Fannie Mae 2013 Annual Report Download - page 249

FANNIE MAE
(In conservatorship)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
F-25
investments is to increase the supply of affordable housing in the United States and to serve communities in need. In addition,
our investments in LIHTC partnerships generate both tax credits and net operating losses that may reduce our federal income
tax liability. Our LIHTC investments primarily represent limited partnership interests in entities that have been organized by
a fund manager who acts as the general partner. These fund investments seek out equity investments in LIHTC operating
partnerships that have been established to identify, develop and operate multifamily housing that is leased to qualifying
residential tenants.
We no longer recognize net operating losses or impairment on our LIHTC partnership investments as the carrying value is
zero. We did not make any LIHTC investments in 2013, 2012 or 2011, other than pursuant to existing prior commitments.
Consolidated VIEs
If an entity is a VIE, we consider whether our variable interest in that entity causes us to be the primary beneficiary. The
primary beneficiary of the VIE is required to consolidate and account for the assets, liabilities and noncontrolling interests of
the VIE in its consolidated financial statements. An enterprise is deemed to be the primary beneficiary when the enterprise
has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and
exposure to benefits and/or losses could potentially be significant to the entity. In general, the investors in the obligations of
consolidated VIEs have recourse only to the assets of those VIEs and do not have recourse to us, except where we provide a
guaranty to the VIE.
As of December 31, 2013, we consolidated certain VIEs that were not consolidated as of December 31, 2012, generally due
to increases in the amount of the certificates issued by the entity that are held in our retained mortgage portfolio (for example,
when we hold a substantial portion of the securities issued by Fannie Mae multi-class resecuritization trusts). As a result of
consolidating these entities, which had combined total assets of $1.9 billion in unpaid principal balance as of December 31,
2013, we derecognized our investment in these entities and recognized the assets and liabilities of the consolidated entities at
fair value.
As of December 31, 2013, we also deconsolidated certain VIEs that were consolidated as of December 31, 2012, generally
due to decreases in the amount of the certificates issued by the entity that are held in our retained mortgage portfolio. As a
result of deconsolidating these entities, which had combined total assets of $1.2 billion in unpaid principal balance as of
December 31, 2012, we derecognized the assets and liabilities of the entities and recognized at fair value our retained
interests as securities in our consolidated balance sheets.
Unconsolidated VIEs
We do not consolidate VIEs when we are not deemed to be the primary beneficiary. Our unconsolidated VIEs include
securitization trusts and limited partnerships. The following table displays the carrying amount and classification of our assets
and liabilities that relate to our involvement with unconsolidated mortgage-backed trusts as of December 31, 2013 and 2012,
as well as our maximum exposure to loss and the total assets of these unconsolidated mortgage-backed trusts.