OFFICE OF FEDERAL HOUSING ENTERPRISE OVERSIGHT 

1700 G STREET NW WASHINGTON DC 20552 (202) 414-3800

 

 

 June 15, 2005 

The Honorable Richard Shelby The Honorable Michael G. Oxley 

Chairman Chairman 

Committee on Banking, Housing, & Urban Affairs Committee on Financial Services 

United States Senate United States House of Representatives 

Washington, D.C. 20510 Washington, D.C. 20515 

Dear Chairmen: 

I am pleased to transmit the 2005 Report to Congress from the Office of Federal Housing 

Enterprise Oversight (OFHEO). This report has been prepared to meet the statutory requirements 

in section 1319B of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 

(Title XIII of P.L. 102-550). The views expressed are those of the Acting Director and do not 

necessarily represent those of the President or the Secretary of Housing and Urban Development. 

This report covers accomplishments in 2004 during the tenure of former OFHEO Director 

Armando Falcon, Jr. who resigned May 20 after serving nearly six years. As Acting Director I 

thank him for his leadership and historic contributions to the safety and soundness regulation of 

Fannie Mae and Freddie Mac (the Enterprises). 

Under Director Falcon, OFHEO accomplished its statutory mission, under difficult constraints, of 

ensuring the safe and sound operations of the Enterprises. Director Falcon transformed OFHEO 

from a 70-person agency with a $16 million budget in 1999 into the strong, capable regulator it is 

today. He quadrupled OFHEO resources, completed a complex, risk-based capital regulation and 

crafted remediation plans for Freddie Mac and Fannie Mae. He reconfigured OFHEO’s 

examination program which allowed Agency examiners to detect problems at Fannie Mae before 

disruptions occurred in our housing finance system. Finally, Director Falcon crafted a strong 

corporate governance regulation for the Enterprises. He played a significant role in preserving the 

integrity of our housing finance system which contributed to the record homeownership in our 

country today. 

Pursuant to the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 the 

Agency continues to recommend legislative enhancements to OFHEO’s authority, particularly in 

those areas that would align the safety and soundness authority of the Agency more closely to our 

fellow federal banking agencies. We also believe that permanent funding of OFHEO, outside the 

appropriations process, is critical to ensuring the agency can adapt and respond quickly to changing 

circumstances at either Enterprise. 

TABLE OF CONTENTS

YEAR IN REVIEW...........................................................................................................................................1 

FINANCIAL PERFORMANCE OF THE ENTERPRISES IN 2004 ...................................................2 

SUPERVISORY ACTIONS IN 2004...........................................................................................................4

 RULEMAKING ...........................................................................................................................4 

OFHEO ACTIONS ON EXECUTIVE COMPENSATION ................................................................... 5 

OFHEO RESEARCH AND PUBLICATIONS ..........................................................................................6 

 OFHEO HOUSE PRICE INDEX MAP.................................................................................. 8 

FINANCING OFHEO'S OPERATIONS ...................................................................................................9 

FANNIE MAE ANNUAL EXAMINATION........................................................................................... 10 

 EXAMINATION RESULTS AND CONCLUSIONS ...................................................... 10

 MANAGEMENT SUPERVISION ........................................................................................ 11

 ASSET QUALITY AND CREDIT RISK MANAGEMENT ........................................... 15

 EARNINGS................................................................................................................................ 15

 LIQUIDITY RISK..................................................................................................................... 16

 SENSITIVITY TO MARKET RISK ...................................................................................... 17

 CAPITAL ADEQUACY ........................................................................................................... 17

FREDDIE MAC ANNUAL EXAMINATION........................................................................................ 19

 EXAMINATION RESULTS AND CONCLUSIONS ...................................................... 19

 MATTERS REQUIRING BOARD ATTENTION ........................................................... 20

 COMPLIANCE WITH CONSENT ORDER .....................................................................20

 BOARD AND MANAGEMENT SUPERVISION ............................................................ 21

 ASSET QUALITY AND CREDIT RISK MANAGEMENT ........................................... 22

 EARNINGS................................................................................................................................ 23

 LIQUIDITY................................................................................................................................ 23

 SENSITIVITY TO MARKET RISK ..................................................................................... 24

 CAPITAL ADEQUACY .......................................................................................................... 24

HISTORICAL DATA TABLES ...................................................................................................................25 

YEAR IN REVIEW

HOUSING SECTOR REMAINS STRONG, WITH MORE MODERATE 

REFINANCE VOLUMES 

The U.S. economy grew at a more moderate but healthy 3.9 percent rate during 2004 

compared to 4.4 percent the year before, still benefiting from the stimulus of prior years’ tax 

and interest rate cuts. Labor market conditions continued to tighten in 2004. The 

unemployment rate fell to 5.4 percent at year-end, down from 5.7 percent one year earlier. 

The persistence of the expansion led the Federal Reserve to adopt a tightening policy, and it 

began raising interest rates in June, the first time since May 2000. The Federal Funds target 

rate was raised five times between June and December, from 1.0 percent to 2.25 percent, the 

highest level since October 2001. Long-term yields initially rose in response but subsided 

shortly thereafter. Mortgage interest rates followed the trends of long-term Treasury issues, 

as is typical. According to Freddie Mac’s Primary Mortgage Market Survey (PMMS), the 

average 30-year fixed-rate mortgage (FRM) commitment interest rate trended down to a low 

of 5.4 percent in the second week of March. That rate dramatically reversed course in the 

second quarter, rising to 6.3 percent in the second week of May 2004. The average 

commitment interest rate fell in the third quarter and was generally flat in the fourth quarter. 

For the year, the 30-year FRM commitment interest rate averaged 5.84 percent. That was 

just one basis point above the average rate for 2003, the lowest rate in the history of Freddie 

Mac’s PMMS. The commitment rate on one-year Treasury-indexed adjustable-rate 

mortgages (ARM) averaged 3.9 percent in 2004, up slightly from the previous year’s average 

of 3.8 percent. 

Low interest rates continued to have a positive impact on the U.S. housing sector. Singlefamily housing starts increased for the fourth consecutive year, totaling 1.65 million units in 

2004, up from 1.53 million units in 2003. Home sales set new records for the fourth 

consecutive year. Combined sales of new and existing homes totaled 7.9 million units in 

2004, an increase of 9.9 percent from the record-setting level in 2003 of 7.3 million units. 

Whereas housing starts and sales continued to swell, originations of single-family mortgages 

retreated in 2004, falling 27 percent to $2.8 trillion. Despite that decline, originations came 

in at their second highest level ever. The decline in originations was driven by a decline in 

mortgage refinancings after the extraordinary volumes in 2003 when interest rates declined 

significantly. According to Inside Mortgage Finance, refinancings totaled $1.5 trillion in 2004, 

down from $2.8 trillion the year before. 

The average rate of increase in house prices, as measured by OFHEO’s House Price Index, 

reached double-digits in 2004, the first time since 1979. The average U.S. home price 

increased 11.9 percent from the fourth quarter of 2003 to the fourth quarter of 2004, 

compared to 8.1 percent the year before. Five of the nine Census Divisions experienced 

double-digit rates of appreciation, up from three the year before. The generally healthy 

economy and continued low interest rates strengthened demand for homes. 

