Fannie Mae 2009 Annual Report Download - page 159

purchase of newly originated Alt-A loans effective January 1, 2009, we expect our acquisitions of Alt-A
mortgage loans to continue to be minimal in future periods and the percentage of the book of business
attributable to Alt-A to decrease over time. We currently are not acquiring mortgages that are classified as
subprime. We apply these classification criteria in order to determine our Alt-A and subprime loan exposures;
however, we have other loans with some features that are similar to Alt-A and subprime loans that we have
not classified as Alt-A or subprime because they do not meet our classification criteria. The unpaid principal
balance of Alt-A and subprime loans included in our single-family guaranty book of business of $255.7 billion
as of December 31, 2009, represented approximately 9% of our conventional single-family guaranty book of
business and 82% of our total exposure to Alt-A and subprime loans and mortgage-related securities of
$312.4 billion as of December 31, 2009. See “Note 18, Concentrations of Credit Risk” for additional
information on our total exposure to Alt-A and subprime loans and mortgage-related securities.
We also provide information on our jumbo-conforming, high-balance loans and reverse mortgages. The
outstanding unpaid principal balance of our jumbo-conforming and high-balance loans was $66.6 billion, or
2.4% of our conventional single-family guaranty book of business, as of December 31, 2009 and $19.7 billion,
or 0.7% of our conventional single-family guaranty book of business, as of December 31, 2008. Jumbo-
conforming and high-balance loans refer to high-balance loans we acquired pursuant to the Economic
Stimulus Act of 2008, the 2008 Reform Act and the American Recovery and Reinvestment Act of 2009,
which increased our conforming loan limits in certain high-cost areas above our standard conforming loan
limit. The standard conforming loan limit for a one-unit property was $417,000 in 2009 and 2008. See
“Business—Our Charter and Regulation of Our Activities—Charter Act—Loan Standards” for additional
information on our loan limits.
The outstanding unpaid principal balance of reverse mortgages included in our mortgage portfolio was
$50.2 billion as of December 31, 2009 and $41.6 billion as of December 31, 2008. The majority of these loans
are Home Equity Conversion Mortgages, a type of reverse mortgage product that has been in existence since
1989 and accounts for approximately 90% of the total market share of reverse mortgages. Our market share of
new reverse mortgage acquisitions was approximately 90% in 2008 and 50% in 2009. The decrease in our
market share was a result of the changes in our pricing strategy and market conditions and also resulted in our
market share of acquisitions in the fourth quarter to fall below 10%. Because Home Equity Conversion
Mortgages are insured by the federal government through the FHA, we believe that we have limited exposure
to losses on these loans, although home price declines and a weak housing market have also affected the
performance of this book.
Problem Loan Management and Foreclosure Prevention
Our problem loan management strategies are focused on keeping borrowers in their homes to minimize
foreclosures, which advances our public mission and may also help in reducing our long-term credit losses. In
the following section, we present statistics on our problem loans, describe specific efforts undertaken to
manage these loans and prevent foreclosures and provide metrics regarding the performance of our loan
workout activities.
We generally define single-family problem loans as loans that have been identified as being at imminent risk
of payment default; early stage delinquent loans that are either 30 days or 60 days past due; and seriously
delinquent loans, which are loans that are three or more monthly payments past due or in the foreclosure
process. Unless otherwise noted, single-family delinquency data is calculated based on number of loans. We
include conventional single-family loans that we own and that back Fannie Mae MBS in the calculation of the
single-family delinquency rate. Percentage of book calculations are based on the unpaid principal balance of
loans for each category divided by the unpaid principal balance of our total single-family guaranty book of
business for which we have detailed loan level information.
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