Fannie Mae 2006 Annual Report Download - page 262

Consolidated VIEs
We consolidate in our financial statements Fannie Mae MBS trusts when we own 100% of the trust, which
gives us the unilateral ability to liquidate the trust. We also consolidate MBS trusts that do not meet the
definition of a QSPE when we are deemed to be the primary beneficiary. This includes certain private-label
and Fannie Mae securitization trusts that meet the VIE criteria. As an active participant in the secondary
mortgage market, our ownership percentage in any given mortgage-related security will vary over time. Third-
party ownership in these consolidated MBS trusts is recorded as a component of either “Short-term debt” or
“Long-term debt” in the consolidated balance sheets. We consolidate in our financial statements the assets and
liabilities of limited partnerships that are VIEs if we are deemed to be the primary beneficiary. Third-party
ownership in these consolidated limited partnerships is recorded in “Minority interests in consolidated
subsidiaries” in the consolidated balance sheets. In general, the investors in the obligations of consolidated
VIEs have recourse only to the assets of those VIEs and do not have recourse to us, except where we provide
a guaranty to the VIE.
The following table displays the carrying amount and classification of consolidated assets of VIEs as of
December 31, 2006 and 2005.
2006 2005
As of December 31,
(Dollars in millions)
MBS trusts:
Loans held for investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $102,293 $109,662
Loans held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 797 882
AFS securities
(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,701 2,644
Total MBS trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104,791 113,188
Limited partnerships:
Partnership investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,410 4,555
Cash, cash equivalents and restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 149
Total limited partnership investments
(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,576 4,704
Total assets of consolidated VIEs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $110,367 $117,892
(1)
Includes assets consolidated from mortgage revenue bonds of $76 million and $114 million as of December 31, 2006
and 2005, respectively.
(2)
Includes LIHTC partnerships of $4.0 billion and $3.3 billion as of December 31, 2006 and 2005, respectively.
As of December 31, 2006 and 2005, we had $2.4 billion and $2.9 billion of loans held for sale, $12.9 billion
and $18.3 billion of AFS securities, and $723 million and $849 million of trading securities, respectively, that
were transferred to VIEs as a result of securitization transactions that did not qualify as sales under SFAS 140.
Non-consolidated VIEs
We also have investments in VIEs that we do not consolidate because we are not deemed to be the primary
beneficiary. These VIEs include the securitization trusts and LIHTC partnerships described above where our
ownership represents a significant variable interest in the entity, including our investments in certain Fannie
Mae securitization trusts, private-label trusts, LIHTC partnerships, other tax partnerships and other entities that
meet the VIE criteria.
We consolidated our investments in certain LIHTC funds that were structured as limited partnerships. The
funds that were consolidated, in turn, own a majority of the limited partnership interests in other LIHTC
operating partnerships, which did not require consolidation under FIN 46R and are therefore accounted for
F-31
FANNIE MAE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)