Fannie Mae 2010 Annual Report Download - page 150

expect, the conservator requests additional funds on our behalf from Treasury under the senior preferred stock
purchase agreement.
OFF-BALANCE SHEET ARRANGEMENTS
We enter into certain business arrangements to facilitate our statutory purpose of providing liquidity to the
secondary mortgage market and to reduce our exposure to interest rate fluctuations. Some of these
arrangements are not recorded in our consolidated balance sheets or may be recorded in amounts different
from the full contract or notional amount of the transaction, depending on the nature or structure of, and
accounting required to be applied to, the arrangement. These arrangements are commonly referred to as “off-
balance sheet arrangements” and expose us to potential losses in excess of the amounts recorded in our
consolidated balance sheets.
Our off-balance sheet arrangements result primarily from the following:
• our guaranty of mortgage loan securitization and resecuritization transactions over which we do not have
control;
• other guaranty transactions;
• liquidity support transactions; and
• partnership interests.
In 2009 and prior, most MBS trusts created as part of our guaranteed securitizations were not consolidated by
the company for financial reporting purposes because the trusts were considered to be qualifying special
purpose entities under the accounting rules governing the transfer and servicing of financial assets and the
extinguishment of liabilities. Effective January 1, 2010, we prospectively adopted the new accounting
standards, which resulted in the majority of our single-class securitization trusts being consolidated by us upon
adoption.
Our Fannie Mae MBS and other credit guarantees outstanding totaled $2.7 trillion as of December 31, 2010
and $2.8 trillion as of December 31, 2009. These totals include $2.6 trillion of consolidated Fannie Mae MBS
and $7.5 billion of Fannie Mae MBS held in portfolio as of December 31, 2010 and $147.9 billion of
consolidated Fannie Mae MBS and $220.2 billion of Fannie Mae MBS held in portfolio as of December 31,
2009.
Our maximum potential exposure to credit losses relating to our outstanding and unconsolidated Fannie Mae
MBS and other financial guarantees is primarily represented by the unpaid principal balance of the mortgage
loans underlying outstanding and unconsolidated Fannie Mae MBS and other financial guarantees of
$56.9 billion as of December 31, 2010 and $2.5 trillion as of December 31, 2009.
For information on the mortgage loans underlying both our on- and off-balance sheet Fannie Mae MBS, as
well as whole mortgage loans that we own, see “Risk Management—Credit Risk Management.”
Partnership Investment Interests
For partnership investments where we have determined that we are the primary beneficiary, we have
consolidated these investments and recorded all of the partnership assets and liabilities in our consolidated
balance sheets. The carrying value of our partnership investments, which primarily include investments in
affordable rental and for-sale housing partnerships, totaled $1.8 billion as of December 31, 2010, compared
with $2.4 billion as of December 31, 2009.
LIHTC Partnership Interests
In most instances, we are not the primary beneficiary of our LIHTC partnership investments, and therefore our
consolidated balance sheets reflect only our investment in the LIHTC partnership, rather than the full amount
of the LIHTC partnership’s assets and liabilities. During 2009, we explored options to sell or otherwise
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