Fannie Mae 2009 Annual Report Download - page 38

location-efficient mortgages. It is unclear what action the Senate will take on this legislation, or what impact it
may have on our business if this legislation is enacted.
In addition, legislation has been enacted or is being considered in some jurisdictions that would enable lending
for residential energy efficiency improvements, with loans repaid via the homeowner’s real property tax bill.
This structure is designed to grant lenders of energy efficiency loans the equivalent of a tax lien, giving them
priority over all other liens on the property, including previously recorded first lien mortgage loans.
Consequently, the legislation could increase our credit losses, impact our business volumes and limit the size
of loans we acquire where these laws are in effect.
In May 2009, the House of Representatives passed a bill that, among other things, would enhance consumer
protections in mortgage loan transactions, impose new servicing standards and allow for assignee liability.
Similar provisions were also included in the House-passed financial regulation reform bill. If enacted, the
legislation would impact our business and the overall mortgage market. However, it is unclear when, or if, the
Senate will consider comparable legislation.
In March 2009, the House of Representatives passed a housing bill that, among other things, includes
provisions intended to stem the rate of foreclosures by allowing bankruptcy judges to modify the terms of
mortgages on principal residences for borrowers in Chapter 13 bankruptcy. Specifically, the House bill would
allow bankruptcy judges to adjust interest rates, extend repayment terms and lower the outstanding principal
amount to the current estimated fair value of the underlying property. If enacted, this legislation could have an
adverse impact on our business. The Senate passed a similar housing bill in May 2009 that did not include
comparable bankruptcy-related provisions. It is unclear when, or if, the Senate will reconsider other alternative
bankruptcy-related legislation.
We cannot predict whether any legislation will be enacted and, if legislation is enacted, the prospects for the
timing and content of the legislation, or the impact that any enacted legislation could have on our company or
our industry.
OUR CHARTER AND REGULATION OF OUR ACTIVITIES
Charter Act
We are a shareholder-owned corporation, originally established in 1938, organized and existing under the
Federal National Mortgage Association Charter Act, as amended, which we refer to as the Charter Act or our
charter. The Charter Act sets forth the activities that we are permitted to conduct, authorizes us to issue debt
and equity securities, and describes our general corporate powers. The Charter Act states that our purpose is
to:
• provide stability in the secondary market for residential mortgages;
• respond appropriately to the private capital market;
• provide ongoing assistance to the secondary market for residential mortgages (including activities relating
to mortgages on housing for low- and moderate-income families involving a reasonable economic return
that may be less than the return earned on other activities) by increasing the liquidity of mortgage
investments and improving the distribution of investment capital available for residential mortgage
financing; and
• promote access to mortgage credit throughout the nation (including central cities, rural areas and
underserved areas) by increasing the liquidity of mortgage investments and improving the distribution of
investment capital available for residential mortgage financing.
It is from these sections of the Charter Act that we derive our mission of providing liquidity, increasing
stability and promoting affordability in the residential mortgage market. In addition to the alignment of our
overall strategy with these purposes, all of our business activities must be permissible under the Charter Act.
Our charter authorizes us to: purchase, service, sell, lend on the security of, and otherwise deal in certain
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