Fannie Mae 2009 Annual Report Download - page 145

December 31, 2009 and December 31, 2008, respectively. These commitments require us to advance funds to
third parties that enable them to repurchase tendered bonds or securities that are unable to be remarketed. Any
repurchased securities are pledged to us to secure funding until the securities are remarketed. We hold cash
and cash equivalents in our cash and other investments portfolio in excess of these commitments to advance
funds. Of the outstanding December 31, 2009, commitments, $870 million are associated with the temporary
credit and liquidity facilities program that Fannie Mae is participating in with the Treasury and Freddie Mac.
See “Certain Relationships and Related Transactions, and Director Independence—Transactions with 5%
Shareholders” for a description of the program. At December 31, 2009 there were no liquidity guarantee
advances outstanding; whereas at December 31, 2008 there were $8 million in liquidity advances outstanding.
Fannie Mae MBS Transactions and Other Financial Guarantees
Although we hold some Fannie Mae MBS in our mortgage portfolio, most outstanding Fannie Mae MBS are
held by third parties and therefore not reflected in our consolidated balance sheets. Table 39 presents the
amounts of both our on- and off-balance sheet Fannie Mae MBS and other guaranty obligations as of
December 31, 2009 and 2008.
Table 39: On- and Off-Balance Sheet MBS and Other Guaranty Arrangements
2009 2008
(1)
As of December 31,
(Dollars in millions)
Fannie Mae MBS and other guarantees outstanding
(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,828,513 $2,611,523
Less: Consolidated Fannie Mae MBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (147,855) (65,306)
Less: Fannie Mae MBS held in portfolio
(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (220,245) (228,949)
Fannie Mae MBS held by third parties and other guarantees . . . . . . . . . . . . . . . . . . . . . . . . . $2,460,413 $2,317,268
(1)
Certain prior period amounts have been reclassified to conform to the current period presentation.
(2)
Includes unpaid principal balance of other guarantees of $27.6 billion as of December 31, 2009 and $27.8 billion as of
December 31, 2008.
(3)
Amounts represent unpaid principal balance and are recorded in “Investments in Securities” in our consolidated
balance sheets.
Our maximum potential exposure to credit losses relating to our outstanding and unconsolidated Fannie Mae
MBS held by third parties and other financial guarantees is primarily represented by the unpaid principal
balance of the mortgage loans underlying outstanding and unconsolidated Fannie Mae MBS held by third
parties and other financial guarantees of $2.5 trillion as of December 31, 2009 and $2.3 trillion as of
December 31, 2008. Our maximum potential exposure to credit losses is significantly higher than the guaranty
obligations of $14.0 billion as of December 31, 2009 and $12.1 billion as of December 31, 2008, and reserve
for guaranty losses of $54.4 billion as of December 31, 2009 and $21.8 billion as of December 31, 2008
reflected in our consolidated balance sheets.
For information on the mortgage loans underlying both our on- and off-balance sheet Fannie Mae MBS, as
well as whole mortgage loans that we own, see “Risk Management—Credit Risk Management—Single Family
Mortgage Credit Risk Management.” For additional information on our securitization transactions, see
“Note 2, Consolidations,” “Note 6, Portfolio Securitizations” and “Note 7, Financial Guarantees and Master
Servicing.”
Elimination of QSPEs and Changes in the Consolidation Model for Variable Interest Entities
Effective January 1, 2010, we prospectively adopted two new accounting standards that eliminated the concept
of QSPEs and amended the accounting for transfers of financial assets and the consolidation model for
variable interest entities (“VIEs”). Under these new accounting standards, the consolidation exemption for
QSPEs was removed. All formerly designated QSPEs must be evaluated for consolidation in accordance with
140