The rising house price appreciation rate led to a decline in housing affordability. The 

National Association of Realtors’ housing affordability index was 132.6 in 2004, down from 
2 

138.4 the year before. Notwithstanding, a record 69.2 percent of U.S. households owned 

their homes as of the end of the fourth quarter 2004, up from 68.6 percent one year earlier. 

The rental vacancy rate fell fractionally from the fourth quarter of 2003 to the fourth quarter 

of 2004, to 10.0 percent. 

FINANCIAL PERFORMANCE OF THE ENTERPRISES IN 2004 

Fannie Mae and Freddie Mac each were profitable in 2004 but faced internal and external 

challenges. Internally, both Enterprises had to address serious accounting and control 

problems. Externally, a major shift in the composition of primary mortgage market loan 

production and increased demand for mortgages by other investors diminished investment 

opportunities for Fannie Mae and Freddie Mac. 

In December 2004, following an OFHEO report of special examination findings, the 

Securities and Exchange Commission (SEC) advised Fannie Mae that certain accounting 

practices followed for years 2001 through 2004 did not comply with Generally Accepted 

Accounting Principles. The SEC directed Fannie Mae to restate financial statements issued 

for each of those years. Accordingly, there are no audited financial data with which to gauge 

the financial performance of Fannie Mae for 2004. Data referenced below were derived 

from Fannie Mae’s Monthly Summary for December 2004. Freddie Mac published 

unaudited financial data for 2004. 

While mortgage originations came in at their second highest level ever in 2004, both 

Enterprises dramatically reduced their purchase and issuance activities. Higher ARM and 

subprime shares of mortgages originated in 2004 resulted in originators retaining a larger 

share of their production for their portfolios or using other securitization channels to a 

greater degree than usual. Fannie Mae purchased or guaranteed $725 billion of mortgages in 

2004. That was about one-half of the Enterprise’s business activity the year before. The 

Enterprise issued $552 billion of new mortgage-backed securities (MBS) in 2004, less than 

one-half the volume issued in 2003. Freddie Mac’s business volume also was down sharply 

in 2004 compared to the previous year. The Enterprise purchased or guaranteed $495 

billion of mortgages in 2004 and issued $365 billion of new MBS, about one-half the volume 

issued in 2003. 

Each Enterprise grew its mortgage portfolio by less than one percent in 2004, the lowest rate 

of growth in well over a decade for both Enterprises. Competition for mortgages and 

mortgage securities by investors (banks in particular) continued to be strong. That 

competition caused a compression of spreads between yields on new mortgage investments 

and debt costs and helped to make portfolio purchases less attractive in 2004. The 

Enterprises generally invest in mortgages or mortgage securities only when yields are 

sufficient to provide desired levels of returns, after interest and appropriate hedging and 

rebalancing costs. 

Freddie Mac’s GAAP earnings fell in 2004. Net income was $2.9 billion in 2004 compared 

with $4.8 billion the year before. The decline was driven primarily by an increase ($4.5 

billion) in losses on derivative instruments that did not qualify for hedge accounting. Those 

losses were partially offset by a reduction in losses on debt retirement of $1.4 billion. 

Guarantee fee income declined 16.4 percent in 2004, to $1.4 billion. The more stable 
3 

interest rate environment in 2004 led to a substantial reduction in the amount of deferred fee 

income (i.e., credit and buy down fees) amortized to income. As a result, the average 

guarantee fee rate fell 5.8 basis points, to 17.5 basis points. Administrative expenses fell a 

modest 3 percent, to $1.8 billion. Salaries, benefits, and professional services were up sharply 

because of the restatement but those increases were largely offset by a decline in other 

expenses. 

Credit losses for Freddie Mac, which include charge-offs and foreclosed property expenses 

remained very low at $137 million in 2004, up from $86 million the year before. The credit 

loss rate for Freddie Mac (credit losses as a percentage of the average total mortgage 

portfolio, excluding non-Freddie Mac securities) increased from 0.8 basis points in 2003 to a 

modest 1.1 basis points in 2004. 

The fair value balance sheet disclosure of Freddie Mac provides additional information on 

the economic condition of the Enterprise. Freddie Mac’s fair value balance sheet showed an 

increase in fair value net worth of 12.8 percent or $3.6 billion, to $30.9 billion in 2004. 

Adjusted for capital transactions (primarily dividend payments), fair value net worth 

increased by $4.6 billion. Core spread income from the retained mortgage portfolio and 

guarantee fees from the sold portfolio were chiefly responsible for the gain in fair value net 

worth achieved in 2004. However, significant portions of the gain were also accounted for 

by tighter mortgage-to-debt option-adjusted spreads and longer expected guarantee fee 

income streams on existing guarantees. These portions of the gain may provide little longterm benefit. 
4 

SUPERVISORY ACTIONS IN 2004

Enforcement Actions 

OFHEO continued administrative actions against Leland Brendsel, former Freddie Mac 

Chief Executive Officer and Chairman, Vaughn Clarke, former Freddie Mac Chief Financial 

Officer, and the Enterprise. The charges relate to conduct and violations that contributed to 

the improper management of earnings and the resulting restatement of earnings by Freddie 

Mac. The charges call for the benefits of the individuals to be reduced to those appropriate 

in a termination for cause—a significant decrease—and for repayment of bonuses. Civil 

money penalties and restitution for losses to Freddie Mac are also sought against the two 

former executive officers. A U.S. District court ruled that compensation and other benefits 

held by Freddie Mac in response to a request from OFHEO must be released; and, 

accordingly, compensation and benefits were released by the company. The underlying 

administrative actions against the two individuals remain before an Administrative Law 

Judge, where discovery continues and various pre-hearing motions and filings are pending. 

Supervisory Steps 

As part of its special examination of Fannie Mae, OFHEO entered into an agreement with 

the Board of Directors of Fannie Mae. The Agreement specified actions the company must 

undertake to address accounting, staffing and internal control matters. The Agreement 

required the submission of a capital plan and a surplus capital requirement of 30 percent 

over the minimum capital level of the Enterprise and for a review of executive compensation 

programs. Also, the Agreement called for external legal and accounting reviews by firms 

selected by the Enterprise and approved by OFHEO. The Agreement further required 

creation of a chief risk officer and greater independence in the internal audit function. 

As part of its special examination of Fannie Mae, OFHEO issued a number of subpoenas 

regarding individuals and materials. A large number of witnesses were interviewed and large 

amounts of materials reviewed by OFHEO attorneys in anticipation of such interviews. 

OFHEO is working with the Securities and Exchange Commission (SEC), Public Company 

Accounting Oversight Board (PCAOB) and Justice Department during the course of its 

special examination. 

RULEMAKING 

OFHEO proposed a rule to amend its corporate governance regulation that would update 

provisions to increase the oversight responsibilities of the Board, address audit firm and 

audit partner rotation, separate the functions of chief executive officer and chairman of the 

Board, create the positions of chief risk officer and chief compliance officer and add other 

provisions. 
5 

OFHEO ACTIONS ON EXECUTIVE COMPENSATION

OFHEO’s enabling statute and the Enterprise charter acts charge the Director of OFHEO 

with oversight responsibility in the area of executive compensation. OFHEO’s statute 

requires the Director to prohibit an Enterprise from providing excessive compensation to 

any executive officer. Specifically, the statute provides that compensation must be 

reasonable and comparable with compensation paid by other similar businesses to executives 

having similar duties and responsibilities. “Similar businesses” include publicly held financial 

institutions or major financial services companies. 

