Fannie Mae 2007 Annual Report Download - page 12

10
FANNIE MAE
Conclusion:
Lessons of the Crisis
It’s safe to say that 2007-2008 will
go down in housing and fi nancial
history for all the wrong reasons.
Millions of homeowners got stuck in
the wrong mortgage. Speculators and
home fl ippers infl ated home prices
beyond logic and reason. And loose
underwriting funded by investors
looking for an easy return enabled the
whole sorry game.
Two lessons of the past few years are
already clear:
• We still need “stretch” lending.
The subprime boom-and-bust was a
disaster for many homeowners and
investors. But the nation still needs
innovative, affordable — though
sustainable — mortgage credit for
working families, even those without
perfect or traditional credit histories.
The mortgage and housing industry’s
future, including Fannie Mae’s
future, will depend on giving people
a fair chance at owning a home.
• We need mortgage reforms.
It’s too complicated, cumbersome
and expensive to get a mortgage
loan. And, as we now know, it has
been far too easy for rogue lenders to
prey upon unsophisticated borrowers
intimidated by the mortgage process.
At the very least, mortgage terms,
risks and costs should be simplifi ed
and more clearly spelled out — and
predatory lenders cast out. It is a
key priority for Fannie Mae to work
with the industry to strengthen
the process.
In other words, we need to focus on
homeownership, not just home buying.
Both of these lessons speak to a
basic truth that is a core value of our
company: If it is good for borrowers
in the long term, it is good for Fannie
Mae in the long term. For 70 years,
this has guided our company — out
of the Great Depression, and through
multiple booms, busts and cycles as
housing became a pillar of the U.S.
economy. And for the last 40 years as a
shareholder-owned company, this core
value has been a key ingredient in our
ability to generate competitive returns
for our shareholders — and in our
ability to promote affordable housing
for hundreds of millions of Americans.
It is this core value that will help
Fannie Mae through another
challenging year. To bridge us through
it, we are conserving our capital,
aggressively controlling our credit
losses, responding to the demands of a
stressed market and working with our
partners to keep people in their homes.
And all the while, we are investing in
the business for the future.
On behalf of our 5,700 employees,
thank you for being invested in
Fannie Mae, for your patience as we
work through this period, and for your
belief in America’s housing.
Sincerely,
Daniel H. Mudd
If it is good for borrowers in the long
term, it is good for Fannie Mae in the
long term. For 70 years, this has guided
our company.