Fannie Mae 2014 Annual Report Download - page 238

FANNIE MAE
(In conservatorship)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
F-23
preferred stock purchase agreement with Treasury, no amounts are available to distribute as dividends to common or
preferred stockholders (other than to Treasury as holder of the senior preferred stock).
Compensatory Fees
We charge our primary servicers a compensatory fee for servicing delays within their control when they fail to comply with
established loss mitigation and foreclosure timelines per our Servicing Guide, which sets forth our policies and procedures
related to servicing our single-family mortgages. Compensatory fees are intended to compensate us for damages attributed to
such servicing delays and to emphasize the importance of servicer performance.
We recognize a compensatory fee receivable when the amounts are chargeable per our Servicing Guide and are considered
reasonably assured of collection. We subsequently establish a valuation allowance for any amounts we estimate to be
uncollectible. If such fees are not reasonably assured of collection, we recognize them on a cash basis when received. The
income associated with these fees is recognized as a component of “Foreclosed property expense (income)” in our
consolidated statements of operations and comprehensive income.
Fee and Other Income
Fee and other income includes transaction fees, technology fees, multifamily fees and other miscellaneous income. During
the year ended December 31, 2014, we recognized $4.8 billion in “Fee and other income” in our consolidated statement of
operations and comprehensive income resulting from settlement agreements resolving certain lawsuits relating to private-
label mortgage-related securities (“PLS”) sold to us.
New Accounting Guidance
In January 2014, the Financial Accounting Standards Board (“FASB”) issued guidance clarifying when a creditor is
considered to have received physical possession of residential real estate property collateralized by a consumer mortgage loan
in order to reduce diversity in practice for when a creditor derecognizes the loan receivable and recognizes the real estate
property. The guidance also requires interim and annual disclosure of the amount of foreclosed residential real estate property
held by the creditor and the recorded investment in consumer mortgage loans collateralized by residential real estate property
that are in the process of foreclosure. The new guidance is effective for us on January 1, 2015. We have evaluated this
guidance and determined it will not have a material impact on our consolidated financial statements.
In May 2014, the FASB issued guidance on revenue from contracts with customers. The standard outlines a single model for
entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue
recognition guidance. The following contracts with customers are excluded from the scope of the new standard and will
continue to be accounted for under existing guidance: leases, insurance, financial instruments (e.g., receivables, investments,
liabilities, debt and derivatives) and guarantees. The new guidance is effective for us on January 1, 2017. We have evaluated
this guidance and determined it will not have a material impact on our consolidated financial statements.
In June 2014, the FASB issued guidance to amend the accounting for repurchase-to-maturity transactions and repurchase
agreements executed as repurchase financings. The guidance requires repurchase-to-maturity transactions to be accounted for
as secured borrowings. In addition, the guidance removes the requirement to determine whether a repurchase financing and
the initial transfer of a financial asset are linked for purposes of assessing whether sale accounting is appropriate. Under the
amended guidance, repurchase financing transactions will be evaluated in the same manner as other repurchase transactions.
The guidance also requires additional disclosures on transfers accounted for as sales transactions and collateral pledged in
repurchase agreements accounted for as secured borrowings. The new guidance is effective on January 1, 2015, except for
disclosures related to repurchase transactions accounted for as secured borrowings, which are effective April 1, 2015. We
have evaluated this guidance and determined it will not have a material impact on our consolidated financial statements.
In August 2014, the FASB issued guidance on the classification of certain government guaranteed mortgage loans upon
foreclosure. The guidance requires that a government guaranteed mortgage loan be derecognized and that a separate other
receivable be recognized upon foreclosure if certain conditions are met. Upon foreclosure, the separate other receivable
should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the
guarantor. The new guidance is effective for us on January 1, 2015. We have evaluated this guidance and determined it will
not have a material impact on our consolidated financial statements.