Fannie Mae 2003 Annual Report Download

Download and view the complete annual report

Please find the complete 2003 Fannie Mae annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 35

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35

“I feel great about Fannie Mae because I’m proud
of our mission and what we do. I’m proud of how
we do it, and I’m proud of the results it brings.”
FANNIE MAE 2003 ANNUAL REPORT
KATRINA JONES
Fannie Mae Employee

Table of contents

  • Page 1
    F ANNIE M AE 2003 A NNUAL R EPORT "I feel great about Fannie Mae because I'm proud of our mission and what we do. I'm proud of how we do it, and I'm proud of the results it brings." K ATRINA J ONES Fannie Mae Employee

  • Page 2
    ... housing for all Americans. Because having a safe place to call home strengthens families, communities, and our nation as a whole. Table of Contents 1 Financial Highlights 2 Letter to Shareholders 12 Shareholder Value 15 Because of Fannie Mae's Mission: "Our commitment is to help make the dream...

  • Page 3
    ... of the option and any acceleration of expense related to options extinguished prior to exercise. See 2003 Form 10-K "Item 6-Selected Financial Data" and "Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations-Core Business Earnings and Business Segment Results...

  • Page 4
    ... and mortgage markets in U.S. history. Housing sales hit record levels; mortgage interest rates fell to 45-year lows, fueling a flurry of refinancing; and mortgage originations hit a stunning $3.7 trillion, more than a 40 percent increase from 2002. Thanks in great part to Fannie Mae's technology...

  • Page 5
    ...Fannie Mae and our mission Given Fannie Mae's unique role in the U.S. housing sector, the mortgage industry, the financial markets, and in the plans of American home buyers, it is important for us to return from time to time to what I call the First Principles of Fannie Mae: to describe to the world...

  • Page 6
    ... work of our employees and the capital of investors like you, we do an outstanding job of accomplishing that mission, year in and year out. Our people are mission-driven, diverse, and values oriented Fannie Mae's mission of expanding homeownership and affordable housing to all Americans, especially...

  • Page 7
    ...: a private company with a public mission of expanding opportunities for homeownership and affordable housing - one that takes our mission and high standards of integrity very seriously. Which leads to the second question to be addressed: What does Fannie Mae do? T HOMAS E. D ONILON Executive Vice...

  • Page 8
    ... rate changes so that we can fund long-term, fixed-rate mortgages that give the consumer the right to refinance at any time. Banks, on the other hand, still typically prefer to finance short-term, floating-rate mortgages, which is why these mortgages make up over half of the jumbo market (for loans...

  • Page 9
    ... financial markets, it can go dramatically higher. Consumers recognize the benefits we provide and act accordingly, as demonstrated by this graph: 2003 Conforming Loan Limit - $322,700 Source: Federal Housing Finance Board, Monthly Interest Rate Survey This illustrates that mortgage originations...

  • Page 10
    ...team investigating the creation of a market for long-term, fixed-rate mortgages. At the same time, European mortgage lenders have proposed that the European Union create a new European Mortgage Finance Agency. A senior official of Japan's Government Housing Loan Corporation has stated his desire for...

  • Page 11
    ... to growth also means that we respond to market conditions. When mortgages are attractively priced, we speed up our portfolio acquisitions, either buying whole loans or MBS. When the market does not offer the return we seek - such as when high investor demand drives up mortgage prices - we may slow...

  • Page 12
    ... our American Communities Fund, and through targeted investments like Low-Income Housing Tax Credits that help finance affordable rental housing. It is because of initiatives like our Trillion Dollar Commitment and our American Dream Commitment that we have exceeded our HUD affordable housing goals...

  • Page 13
    ... it is good for families, communities, and the nation. Second, Fannie Mae helps create a market-based, consumeroriented housing finance system that is designed to deliver the consumer's favorite mortgage option at an affordable price. F RANKLIN D. R AINES Chairman and Chief Executive Officer FA...

  • Page 14
    ... - gross mortgage portfolio plus outstanding mortgage-backed securities we guarantee that are held by other investors. During the past decade, our book of business has grown from $661 billion to nearly $2.2 trillion - representing a compound annual growth rate of approximately 13 percent. In 2003...

  • Page 15
    ...in 2003 totaled $123 million, nearly one-half the total 10 years earlier thanks to the strength of the housing market, our efficient loss mitigation process, and extensive use of credit enhancements to share credit risk. As a percentage of the average mortgage credit book of business, credit-related...

  • Page 16
    ... on its common stock by 27.3 percent, from $1.32 in 2002 to $1.68 in 2003. This marks the 19th consecutive year in which we have increased our dividend and reflects the Board of Directors' confidence in the strength and sustainability of Fannie Mae's business performance. Fannie Mae's Board of...

