Fannie Mae 2008 Annual Report Download - page 9

Management of Our Business
Business Objectives and Strategy
FHFA, in its role as conservator, has overall management authority over our business but has delegated
specified oversight authorities to our Board of Directors. The conservator also has delegated authority to our
management to conduct our day-to-day operations. The Board of Directors and management are in
consultation with the conservator in establishing the strategic direction for the company, and the conservator
has approved the company’s current business objectives and strategy.
We face a variety of different, and potentially conflicting, objectives, including:
• providing liquidity, stability and affordability in the mortgage market;
• immediately providing additional assistance to this market and to the struggling housing market;
• limiting the amount of the investment Treasury must make under the senior preferred stock purchase
agreement in order to eliminate a net worth deficit;
• returning to long-term profitability; and
• protecting the interests of the taxpayers.
These objectives create conflicts in strategic and day-to-day decision-making that could lead to less than
optimal outcomes for one or more, or possibly all, of these objectives. For example, limiting the amount of
funds Treasury must invest in us pursuant to the senior preferred stock purchase agreement in order to
eliminate a net worth deficit could require us to constrain some of our business activities, including activities
that provide liquidity, stability and affordability to the mortgage market. Conversely, to the extent we increase
our efforts, or undertake new activities, to assist the mortgage market, our financial results are likely to suffer,
and we may be less effective in limiting Treasury’s future investments in us under the senior preferred stock
purchase agreement. We regularly consult with and receive direction from our conservator on how to balance
these objectives.
Currently, we are primarily focusing on:
• providing liquidity, stability and affordability in the mortgage market; and
• immediately providing additional assistance to this market and to the struggling housing market.
More specifically, in pursuit of these objectives, we have concentrated our efforts on keeping people in their
homes and preventing foreclosures. In addition, we have remained active in the secondary mortgage market
through our guaranty business. The essence of this strategy is to build liquidity and affordability in the
mortgage market, while efficiently creating and implementing successful foreclosure prevention approaches.
Currently, one of the principal ways in which we are focusing on these objectives is through our participation
in HASP, which we describe in more detail below. Focusing on these objectives is likely to contribute to
further deterioration in both our results of operations and our net worth, which in turn would both increase the
amount that Treasury will be required to invest in us under the senior preferred stock purchase agreement and
inhibit our ability to return to long-term profitability. We therefore consult regularly with our conservator on
how to balance these objectives against potentially competing considerations, such as limiting the amount of
Treasury’s investment in us and returning to long-term profitability.
Homeowner Affordability and Stability Plan
On February 18, 2009, the Obama Administration announced the Homeowner Affordability and Stability Plan.
HASP includes several different elements that impact and involve us:
•Loan Modification Program. Under HASP, we will offer to financially struggling homeowners loan
modifications that reduce their monthly principal and interest payments on their mortgages. This program
will be conducted in accordance with HASP requirements for borrower eligibility. The program seeks to
provide a uniform, consistent regime that servicers would use in modifying loans to prevent foreclosures.
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