Fannie Mae 2007 Annual Report Download - page 57

The occurrence of a major natural or other disaster in the United States could increase our delinquency
rates and credit losses or disrupt our business operations and lead to financial losses.
The occurrence of a major natural disaster, terrorist attack or health epidemic in the United States could
increase our delinquency rates and credit losses in the affected region or regions, which could have a material
adverse effect on our earnings, liquidity and financial condition. For example, we experienced an increase in
our delinquency rates and credit losses in 2005 as a result of Hurricane Katrina.
The contingency plans and facilities that we have in place may be insufficient to prevent a disruption in the
infrastructure that supports our business and the communities in which we are located from having an adverse
effect on our ability to conduct business. Substantially all of our senior management and investment personnel
work out of our offices in the Washington, DC metropolitan area. If a disruption occurs and our senior
management or other employees are unable to occupy our offices, communicate with other personnel or travel
to other locations, our ability to service and interact with each other and with our customers may suffer, and
we may not be successful in implementing contingency plans that depend on communication or travel.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
We own our principal office, which is located at 3900 Wisconsin Avenue, NW, Washington, DC, as well as
additional Washington, DC facilities at 3939 Wisconsin Avenue, NW and 4250 Connecticut Avenue, NW. We
also own two office facilities in Herndon, Virginia, as well as two additional facilities located in Reston,
Virginia, and Urbana, Maryland. These owned facilities contain a total of approximately 1,459,000 square feet
of space. We lease the land underlying the 4250 Connecticut Avenue building pursuant to a ground lease that
automatically renews on July 1, 2029 for an additional 49 years unless we elect to terminate the lease by
providing notice to the landlord of our decision to terminate at least one year prior to the automatic renewal
date. In addition, we lease approximately 428,000 square feet of office space at 4000 Wisconsin Avenue, NW,
which is adjacent to our principal office. The present lease term for 4000 Wisconsin Avenue expires in April
2013. We have one additional 5-year renewal option remaining under the original lease. We also lease an
additional approximately 471,000 square feet of office space at seven locations in Washington, DC, suburban
Virginia and Maryland. We maintain approximately 454,000 square feet of office space in leased premises in
Pasadena, California; Atlanta, Georgia; Chicago, Illinois; Philadelphia, Pennsylvania; and Dallas, Texas.
Item 3. Legal Proceedings
This item describes our material legal proceedings. In addition to the matters specifically described in this
item, we are involved in a number of legal and regulatory proceedings that arise in the ordinary course of
business that do not have a material impact on our business. Litigation claims and proceedings of all types are
subject to many factors that generally cannot be predicted accurately.
We record reserves for claims and lawsuits when they are probable and reasonably estimable. We presently
cannot determine the ultimate resolution of the matters described below. For matters where the likelihood or
extent of a loss is not probable or cannot be reasonably estimated, we have not recognized in our consolidated
financial statements the potential liability that may result from these matters. If one or more of these matters
is determined against us, it could have a material adverse effect on our earnings, liquidity and financial
condition.
Securities Class Action Lawsuits
In re Fannie Mae Securities Litigation
Beginning on September 23, 2004, 13 separate complaints were filed by holders of our securities against us, as
well as certain of our former officers, in three federal district courts. All of the cases were consolidated and/or
transferred to the U.S. District Court for the District of Columbia. The court entered an order naming the Ohio
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