Fannie Mae 2009 Annual Report Download - page 243

Treasury Home Affordable Modification Program
On February 18, 2009, the Obama Administration announced its Homeowner Affordability and Stability Plan,
a plan to provide stability and affordability to the U.S. housing market. Pursuant to this plan, in March 2009,
the Administration announced the details of its Making Home Affordable Program, a program intended to
provide assistance to homeowners and prevent foreclosures. One of the primary initiatives under the Making
Home Affordable Program is the Home Affordable Modification Program, or HAMP, which is aimed at
helping borrowers whose loan is either currently delinquent or at imminent risk of default by modifying their
mortgage loan to make their monthly payments more affordable. In addition to our participation in the
Administration’s initiatives under the Making Home Affordable Program, Treasury engaged us to serve as
program administrator for loans modified under HAMP pursuant to the financial agency agreement between
Treasury and us, dated February 18, 2009. See “Business—Making Home Affordable Program—Our Role as
Program Administrator of HAMP” for a description of our principal activities as HAMP program
administrator.
Under our arrangement with Treasury, Treasury has agreed to compensate us for a significant portion of the
work we have performed in our role as HAMP program administrator. In December 2009, Treasury
established a budget for services provided by us in connection with HAMP that contemplates that, in
U.S. government fiscal years 2009, 2010 and 2011, we will receive an aggregate of approximately
$81.3 million from Treasury for our work as HAMP program administrator, as well as receive from Treasury
an additional amount of approximately $70.2 million to be passed through to third-party vendors engaged by
us for HAMP. These amounts are based on current workload estimates and program scope relating to HAMP
and will be updated to reflect any changes in policy, workload and program scope. As of February 26, 2010,
we have not billed Treasury and have not received compensation for the work we have performed in our role
as HAMP program administrator.
Treasury Housing Finance Agency Initiative
On October 19, 2009, we entered into a memorandum of understanding with Treasury, FHFA and Freddie Mac
that established terms under which we, Freddie Mac and Treasury would provide assistance to state and local
housing finance agencies (“HFAs”) so that the HFAs could continue to meet their mission of providing
affordable financing for both single-family and multifamily housing. Pursuant to this HFA initiative, we,
Freddie Mac and Treasury are providing assistance to the HFAs through two primary programs: a temporary
credit and liquidity facilities (“TCLF”) program, which is intended to improve the HFAs’ access to liquidity
for outstanding HFA bonds, and a new issue bond (“NIB”) program, which is intended to support new lending
by the HFAs. We entered into various agreements in November and December 2009 to implement these HFA
assistance programs, including several to which Treasury is a party. Pursuant to the TCLF program, Treasury
has purchased participation interests in temporary credit and liquidity facilities provided by us and Freddie
Mac to the HFAs, which facilities create a credit and liquidity backstop for the HFAs. Pursuant to the NIB
program, Treasury has purchased new securities issued by us and Freddie Mac backed by new housing bonds
issued by the HFAs.
The total amount established by Treasury for the TCLF program and the NIB program was $23.4 billion: an
aggregate of $8.2 billion for the TCLF program (of which $7.7 billion consists of principal and approximately
$500 million consists of accrued interest) and an aggregate of $15.2 billion for the NIB program (of which
$12.4 billion related to single-family bonds and $2.8 billion related to multifamily bonds). We and Freddie
Mac administer these programs on a coordinated basis. We provide temporary credit and liquidity facility
support and issue securities backed by HFA bonds on a 50-50 pro rata basis with Freddie Mac under these
programs. Accordingly, our portion of the programs totals $11.7 billion: $4.1 billion in support provided under
the TCLF program and $7.6 billion in securities issued under the NIB program. Freddie Mac is also providing
$54.1 million in assistance to the HFAs through a multifamily credit enhancement program. We did not
participate in this program.
Treasury will bear the initial losses of principal under the TCLF program and the NIB program up to 35% of
total principal on a combined program-wide basis, and thereafter we and Freddie Mac each will bear the
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