Fannie Mae 2011 Annual Report Download - page 55

our underserved markets plan are or were feasible. If we fail to meet our duty to serve, and FHFA determines that
the benchmarks and objectives in our underserved markets plan are or were feasible, then, in the Director’s
discretion, we may be required to submit a housing plan. Under the proposed rule, the housing plan must describe
the activities that we will take to comply with the duty to serve a particular underserved market for the next
calendar year, or improvements and changes in operations that we will make during the remainder of the current
year.
Under the proposed rule, we would be required to provide quarterly and annual reports on our performance and
progress towards meeting our duty to serve.
See “Risk Factors” for a description of how changes we may make in our business strategies in order to meet our
housing goals and duty to serve requirement may increase our credit losses and adversely affect our results of
operations.
MAKING HOME AFFORDABLE PROGRAM
The Obama Administration’s Making Home Affordable Program, which was introduced in February 2009, is
intended to provide assistance to homeowners and prevent foreclosures. Working with our conservator, we have
devoted significant effort and resources to help distressed homeowners through initiatives that support the Making
Home Affordable Program. Below we describe key aspects of the Making Home Affordable Program and our role
in the program. For additional information about our activities under the program, please see “Business—Making
Home Affordable Program” in our Annual Report on Form 10-K for the year ended December 31, 2009. For
information about the program’s financial impact on us, please see “MD&A—Consolidated Results of
Operations—Financial Impact of the Making Home Affordable Program on Fannie Mae.”
The Making Home Affordable Program is comprised primarily of a Home Affordable Refinance Program
(“HARP”), under which we acquire or guarantee loans that are refinancings of mortgage loans we own or
guarantee, and Freddie Mac does the same, and a Home Affordable Modification Program (“HAMP”), which
provides for the modification of mortgage loans owned or guaranteed by us or Freddie Mac, as well as other
mortgage loans. These two programs were designed to expand the number of borrowers who can refinance or
modify their mortgages to achieve a monthly payment that is more affordable now and into the future or to obtain
a more stable loan product, such as a fixed-rate mortgage loan in lieu of an adjustable-rate mortgage loan. We
participate in the Making Home Affordable Program, and our sellers and servicers offer HARP and HAMP to
Fannie Mae borrowers. We also serve as Treasury’s program administrator for HAMP and other initiatives under
the Making Home Affordable Program.
Changes to the Home Affordable Refinance Program
In the fourth quarter of 2011, FHFA, Fannie Mae, and Freddie Mac announced changes to HARP aimed at
making refinancing under the program easier and potentially less expensive for qualifying homeowners and
encouraging lenders to participate in the program. While HARP previously limited eligibility to borrowers with
mortgage loans for their primary residence that had LTV ratios greater than 80% but no greater than 125%, the
new HARP guidelines remove that ceiling when a borrower refinances into a new fixed-rate mortgage. Other
changes to HARP include:
• eliminating risk-based fees for borrowers who refinance into loans with terms up to 20 years and lowering
fees for other borrowers to no more than 75 basis points;
• eliminating the need for a new property appraisal in many cases;
• extending the ending date for HARP from June 2012 to December 2013; and
• reducing the extent to which lenders will be liable for violations of representations and warranties in
connection with refinancings under HARP.
At this time, we do not know how many eligible borrowers are likely to refinance under the program and,
therefore, how many HARP loans we will acquire.
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