Fannie Mae 2009 Annual Report Download - page 98

Provision for Credit Losses Attributable to the Guaranty Book of Business
Our allowance for loan losses and reserve for guaranty losses, which we collectively refer to as our combined
loss reserves, provide for probable credit losses inherent in our guaranty book of business as of each balance
sheet date. We establish our loss reserves through the provision for credit losses for losses that we believe
have been incurred and will eventually be reflected over time in our charge-offs. When we determine that a
loan is uncollectible, typically upon foreclosure, we record the charge-off against our loss reserves. We record
recoveries of previously charged-off amounts as a credit to our loss reserves. We summarize the changes in
our loss reserves in Table 9.
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