Fannie Mae 2009 Annual Report Download - page 7

conservatorship, or what changes to our business structure will be made during or following the
conservatorship.
Since our entry into conservatorship, we have entered into agreements with Treasury that include covenants
that significantly restrict our business activities and provide for substantial U.S. government financial support.
We provide additional information on the conservatorship, the provisions of our agreements with the Treasury,
and its impact on our business below under “Conservatorship and Treasury Agreements” and “Risk Factors.”
RESIDENTIAL MORTGAGE MARKET
The U.S. Residential Mortgage Market
We conduct business in the U.S. residential mortgage market and the global securities market. In response to
the financial crisis and severe economic recession that began in December 2007, accelerated in late 2008 and
continued to deepen in 2009, the U.S. government took a number of extraordinary measures designed to
provide fiscal stimulus, improve liquidity and protect and support the housing and financial markets. Examples
of these measures include: (1) the Federal Reserve’s temporary program to purchase up to $1.25 trillion of
GSE mortgage-backed securities by March 31, 2010, which is intended to provide support to mortgage lending
and the housing market and to improve overall conditions in private credit markets; (2) the Administration’s
Making Home Affordable Program, which is intended to stabilize the housing market by providing assistance
to homeowners and preventing foreclosures; and (3) the first-time and move-up homebuyer tax credits, enacted
to help increase home sales and stabilize home prices.
Total U.S. residential mortgage debt outstanding, which includes $10.9 trillion of single-family mortgage debt
outstanding, was estimated to be approximately $11.8 trillion as of September 30, 2009, the latest date for
which information was available, according to the Federal Reserve. After increasing every quarter since record
keeping began in 1952 until the second quarter of 2008, single-family mortgage debt outstanding has been
steadily declining since then. We owned or guaranteed mortgage assets representing approximately 27.5% of
total U.S. residential mortgage debt outstanding as of September 30, 2009.
We operate our business solely in the United States and its territories, and accordingly, we generate no revenue
from and have no assets in geographic locations other than the United States and its territories.
Housing and Mortgage Market and Economic Conditions
The housing sector, while still fragile, began to show some signs of stabilization and improvement in the
second half of 2009, due in part to the government’s policy initiatives and programs to provide fiscal stimulus,
improve liquidity and protect and support the housing and financial markets, and the U.S. economy began to
emerge from the financial crisis and severe economic recession that began at the end of 2007. Home price
declines began to moderate and deterioration in the labor market began to abate as payroll job losses
diminished and weekly claims for unemployment fell steadily as 2009 progressed. Mortgage interest rates
began to decline in late 2008 when the Federal Reserve announced that it would purchase $1.25 trillion of
GSE mortgage-backed securities in an effort to lower rates, increase credit availability and bolster the housing
market. Mortgage interest rates remained low throughout 2009, falling to record lows in the spring of 2009
and again in the fall.
2