Fannie Mae 2010 Annual Report Download - page 300

Short-Term Debt and Long-Term Debt
At the transition date, we recognized an increase of $6.4 billion in “Short-term debt of consolidated trusts”
and $2.4 trillion in “Long-term debt of consolidated trusts.” The debt of consolidated trusts represents the
amount of Fannie Mae debt securities issued by such trusts and held by third-party certificateholders. We
recognized an increase of $10.6 billion in “Accrued interest payable of consolidated trusts,” which represents
the interest expense accrued as of the transition date on the long-term debt of the newly consolidated trusts.
Prior to the transition date, we reported debt issued both by us and by consolidated trusts collectively as either
“Short-term debt” or “Long-term debt.” Effective at the transition date, we report debt issued by us as either
“Short-term debt of Fannie Mae” or “Long-term debt of Fannie Mae.” We report the debt of consolidated
trusts as either “Short-term debt of consolidated trusts” or “Long-term debt of consolidated trusts.” Prior
period amounts have been reclassified to conform to our current period presentation.
Servicer and MBS Trust Receivable and Payable
At the transition date we recognized a net decrease of $17.1 billion in “Servicer and MBS trust receivable.”
Prior to our adoption of the new accounting standards, we recorded a receivable from unconsolidated trusts,
net of a valuation allowance, when a delinquency advance was made to the trust. This receivable now
represents intercompany activity that we eliminate for the purpose of our consolidated financial statements.
We also recognized a decrease of $16.6 billion in “Servicer and MBS trust payable,” which consisted of two
components. First, we have the option to purchase loans and foreclosed properties from the trust when certain
contingencies have been met. At December 31, 2009, we recorded a payable to the trust for loans and
foreclosed properties that had been purchased during the month of December. Second, prior to the
consolidation of certain out of portfolio trusts, we recognized a loan in our consolidated balance sheets at fair
value and recorded a corresponding liability to the unconsolidated trust when the contingency on our option to
purchase loans from the trust had been met. These payables now represent intercompany activity that we
eliminate for the purpose of our consolidated financial statements.
Restricted Cash
At the transition date, “Restricted cash” increased by $45.6 billion to record cash payments received by the
servicer or consolidated trusts due to be remitted to the MBS certificateholders that have been determined to
be restricted for use.
Federal Funds Sold and Securities Purchased Under Agreements to Resell or Similar Arrangements
At the transition date, we recognized a decrease of $316 million in “Federal funds sold and securities
purchased under agreements to resell or similar arrangements” relating to dollar roll transactions that utilized
Fannie Mae MBS. As a result of the dollar roll transactions, we held investments in Fannie Mae MBS in our
consolidated balance sheet as of December 31, 2009 that were issued from trusts that subsequently
consolidated at the transition date. Similar to our treatment of Fannie Mae MBS classified as trading or AFS,
we eliminated our secured financing receivable related to these dollar roll transactions and recharacterized the
transfer of the Fannie Mae MBS as debt extinguishment in our consolidated financial statements.
Accounting for Portfolio Securitizations
At the transition date, we reclassified the majority of our HFS mortgage loans to HFI due to the change in our
accounting for portfolio securitizations. Prior to our adoption of the new accounting standards, we classified
mortgage loans acquired with the intent to securitize as HFS in our consolidated balance sheets as the majority
of the transfers of mortgage loans under portfolio securitization transactions qualified as sales under the
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FANNIE MAE
(In conservatorship)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)