Fannie Mae 2014 Annual Report Download - page 314

FANNIE MAE
(In conservatorship)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
F-99
Stock Purchase Agreement Class Action Litigations”). The preferred shareholder plaintiffs allege that the net worth sweep
dividend provisions of the senior preferred stock that were implemented pursuant to the August 2012 amendments to the
senior preferred stock purchase agreements nullified certain of the shareholders’ rights, particularly the right to receive
dividends. The common shareholder plaintiffs allege that the August 2012 amendments constituted a taking of their property
by requiring that all future profits of Fannie Mae and Freddie Mac be paid to Treasury. Plaintiffs allege claims for breach of
contract and breach of the implied covenant of good faith and fair dealing against us, FHFA and Freddie Mac, a takings claim
against FHFA and Treasury, and a breach of fiduciary duty claim derivatively on our and Freddie Mac’s behalf against FHFA
and Treasury. Plaintiffs seek to represent several classes of preferred and/or common shareholders of Fannie Mae and/or
Freddie Mac who held stock as of the public announcement of the August 2012 amendments. Plaintiffs seek unspecified
damages, equitable and injunctive relief, and costs and expenses, including attorneys’ fees.
A non-class action suit, Arrowood Indemnity Company v. Fannie Mae, was filed in the U.S. District Court for the District of
Columbia on September 20, 2013 by preferred shareholders against us, FHFA as our conservator, the Director of FHFA (in
his official capacity), Treasury, the Secretary of the Treasury (in his official capacity) and Freddie Mac. Plaintiffs bring claims
for breach of contract and breach of the implied covenant of good faith and fair dealing against us, FHFA and Freddie Mac,
and claims for violation of the Administrative Procedure Act against the FHFA and Treasury defendants, alleging that the net
worth sweep provisions nullified certain rights of the preferred shareholders, particularly the right to receive dividends.
Plaintiffs seek damages, equitable and injunctive relief, and costs and expenses, including attorneys’ fees.
On September 30, 2014, the court dismissed both lawsuits and plaintiffs in both suits filed timely notices of appeal. On
October 27, 2014, the U.S. Court of Appeals for the D.C. Circuit consolidated these appeals with appeals in two other cases
involving the same subject matter, but to which we are not a party.
Given the stage of these lawsuits, the substantial and novel legal questions that remain, and our substantial defenses, we are
currently unable to estimate the reasonably possible loss or range of loss arising from this litigation.
Unconditional Purchase and Lease Commitments
We have unconditional commitments related to the purchase of loans and mortgage-related securities. These include both on-
and off-balance sheet commitments. A portion of these have been recorded as derivatives in our consolidated balance sheets.
We lease certain premises and equipment under agreements that expire at various dates through 2029. Some of these leases
provide for payment by the lessee of property taxes, insurance premiums, cost of maintenance and other costs. Rental
expenses for operating leases were $43 million, $41 million and $41 million for the years ended December 31, 2014, 2013
and 2012, respectively.
The following table summarizes by remaining maturity, non cancelable future commitments related to loan and mortgage
purchases, operating leases and other agreements as of December 31, 2014.
As of December 31, 2014
Loans and
Mortgage-Related
Securities(1) Operating
Leases Other(2)
(Dollars in millions)
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 56,333 $ 39 $ 209
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 32 166
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 27 59
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 8 22
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 14
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3 —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 56,333 $ 109 $ 470
__________
(1) Primarily includes $56.2 billion that has been accounted for as mortgage commitment derivatives.
(2) Includes purchase commitments for certain telecom services, computer software and services, and other agreements and commitments.