Fannie Mae 2011 Annual Report Download - page 81

Structural changes in the financial services industry may negatively impact our business.
The financial market crisis resulted in mergers of some of our most significant institutional counterparties.
Consolidation within the financial services industry has increased and may continue to increase our concentration
risk to counterparties in this industry, and we are and may become more reliant on a smaller number of
institutional counterparties. This both increases our risk exposure to any individual counterparty and decreases
our negotiating leverage with these counterparties. The structural changes in the financial services industry could
affect us in substantial and unforeseeable ways and could have a material adverse effect on our business, results
of operations, financial condition, liquidity and net worth.
The occurrence of a major natural or other disaster in the United States could negatively impact our credit
losses and credit-related expenses or disrupt our business operations in the affected geographic area.
We conduct our business in the residential and multifamily mortgage markets and own or guarantee the
performance of mortgage loans throughout the United States. The occurrence of a major natural or environmental
disaster, terrorist attack, pandemic, or similar event (a “major disruptive event”) in a regional geographic area of
the United States could negatively impact our credit losses and credit-related expenses in the affected area.
The occurrence of a major disruptive event could negatively impact a geographic area in a number of different
ways, depending on the nature of the event. A major disruptive event that either damages or destroys residential
or multifamily real estate securing mortgage loans in our book of business or negatively impacts the ability of
borrowers to continue to make principal and interest payments on mortgage loans in our book of business could
increase our delinquency rates, default rates and average loan loss severity of our book of business in the affected
region or regions, which could have a material adverse effect on our business, results of operations, financial
condition, liquidity and net worth. While we attempt to create a geographically diverse mortgage credit book of
business, there can be no assurance that a major disruptive event, depending on its magnitude, scope and nature,
will not generate significant credit losses and credit-related expenses.
Additionally, the contingency plans and facilities that we have in place may be insufficient to prevent an adverse
effect on our ability to conduct business, which could lead to financial losses. If a disruption occurs and our
senior management or other employees are unable to occupy our offices, communicate with other personnel or
travel to other locations, our ability to interact with each other and with our customers may suffer, and we may
not be successful in implementing contingency plans that depend on communication or travel.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
We own our principal office, which is located at 3900 Wisconsin Avenue, NW, Washington, DC, as well as
additional Washington, DC facilities at 3939 Wisconsin Avenue, NW and 4250 Connecticut Avenue, NW. We
also own two office facilities in Herndon, Virginia, as well as two additional facilities located in Reston,
Virginia; and Urbana, Maryland. These owned facilities contain a total of approximately 1,459,000 square feet of
space. We lease the land underlying the 4250 Connecticut Avenue building pursuant to a ground lease that
automatically renews on July 1, 2029 for an additional 49 years unless we elect to terminate the lease by
providing notice to the landlord of our decision to terminate at least one year prior to the automatic renewal date.
In addition, we lease approximately 429,000 square feet of office space, including a conference center, at 4000
Wisconsin Avenue, NW, which is adjacent to our principal office. The present lease term for the office space at
4000 Wisconsin Avenue expires in April 2013 and we have one additional 5-year renewal option remaining
under the original lease. The lease term for the conference center at 4000 Wisconsin Avenue expires in April
2018. We also lease an additional approximately 317,000 square feet of office space at three other locations in
Washington, DC and Virginia. We maintain approximately 723,000 square feet of office space in leased premises
in Pasadena, California; Irvine, California; Atlanta, Georgia; Chicago, Illinois; Philadelphia, Pennsylvania; and
three facilities in Dallas, Texas.
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