Fannie Mae 2013 Annual Report Download - page 121

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Our off-balance sheet arrangements result primarily from the following:
• our guaranty of mortgage loan securitization and resecuritization transactions over which we do not have control;
• other guaranty transactions;
• liquidity support transactions; and
• partnership interests.
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 $44.3 billion as of December 31, 2013 and $53.1
billion as of December 31, 2012.
For more 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. Our partnership
investments primarily consist of investments in affordable rental and for-sale housing partnerships. The carrying value of our
partnership investments, including those we have consolidated, totaled $809 million as of December 31, 2013, compared with
$1.2 billion as of December 31, 2012.
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. We did not make any LIHTC investments in 2013, other than pursuant to existing prior
commitments.
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. 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 to the HFAs. These
facilities create a credit and liquidity backstop for the HFAs. Our outstanding commitments under the TCLF program totaled
$821 million as of December 31, 2013 and $1.6 billion as of December 31, 2012.
Multifamily Bond Credit Enhancement Liquidity Commitments
Our total outstanding liquidity commitments to advance funds for securities backed by multifamily housing revenue bonds
totaled $13.0 billion as of December 31, 2013 and $15.3 billion as of December 31, 2012. These commitments require us to
advance funds to third parties that enable them to repurchase tendered bonds or securities that are unable to be remarketed.
We hold cash and cash equivalents in our cash and other investments portfolio in excess of these commitments to advance
funds.