The Enterprise charter acts require the companies to obtain the prior approval of OFHEO’s 

Director before entering into or changing termination agreements with their executive 

officers. The Director may not approve any such agreement unless the Director determines 

that the benefits provided thereunder are comparable to benefits provided under such 

agreements for officers of other public and private entities involved in financial services and 

housing interests who have comparable duties and responsibilities. 

In 2004, OFHEO’s proposed corporate governance rule included several requirements in 

the area of executive compensation. Specifically, the rule: 

• Requires reasonable and appropriate compensation for directors, officers and 

employees, highlighting the need to avoid compensation incentives that excessively 

focus on short-term earnings; 

• Requires that compensation programs consider risk management, compliance with 

the law and operational stability in addition to earnings; and, 

• Requires reimbursement by a senior officer if an accounting restatement is required 

under certain circumstances. 

OFHEO’s investigations of both Freddie Mac and Fannie Mae found compensation 

incentives focused primarily on short-term earnings to be instrumental in leading to 

improper conduct. Therefore, after reviewing nine termination benefit agreements and 

discussing them with the applicable enterprise, OFHEO required modifications in several 

cases to provide a more appropriate incentive structure. OFHEO also advised each 

Enterprise which executive officer’s contracts are now subject to OFHEO’s oversight due to 

organizational changes within each company. 
6 

OFHEO RESEARCH AND PUBLICATIONS

During 2004, OFHEO continued to focus its research plans and activities on a variety of 

topics that assist the agency in achieving its strategic goals. In 2004 OFHEO placed a 

priority on research and analysis primarily related to analyzing risk and capital adequacy. 

OFHEO also continued its practice of publishing reports and papers, and posting 

information on its Web site, to better inform interested parties about the issues OFHEO 

addresses regarding the Enterprises and the secondary mortgage market. The papers and 

reports are the result of research, analysis and special examination work accomplished 

throughout the year. 

In September 2004, OFHEO released the “Report of Findings to Date: Special 

Examination of Fannie Mae” which outlined the misapplication of some Generally Accepted 

Accounting Principles (GAAP) that OFHEO found at Fannie Mae during the course of the 

special examination. OFHEO issued public statements on the special examination of Fannie 

Mae, the Freddie Mac restatement of financial results, the Agreement for corrective action 

with the Fannie Mae Board of Directors, directives to the Enterprises, and quarterly capital 

classifications throughout the year. 

OFHEO also released two research papers during 2004. “The Single-Family Mortgage 

Industry in the Internet Era: Technology Developments and Market Structure,” released in 

January, examined how changes in technology have affected the structure and business 

practices of firms in the single-family mortgage industry in the last two decades, and how 

firms are seeking to exploit business opportunities created by automated underwriting and 

the Internet. “Mortgage Markets and the Enterprises in 2003,” released in October 2004, 

reviewed developments in the housing sector and the primary mortgage market, the 

secondary market activity of Fannie Mae and Freddie Mac, and the financial performance of 

the Enterprises in 2003. 

OFHEO published two staff working papers in 2004, continuing the working paper series 

begun in 2002. These papers continue research on topics of interest to OFHEO, including 

the value of foreclosed property and equity options markets. These working papers, as well 

as OFHEO research papers and reports are available at www.ofheo.gov. OFHEO 

researchers also presented papers and led discussions at professional and industry 

conferences on topics such as house prices, the regulation of the Enterprises, and the 

performance of prime and non-prime mortgages. 

OFHEO also published a public version of the software used to run the risk- based capital 

stress test, along with a stylized data set to use in the model. By running the data for this 

hypothetical firm through the stress test model, a member of the public can better 

understand the sensitivities and implications of the stress test. 

In 2004 OFHEO began calculating and publishing the maximum conforming loan limit for 

single-family mortgages purchased by Fannie Mae and Freddie Mac. In November 2004, 

OFHEO announced that the 2005 limit can be no higher than $359,650 for one-unit 

properties. Effective January 1, 2005, the Enterprises’ conforming loan limit for larger 

properties applies as follows: Two-unit mortgages are limited to $460,400; three-unit 

mortgages: $556,500; and four-unit mortgages: $691,600. The limit in statutorily designated 
7 

high-cost areas (Alaska, Guam, Hawaii, and the U.S. Virgin Islands) is 50 percent higher, for 

example, $539,475 for a one-unit, single-family mortgage. For second mortgages, the 2005 

limit is $179,825. In the designated high-cost areas this is $269,725. 

OFHEO contributed its expertise in working with other federal agencies during the course 

of 2004. OFHEO worked with 10 other federal agencies and financial regulators to issue a 

Spanish-language brochure, “Putting Your Home on the Loan Line Is Risky Business,” that 

alerts consumers to potential borrowing pitfalls, including high-cost home loans, and 

provides tips for getting the best financing deal possible. OFHEO also worked with the 

International Monetary Fund and the State Department to assist officials from Armenia, 

Kazakhstan, Japan and Korea with expertise on developing and regulating mortgage markets. 

OFHEO also continued quarterly publication of its House Price Index (HPI), which uses 

Enterprise data to calculate changes in house prices for the nation as a whole, the nine 

Census Divisions, the 50 states and the District of Columbia, and 379 Metropolitan 

Statistical Areas or Metropolitan Divisions. In 2004, OFHEO began providing data on 25 

additional MSAs and 29 Metropolitan Divisions (which replaced 11 MSAs) to be consistent 

with definitions revised by the Office of Management and Budget based on 2000 census data. 

The HPI is based on over 29 million repeat transactions over 30 years. OFHEO developed 

the HPI as a key input for its risk-based capital stress test. It is regularly reported by media 

organizations throughout the nation and used by researchers to analyze house price behavior 

(Map on following page). 
8 

OFHEO HOUSE PRICE INDEX 

U.S. MAP 

Fourth Quarter 2003 – Fourth Quarter 2004 
9 

FINANCING OFHEO’S OPERATIONS

OFHEO’S BUDGET 

The business operations of OFHEO are not financed by taxpayer funds. The annual 

operating budget, however, is subject to the federal appropriations process and is 

constrained by the amount appropriated by Congress and signed into law by the President. 

The amounts provided for by the appropriations process are collected from Fannie Mae and 

Freddie Mac in the form of an annual assessment. 

Following two months of operating under continuing resolutions, OFHEO received its full 

fiscal year 2005 budget request of $59.2 million in December 2004. This will fund existing 

activities and provide resources to strengthen examination, compliance, accounting oversight 

and capital review and adequacy programs. Subsequently, in May 2005, Congress 

appropriated an additional $5 million for OFHEO to cover the increased costs of the special 

examinations of Fannie Mae and Freddie Mac and associated litigation. 

