Fannie Mae 2010 Annual Report Download - page 329

Guaranty Obligations
The following table displays changes in our guaranty obligations recognized in “Other liabilities” in our
consolidated balance sheets for the years ended December 31, 2010, 2009 and 2008. We derecognized the
majority of our guaranty obligations and deferred profit from our consolidated balance sheet upon adoption of
the new accounting standards.
2010 2009 2008
For the Year Ended December 31,
(Dollars in millions)
Beginning balance, January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,996 $12,147 $15,393
Adoption of new accounting standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,320) — —
Additions to guaranty obligations
(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225 7,577 7,279
Amortization of guaranty obligations into guaranty fee income . . . . . . . . . . . . (132) (5,260) (9,585)
Impact of consolidation activity
(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (468) (940)
Ending balance, December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 769 $13,996 $12,147
(1)
Represents the fair value of our contractual obligation at issuance of new guarantees.
(2)
Represents the derecognition of guaranty obligations during the period due to consolidations excluding the impact of
adopting the new accounting standards.
Deferred profit is a component of guaranty obligations in “Other liabilities” in our consolidated balance sheets
and is included in the table above. Deferred profit had a carrying amount of $35 million and $1.6 billion as of
December 31, 2010 and 2009, respectively. We recognized deferred profit amortization of $6 million,
$830 million and $2.0 billion for the years ended December 31, 2010, 2009 and 2008, respectively.
Guaranty Assets
As guarantor at inception of a guaranty to an unconsolidated entity, we recognize a non-contingent liability for
the fair value of our obligation to stand ready to perform over the term of the guaranty in the event that
specified triggering events or conditions occur. We also record a guaranty asset that represents the present
value of cash flows expected to be received as compensation over the life of the guaranty.
The following table displays changes in guaranty assets recognized in “Other assets” in our consolidated
balance sheets for the years ended December 31, 2010, 2009 and 2008.
2010 2009 2008
For the Year Ended December 31,
(Dollars in millions)
Beginning balance, January 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,356 $ 7,043 $ 9,666
Adoption of new accounting standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,014) — —
Fair value of expected cash flows at issuance for new guaranteed Fannie Mae
MBS issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182 4,135 3,938
Net change in fair value of guaranty assets from portfolio securitizations. . . . . (1) 511 (136)
Impact of amortization on guaranty contracts . . . . . . . . . . . . . . . . . . . . . . . . (59) (2,719) (2,767)
Other-than-temporary impairments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7) (347) (3,270)
Impact of consolidation of MBS trusts
(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . — (267) (388)
Ending balance, December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 457 $ 8,356 $ 7,043
(1)
Represents the derecognition of guaranty assets during the period due to consolidations excluding the impact of
adopting the new accounting standards.
F-71
FANNIE MAE
(In conservatorship)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)