Fannie Mae 2014 Annual Report Download - page 180

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Objectives and Weighting Summary of Performance
Maintain the dollar volume of new multifamily business for each
Enterprise at or below the 2013 caps, excluding:
• Affordable housing loans, loans to small multifamily properties and
loans to manufactured housing rental communities.
The objective was achieved. The company provided $28.9
billion in liquidity to the multifamily market in 2014,
compared to a $30.4 billion cap.
Reduce taxpayer risk through increasing the role of private capital in the mortgage market—30% weight
Single Family:
• Each Enterprise will transact credit risk transfers on single family
mortgages with at least $90 billion of unpaid principal balances
adjusted for the amount of credit risk transferred;
• Each Enterprise must utilize at least one transaction type in addition
to the Freddie Mac Structured Agency Credit Risk (STACR®) or the
Fannie Mae Connecticut Avenue Securities (CAS) structures (e.g.
insurance, upfront credit risk transfers, and senior/subordinated
securitizations):
FHFA will provide some extra Scorecard credit for the substantial
completion of R&D efforts in this space;
FHFA will provide more extra Scorecard credit for completing any
additional types of transactions beyond the first two.
The objective was achieved. The company issued $5.8
billion in CAS in 2014, transferring some of the credit risk
on single-family mortgages with an unpaid principal
balance of $222.2 billion. See “MD&A—Risk
Management—Credit Risk Management—Single-Family
Mortgage Credit Risk Management—Risk Sharing
Transactions.” The company also engaged in several
additional transaction types including, in December 2014, a
credit insurance risk transfer (“CIRT™”) transaction that
shifted a portion of the credit risk on a reference pool of
loans with an unpaid principal balance of approximately
$6.4 billion to a panel of reinsurers, as discussed in
“MD&A—Risk Management—Credit Risk Management—
Institutional Counterparty Credit Risk Management—
Credit Guarantors—Reinsurers.”
Multifamily:
• The Enterprises are to assess the economics and feasibility of
adopting additional types of risk transfer structures and of increasing
the amount of risk transferred in current risk transfer structures (risk
is broadly defined to include, but is not limited to, credit,
counterparty or aggregation risk).
The objective was achieved. Fannie Mae conducted an
assessment of the economics and feasibility of adopting
additional types of multifamily mortgage credit risk
transfer structures and submitted the assessment to FHFA.
Retained Portfolio:
• The Enterprises shall submit to FHFA within 60 days retained
portfolio plans that meet, even under adverse conditions, the annual
Senior Preferred Stock Purchase Agreement (PSPA) requirements and
the $250 billion PSPA cap by December 31, 2018:
The plans should focus on reducing less liquid assets;
Any sales should be economically sensible transactions that
consider impacts to the market and neighborhood stability.
The objective was achieved. Fannie Mae submitted a
portfolio plan to FHFA in July 2014 outlining how the
company will meet, even under adverse conditions, the
reductions in its portfolio required by the senior preferred
stock purchase agreement with Treasury. In October 2014,
FHFA requested that the company revise the portfolio plan
to cap the portfolio each year at 90% of the annual limit
under the senior preferred stock purchase agreement. The
company submitted a revised portfolio plan in October
2014 and reduced its mortgage portfolio to $413.3 billion
as of December 31, 2014, below the $422.7 billion cap
requested by FHFA. See “MD&A—Business Segment
Results—The Capital Markets Group’s Mortgage
Portfolio” for more information about Fannie Mae’s
mortgage portfolio.
The Enterprises are to finalize mortgage insurance Master Policies
and enhanced eligibility requirements. To the extent that this objective was within management’s control, the objective was achieved. The
company announced the implementation of new mortgage
insurance master primary policies in 2014. Also in 2014,
FHFA posted for public input proposed revisions by Fannie
Mae and Freddie Mac to their eligibility standards for
approved private mortgage insurers. FHFA, Fannie Mae
and Freddie Mac are continuing to review the public input
provided on the proposed revisions to the eligibility
standards for approved private mortgage insurers. For more
information on these policies and requirements, see
“MD&A—Risk Management—Credit Risk Management—
Institutional Counterparty Credit Risk Management—
Credit Guarantors—Mortgage Insurers.”