Fannie Mae 2005 Annual Report Download - page 6

PART I
Item 1. Business
EXPLANATORY NOTE ABOUT THIS REPORT
We filed our Annual Report on Form 10-K for the year ended December 31, 2004 (“2004 Form 10-K”) on
December 6, 2006, which represented a significant step in our efforts to return to timely financial reporting.
Our 2004 Form 10-K contained our consolidated financial statements and related notes for the year ended
December 31, 2004, as well as a restatement of our previously issued consolidated financial statements and
related notes for the years ended December 31, 2003 and 2002, and for the quarters ended June 30, 2004 and
March 31, 2004. The filing of this Annual Report on Form 10-K for the year ended December 31, 2005
(“2005 Form 10-K”) has been delayed significantly as a result of the substantial time and effort devoted to
ongoing controls remediation and systems reengineering and development necessary to complete the restate-
ment of our financial results for 2003 and 2002. Because of the delay in our periodic reporting and the
changes that have occurred in our business since December 31, 2005, where appropriate, the information
contained in this report reflects current information about our business. All amounts in this Annual Report on
Form 10-K affected by the restatement adjustments reported in our 2004 Form 10-K reflect such amounts as
restated.
We have not filed our Annual Report on Form 10-K for the year ended December 31, 2006 (“2006
Form 10-K”) or quarterly reports on Form 10-Q for 2005 or 2006. In lieu of filing quarterly reports for 2005,
we have included in this report substantially all of the information required to be included in quarterly reports.
We previously announced that we expect to file our 2006 Form 10-K by the end of 2007. We are assessing
how the timing of the filing of this 2005 Form 10-K will impact the timing of our filing the 2006 Form 10-K.
We have made significant progress in our efforts to remediate operational weaknesses that have prevented us
from reporting our financial results on a timely basis. We intend to continue to provide periodic updates
regarding our progress toward timely financial reporting.
OVERVIEW
Fannie Mae’s activities enhance the liquidity and stability of the mortgage market and contribute to making
housing in the United States more affordable and more available to low-, moderate- and middle-income
Americans. These activities include providing funds to mortgage lenders through our purchases of mortgage
assets, and issuing and guaranteeing mortgage-related securities that facilitate the flow of additional funds into
the mortgage market. We also make other investments that increase the supply of affordable housing.
We are a government-sponsored enterprise (“GSE”) chartered by the U.S. Congress under the name “Federal
National Mortgage Association” and are aligned with national policies to support expanded access to housing
and increased opportunities for homeownership. We are subject to government oversight and regulation. Our
regulators include the Office of Federal Housing Enterprise Oversight (“OFHEO”), the Department of Housing
and Urban Development (“HUD”), the Securities and Exchange Commission (“SEC”) and the Department of
the Treasury.
While we are a Congressionally-chartered enterprise, the U.S. government does not guarantee, directly or
indirectly, our securities or other obligations. We are a stockholder-owned corporation, and our business is
self-sustaining and funded exclusively with private capital. Our common stock is listed on the New York Stock
Exchange, or NYSE, and traded under the symbol “FNM.” Our debt securities are actively traded in the
over-the-counter market.
RECENT SIGNIFICANT EVENTS
OFHEO Consent Order. In 2003, OFHEO commenced a special examination of our accounting policies and
practices, internal controls, financial reporting, corporate governance, and other matters. On May 23, 2006,
concurrently with OFHEO’s release of its final report of the special examination, we agreed to OFHEO’s
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