Fannie Mae 2006 Annual Report Download - page 263

using the equity method. Such investments, which are generally funded through a combination of debt and
equity, have a recorded investment of $3.7 billion and $3.0 billion as of December 31, 2006 and 2005,
respectively. In addition, such unconsolidated operating partnerships had $217 million and $204 million in
mortgage debt that we own or guarantee, as of December 31, 2006 and 2005, respectively.
The following table displays the total assets of unconsolidated VIEs where we have significant involvement, as
well as our aggregate maximum exposure to loss as of December 31, 2006 and 2005.
2006 2005
As of December 31,
(Dollars in millions)
Mortgage-backed trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $53,719 $43,671
Limited partnership investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,578 6,725
Asset-backed trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,999 4,423
Total assets of unconsolidated VIEs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $66,296 $54,819
Maximum exposure to loss
(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $29,522 $25,719
(1)
Represents the greater of our recorded investment in the entity or the unpaid principal balance of the assets that are
covered by our guaranty.
3. Mortgage Loans
We own both single-family mortgage loans, which are secured by four or fewer residential dwelling units, and
multifamily mortgage loans, which are secured by five or more residential dwelling units. We classify these
loans as either HFI or HFS. We report HFI loans at the unpaid principal amount outstanding, net of
unamortized premiums and discounts, other cost basis adjustments, and an allowance for loan losses. We
report HFS loans at the lower of cost or market determined on a pooled basis, and record valuation changes in
the consolidated statements of income.
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FANNIE MAE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)