Fannie Mae 2008 Annual Report Download - page 384

contract compliance. We generally require servicers to submit periodic property operating information and
condition reviews so that we may monitor the performance of individual loans. We use this information to
evaluate the credit quality of our portfolio, identify potential problem loans and initiate appropriate loss
mitigation activities.
The following table displays the regional geographic concentration of single-family and multifamily loans in
our mortgage portfolio and those loans held or securitized in Fannie Mae MBS as of December 31, 2008 and
2007.
2008 2007 2008 2007
As of December 31,
Single-family
Conventional Mortgage
Credit Book
(2)
As of December 31,
Multifamily Mortgage
Credit Book
(3)
Geographic Concentration
(1)
Midwest................................. 16% 17% 9% 9%
Northeast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 19 23 24
Southeast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 25 19 18
Southwest ............................... 16 16 15 14
West ................................... 24 23 34 35
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% 100% 100% 100%
(1)
Midwest includes IL, IN, IA, MI, MN, NE, ND, OH, SD and WI. Northeast includes CT, DE, ME, MA, NH, NJ, NY,
PA, PR, RI, VT and VI. Southeast includes AL, DC, FL, GA, KY, MD, NC, MS, SC, TN, VA and WV. Southwest
includes AZ, AR, CO, KS, LA, MO, NM, OK, TX and UT. West includes AK, CA, GU, HI, ID, MT, NV, OR, WA
and WY.
(2)
Includes the portion of our conventional single-family mortgage credit book for which we have more detailed loan-
level information, which constituted approximately 96% and 95% of our total conventional single-family mortgage
credit book of business as of December 31, 2008 and 2007, respectively. Excludes non-Fannie Mae mortgage-related
securities backed by single-family mortgage loans and credit enhancements that we provide on single-family mortgage
assets.
(3)
Includes mortgage loans in our portfolio, credit enhancements and outstanding Fannie Mae MBS (excluding Fannie
Mae MBS backed by non-Fannie Mae mortgage-related securities) where we have more detailed loan-level
information, which constituted approximately 82% and 80% of our total multifamily mortgage credit book of business
as of December 31, 2008 and 2007, respectively.
Non-traditional Loans; Alt-A and Subprime Loans and Securities
We own and guarantee loans with non-traditional features, such as interest-only loans and negative-amortizing
loans. We also own and guarantee Alt-A and subprime mortgage loans and mortgage-related securities. An
Alt-A mortgage loan generally refers to a mortgage loan that can be underwritten with reduced or alternative
documentation than that required for a full documentation mortgage loan but may also include other
alternative product features. As a result, Alt-A mortgage loans generally have a higher risk of default than
non-Alt-A mortgage loans. In reporting our Alt-A exposure, we have classified mortgage loans as Alt-A if the
lenders that deliver the mortgage loans to us have classified the loans as Alt-A based on documentation or
other product features. We have classified private-label mortgage-related securities held in our investment
portfolio as Alt-A if the securities were labeled as such when issued. A subprime mortgage loan generally
refers to a mortgage loan made to a borrower with a weaker credit profile than that of a prime borrower. As a
result of the weaker credit profile, subprime borrowers have a higher likelihood of default than prime
borrowers. Subprime mortgage loans are typically originated by lenders specializing in this type of business or
by subprime divisions of large lenders, using processes unique to subprime loans. In reporting our subprime
F-106
FANNIE MAE
(In conservatorship)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)