Fannie Mae 2011 Annual Report Download - page 152

Our maximum potential exposure to credit losses relating to our outstanding and unconsolidated Fannie Mae
MBS and other financial guarantees is primarily represented by the unpaid principal balance of the mortgage
loans underlying outstanding and unconsolidated Fannie Mae MBS and other financial guarantees of $62.0
billion as of December 31, 2011 and $56.9 billion as of December 31, 2010.
For information on the mortgage loans underlying both our on- and off-balance sheet Fannie Mae MBS, as well
as whole mortgage loans that we own, see “Risk Management—Credit Risk Management.”
Partnership Investment Interests
For partnership investments where we have determined that we are the primary beneficiary, we have
consolidated these investments and recorded all of the partnership assets and liabilities in our consolidated
balance sheets. The carrying value of our partnership investments, which primarily include investments in
affordable rental and for-sale housing partnerships, totaled $1.4 billion as of December 31, 2011, compared with
$1.8 billion as of December 31, 2010.
LIHTC Partnership Interests
In most instances, we are not the primary beneficiary of our LIHTC partnership investments, and therefore our
consolidated balance sheets reflect only our investment in the LIHTC partnership, rather than the full amount of
the LIHTC partnership’s assets and liabilities. FHFA informed us that, after consultation with Treasury,
generally we are not authorized to sell or transfer our LIHTC partnership interests. Some exceptions to this rule
exist in very limited circumstances and, in most cases, only with FHFA consent.
In the fourth quarter of 2009, we reduced the carrying value of our LIHTC partnership investments to zero, as we
no longer had both the intent and ability to sell or otherwise transfer our LIHTC investments for value. However,
we still have an obligation to fund our LIHTC partnership investments and have recorded such obligation as a
liability in our financial statements. Our obligation to fund consolidated LIHTC partnerships was $53 million as
of December 31, 2011 and $139 million as of December 31, 2010. Our obligation to fund unconsolidated LIHTC
partnerships was $140 million as of December 31, 2011 and $141 million as of December 31, 2010. Our
contributions to consolidated LIHTC partnerships were $34 million for the year ended December 31, 2011 and
$114 million for the year ended December 31, 2010. Our contribution to unconsolidated LIHTC partnerships was
$42 million for the year ended December 31, 2011 and $158 million for the year ended December 31, 2010. As a
result of our current tax position, we currently are not making any new LIHTC investments, other than pursuant
to commitments existing prior to 2008, and are not recognizing any tax benefits in our consolidated statements of
operations associated with the tax credits and net operating losses. For additional information regarding our
holdings in off-balance sheet limited partnerships and other off-balance sheet transactions, refer to “Note 2,
Consolidations and Transfers of Financial Assets” and “Note 17, Concentrations of Credit Risk.”
Treasury Housing Finance Agency Initiative
During the fourth quarter of 2009, we entered into a memorandum of understanding with Treasury, FHFA and
Freddie Mac pursuant to which we agreed to provide assistance to state and local housing finance agencies
(“HFAs”) through two primary programs, which together comprise what we refer to as the HFA initiative.
In November 2011, we entered into an Omnibus Consent to HFA Initiative Program Modifications with
Treasury, Freddie Mac and FHFA pursuant to which the parties agreed to specified modifications to the HFA
initiative programs, including a three-year extension of the expiration date for the temporary credit and liquidity
facilities (“TCLFs”) from December 2012 to December 2015, and a one-year extension of the expiration date for
release of escrowed funds for the new issue bond (“NIB”) program from December 31, 2011 to December 31,
2012. See “Certain Relationships and Related Transactions, and Director Independence—Transactions with
Related Persons—Transactions with Treasury—Treasury Housing Finance Agency Initiative” for a discussion of
the HFA initiative.
Pursuant to the TCLF program that we describe in “Related Parties” in “Note 1, Summary of Significant
Accounting Policies,” Treasury has purchased participation interests in TCLFs provided by us and Freddie Mac
- 147 -