Congress is considering legislation that would transfer all resources available to OFHEO to a 

new, strengthened housing government-sponsored enterprise regulator, outside of the 

appropriations process. Absent legislative change, however, OFHEO will continue to be 

subject to the appropriations process. The Administration proposed a fiscal year 2006 

budget of $60 million to fund OFHEO’s operations. 

 

OFHEO CONTINUES TO RECEIVE UNQUALIFIED AUDIT OPINION IN FY 

2004 

In conjunction with the goal of the government to improve accountability, OFHEO 

prepared financial statements for fiscal year 2004 and subjected these statements and 

underlying processes to an independent audit. The certified public accounting firm of 

Dembo, Jones, Healy, Pennington and Marshall audited the statements. The firm issued an 

unqualified audit opinion on OFHEO fiscal year 2004 financial statements, found no 

material weaknesses in internal controls, or instances of non- compliance with laws and 

regulations. While not required by law, OFHEO voluntarily began obtaining outside audit 

reviews of its financial statements in fiscal year 1998. Fiscal year 2004 represents the seventh 

straight year OFHEO has received a clean, unqualified audit opinion which can be viewed 

on OFHEO’s Web site at http://www.ofheo.gov/media/pdf/fy04auditedfinancials.pdf. 
10 

FANNIE MAE ANNUAL EXAMINATION 

In accordance with OFHEO’s risk-based examination approach, examinations of Fannie 

Mae during 2004 primarily focused on the evaluation of the policies, practices, and controls 

in business lines managed by the Chief Financial Officer (CFO) and related functions. 

Examinations conducted in other areas of Fannie Mae focused on policies, risk management, 

and reports for the Board and executive management. 

EXAMINATION RESULTS AND CONCLUSIONS 

Overall, Fannie Mae’s condition warrants significant supervisory concern. The quality of 

policies, controls and communication varied among the business lines due to weaknesses in 

the program of former executive management. The program failed to establish an explicit 

baseline of standards that ensured all Enterprise activities consistently met industry standards 

in policies, controls and communication. These weaknesses, coupled with a focus on 

expense control, impeded or prevented Fannie Mae from building aspects of the 

organizational structure and culture needed to effectively manage the company through 

significant business growth. Deficiencies noted during 2004 indicate Fannie Mae’s program 

needs strengthening in several areas: 

• The quality of policies varies due to the lack of standardization in their production 

and review. 

• Reporting to the Board requires improvement. 

• The lack of a centralized authority in operations and weaknesses in independent risk 

oversight prevented several deficiencies from being detected, reported, and corrected. 

The organizational structure failed to provide fundamental controls for the controller 

department. 

• Deficiencies identified inadvertently or through reviews conducted by Fannie Mae 

and OFHEO indicate several areas in operations controls need strengthening. 

• Information technology in the areas of business continuity planning, crisis 

management, data center, and e-business activities are managed satisfactorily. 

• Credit risk management is satisfactory for processes concerning counterparty risk 

management, multifamily operations, and new product development. However, 

deficiencies noted in several areas indicate that business line management needs to 

strengthen its oversight functions. 

• Liquidity management is satisfactory but requires strengthening in some areas of 

policies and procedures, contingency planning, and systems issues that impact some 

process efficiencies. 
11 

• Interest rate risk is managed satisfactorily, and risk levels remain within limits set by 

management. 

The Board and management initiated actions to address the issues noted in this report, and 

have already devoted significant resources to correct the deficiencies noted in OFHEO’s 

special examination of Fannie Mae released in September 2004. 

MANAGEMENT SUPERVISION

The performances of the CEO, CFO, and controller were ineffective due to their lack of 

adequate policies, controls, and systems in the Controller’s department and other areas 

managed by the CFO. The internal audit function was weak due to compromised 

independence, a lack of audit experience, and poor quality of the audit program. The interim 

and new management team has begun to implement a program to correct these deficiencies 

but it is too early to determine the effectiveness of their management or program. 

The program of former executive management generated weaknesses in communication and 

controls. Some Board reports and presentations needed additional information and/or 

better risk metrics. The lack of a centralized authority in operations and independent risk 

oversight prevented some deficiencies from being detected, reported, and corrected. Poor 

controls in the controller department coupled with inadequate oversight from internal audit 

contributed to long-standing problems in financial reporting. 

Former executive management fostered a culture of excessive expense control that 

contributed to inadequate policies, controls, and systems in the controller department and 

other areas within the Enterprise. The excessive expense controls prevented several systems, 

processes and controls from being properly implemented or updated, and impeded the 

ability of business line management to prepare for future growth in business activities and 

changes in Generally Accepted Accounting Principles (GAAP). Internal audit was also 

significantly understaffed. 

Organizational structure and control deficiencies contributed to the use of accounting 

policies and practices that were overly aggressive or not compliant with GAAP. These 

deficiencies include: 

• No policies or procedures to formally establish personnel responsibilities for the 

development, review, and approval of accounting standards. 

• No Controller department procedures to formally detail actual practices in applying 

accounting methodologies, or recording transactions. 

• Poor segregation of duties in the Controller department for the authorization and 

recording of transactions, the modeling and recording of transactions, and financial 

reporting and forecasting. 

• Lack of accounting technical expertise in the CFO and many of the controller 

department’s management and staff. 
12 

• The independence of internal audit was compromised through inappropriate 

reporting lines, and the CFO’s undue influence over the general auditor’s 

compensation. The general auditor was also responsible for auditing his prior work. 

• Excessively low staff levels in the Controller department and internal audit. 

• Systems limitations in the Controller department created by excessive expense 

controls over systems and staff resources. 

• Inadequate communication with the Board and its audit committee on accounting 

policy, and the resulting impact on public disclosures and compliance with GAAP. 

The lack of centralized authority in operations and independent risk oversight prevented 

many deficiencies in several business lines from being detected, reported, and corrected. 

Several internal control standards were left to individual managers to establish, and 

accountability for detection of deficiencies largely fell on internal audit. Internal audit did 

not detect or accurately report several deficiencies as well as its own resource deficiencies to 

the audit committee. 

The former strategic plan did not adequately coordinate all business lines for new business 

growth and changes in accounting requirements. Business line management sometimes 

made decisions independently and addressed systems upgrades or deficiencies with manual 

work-arounds, rather than implementing improvements within a comprehensive framework. 

The Board began taking action and established a compliance committee to oversee 

corrective actions and initiated analysis of compensation, organizational structure, and their 

capital plan after the release of OFHEO’s special examination of Fannie Mae in September 

2004. Once the SEC concurred with OFHEO’s conclusions that accounting methodologies 

did not comply with GAAP guidelines, the Board established a program to correct 

accounting policies and methodologies. The Board devoted significant resources to develop 

and monitor a program to correct deficiencies noted in the special examination by: 

• Appointing a non-executive chairman to the Board and establishing separate 

positions for Chairman and CEO. 

• Establishing compliance and review committees of the Board and a team that 

monitors and reports to the compliance committee efforts made to comply with 

OFHEO’s September 2004 agreement and March 2005 supplemental agreement. 

• Hiring consultants to recommend an organizational structure and compensation plan 

that meets or exceeds industry standards. 

