Fannie Mae 2010 Annual Report Download - page 219

• We incurred single-family credit-related expenses of $26.4 billion for 2010, significantly lower than our
target of $45.4 billion.
• We significantly increased our default prevention and loss mitigation activities in 2010 as compared to
2009, completing over 400,000 modifications, disposing of more than 185,000 REO properties and
providing over 75,000 foreclosure alternatives in 2010. In addition, our serious delinquency rate
declined by more than 100 basis points from its peak in February 2010.
• We made improvements to the HAMP system of record, supported Treasury-hosted borrower outreach
events and conducted training of industry stakeholders and participating servicers.
• We made significant progress in meeting our new 2010 housing goals despite difficult market
conditions. We also prepared for implementation of the final duty to serve rule.
The Compensation Committee concluded that the company had substantially met this goal. The
Compensation Committee recognized the company’s 2010 achievements described above, particularly the
company’s strong performance with respect to its liquidity subgoal. The company provided substantial
liquidity to the market in 2010, while also acquiring new business with a high credit quality that is
expected to be profitable. The Compensation Committee concluded, however, that the company only
partially met its subgoal relating to the management of its credit book of business. While the company’s
credit losses were lower than expected in 2010, it was partially due to the temporary halt to foreclosures
by some of our servicers during the fourth quarter of 2010. In addition, the Committee took into account
the foreclosure process deficiencies of servicers, lawyers and other service providers that were discovered
in 2010.
•Goal 2: Our second 2010 performance goal was to build a more streamlined, higher-performing
company. Our subgoals under this goal consisted of: enhancing our financial metrics; improving our
business processes and technology infrastructure; developing and retaining employees; and achieving and
maintaining a strong risk and control environment. Key achievements during 2010 pursuant to this goal
were as follows:
• We operated within our 2010 corporate forecast of revenues and expenses, developed a three-year cost
reduction plan and developed new reporting and tracking methodologies for key business metrics.
• We implemented a corporate project quality office, documented the current state architecture, created a
baseline future state and made a number of organizational changes to optimize the technology and
operations areas.
• We enhanced our talent development and review processes, and retained high-performing employees at
a higher rate than lower performers.
• We resolved specified risk and control matters identified by internal audit and FHFA, and remediated
our material weakness in internal control over financial reporting relating to change management by
September 30, 2010.
• We conducted risk control self-assessments for all high risk and a majority of medium risk processes
and developed remediation plans for identified high exposure items.
The Compensation Committee concluded that the company had substantially met this goal. In making its
determination, the Committee took into account the company’s 2010 achievements described above. In
addition, while the Committee acknowledged the significant progress the company had made in
addressing risk and control issues in 2010, it concluded that the company only partially met its subgoal
relating to its risk and control environment, and that the company must continue to work toward
operational excellence and better manage its internal controls. For example, the company initially
produced information for Treasury’s June MHA report that contained an error.
•Goal 3: Our third 2010 performance goal was to build a stronger service and delivery model. The
Compensation Committee concluded that we met this goal for 2010 by successfully developing a three-
year operating plan to improve organizational efficiency and reduce costs.
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