Georgia 76.6% 79.5% 80.4% 78.7% 81.2% 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 nine 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 20 20 15 12 14 12 9 7 7 5 4 4 4 4 4 3 4 3 3 3 24 23 19 16 18 15 13 10 10 8 0 10 20 30 40 50 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 # o f L oa ns (T ho us an ds ) Short Sales Deeds-in-Lieu 35 42 40 43 40 37 39 36 32 29 6 4 4 4 3 2 2 2 2 2 41 46 44 48 44 40 41 38 34 31 0 10 20 30 40 50 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 # o f L oa ns (T ho us an ds ) Modif ications Repayment Plans and Forbearances Compl ted 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 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 Modifications (2) 60,025 51,936 46,671 35,332 41,697 39,712 43,153 40,358 37,337 39,159 36,044 32,010 % Current or Paid Off 3 months post modification 83% 84% 85% 84% 84% 85% 86% 83% 83% 84% 83% 79% 6 months post modification 79% 79% 78% 77% 80% 82% 79% 77% 79% 79% 76% n/a 9 months post modification 76% 74% 73% 76% 78% 78% 76% 75% 76% 74% n/a n/a 12 months post modification 72% 71% 73% 75% 76% 76% 75% 74% 73% n/a n/a n/a 15 months post modification 70% 71% 73% 74% 74% 75% 74% 71% n/a n/a n/a n/a 18 months post modification 70% 71% 72% 73% 75% 75% 72% n/a n/a n/a n/a n/a 21 months post modification 71% 71% 72% 74% 75% 74% n/a n/a n/a n/a n/a n/a 24 months post modification 71% 71% 73% 75% 74% 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% 0.8% 0.8% 0.5% 1.2% 1.9% 2.0% Interest Only Loans 2.6% 2.9% 3.7% 4.7% 5.6% 6.6% 0.2% 18.7% 21.8% 25.8% 28.6% 32.6% Loans with FICO < 620 (4) 2.5% 2.6% 2.9% 3.2% 3.5% 3.9% 11.9% 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% 17.2% 15.7% 14.2% 14.7% 15.1% 15.5% Loans with Origination LTV Ratio > 90% 15.8% 15.1% 12.8% 10.0% 9.4% 9.4% 13.1% 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% 2.7% 2.0% 2.3% 2.2% 2.7% 3.4% Alt-A Loans (5) 4.3% 4.7% 5.6% 6.6% 7.6% 8.9% 14.5% 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 19.4% 19.5% 16.5% 11.2% 7.1% 2.5% 10.2% 7.4% 3.5% 1.4% 0.1%  Vintages 2009 - 2014 79.5% 76.2% 65.3% 51.6% 39.0% 22.0% 13.4% 10.0% 5.1% 2.4% 0.4%  2005 - 2008 12.8% 14.7% 21.7% 30.4% 38.0% 48.7% 75.1% 77.6% 81.8% 82.9% 87.9% 88.1% 2004 & Prior 7.8% 9.1% 13.1% 18.0% 23.0% 29.2% 11.5% 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% 33.7% 28.9% 21.4% 11.0% 17.5% 15.5% Illinois 4.1% 4.1% 4.2% 4.3% 4.3% 4.3% 10.9% 12.9% 9.6% 3.5% 4.3% 4.2% New Jersey 4.0% 4.0% 4.0% 4.0% 4.0% 3.9% 6.7% 3.7% 2.0% 0.8% 1.2% 1.2% Maryland 2.8% 2.8% 2.8% 2.9% 2.8% 2.8% 5.5% 3.1% 1.8% 0.6% 1.9% 2.0% New York 5.5% 5.6% 5.6% 5.6% 5.5% 5.3% 4.6% 1.9% 0.9% 0.6% 0.8% 0.8% Ohio 2.1% 2.1% 2.2% 2.3% 2.4% 2.6% 4.3% 4.1% 3.3% 2.1% 2.2% 2.2% Pennsylvania 3.0% 3.1% 3.1% 3.0% 3.0% 3.0% 4.1% 3.0% 1.6% 0.8% 0.8% 0.8% Washington 3.5% 3.5% 3.5% 3.5% 3.5% 3.4% 3.6% 3.7% 2.5% 3.2% 1.5% 1.1% Connecticut 1.3% 1.4% 1.4% 1.4% 1.4% 1.4% 2.8% 1.4% 0.9% 0.3% 0.4% 0.4% Michigan 2.4% 2.4% 2.5% 2.5% 2.6% 2.7% 1.7% 3.2% 4.5% 5.8% 6.3% 7.4% All Other States 65.6% 65.4% 64.7% 64.2% 63.9% 63.6% 22.1% 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 September 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 September 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 nine months ended September 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 September 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 2004 2005 2006 2007 2008 20092010201120122014 2013 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% 14.0% Yr1-Q1 Yr2-Q1 Yr3-Q1 Yr4-Q1 Yr5-Q1 Yr6-Q1 Yr7-Q1 Yr8-Q1 Yr9-Q1 Yr10-Q1 Yr11-Q1 Cu mu lat ive D efa ult R ate Time Since Beginning of Origination Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

 