  • Page 17
    Because of Fannie Mae's Mission. Interviews Highlighting Our Vital Role in Housing and Homeownership 0 FA N N I E M A E 2 0 0 3 A N N UA L R E P O RT 15

  • Page 18
    "Everybody wins if we can increase minority homeownership, so together we're taking on the challenge of getting more people into homes." A NGELO M OZILO Chairman and CEO C OUNTRYWIDE F INANCIAL C ORPORATION 16

  • Page 19
    ...invaluable in helping to reach this goal. Our unifying mission is to close the gap in minority homeownership." As Mozilo notes, "You can't quantify the emotional impact of homeownership in people's lives." So as long as there is a gap in minority and non-minority homeownership rates, Fannie Mae and...

  • Page 20
    "Fannie Mae is critically important to us and to all kinds of organizations that create affordable housing." B ART H ARVEY Chairman and CEO T HE E NTERPRISE F OUNDATION 18

  • Page 21
    ... our first partnership with Fannie Mae in 1987, together we have provided over a billion dollars in affordable rental housing to help reach those households with very low income levels. It's a wonderful achievement - a real public/private partnership that has evolved over time, served the neediest...

  • Page 22
    "Without Fannie Mae, we would be on the outside looking in." G REG S T. E TIENNE Chief Operating Officer L IBERTY B ANK AND T RUST 20

  • Page 23
    ... capacity with fewer resources. Before Fannie Mae, using manual underwriting, we would only be able to approve 60 percent of mortgage loan applications - that was it. Today, with the aid of Fannie Mae's Desktop Underwriter, we are able to approve 80 percent of applications. DU also helps us provide...

  • Page 24
    "The American Dream is about owning a home. Fannie Mae and our local bank helped make it possible for us." H ARVEY AND B EVERLY L EWIS Homeowners 22

  • Page 25
    ...the home-buying process. We didn't think we'd ever own a home. We didn't have good credit, but it wasn't real bad. Through our lender, we got a Fannie Mae product that was perfect for us. We made a low down payment and, after two years of making payments on time, we were told our interest rate would...

  • Page 26
    "I look forward to coming to work every day because I know we make a difference." E DNA F IGUEROA Fannie Mae Employee 24

  • Page 27
    ...get into a home. Without Fannie Mae, a lot of people would not have access to homeownership. For a lot of immigrants, it wouldn't feel like complete citizenship without owning a home. It doesn't stop there. There are so many benefits associated with homeownership and that's why we work very hard in...

  • Page 28
    "What I do counts in helping people to get into homes of their own." B ILL C RAGG Fannie Mae Employee 26

  • Page 29
    ... essential to us. Our technology has helped to streamline the entire mortgage process. What used to take weeks takes minutes now. This saves our lenders money that then lowers the cost for the borrower. One of the goals of our expanded American Dream Commitment is to help lenders reduce the cost of...

  • Page 30
    ... Vice President Housing and Community Development A D OLFO M ARZOL Executive Vice President Finance and Credit P ETER S. N ICULESCU Executive Vice President Mortgage Portfolio Business J ULIE S T. J OHN Executive Vice President and Chief Technology Officer M ICHAEL J. W ILLIAMS President Fannie Mae...

  • Page 31
    ... Chief Executive Officer HomeSide International Inc. A mortgage banking company Jacksonville, Florida L ESLIE R AHL President and Founder Capital Market Risk Advisors, Inc. A financial advisory firm New York, New York TAYLOR C. S EGUE , III* Howard and Howard A law firm Bloomfield Hills, Michigan...

  • Page 32
    ... adjusted to reflect the benefits of tax-exempt income and investment tax credits based on applicable federal income tax rates and the amortization of purchased options expense. Credit loss ratio: The ratio of credit-related losses to the average mortgage credit book of business. Credit-related...

  • Page 33
    ... Washington Partnership Office (206) 839-1541 W ISCONSIN Wisconsin Partnership Office (414) 274-3150 W YOMING Wyoming Partnership Office (307) 432-5501 Regional Locations Atlanta, Georgia (404) 380-6000 Chicago, Illinois (312) 368-6200 Philadelphia, Pennsylvania (215) 575-1400 Dallas, Texas...

  • Page 34
    .... Fannie Mae will provide, without charge, copies of its most recent Annual Report on Form 10-K upon request. Call 1-800-FNM-2-YOU (1-800-366-2968) for a hard copy of investor-related material. Common Stock Performance (New York Stock Exchange Composite Price) Quarterly stock performance data for...

  • Page 35
    3900 Wisconsin Avenue, NW Washington, DC 20016-2892 CA297U 03/04 ©2004, FANNIE M AE A LL RIGHTS RESERVED This annual report was printed in the U.S.A. on recycled paper and is recyclable. Design: Schum & Associates, www.schum.com Photography: Adam Auel, Jock McDonald, Michael Grasso