• Removing key executives who managed the accounting activities, appointing interim 

managers and a permanent controller, and hiring search firms to help replace the 

interim CEO, CFO, and the head of internal audit. 

• Replacing the external auditor. The new auditor has initiated a comprehensive, 

substantive audit of Fannie Mae’s processes, controls, and accounting policies and 

methodologies. 

• Hiring an accounting firm to assist management in a comprehensive review of all 

accounting policies. 

• Changing the organizational structure of the departments managed by the CFO to 

establish appropriate internal controls and segregation of duties in the areas of 
13 

internal audit, chief risk officer, accounting, policies, reporting performance, and 

performance planning, forecasting, and modeling. 

• Strengthening independent risk management by establishing a centralized risk 

management unit, establishing appropriate separation of duties in the controller 

department, developing a stand-alone ethics and compliance function, and making 

internal audit independent both in organization structure and function. 

• Centralizing the line of business management of operations. 

• Eliminating hedge accounting for derivatives until systems can be upgraded to 

properly apply the rules and document compliance required by SFAS 133. 

Operations Risk 

The 2004 examinations focused on the evaluation of internal controls, systems, 

communication, and culture in the lines of business under the CFO, and corrective actions 

taken by the Board to address the deficiencies OFHEO noted. Limited operations reviews 

were conducted in cash flow forecasting, credit risk measurement, and information 

technology (IT) in the areas of business continuity planning, crisis management, data center 

and e-business activities. 

Operations risk management for transactions, accounting, and financial statement records of 

the Controller’s department is weak but improving. Operations examinations outside of the 

controller department were limited this year, accordingly, OFHEO cannot rate the quality of 

operations risk management in the other lines of business. In addition to deficiencies 

discovered through reviews conducted by OFHEO and Fannie Mae management, new 

issues continue to emerge that indicate that operations controls need strengthening. The full 

picture of the quality of operations risk management will not be known until the Board 

consultants and the external auditor complete their analyses and OFHEO completes its 

ongoing examination. 

Operations risk management for business lines managed by the CFO is weak based on: 

• Accounting policies that are not compliant with GAAP. 

• Inadequate systems used to record transactions and produce financial statements. 

• The lack of a standardized or centralized program for business line controls. 

• An operations risk management program that did not meet industry standards in 

several areas in organizational structure and communication. 

• Former executive management began implementing a program to correct these 

deficiencies in 2004 but did not communicate the deficiencies to the Board.

Many aspects of the operational structure do not meet industry standards in the areas of 

segregation of duties, personnel expertise, and systems limitations and controls. Inadequate 

segregation of duties, poor clarification of personnel responsibilities and inadequate technical 

expertise of decision-makers and a willful disregard of accounting rules contributed to the 

use of accounting policies and practices that were overly aggressive or not compliant with 

GAAP. The former CFO reporting lines generated conflicts of interest by combining the 

following functions: 
14 

• The authorization and recording of financial transactions. 

• Modeling and recording of security amortization. 

• Financial reporting and forecasting. 

• Risk taking, risk management, and financial controls. 

The corporate-wide standards for business line oversight of operations risk management are 

weak due to a lack of centralization in operations oversight and non-standardization in 

controls and reporting requirements. Individual managers sometimes determined their own 

controls and report quality, which led to non-standardized and uncoordinated solutions that 

generated work-around fixes rather than coordinated solutions built for long-term viability. 

Operations risk management in business lines managed by the CFO is improving due to the 

significant resources employed by the Board and the new executive management team to 

identify and correct deficiencies. The program is in its initial stages, and will take 

considerable time to fully implement. Issues such as the segregation of duties, hiring of new 

personnel, new accounting policies, and temporary manual work-arounds for systems 

deficiencies have been or can be corrected within months. Implementation of new systems 

for financial records and other areas will require several years to address. 

The Board and new executive management devoted significant resources to develop a 

program to improve operations risk management throughout the Enterprise. The program 

addresses the operational deficiencies noted in the formal agreements with OFHEO and 

identifies and corrects issues throughout Fannie Mae. The Board and company management 

are in the initial stages of developing and implementing a comprehensive, corporate-wide 

framework for monitoring and controlling operational risk. Company management began to 

implement improvements noted in the independent organizational study conducted by 

consultants hired by the Board, and developed tracking reports to help monitor progress in 

meeting time lines for correction. The corrective actions to address operations risk issues 

include: 

• Operations risk management centralized in one business line. 

• Integration of controller department systems into the corporate-wide program for 

information technology. 

• An organization structure that meets or exceeds industry standards. 

• Improved controls and clarified accountability within the lines of business. 

• A centralized independent risk management function that evaluates all risks within 

Fannie Mae, including operations risk. 

• Improved reports, and risk metrics to better communicate risk levels and trends. 

• Improved policies and procedures to better communicate standards, controls, and 

risk limits. 

Information technology in the areas of business continuity planning, crisis management, data 

center and e-business activities are managed satisfactorily. Systems are secure and 

management established effective systems redundancies and business continuity processes. 

The IT strategic plan is satisfactory and appropriately integrated with corporate objectives. 
15 

Policies for the areas examined were generally satisfactory but some contained out-of-date 

and incomplete information. 

ASSET QUALITY AND CREDIT RISK MANAGEMENT

Credit quality is strong. Credit risk management is satisfactory for processes concerning 

counterparty risk management, multifamily operations, and new product development. 

Weaknesses in many of these areas indicate that management in both the single-family and 

multifamily lines of business and internal audit need to strengthen their oversight functions. 

Most weaknesses were minor but several are of greater significance: 

• Management of mortgage fraud in seller/servicers. 

• Systems integration and process efficiencies. 

• Methodologies used in the loan loss reserve. 

• Validation of some credit risk models. 

• Policy review process. 

Management in the lines of business and independent risk management have already begun 

to address many of these issues. Management has recently corrected issues in the risk rating 

system, begun improvements in policy review and model validation, and proposed structural 

changes to improve controls and operations. 

EARNINGS

The analysis below is based on financial statements that will be revised significantly at the 

conclusion of the ongoing restatement. 

Earnings for 2004 are satisfactory. The business model exhibits the capacity for sustainable 

profits. Earnings capacity benefits from the government sponsored Enterprise status of the 

company which lowers borrowing costs and enhances the market’s reception to its 

guarantees. The analysis of earnings is impeded by the lack of GAAP-compliant statements. 

The capacity of the Enterprise for future earnings is a key component of the plan of 

management to achieve the capital ratios required in its agreement with OFHEO. The 

preferred equity issuance near year-end 2004 increased capital by $5 billion but as of March 

2005, capital levels remained $5 billion below a 30 percent surplus, the required level. 

Management has also reduced dividend payments by 50 percent, which will increase retained 

earnings by roughly $1 billion per year. Reductions in asset growth to reduce capital 

requirements, however, may limit earnings growth. 

The rapid earnings growth reported in preceding years was not maintained in 2004, as 

expansion of the mortgage asset portfolio ceased and the guaranty business grew only 

modestly. Earnings in 2005 will likely be affected by asset reductions caused by the need to 

build capital and higher expenses from the restatement effort and systems upgrades. 
16 

Earnings from the mortgage asset portfolio remained strong in 2004 but were restrained by 

flat growth and a lower investment spread. The lack of growth in mortgage assets in 2004 

followed 13 consecutive years of double-digit growth. Unusually tight spreads between 

market yields on mortgages and Fannie Mae’s borrowing costs limited profitable purchase 

opportunities. Strong demand for mortgage assets at depository institutions held down 

mortgage yields throughout 2004. 

