Fannie Mae 2014 Annual Report Download - page 95

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(1) Gains from partnership investments are included in other expenses in our consolidated statements of operations and comprehensive
income. Gains from partnership investments are reported using the equity method of accounting. As a result, net income attributable to
noncontrolling interest from partnership investments is not included in income for the Multifamily segment.
(2) Consists of the benefit for credit losses and foreclosed property income (expense).
(3) Consists of net interest losses, investment gains, net, administrative expenses and other expenses.
(4) Reflects unpaid principal balance of multifamily Fannie Mae MBS issued (excluding portfolio securitizations), multifamily loans
purchased, and credit enhancements provided during the period.
(5) Reflects unpaid principal balance of multifamily Fannie Mae MBS issued during the period. Includes: (a) issuances of new MBS,
(b) Fannie Mae portfolio securitization transactions of $3.4 billion, $2.9 billion and $4.4 billion for the years ended December 31, 2014,
2013 and 2012, respectively, and (c) conversions of adjustable-rate loans to fixed-rate loans and discount MBS (“DMBS”) to MBS of
$3 million, $68 million and $215 million for the years ended December 31, 2014, 2013 and 2012, respectively.
(6) Includes $18.7 billion and $22.4 billion of Fannie Mae multifamily MBS held in the retained mortgage portfolio, the vast majority of
which have been consolidated to loans in our consolidated balance sheets as of December 31, 2014 and 2013, respectively.
(7) Our Multifamily guaranty book of business consists of (a) multifamily mortgage loans of Fannie Mae, (b) multifamily mortgage loans
underlying Fannie Mae MBS, and (c) other credit enhancements that we provide on multifamily mortgage assets. It excludes non-
Fannie Mae mortgage-related securities held in our retained mortgage portfolio for which we do not provide a guaranty.
(8) Calculated based on Multifamily segment guaranty fee income divided by the average multifamily guaranty book of business,
expressed in basis points.
(9) Calculated based on Multifamily segment credit losses divided by the average multifamily guaranty book of business, expressed in
basis points. Negative credit losses are the result of recoveries on previously charged-off amounts.
(10) Includes mortgage loans and Fannie Mae MBS guaranteed by the Multifamily segment. Information labeled as of December 31, 2014 is
as of September 30, 2014 and is based on the Federal Reserve’s September 2014 mortgage debt outstanding release, the latest date for
which the Federal Reserve has estimated mortgage debt outstanding for multifamily residences. Prior period amounts may have been
changed to reflect revised historical data from the Federal Reserve.
(11) Interest expense estimate is based on allocated duration-matched funding costs. Net interest income was reduced by guaranty fees
allocated to Multifamily from the Capital Markets group on multifamily loans in our retained mortgage portfolio.
(12) Based on unpaid principal balance.
2014 compared with 2013
Pre-tax income decreased in 2014 compared with 2013 primarily due to decreases in credit-related income and gains on
partnership investments, partially offset by an increase in guaranty fee income.
Credit-related income decreased in 2014 compared with 2013 primarily as a result of smaller improvements in property
valuations in 2014 compared with 2013, as well as improvements in loss severity trends in 2013.
Guaranty fee income increased in 2014 compared with 2013 as loans with higher guaranty fees have become a larger part of
our multifamily guaranty book of business, while loans with lower guaranty fees continue to liquidate.
Gains from partnership investments decreased in 2014 compared with 2013 primarily as a result of lower sales activity.
We recognized a provision for federal income taxes in 2014 compared with a benefit for federal income taxes in 2013. The
benefit for federal income taxes in 2013 primarily represented the release in the first quarter of 2013 of the substantial
majority of the valuation allowance against the portion of our deferred tax assets that we attributed to our Multifamily
segment.
Multifamily new business volume in 2014 was consistent with 2013 levels. FHFA’s 2014 conservatorship scorecard included
an objective to maintain the dollar volume of new multifamily business at or below the 2013 cap, excluding volume
associated with affordable housing loans, as well as loans to small multifamily properties and loans to manufactured housing
rental communities. Similar to the 2014 scorecard, the 2015 conservatorship scorecard includes a provision to maintain the
dollar volume of new multifamily business at $30 billion or below, with the same exclusions as the 2014 scorecard.
2013 compared with 2012
Pre-tax income increased in 2013 compared with 2012 primarily due to increased guaranty fee income, increased credit-
related income and increased gains from partnership investments.
Guaranty fee income increased in 2013 compared with 2012 as we continued to acquire loans with higher guaranty fees.
Loans with higher guaranty fees have become a larger part of our multifamily guaranty book of business, while loans with
lower guaranty fees continue to liquidate.