Fannie Mae 2014 Annual Report Download - page 13

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95.01% to 97% LTV ratios will not materially affect our overall credit risk due to our requirements for these loans and our
expectation that they will constitute a small portion of our overall acquisition volumes. Our requirements for these loans
include compensating factors and risk mitigants, which reduce risk layering. For purchase transactions, at least one borrower
on the loan must be a first-time home buyer and occupy the property as his or her principal residence. In some cases, we also
require the borrower to receive housing counseling before obtaining the loan. Eligibility for refinance transactions is limited
to existing Fannie Mae loans to provide support for borrowers who may not otherwise be eligible for our Refi PlusTM
initiative. For both purchase and refinance loans, the loans must have fixed-rate terms and must be underwritten through
Desktop Underwriter®, our proprietary automated underwriting system. Desktop Underwriter provides a comprehensive
credit risk assessment on loan applications submitted through the system, assessing risk layers and compensating factors, and
denying loan applications that do not meet our eligibility requirements. We require mortgage insurance or other appropriate
credit enhancement for all non-HARP loans with LTV ratios greater than 80%.
To the extent we are able to encourage lenders to increase access to mortgage credit, we may acquire a greater number of
single-family loans with higher risk characteristics than we have acquired in the most recent periods; however, we believe our
single-family acquisitions will continue to have a strong overall credit risk profile given our current underwriting and
eligibility standards and product design. We actively monitor the credit risk profile and credit performance of our single-
family loan acquisitions.
Contributions to the Housing and Mortgage Markets
Liquidity and Support Activities
As the largest provider of residential mortgage credit in the United States, we indirectly enable families to buy, refinance or
rent homes. During 2014, we continued to provide critical liquidity and support to the U.S. mortgage market in a number of
important ways:
• We serve as a stable source of liquidity for purchases of homes and financing of multifamily rental housing, as well
as for refinancing existing mortgages. We provided approximately $434 billion in liquidity to the mortgage market
in 2014 through our purchases and guarantees of loans and securities. This liquidity enabled borrowers to complete
approximately 937,000 mortgage refinancings and approximately 887,000 home purchases, and provided financing
for approximately 446,000 units of multifamily housing.
• Our role in the market enables qualified borrowers to have reliable access to affordable mortgage credit, including a
variety of conforming mortgage products such as the prepayable 30-year fixed-rate mortgage that protects
homeowners from fluctuations in interest rates.
• We provided approximately 165,000 loan workouts in 2014 to help homeowners stay in their homes or otherwise
avoid foreclosure. Our loan workout efforts have helped to stabilize neighborhoods, home prices and the housing
market.
• We helped borrowers refinance loans, including through our Refi Plus initiative, which offers additional refinancing
flexibility to eligible borrowers who are current on their loans and whose loans are owned or guaranteed by us and
meet certain additional criteria. We acquired approximately 302,000 Refi Plus loans in 2014. Refinancings delivered
to us through Refi Plus in the fourth quarter of 2014 reduced borrowers’ monthly mortgage payments by an average
of $172.
• We support affordability in the multifamily rental market. Over 85% of the multifamily units we financed in 2014
were affordable to families earning at or below the median income in their area.
• In addition to purchasing and guaranteeing loans, we provide funds to the mortgage market through short-term
financing and other activities. These activities are described in “Business Segments—Capital Markets.”
2014 Market Share
We estimate that our single-family market share was 32% in 2014, compared with 39% in 2013. These amounts represent our
single-family mortgage acquisitions for each year, excluding delinquent loans we purchased from our MBS trusts, as a
percentage of the single-family first-lien mortgages we currently estimate were originated in the United States that year.
Because our estimate of mortgage originations in prior periods is subject to change as additional data become available, these
market share estimates may change in the future, perhaps materially.
We remained the largest single issuer of mortgage-related securities in the secondary market during the fourth quarter of
2014, with an estimated market share of new single-family mortgage-related securities issuances of 40%, compared with 38%