Fannie Mae 2006 Annual Report Download - page 61

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
ORGANIZATION OF MD&A
We intend for our MD&A to provide information that will assist the reader in better understanding our
consolidated financial statements. Our MD&A explains the changes in certain key items in our consolidated
financial statements from year to year, the primary factors driving those changes, our risk management
processes and results, any known trends or uncertainties of which we are aware that we believe may have a
material effect on our future performance, as well as how certain accounting principles affect our consolidated
financial statements. Our MD&A also provides information about our three complementary business segments
in order to explain how the activities of each segment impact our results of operations and financial condition.
This discussion should be read in conjunction with our consolidated financial statements as of December 31,
2006 and the notes accompanying those consolidated financial statements. Readers should also review
carefully “Item 1—Business—Forward-Looking Statements” and “Item 1A—Risk Factors” for a description of
the forward-looking statements in this report and a discussion of the factors that might cause our actual results
to differ, perhaps materially, from these forward-looking statements. Please refer to “Glossary of Terms Used
in This Report” for an explanation of key terms used throughout this discussion.
Our MD&A is organized as follows:
Section Page
• Executive Summary .............................................................. 46
• Critical Accounting Policies and Estimates ............................................. 53
• Consolidated Results of Operations .................................................. 59
• Business Segment Results ......................................................... 74
• Consolidated Balance Sheet Analysis ................................................. 79
• Supplemental Non-GAAP Information—Fair Value Balance Sheet ........................... 88
• Liquidity and Capital Management .................................................. 96
• Off-Balance Sheet Arrangements and Variable Interest Entities .............................. 105
• 2006 Quarterly Review ........................................................... 108
• Risk Management ............................................................... 118
• Impact of Future Adoption of New Accounting Pronouncements ............................. 151
• Glossary of Terms Used in This Report ............................................... 153
EXECUTIVE SUMMARY
Our Mission and Business
Fannie Mae is a mission-driven company, owned by private shareholders (NYSE: FNM) and chartered by
Congress to support liquidity and stability in the secondary mortgage market. Our business includes three
integrated business segments—Single-Family, HCD and Capital Markets—that work together to provide
services, products and solutions to our lender customers and a broad range of housing partners. Together, our
business segments contribute to our chartered mission objectives, helping to increase the total amount of funds
available to finance housing in the U.S. and to make homeownership more available and affordable for low-,
moderate- and middle-income Americans. We also work with our customers and partners to increase the
availability and affordability of rental housing.
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