Fannie Mae 2004 Annual Report Download - page 19

The following table provides a breakdown of our multifamily mortgage credit book of business as of
December 31, 2004. Our multifamily mortgage credit book of business refers to the sum of the unpaid
principal balance of: (1) the multifamily mortgage loans we hold in our investment portfolio; (2) the Fannie
Mae MBS and non-Fannie Mae mortgage-related securities backed by multifamily mortgage loans we hold in
our investment portfolio; (3) Fannie Mae MBS backed by multifamily mortgage loans that are held by third
parties; and (4) credit enhancements that we provide on multifamily mortgage assets. Our HCD business
manages the risk that borrowers will default in the payment of principal and interest due on the multifamily
mortgage loans held in our investment portfolio or underlying Fannie Mae MBS (whether held in our
investment portfolio or held by third parties).
Multifamily Mortgage Credit Book of Business
Conventional
(1)
Government
(2)
Total
As of December 31, 2004
(Dollars in millions)
Mortgage portfolio:
(3)
Mortgage loans
(4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 43,396 $1,074 $ 44,470
Fannie Mae MBS
(4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505 892 1,397
Agency mortgage-related securities
(4)(5)
.................. — 68 68
Mortgage revenue bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,037 2,744 10,781
Other mortgage-related securities
(6)
..................... 12 46 58
Total mortgage portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,950 4,824 56,774
Fannie Mae MBS held by third parties
(7)
. . . . . . . . . . . . . . . . . . . 54,639 2,005 56,644
Book of business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106,589 6,829 113,418
Other
(8)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,111 368 14,479
Total multifamily mortgage credit book of business . . . . . . . . . . . $120,700 $7,197 $127,897
(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 HCD business manages the credit risk
relating to the multifamily mortgage loans and Fannie Mae MBS held in our portfolio that are backed by multifamily
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 investors other than Fannie Mae. The principal balance of resecuritized Fannie Mae
MBS is included only once.
(8)
Includes additional multifamily credit enhancements that we provide not otherwise reflected in the table.
Unlike single-family loans, most multifamily loans require that the borrower pay a prepayment premium if the
loan is paid before the maturity date. Additionally, some multifamily loans are subject to lock-out periods
during which the loan may not be prepaid. The prepayment premium can take a variety of forms, including
yield maintenance, defeasance or declining percentage. These prepayment provisions may provide incremental
levels of certainty and reinvestment cash flow protection to investors in multifamily loans and mortgage-
related securities, and may reduce the likelihood that a borrower will prepay a loan during a period of
declining interest rates.
Our Multifamily Group generally creates multifamily Fannie Mae MBS in the same manner as our Single-
Family business creates single-family Fannie Mae MBS. Mortgage lenders deliver multifamily mortgage loans
14