Fannie Mae 2009 Annual Report Download - page 45

determination, there will be no enforcement action against us for failing to meet these goals. We will file our
assessment of our performance against our housing goals with FHFA in mid-March, and FHFA will determine
our final performance numbers.
We did not meet our “low- and moderate-income housing” and “special affordable housing” goals, or any of
our home purchase subgoals, for 2008, given declining market conditions. In March 2009, FHFA notified us of
its determination that achievement of these housing goals and subgoals was not feasible due to housing and
economic conditions and our financial condition in 2008.
In 2007, we met each of our three housing goals and two of the four subgoals. However, we did not meet our
“low- and moderate-income housing” and “special affordable housing” home purchase subgoals in 2007. In
April 2008, HUD notified us of its determination that achievement of these subgoals was not feasible,
primarily due to reduced housing affordability and turmoil in the mortgage market, which reduced the share of
the conventional conforming primary home purchase market that would qualify for these subgoals.
See “Risk Factors” for a description of how changes we have made to our business strategies in order to meet
our housing goals and subgoals have increased our credit losses and will adversely affect our results of
operations.
MAKING HOME AFFORDABLE PROGRAM
During 2009, the Obama Administration introduced a comprehensive Financial Stability Plan to help protect
and support the U.S. housing and mortgage markets and stabilize the financial markets. As part of this plan, in
March 2009, the Administration announced details of Making Home Affordable, a program intended to
provide assistance to homeowners and prevent foreclosures. Working with our conservator, we have devoted
significant effort and resources to help distressed homeowners through initiatives that support the Making
Home Affordable Program. Below we describe key aspects of the Making Home Affordable Program and our
role in the program. For additional information about our activities under the program and its financial impact
on us, please see “Executive Summary—Homeowner Assistance Initiatives” and “MD&A—Consolidated
Results of Operations—Financial Impact of the Making Home Affordable Program on Fannie Mae.”
The Making Home Affordable Program includes a Home Affordable Refinance Program (“HARP”), under
which we acquire or guarantee loans that are refinancings of mortgage loans we own or guarantee, and
Freddie Mac does the same, and a Home Affordable Modification Program (“HAMP”), which provides for the
modification of mortgage loans owned or guaranteed by us or Freddie Mac, as well as other mortgage loans.
These two programs were designed to expand the number of borrowers who can refinance or modify their
mortgages to achieve a monthly payment that is more affordable now and into the future or to obtain a more
stable loan product, such as a fixed-rate mortgage loan in lieu of an adjustable-rate mortgage loan.
In March 2009, we announced our participation in the Making Home Affordable Program and released
guidelines for Fannie Mae sellers and servicers in offering HARP and HAMP for Fannie Mae borrowers. We
also serve as program administrator under HAMP for loans we do not own or guarantee.
In an effort to expand the benefits available through the Making Home Affordable Program to more
borrowers, the government announced a number of updates to the program throughout 2009. Key elements of
HARP and HAMP are described below.
Home Affordable Refinance Program
HARP is targeted at borrowers who have demonstrated an acceptable payment history on their mortgage loans
but may have been unable to refinance due to a decline in home prices or the unavailability of mortgage
insurance. Loans under this program are available only if the new mortgage loan either reduces the monthly
principal and interest payment for the borrower or provides a more stable loan product (such as movement
from an adjustable-rate mortgage to a fixed-rate mortgage loan). Other eligibility requirements that must be
met under this program include the following.
•Ownership. We must own or guarantee the mortgage loan being refinanced.
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