Fannie Mae 2004 Annual Report Download - page 39

• our expectation that we will experience high levels of period to period volatility in our financial results as
part of our normal business activities, primarily due to changes in market conditions that result in periodic
fluctuations in the estimated fair value of our derivatives;
• our expectation of a reduction in our net interest income and net interest yield in 2005 and 2006, due to
the decrease in the volume of our interest-earning assets as well as in the spread between the average
yield on these assets and our borrowing costs since year-end 2004;
• our expectation that unrealized gains and losses on trading securities will fluctuate each period with
changes in volumes, interest rates and market prices;
• our expectation that tax credits and net operating losses resulting from our investments in LIHTC
partnerships will grow in the future, which is likely to reduce our effective tax rate, and that it is more
likely than not that the results of future operations will generate sufficient taxable income to realize the
entire tax benefit;
• our belief that the guaranty fee income generated from future business activity will largely replace any
guaranty fee income lost as a result of mortgage prepayments;
• our expectation that loans that permit a borrower to defer principal or interest payments, such as negative-
amortizing and interest-only loans, will default more often than traditional mortgage loans;
• our belief that our short-term and long-term funding needs and uses of cash in 2007 will remain generally
consistent with current needs and uses, and that our sources of liquidity will remain adequate to meet
both our short-term and long-term funding needs in 2007;
• our expectation that, over the long term, our funding needs and sources of liquidity will remain relatively
consistent with current needs and sources;
• our intent to consider an increase in our issuance of debt in future years, if we decide to increase our
purchase of mortgage assets following the modification or expiration of the current limitation on the size
of our mortgage portfolio;
• our expectation that the aggregate estimated fair value of our derivatives will decline and result in
derivative losses if long-term interest rates decline;
• our expectation that the outcome of the current FASB assessment of what activities a QSPE may perform
might affect the entities we consolidate in future periods;
• our estimate that we will complete testing of most of our newly implemented internal controls and
remediate most of our remaining material weaknesses in connection with the filing of our Annual Report
on Form 10-K for the year ended December 31, 2006, which we will not file on a timely basis;
• our expectation that the continued downturn in the manufactured housing sector will result in the
recognition of additional impairment on our investments in manufactured housing securities;
• our expectation that there will not be any change in our ability to borrow funds through the issuance of
debt securities in the capital markets in the foreseeable future;
• our expectation that our internal control environment will continue to be modified and enhanced in order
to enable us to file periodic reports with the SEC on a current basis in the future;
• our intention to continue to make significant adjustments to our mortgage loan sourcing and purchase
strategies in an effort to meet HUD’s increased housing goals and subgoals;
• our expectation that the Compensation Committee and the Board will review the performance shares
program and determine the appropriate approach for settling our obligations with respect to the existing
unpaid performance share cycles;
• our intent that, in the event that we were required to make payments under Fannie Mae MBS guaranties,
we would pursue recovery of these payments by exercising our rights to the collateral backing the
underlying loans or through available credit enhancements (which includes all recourse with third parties
and mortgage insurance);
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