Fannie Mae 2014 Annual Report Download - page 253

FANNIE MAE
(In conservatorship)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
F-38
term standby commitments that generally require us to purchase loans from lenders if the loans meet certain delinquency
criteria.
We recognize a guaranty obligation for our obligation to stand ready to perform on our guarantees to unconsolidated trusts
and other guaranty arrangements. These guarantees expose us to credit losses on the mortgage loans or, in the case of
mortgage-related securities, the underlying mortgage loans of the related securities. The remaining contractual terms of our
guarantees range from 30 days to 38 years; however, the actual term of each guaranty may be significantly less than the
contractual term based on the prepayment characteristics of the related mortgage loans.
The following table displays our maximum exposure, guaranty obligation recognized in our consolidated balance sheets and
the maximum potential recovery from third parties through available credit enhancements and recourse related to our
financial guarantees as of December 31, 2014 and 2013.
As of December 31,
2014 2013
Maximum
Exposure(1) Guaranty Obligation Maximum Recovery(2) Maximum Exposure(1) Guaranty Obligation Maximum Recovery(2)
(Dollars in millions)
Non-consolidated Fannie Mae MBS . . . . . . . . . $ 17,184 $ 214 $ 9,775 $ 19,317 $ 232 $ 10,541
Other guaranty arrangements(3) . . . . . . . . . . . . . 18,781 168 4,447 30,598 253 4,525
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,965 $ 382 $ 14,222 $ 49,915 $ 485 $ 15,066
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(1) Primarily consists of the unpaid principal balance of the underlying mortgage loans.
(2) Recoverability of such credit enhancements and recourse is subject to, among other factors, our mortgage insurers’ and financial
guarantors’ ability to meet their obligations to us. For information on our mortgage insurers and financial guarantors, see “Note 16,
Concentrations of Credit Risk.”
(3) Primarily consists of credit enhancements, long-term standby commitments, and our commitment under the TCLF program.
7. Acquired Property, Net
Acquired property, net consists of held-for-sale foreclosed property received in satisfaction of a loan, net of a valuation
allowance for declines in the fair value of the properties after initial acquisition. We classify properties as held for sale when
we intend to sell the property and are actively marketing it for sale. The following table displays the activity in acquired
property, and related valuation allowance, for the years ended December 31, 2014, 2013 and 2012.
For the Year Ended December 31,
2014 2013 2012
(Dollars in millions)
Beginning balance — Acquired property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,307 $ 11,158 $ 12,401
Additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,100 16,092 16,915
Disposals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,965)(14,943)(18,158)
Ending balance — Acquired property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,442 12,307 11,158
Beginning balance — Valuation allowance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (686)(669)(1,028)
(Increase) decrease in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (138)(17) 359
Ending balance — Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (824)(686)(669)
Ending balance — Acquired property, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,618 $ 11,621 $ 10,489