The guaranty business experienced lower growth but higher guarantee fee (g-fee) rates. The 

outstanding mortgage security portfolio grew 8 percent in 2004 after exceptionally high 

growth in 2003 at 26 percent. A shift in primary market production toward adjustable-rate 

mortgages (ARMs) and subprime loans contributed to Fannie Mae’s lower share of new 

business. Private label mortgage-backed security (MBS) issues reached record levels at $864 

billion or about 46 percent of total MBS issues in 2004, up from about 20 percent in 2002 

and 2003. The increase in g-fees is, in part, due to the increase in purchase money 

mortgages, and the decline in refinancings which have lower g-fees. 

Expenses will increase in 2005 to cover financial restatement efforts and systems upgrades, 

partially offset from cost control in other expense categories. Expenses will increase to 

cover external consultants, the expanded scope of the external auditor, and internal activities 

to identify and correct deficiencies in the controller department and other areas within 

Fannie Mae. The increase in systems expenses is primarily from changes to the controller 

department systems so that they can automatically apply GAAP compliant accounting 

methodologies. 

LIQUIDITY RISK

Liquidity management is satisfactory but requires strengthening in some areas of policies and 

procedures, contingency planning, and systems issues that impact some process efficiencies. 

Policies provide guidelines and limits for the securities portfolios and asset coverage of short 

term liabilities. Daily cash flows and asset portfolios are managed satisfactorily. Some 

manual processes are inefficient but are capable of producing impacted reports on time. 

Management is in the process of addressing the following issues. 

• Some policies and procedures are being refined with more formal guidelines for 

cashflow forecasting and tenor management. 

• Contingency planning is being refined with estimates of realistic stress scenarios. 

• Processes will be refined through automation and systems integration. 

The market value of Fannie Mae’s mortgage and non-mortgage securities amply cover the 

liabilities that mature in one year or less. Systemic market events have not reduced the 

liquidity of the market for Fannie Mae debt because of the market’s perception of Fannie 

Mae’s debt as a “flight to quality” product. In addition, recent company-specific events 

concerning financial statement and internal control deficiencies generated only a small 

impact on the cost of and market access to funding to date. OFHEO cannot provide a 

liquidity rating until an evaluation is completed of the analysis of cash flow variances and 

stress scenarios by the management of the treasury department of the company. 
17 

SENSITIVITY TO MARKET RISK

Interest rate risk (IRR) is managed satisfactorily due to effective communication and risk 

management from front office personnel throughout portfolio strategy, portfolio 

transactions, treasury, and the risk policy committee. Risk levels have been consistently 

maintained within management’s IRR limits. IRR management should be strengthened 

through: 

• A more comprehensive policy. 

• Reports that better communicate the Enterprise’s total IRR profile to Board 

members. 

OFHEO cannot provide a final rating on the quantity of risk until a comprehensive review 

of data inputs, assumptions, methodologies and models used to estimate risk/return metrics 

is completed. An evaluation of middle or back office operations, securities valuation 

methodologies, and IRR model development and use was not done during this examination 

cycle. 

CAPITAL ADEQUACY

Fannie Mae’s capital is classified as significantly undercapitalized at year-end 2004. As of 

December 31, 2004, based upon information provided and certified by Fannie Mae 

management including adjustments for the estimated impact of accounting errors, Fannie 

Mae’s estimated core capital exceeded the estimated minimum capital requirement by a small 

margin. Given the significant control weaknesses and the remaining uncertainties associated 

with the ongoing review of Fannie Mae’s financial controls and accounting policies, risk 

remains that accounting adjustments could deplete Fannie Mae’s core capital from those 

estimates. The small surplus at year-end 2004 left little room for discrepancies in the 

estimated capital position. It is noteworthy, however, that as of March 31, 2005 Fannie Mae 

had achieved an estimated capital surplus over the minimum capital requirement, resulting in 

a classification of adequately capitalized for March 31, 2005. The estimated $4 billion 

surplus on that date provided an added cushion to cover the impact of additional 

uncertainties in the estimated accounting impact on capital. 

Capital was classified as adequately capitalized at the end of the first two quarters in 2004 

because capital levels met and exceeded both the minimum and risk-based capital 

requirements based on existing financial statements. After the SEC required Fannie Mae to 

restate its financial statements to address accounting issues, OFHEO reduced Fannie Mae’s 

capital classification to significantly undercapitalized at the end of the third quarter 2004 to 

reflect an estimated reduction in core capital below the minimum capital requirement. 

OFHEO and Fannie Mae entered into an agreement on September 27, 2004, that required 

Fannie Mae to achieve a 30 percent capital surplus by June 30, 2005 to provide coverage for 

uncertainties in Fannie Mae’s controls and accounting practices. On December 21, 2004, 

OFHEO classified Fannie Mae as significantly undercapitalized based upon the ruling of the 

Securities and Exchange Commission that Fannie Mae must restate its financial results due 
18 

to inaccuracies in SFAS 133 reporting. Fannie Mae disclosed that the estimated impact of 

the disallowed hedges approximates $9 billion. OFHEO adjusted the previously reported 

financial results for September 30, 2004 reflecting the $9 billion capital reduction, resulting in 

a deficit capital surplus of approximately $2 billion. As a result of the significantly 

undercapitalized classification for September 30, 2004, Fannie Mae submitted a capital 

restoration plan that outlined the strategy of the company for achieving the required capital 

surplus by September 30, 2005. Fannie Mae strengthened its capital position by issuing $5 

billion in preferred stock on December 30, 2004. Additional accounting errors impacting 

December 31, 2004 surfaced in early 2005 resulting in a small estimated capital surplus of 

$475 million. 

Due to the continued uncertainty in the financial estimates and the small margin for error, 

OFHEO continued the significantly undercapitalized position as of year-end 2004. During 

2005, Fannie Mae has continued to generate earnings and has initiated select asset sales. 

These actions have generated an estimated capital surplus of $4 billion as of March 31, 2005 

and a capital classification of adequately capitalized by OFHEO. Further, efforts to achieve 

the 30 percent capital surplus by September 30, 2005 in accordance with the capital 

restoration plan remain on track with contingency plans available should additional changes 

alter the plan. 

