Fannie Mae 2009 Annual Report Download - page 274

securities sold under agreements to repurchase as financing activities. We classify cash flows related to dollar
roll transactions that do not meet the requirements to be accounted for as secured borrowings as purchases and
sales of securities in investing activities.
Restricted Cash
When we collect and hold cash that is due to certain Fannie Mae MBS trusts in advance of our requirement to
remit these amounts to the trust, we record the collected cash amount as “Restricted cash” in our consolidated
balance sheets. Additionally, we record “Restricted cash” as a result of partnership restrictions related to
certain consolidated partnership funds. We also have restricted cash related to certain collateral arrangements.
Securities Purchased under Agreements to Resell and Securities Sold under Agreements to Repurchase
When securities purchased under agreements to resell or securities sold under agreements to repurchase
resulting from dollar roll transactions do not meet all of the conditions of a secured financing, we account for
the transactions as purchases or sales, respectively. We treat securities purchased under agreements to resell
and securities sold under agreements to repurchase as secured financing transactions when all of the conditions
have been met. We record these transactions at the amounts at which the securities will be subsequently
reacquired or resold, including accrued interest.
Investments in Securities
Securities Classified as Available-for-Sale or Trading
We classify and account for our securities as either available-for-sale (“AFS”) or trading. We measure AFS
securities at fair value in our consolidated balance sheets, with unrealized gains and losses included in
“Accumulated other comprehensive loss” (“AOCI”), net of applicable income taxes. We recognize realized
gains and losses on AFS securities when securities are sold. We calculate the gains and losses using the
specific identification method and record them in “Investment gains (losses), net” in our consolidated
statements of operations. We measure trading securities at fair value in our consolidated balance sheets with
unrealized and realized gains and losses included as a component of “Fair value losses, net” in our
consolidated statements of operations. We include interest and dividends on securities, including amortization
of the premium and discount at acquisition, in our consolidated statements of operations. We describe our
amortization policy in the “Amortization of Cost Basis and Guaranty Price Adjustments” section of this note.
When we receive multiple deliveries of securities on the same day that are backed by the same pools of loans,
we calculate the specific cost of each security as the average price of the trades that delivered those securities.
Currently, we do not have any securities classified as held-to-maturity, although we may elect to do so in the
future.
We determine fair value using quoted market prices in active markets for identical assets when available. If
quoted market prices in active markets for identical assets are not available, we use quoted market prices for
similar securities that we adjust for observable or corroborated (i.e., information purchased from third-party
service providers) market information. In the absence of observable or corroborated market data, we use
internally developed estimates, incorporating market-based assumptions when such information is available.
Other-Than-Temporary Impairment of Debt Securities
Prior to April 1, 2009, we considered a debt security to be other-than-temporarily impaired if its estimated fair
value was less than its amortized cost basis and we determined that it was probable that we would be unable
to collect all of the contractual principal and interest payments or we did not intend to hold the security until
it recovered to its previous carrying amount. In making an other-than-temporary impairment assessment, we
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FANNIE MAE
(In conservatorship)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)