Fannie Mae 2014 Annual Report Download - page 70

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negatively impact our credit losses and credit-related expenses in the affected area or, depending on the nature of the event,
nationally.
The occurrence of a major disruptive event could negatively impact a geographic area in a number of different ways,
depending on the nature of the event. A major disruptive event that either damages or destroys residential or multifamily real
estate securing mortgage loans in our book of business or negatively impacts the ability of borrowers to continue to make
principal and interest payments on mortgage loans in our book of business could increase our delinquency rates, default rates
and average loan loss severity of our book of business in the affected region or regions, which could have a material adverse
effect on our business, results of operations, financial condition, liquidity and net worth. While we attempt to create a
geographically diverse mortgage credit book of business, there can be no assurance that a major disruptive event, depending
on its magnitude, scope and nature, will not generate significant credit losses and credit-related expenses.
In addition, as described in a risk factor above, although we have business continuity plans and facilities in place, the
occurrence of a catastrophic event could overwhelm our recovery capabilities, which could materially adversely affect our
ability to conduct our business and lead to financial losses.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
We own our principal office, which is located at 3900 Wisconsin Avenue, NW, Washington, DC, as well as additional
Washington, DC facilities at 3939 Wisconsin Avenue, NW and 4250 Connecticut Avenue, NW. We also own two office
facilities in Herndon, Virginia, as well as two additional facilities located in Reston, Virginia and Urbana, Maryland. These
owned facilities contain a total of approximately 1,459,000 square feet of space. We lease the land underlying the 4250
Connecticut Avenue building pursuant to a ground lease that automatically renews on July 1, 2029 for an additional 49 years
unless we elect to terminate the lease by providing notice to the landlord of our decision to terminate at least one year prior to
the automatic renewal date. In addition, we lease approximately 429,000 square feet of office space, including a conference
center, at 4000 Wisconsin Avenue, NW, which is adjacent to our principal office. The lease term for the office and conference
center at 4000 Wisconsin Avenue expires in April 2018. We also lease an additional approximately 170,000 square feet of
office space at two other locations in Washington, DC and Virginia. We maintain approximately 715,000 square feet of office
space in leased premises in Pasadena, California; Irvine, California; Atlanta, Georgia; Chicago, Illinois; Philadelphia,
Pennsylvania; and three facilities in Dallas, Texas.
In January 2015, we entered into a lease for a future principal office to be built at 1150 15th Street, NW, Washington, DC.
The lease provides that the building will be delivered in two phases in 2017 and 2018.
Item 3. Legal Proceedings
This item describes our material legal proceedings. We describe additional material legal proceedings in “Note 19,
Commitments and Contingencies,” which is incorporated herein by reference. In addition to the matters specifically
described or incorporated by reference in this item, we are involved in a number of legal and regulatory proceedings that arise
in the ordinary course of business that do not have a material impact on our business. Litigation claims and proceedings of all
types are subject to many factors that generally cannot be predicted accurately.
We record reserves for legal claims when losses associated with those claims become probable and the amounts can be
reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts
reserved for those claims. For matters where the likelihood or extent of a loss is not probable or cannot be reasonably
estimated, we do not recognize in our consolidated financial statements the potential liability that may result from these
matters. Except for matters that have been settled, we presently cannot determine the ultimate resolution of the matters
described below or incorporated by reference into this item. If certain of these matters are determined against us, it could
have a material adverse effect on our results of operations, liquidity and financial condition, including our net worth.
FHFA Private-Label Mortgage-Related Securities Litigation
In the third quarter of 2011, FHFA, as conservator, filed 16 lawsuits on behalf of both Fannie Mae and Freddie Mac against
various financial institutions, their officers and affiliated and unaffiliated underwriters that were responsible for marketing
and selling private-label mortgage-related securities to us. Fourteen of these lawsuits were resolved during 2013 and 2014,
and two remain pending.
One of the remaining lawsuits is against Nomura Holding America Inc. and certain related entities and individuals, and is
pending in the U.S. District Court for the Southern District of New York. The other remaining lawsuit is against The Royal