Management satisfactorily monitors and reports regulatory capital to OFHEO. Operational 

weaknesses, accounting issues, and internal control deficiencies throughout Fannie Mae 

continue to impact capital requirements and capital management practices. Management 

continues to take steps to restore capital levels and remains on target to achieve the 

OFHEO-directed 30 percent minimum capital surplus by September 30, 2005. The capital 

restoration plan appropriately details contingent actions that could increase capital levels 

should primary means become insufficient. 
19 

FREDDIE MAC ANNUAL EXAMINATION 

OFHEO’s examination activities focused heavily on compliance by the Enterprise with the 

extensive requirements of the Consent Order the Board of Directors executed on December 

9, 2003 (Consent Order) 1 and with the implementation by the Enterprise of plans it 

submitted in response to the Consent Order requirements. Correspondingly, we targeted 

our examination resources to evaluate Board and management compliance with specific 

actions required by the Consent Order and the Enterprise that pertained to: the Board of 

Directors and Senior Management (Article II); Internal Controls (Article III); Internal Audit 

(Article IV); Internal Accounting (Article V); Risk Management Transactions (Article VI); 

Public Disclosures and Regulatory Reporting (Article VII); and Consent Order Oversight 

and Reporting (Article VIII). We performed additional on-site and off-site examination 

activities necessary to assess credit risk (including asset quality), earnings, capital adequacy, 

information technology, interest rate risk, liquidity risk, and management processes. 

EXAMINATION RESULTS AND CONCLUSIONS 

Overall, the condition of the Enterprise is improving but continues to warrant supervisory 

concern. The Enterprise is in the process of implementing plans to address the matters in 

the wide-ranging Consent Order and is subject to a capital directive as a result of a 

combination of moderate to severe internal control weaknesses. Although the Enterprise 

reported 2004 financial results on March 31, 2005, it does not have current financial 

statements in circulation, and does not expect to be a timely filer of 2005 financial 

information until the first quarter of 2006. Ameliorating factors include: (1) a significant 

capital surplus; (2) risk management strengths in key areas such as credit, interest rate, and 

liquidity risk that provide the Enterprise with the ability to withstand economic and market 

fluctuations; and (3) appropriately intensive efforts on the part of the Board of Directors and 

senior management to correct known control weaknesses. 

During 2004 the Board of Directors and senior management made concerted efforts to 

correct extensive control weaknesses of the Enterprise. OFHEO examiners observed 

improvements in both financial reporting and general operational controls. Although the 

remediation of internal control weaknesses is not complete, action plans are in place, or are 

being developed and implemented, to address identified weaknesses. The successful 

completion of those plans will require the continued commitment and intensity of the Board 

and management throughout 2005 and beyond. Moreover, improvements to systems 

capabilities and the successful implementation of re-engineered business processes will be 

necessary to restore the overall control environment to a satisfactory condition. The process 

of validating the adequacy of controls and the actions taken to address significant control 

 

1 See OFHEO Consent Order No. 2003-02, dated December 9, 2003. 
20 

weaknesses will require substantial efforts on the part of Enterprise personnel and the 

independent auditor of the Enterprise. 

Leadership from the Board and senior management has facilitated significant progress over 

the past year. The reconfigured Board and senior management committees and revised 

committee charters have provided a foundation for positive change. 

MATTERS REQUIRING BOARD ATTENTION 

Key matters requiring strong Board oversight:

• The Board should continue to monitor compliance efforts to ensure remediation 

targets are met. Considerable progress was made in 2004 to achieve compliance with 

the provisions of the Consent Order. Aggressive remediation efforts are underway 

and company management anticipates full compliance with the Consent Order and 

related plans during 2006. 

• The Board should ensure management actions to correct internal control weaknesses 

and deficiencies result in processes that are repeatable and sustainable. The 

independent auditor, PricewaterhouseCoopers (PwC), identified material weaknesses 

and internal control deficiencies during its audit of the financial statements for the 

year ending December 31, 2003. PwC identified additional material weaknesses in 

2004. Concerted undertakings to address control deficiencies and permit the timely 

preparation of accurate financial statements are underway. 

• The Board should continually evaluate the effectiveness of governance practices to 

ensure they are consistent with leading practices of other large, complex financial 

services organizations. 

• The Board should closely monitor staffing levels and capacity to ensure day-to-day 

activities and change initiatives are effectively managed. The aggregate level of 

change occurring throughout the Enterprise is high. Processes to manage change 

activities will require the adoption of advanced change control practices to ensure 

corporate-wide change events are properly controlled and integrated. 

COMPLIANCE WITH CONSENT ORDER 

Considerable effort has been made by the Board and management to comply with the 

Consent Order. The rate of progress has been acceptable and, to date, all required reports 

and plans have been filed timely. A significant amount of additional work remains before 

plans submitted in response to the Consent Order are fully implemented. In particular, as 

contemplated by the plans submitted pursuant to the Consent Order, additional time and 

effort is needed to complete activities associated with Article III - Internal Controls and 

Article V - Internal Accounting. Consent Order-related remediation efforts are expected to 

continue throughout 2005 and extend into 2006. OFHEO will continue to perform 
21 

examination activities as necessary to evaluate the effectiveness of actions taken in response 

to Consent Order requirements. 

BOARD AND MANAGEMENT SUPERVISION 

The quality of Board governance is satisfactory. The current senior management team is 

capable. The Board must continue to hold management accountable for the timely and 

complete remediation of issues. The Board is also encouraged to evaluate the effectiveness 

of its governance practices continually to ensure they are consistent with leading practices of 

other large, complex financial service organizations. 

The Board made progress in a number of areas, including hiring executive and senior 

management, revising bylaws in accordance with the Consent Order, adopting corporate 

governance guidelines, and adopting agenda planning and issue/action item tracking 

reporting. The Board reconfigured its committee structure and revised the committee 

charters, and has increased the frequency with which committees meet. Production of 

board/committee meeting minutes became timelier. The Enterprise also has an initiative 

underway to improve board and senior management reporting. 

Areas for improvement include: the development and implementation of a formal strategic 

planning process that is integrated throughout the corporation; a further cultural shift 

toward accountability for controls at all levels of the organization; ongoing succession 

planning for each key position; continued evolution in the quality and content of board-level 

reports; and ongoing director training. 

Internal Controls 

PwC cited a number of broad material weaknesses during its audit of the financial statements 

for 2003. Each broad material weakness represented numerous detailed weaknesses. Senior 

management elevated addressing the weaknesses to a corporate priority and has taken 

appropriate steps to assign sufficient resources with appropriate skill levels to the related 

projects. During 2004, the Enterprise utilized extensive procedures to verify the accuracy of 

the 2004 financial results rather than rely on internal controls. It is anticipated that the 

Enterprise will rely more fully on internal controls during 2005 as remediation activities are 

completed. 

The significant and pervasive nature of weaknesses in accounting operations, along with the 

substantial manual controls needed to prepare reliable financial information, adversely 

affected Freddie Mac’s ability to release timely quarterly financial information. Large-scale, 

persistent efforts are underway to create or improve the processes and controls necessary for 

the ongoing production of timely quarterly financial statements. The aggressive focus on 

implementing controls intended to mitigate control deficiencies and address accounting 

policy issues contributed to an improved timeframe compared with the prior year for 

releasing the year-end 2004 financial statements. Additional progress is needed to allow 

quarterly financial statements to be prepared and released within an appropriate timeframe. 
22 

The ability to release timely financial statements remains a substantial challenge for Freddie 

Mac. Critical components to reach the goal include: 

• Implementing a more disciplined and formal control environment that permeates the 

organization; 

• Moving toward greater reliance on automated, preventative controls rather than 

manual, detective controls; and 

• Establishing a reliable self-assessment framework for internal controls that reinforces 

a strong internal control culture and incorporates responsibility and accountability. 

