Fannie Mae 2004 Annual Report Download - page 12

Although we operate our business through three separate business segments, there are important interrelation-
ships among the functions of these three segments. For example:
•Mortgage Acquisition. As noted above, our Single-Family and HCD business segments work with our
lender customers to securitize mortgage loans into Fannie Mae MBS and to facilitate the purchase of
mortgage loans for our mortgage portfolio. Accordingly, although the Single-Family and HCD businesses
principally manage the relationships with our lender customers, our Capital Markets group works closely
with Single-Family and HCD in making mortgage acquisition decisions. Our Capital Markets group works
directly with our lender customers on structured Fannie Mae MBS transactions.
•Portfolio Credit Risk Management. Our Single-Family and HCD business segments support our Capital
Markets group by assuming and managing the credit risk of borrowers defaulting on payments of principal
and interest on the mortgage loans held in our mortgage portfolio or underlying Fannie Mae MBS held in
our mortgage portfolio. Our Single-Family business also prices the credit risk of the single-family
mortgage loans purchased by our Capital Markets group for our mortgage portfolio.
•Securitization Activities. All three of our business segments engage in securitization activities. Our
Single-Family business issues our single-class, single-family Fannie Mae MBS. These securities are
principally created through lender swap transactions and constitute the substantial majority of our Fannie
Mae MBS issues. The Multifamily Group within our HCD business segment issues our single-class,
multifamily Fannie Mae MBS that are principally created through lender swap transactions. Our Capital
Markets group creates Fannie Mae MBS using mortgage loans that we hold in our mortgage portfolio and
also issues structured Fannie Mae MBS.
•Liquidity Support. The Capital Markets group supports the liquidity of single-family and multifamily
Fannie Mae MBS by holding Fannie Mae MBS in our mortgage portfolio. This support of our Fannie
Mae MBS helps to maintain the competitiveness of our Single-Family and HCD businesses, and increases
the value of our Fannie Mae MBS.
•Mission Support. All three of our business segments contribute to meeting the statutory housing goals
established by HUD. We meet our housing goals both by purchasing mortgage loans for our mortgage
portfolio and by securitizing mortgage loans into Fannie Mae MBS. Both our Single-Family and HCD
businesses securitize mortgages that contribute to our housing goals. In addition, our Capital Markets
group purchases mortgages for our mortgage portfolio that contribute to our housing goals.
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