Fannie Mae 2012 Annual Report Download - page 100

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(1) Guaranty fee income is included in fee and other income in our consolidated statements of operations and comprehensive income (loss).
(2) Gains (losses) from partnership investments are included in other expenses in our consolidated statements of operations and
comprehensive income (loss). Gains (losses) from partnership investments are reported using the equity method of accounting. As a
result, net loss attributable to noncontrolling interest from partnership investments is not included in income for the Multifamily
segment.
(3) Consists of the benefit (provision) for credit losses and foreclosed property income (expense).
(4) Consists of net interest (loss) income, investment gains, administrative expenses, and other (expenses) income.
(5) Calculated based on Multifamily segment guaranty fee income divided by the average multifamily guaranty book of business,
expressed in basis points.
(6) Calculated based on Multifamily segment credit losses divided by the average multifamily guaranty book of business, expressed in
basis points.
(7) Consists of multifamily mortgage loans held in our mortgage portfolio, multifamily mortgage loans held by consolidated trusts,
multifamily Fannie Mae MBS issued from unconsolidated trusts held by either third parties or within our retained portfolio, and other
credit enhancements that we provide on multifamily mortgage assets. Excludes non-Fannie Mae mortgage-related securities held in our
investment portfolio for which we do not provide a guaranty.
(8) Reflects unpaid principal balance of multifamily Fannie Mae MBS issued (excluding portfolio securitizations) and multifamily loans
purchased during the period. Includes HFA new issue bond program issuances, none of which occurred in 2012 or 2011. There were
HFA new issue bond program issuances of $1.0 billion during 2010.
(9) Excludes HFA new issue bond program.
(10) Reflects unpaid principal balance of multifamily Fannie Mae MBS issued during the period. Includes: (a) issuances of new MBS,
(b) Fannie Mae portfolio securitization transactions of $4.4 billion, $10.0 billion and $8.7 billion for the years ended December 31,
2012, 2011 and 2010, respectively, and (c) conversions of adjustable-rate loans to fixed-rate loans and discount MBS (“DMBS”) to
MBS of $215 million, $241 million and $389 million for the years ended December 31, 2012, 2011 and 2010, respectively.
(11) Interest expense estimate is based on allocated duration-matched funding costs. Net interest income was reduced by guaranty fees
allocated to Multifamily from the Capital Markets group on multifamily loans in Fannie Mae’s portfolio.
(12) Based on unpaid principal balance.
(13) As of January 31, 2013, our Multifamily serious delinquency rate was 0.35%.
(14) Includes mortgage loans and Fannie Mae MBS issued and guaranteed by the Multifamily segment. Information is based on the Federal
Reserve’s December 2012 mortgage debt outstanding release. Prior period amounts may have been changed to reflect revised historical
data from the Federal Reserve.
(15) Includes $28.1 billion and $28.3 billion of Fannie Mae multifamily MBS held in the mortgage portfolio, the vast majority of which
have been consolidated to loans in our consolidated balance sheets, as of December 31, 2012 and 2011, respectively, and $1.3 billion
and $1.4 billion of Fannie Mae MBS collateralized by bonds issued by state and local housing finance agencies as of December 31,
2012 and 2011, respectively.
2012 compared with 2011
Net income increased in 2012 compared with 2011, primarily due to credit-related income in 2012 compared with credit-
related expenses in 2011. Credit-related income in 2012 was primarily due to reductions to our total loss reserves resulting
from an improvement in national multifamily market fundamentals. In comparison, credit-related expenses in 2011 were
primarily due to underperformance of certain local markets and properties due to localized economic conditions. Multifamily
credit losses, which consist of net charge-offs and foreclosed property income (expense), were $257 million for 2012
compared with $391 million for 2011.
Guaranty fee income increased in 2012 compared with 2011 as we continued to acquire loans with higher guaranty fees. Our
acquisitions of loans with higher guaranty fees have become a larger part of our multifamily guaranty book of business, while
loans with lower guaranty fees continue to liquidate.
A benefit for federal income taxes of $204 million in 2012 was primarily driven by the utilization of tax credits related to
LIHTC investments to offset our alternative minimum tax liability resulting from our 2012 taxable income. In comparison, a
provision for federal income taxes was recognized in 2011, resulting from an effective settlement of issues with the Internal
Revenue Service relating to tax years 2007 and 2008, which reduced our total corporate tax liability. However, the reduction
in our tax liability also reduced the tax credits we were able to use, resulting in a provision for federal income taxes for the
Multifamily segment in 2011.