18 Total Multifamily Guaranty Book of Business 33,223 $198.4 100% 0.09% $(41) $52 $257 $409 Credit Enhanced Loans: Credit Enhanced 30,402 $182.8 92% 0.09% $(37) $0 $189 $340 Non-Credit Enhanced 2,821 $15.6 8% 0.09% $(4) $52 $68 $69 Origination loan-to-value ratio: (4) Less than or equal to 70% 21,291 $110.8 56% 0.04% $(10) $24 $37 $74 Greater than 70% and less than or equal to 80% 9,864 $81.4 41% 0.16% $(33) $18 $182 $287 Greater than 80% 2,068 $6.3 3% 0.05% $3 $10 $38 $49 Delegated Underwriting and Servicing (DUS ®) Loans: (5) DUS ® - Small Balance Loans (6) 8,555 $16.1 8% 0.14% $11 $3 $19 $37 DUS ® - Non Small Balance Loans 12,641 $165.4 83% 0.07% $(59) $(14) $182 $295 DUS ® - Total 21,196 $181.5 91% 0.07% $(48) $(11) $201 $333 Non-DUS - Small Balance Loans (6) 11,442 $8.2 4% 0.43% $8 $23 $41 $49 Non-DUS - Non Small Balance Loans 585 $8.7 5% 0.06% $(1) $41 $15 $27 Non-DUS - Total 12,027 $17.0 9% 0.24% $7 $63 $56 $76 Maturity Dates: Loans maturing in 2014 156 $1.5 1% 0.67% $(1) $(9) $31 $19 Loans maturing in 2015 2,096 $9.4 5% 0.03% $(3) $(1) $20 $23 Loans maturing in 2016 2,346 $12.3 6% 0.21% $5 $17 $30 $32 Loans maturing in 2017 3,428 $16.8 8% 0.34% $(9) $42 $84 $87 Loans maturing in 2018 2,976 $16.9 9% 0.13% $(4) $0 $35 $86 Other maturities 22,221 $141.5 71% 0.04% $(29) $2 $57 $162 Loan Size Distribution: Less than or equal to $750K 7,807 $2.2 1% 0.41% $4 $7 $13 $19 Greater than $750K and less than or equal to $3M 11,175 $16.9 9% 0.25% $18 $33 $45 $66 Greater than $3M and less than or equal to $5M 4,374 $16.0 8% 0.18% $(11) $2 $31 $44 Greater than $5M and less than or equal to $25M 8,438 $87.6 44% 0.11% $(43) $(18) $141 $205 Greater than $25M 1,429 $75.7 38%  $(9) $29 $28 $75 2012 Multifamily Credit Losses ($ in Millions) (3) 2011 Multifamily Credit Losses ($ in Millions) (3) As of September 30, 2014 Loan Counts Unpaid Principal Balance ($ in Billions) % of Multifamily Guaranty Book of Business (UPB) % Seriously Delinquent (1) 2013 Multifamily Credit Losses ($ in Millions) (2)(3) YTD 2014 Multifamily Credit Losses ($ in Millions) (2)(3) (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. (3) Dollar amount of multifamily credit-related losses/(income) for the applicable period and category. Total credit losses for each period will not tie to sum of all categories due to rounding. Multifamily credit losses for 2011 exclude $19 million of credit-related income from other multifamily mortgage business investments. (4) Weighted average origination loan-to-value ratio is 66% as of September 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 September 30, 2014 Unpaid Principal Balance ($ in Billions) % of Multifamily Guaranty Book of Business (UPB) % Seriously Delinquent (1) # of Seriously Delinquent loans (1) YTD 2014 Multifamily Credit Losses ($ in Millions) (2)(3) 2013 Multifamily Credit Losses ($ in Millions) (2)(3) 2012 Multifamily Credit Losses ($ in Millions) (3) 2011 Multifamily Credit Losses ($ in Millions) (3) Total Multifamily Guaranty Book of Business $198.4 100% 0.09% 79 $(41) $52 $257 $409 By Acquisition Year: 2014 $17.2 9%       2013 $28.6 14%       2012 $31.9 16%   $0 $0   2011 $21.5 11%   $0 $(1) $0  2010 $15.1 8% 0.04% 2 $0 $7 $1  2009 $14.7 7% 0.07% 4 $(4) $(14) $17 $26 2008 $16.2 8% 0.23% 22 $(3) $(6) $60 $126 2007 $21.0 11% 0.31% 24 $(9) $50 $123 $135 2006 $12.4 6% 0.21% 9 $11 $23 $25 $27 Prior to 2006 $19.7 10% 0.14% 18 $(36) $(7) $32 $95 (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. (3) Dollar amount of multifamily credit-related losses/(income) for the applicable period and category. Total credit losses for each period will not tie to sum of all categories due to rounding. Multifamily credit losses for 2011 exclude $19 million of credit-related income from other multifamily mortgage business investments. Multifamily Credit Profile by Acquisition Year Multifamily SDQ Rate by Acquisition Year Cumulative Defaults by Acquisition Year 2005 2006 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 SD Q (% ) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2013 2014 2010 2009 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Cu mu lat ive D ef au lt R ate 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2005 2007 2008 2006 2012 11 2013 2014

 
20 Total Multifamily Guaranty Book of Business $198.4 100% 0.09% $(41) $52 $257 $409 Region: (4) Midwest $17.2 9% 0.25% $(2) $(20) $40 $93 Northeast $37.6 19% 0.08% $3 $(4) $25 $11 Southeast $43.6 22% 0.09% $(18) $6 $138 $173 Southwest $38.9 20% 0.10% $(22) $(16) $19 $105 West $61.1 31% 0.03% $(3) $87 $35 $26 Top Five States by UPB: California $47.1 24% 0.02% $(2) $4 $4 $5 New York $22.4 11% 0.06% $1 $1 $7 $(1) Texas $20.4 10% 0.20% $(34) $(8) $6 $77 Florida $10.8 5% 0.09% $(3) $11 $92 $40 Washington $7.3 4% 0.01% $0 $1 $0 $0 Asset Class: (5) Conventional/Co-op $176.8 89% 0.10% $(35) $52 $242 $393 Seniors Housing $12.7 6%      Manufactured Housing $5.4 3%  $(2) $0 $7 $1 Student Housing $3.5 2%  $(4) $1 $7 $16 Targeted Affordable Segment: Privately Owned with Subsidy (6) $29.4 15% 0.06% $(3) $(8) $9 $55 DUS & Non-DUS Lenders/Servicers: DUS: Bank (Direct, Owned Entity, or Subsidiary) $77.1 39% 0.06% $(21) $6 $55 $129 DUS: Non-Bank Financial Institution $113.0 57% 0.09% $(24) $39 $180 $271 Non-DUS: Bank (Direct, Owned Entity, or Subsidiary) $7.2 4% 0.25% $1 $2 $17 $6 Non-DUS: Non-Bank Financial Institution $1.0 0%  $4 $5 $6 $4 Non-DUS: Public Agency/Non Profit $0.2 0%   $0 $0 $(1) 2011 Multifamily Credit Losses ($ in Millions) (2)(3) As of September 30, 2014 Unpaid Principal Balance ($ in Billions) % of Multifamily Guaranty Book of Business (UPB) % Seriously Delinquent (1) 2013 Multifamily Credit Losses ($ in Millions) (2)(3) 2012 Multifamily Credit Losses ($ in Millions) (3) YTD 2014 Multifamily Credit Losses ($ in Millions) (2)(3) (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. (3) Dollar amount of multifamily credit-related losses/(income) for the applicable period and category. Total credit losses for each period will not tie to sum of all categories due to rounding. Multifamily credit losses for 2011 exclude $19 million of credit-related income from other multifamily mortgage business investments. (4) For information on which states are included in each region, refer to Fannie Mae’s 2014 Q3 Form 10-Q. (5) 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. (6) 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-related losses/(income) for each state which totaled $41M in income as of September 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 $198.4B as of September 30, 2014. Portfolio UPB Concentration by State as of 09/30/2014 Example: UPB in OH is $3B and YTD 2014 Credit Losses are $6M (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.