Fannie Mae 2010 Annual Report Download - page 28

interest in the assets of the related MBS trust and entitles the related holder to a specific portion of cash flows.
Terms to maturity of some multi-class Fannie Mae MBS, particularly REMIC classes, may match or be
shorter than the maturity of the underlying mortgage loans and/or mortgage-related securities. After these
classes expire, cash flows received on the underlying mortgage assets are allocated to the remaining classes in
accordance with the terms of the securities’ structures. As a result, each of the classes in a multi-class MBS
may have a different coupon rate, average life, repayment sensitivity or final maturity. Structured Fannie Mae
MBS are either multi-class MBS or single-class MBS that are typically resecuritizations of other single-
class Fannie Mae MBS. In a resecuritization, pools of MBS are collected and securitized.
BUSINESS SEGMENTS
We have three business segments for management reporting purposes: Single-Family Credit Guaranty,
Multifamily, and Capital Markets. We refer to our business groups that run these segments as our
“Single-Family business,” our “Multifamily business” and our “Capital Markets group.” These groups engage
in complementary business activities in pursuing our mission of providing liquidity, stability and affordability
to the U.S. housing market. These activities are summarized in the table below and described in more detail
following this table. We also summarize in the table below the key sources of revenue for each of our
segments and the primary expenses.
Business
Segment Primary Business Activities Primary Revenues Primary Expenses
Single-Family
Credit
Guaranty, or
Single-Family
•Mortgage securitizations:
Works with our lender
customers to securitize
single-family mortgage loans
delivered to us by lenders
into Fannie Mae MBS, which
we refer to as “lender swap”
transactions
•Mortgage acquisitions:
Works with our Capital
Markets group to facilitate
the purchase of single-family
mortgage loans for our
mortgage portfolio
•Credit risk management:
Prices and manages the
credit risk on loans in our
single-family guaranty book
of business
•Credit loss management:
Works to prevent
foreclosures and reduce costs
of defaulted loans through
foreclosure alternatives,
through management of REO
we acquire upon foreclosure
or through a deed-in-lieu of
foreclosure, and through
lender repurchases
•Guaranty fees: Compensation
for assuming and managing
the credit risk on our single-
family guaranty book of
business
•Fee and other income:
Compensation received for
providing lender services
•Credit-related expenses.
Consists of provision for
single-family loan losses,
provision for single-family
guaranty losses and
foreclosed property expense
on loans underlying our
single-family guaranty book
of business
•Administrative expenses:
Consists of salaries and
benefits, occupancy costs,
professional services, and
other expenses associated
with the Single-Family
business operations
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