Fannie Mae 2004 Annual Report Download - page 14

Fannie Mae MBS. In return, we receive a fee for providing that guaranty. Our guaranty supports the liquidity
of Fannie Mae MBS and makes it easier for lenders to sell these securities. When lenders receive Fannie Mae
MBS in exchange for mortgage loans, they may hold the Fannie Mae MBS for investment or sell the MBS in
the secondary mortgage market. This option allows lenders to manage their assets so that they continue to
have funds available to make new mortgage loans. In holding Fannie Mae MBS created from a pool of whole
loans, a lender has securities that are generally more liquid than whole loans, which provides the lender with
greater financial flexibility. The ability of lenders to sell Fannie Mae MBS quickly allows them to continue
making mortgage loans even under economic and capital markets conditions that might otherwise constrain
mortgage financing activities.
The following table provides a breakdown of our single-family mortgage credit book of business as of
December 31, 2004. Our single-family mortgage credit book of business refers to the sum of the unpaid
principal balance of: (1) the single-family mortgage loans we hold in our investment portfolio; (2) the Fannie
Mae MBS and non-Fannie Mae mortgage-related securities backed by single-family mortgage loans we hold
in our investment portfolio; (3) Fannie Mae MBS backed by single-family mortgage loans that are held by
third parties; and (4) credit enhancements that we provide on single-family mortgage assets. Our Single-Family
business manages the risk that borrowers will default in the payment of principal and interest due on the
single-family mortgage loans held in our investment portfolio or underlying Fannie Mae MBS (whether held
in our investment portfolio or held by third parties).
Single-Family Mortgage Credit Book of Business
Conventional
(1)
Government
(2)
Total
As of December 31, 2004
(Dollars in millions)
Mortgage portfolio:
(3)
Mortgage loans
(4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 345,575 $10,112 $ 355,687
Fannie Mae MBS
(4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341,768 1,239 343,007
Agency mortgage-related securities
(4)(5)
. . . . . . . . . . . . . . . . 37,422 4,273 41,695
Mortgage revenue bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,344 4,951 11,295
Other mortgage-related securities
(6)
. . . . . . . . . . . . . . . . . . . 108,082 669 108,751
Total mortgage portfolio . . . . . . . . . . . . . . . . . . . . . . . . . 839,191 21,244 860,435
Fannie Mae MBS held by third parties
(7)
. . . . . . . . . . . . . . . . . 1,319,066 32,337 1,351,403
Book of business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,158,257 53,581 2,211,838
Other
(8)
........................................ 346 — 346
Total single-family mortgage credit book of business . . . . . . . $2,158,603 $53,581 $2,212,184
(1)
Refers to mortgage loans and mortgage-related securities that are not guaranteed or insured by the U.S. government or
any of its agencies.
(2)
Refers to mortgage loans and mortgage-related securities guaranteed or insured by the U.S. government or one of its
agencies.
(3)
Mortgage portfolio data is reported based on unpaid principal balance. Our Single-Family business manages the credit
risk relating to the single-family mortgage loans and Fannie Mae MBS held in our portfolio that are backed by single-
family mortgage loans. Our Capital Markets group manages the institutional counterparty credit risk relating to the
agency mortgage-related securities, mortgage revenue bonds and other mortgage-related securities held in our portfolio.
(4)
Mortgage loan data includes mortgage-related securities that were consolidated and reported in our consolidated
balance sheet as loans.
(5)
Includes mortgage-related securities issued by Freddie Mac and Ginnie Mae.
(6)
Includes mortgage-related securities issued by entities other than Fannie Mae, Freddie Mac or Ginnie Mae.
(7)
Includes Fannie Mae MBS held by third-party investors. The principal balance of resecuritized Fannie Mae MBS is
included only once.
(8)
Includes additional single-family credit enhancements that we provide not otherwise reflected in the table.
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