Success is contingent on significant improvements to existing information technology 

systems and business processes. Information technology systems and business processrelated initiatives are expected to be a significant, ongoing effort. 

ASSET QUALITY AND CREDIT RISK MANAGEMENT 

The credit risk management function remains satisfactory. Credit quality is strong based on 

internal asset quality indicators. Credit losses are expected to rise but remain low by 

historical standards. Mortgage delinquencies are well controlled. Counterparty financial 

strength is satisfactory. Vulnerability to deterioration in credit quality exists due to industry, 

competitive, regulatory, operational and technological factors. 

The inability of the Enterprise to aggregate counterparty risks at the corporate level has been 

a long-standing finding of internal audit and OFHEO. Management should fulfill its 

commitment to a comprehensive counterparty risk management program which includes: 

appropriate eligibility standards, risk rating capabilities, and exposure limits. 

Single-family 

Credit risk management practices coupled with a number of positive economic factors 

contribute to Freddie Mac’s strong single-family credit quality. Although the quality of 

single-family purchases remains strong, certain underwriting standards have been relaxed to 

increase market share and achieve affordable housing goals. Examples include the purchase 

of non-Loan Prospector and No Income/No Asset documentation loans. OFHEO has 

encouraged management to identify and implement strategies to quantify the impact of rising 

caution and defect rates on profitability, ROE, market share and affordable housing goals. 

Multifamily 

The quality of multifamily purchases is strong and is within corporate targets. Delinquencies 

are well-controlled. There were $4.8 million in net recoveries versus a 2004 net credit loss 

target of $15-$25 million and 2003 net credit losses at $10.5 million. Management has 

reported that credit quality and returns may decline in 2005 due to pressures to meet the 

Department of Housing and Urban Development’s (HUD) affordable housing goals. 
23 

EARNINGS 

Freddie Mac’s fundamental earnings were constrained in 2004 due to market forces, and 

higher levels of administrative expenses. Market forces related to continued competition for 

mortgage assets caused compression in asset yields. Total yields on interest-earning assets 

declined to 4.66 percent from 4.93 percent in 2003. Freddie Mac reduced its purchases of 

30-year products due to lower spreads and increased its level of lower yielding ARM 

products. The trade-off in purchasing ARMS was lower hedging costs related to reduced 

prepayment sensitivity. Freddie Mac expects net interest income to be materially lower in 

2005 due to compression in net interest margin on its existing mortgage portfolio and lower 

nominal margins on floating rate mortgage-related security purchases. Company 

management expects this decrease to be significantly offset by decreased losses in noninterest income, assuming current forward rates are realized. 

Freddie Mac’s administrative expenses increased by $400 million in 2004. Administrative 

expenses were higher due to continued infrastructure and control remediation efforts 

underway to improve Freddie Mac’s financial reporting. 

Freddie Mac’s GAAP earnings fell 40 percent to $2.9 billion, from $4.8 billion in 2003. The 

primary driver of the decline was $4.5 billion in mark-to-market derivative losses. The 

derivative losses were partly due to Freddie Mac’s movement of substantially all pay-fixed 

swaps to no hedge designation in the second quarter of 2004. The Enterprise determined 

that substantially all pay-fixed swaps and other derivatives that previously had been in cash 

flow hedge accounting relationships no longer met the hedge accounting requirements of 

SFAS 133. The change in notional amount of derivatives not designated in hedge 

accounting relationships is likely to produce continued earnings volatility, as periodic 

changes in the fair value of these derivatives are reflected through derivatives gains or losses. 

LIQUIDITY 

Liquidity is satisfactory. The Enterprise has access to sufficient sources of funds on 

acceptable terms to meet present and anticipated liquidity needs. Management is able to 

forecast liquidity needs and sources effectively; and to identify, measure, monitor, and 

control the Enterprise’s liquidity position. Liquidity management policies, procedures and a 

liquidity contingency plan are in place and identify authorized investments, exposure limit 

rules, and independent review requirements. Management consistently maintained its 

liquidity and contingency threshold of five percent of on-balance-sheet assets. Management 

has appropriate policies and procedures for forecasting short- and long-term liquidity needs. 

Risk limits are in place to ensure sufficient liquidity levels, and management evaluates limits 

and pertinent metrics on a daily, weekly, and monthly basis. Market risk oversight provides 

effective monitoring of risk limits as a form of independent risk oversight. 
24 

SENSITIVITY TO MARKET RISK 

Interest rate risk management is satisfactory. Sensitivity to market risk reflects the degree to 

which changes in interest rates can adversely affect the Enterprise’s earnings and capital. 

During 2004, Enterprise management demonstrated an appropriate ability to identify, 

measure, monitor, and control market risk in a manner commensurate with the nature and 

complexity of the Enterprise’s activities. Freddie Mac’s quantitative measures of Enterprise 

sensitivity to market risk exposures—primarily, Portfolio Market Value Sensitivity (PMVS), 

duration gap, convexity, yield curve risk, and basis risk—reflect that earnings and capital are 

appropriately protected against significant movements in market rates. 

PMVS is the approved measure of the Board of interest rate risk exposure, and measures the 

estimated loss in the market value of the common equity of the Enterprise resulting from 

defined adverse changes in LIBOR rates. PMVS is a measure that encompasses both the 

duration and convexity components of interest rate risk. The PMVS levels and other metrics 

observed in 2004 indicate that market risk sensitivity is well-controlled and that there is 

limited potential that the earnings performance of the Enterprise or capital position will be 

adversely affected. 

CAPITAL ADEQUACY 

Regulatory capital is adequate. OFHEO’s Office of Capital Supervision formally classifies 

capital adequacy on a quarterly basis in accordance with Subtitle B of the Federal Housing 

Enterprises Financial Safety and Soundness Act of 1992 and with the requirements set forth 

in OFHEO’s minimum and risk-based capital regulations. The Enterprise currently is 

subject to an OFHEO capital directive that requires the Enterprise to maintain a capital 

surplus of 30 percent over its minimum capital requirement. The capital directive will 

remain in place until the OFHEO Director determines the directive should be modified or 

terminated. 

On March 31, 2005, OFHEO announced that it had classified Freddie Mac as adequately 

capitalized as of December 31, 2004, and that the Enterprise was adequately capitalized 

during all periods in 2004. As of that date, the core capital of the Enterprise exceeded its 

minimum capital requirement by approximately 45 percent. OFHEO supports its capital 

classifications through a combination of compulsory capital reporting and weekly 

monitoring, and ongoing analyses of market and other factors, risk management practices, 

and other factors that could impact the adequacy of capital. 
HISTORICAL DATA TABLES 

Table 1. Fannie Mae Mortgage Purchases 26 

Table 1a. Fannie Mae Mortgage Purchases Detail, By Type of Loan 27 

Table 1b. Fannie Mae Purchases of Mortgage-Related Securities 28 

Table 2. Fannie Mae MBS Issuances 29 

Table 3. Fannie Mae Earnings 30 

Table 4. Fannie Mae Balance Sheet 31 

Table 4a. Fannie Mae Total MBS Outstanding Detail 32 

Table 5. Fannie Mae Retained Mortgage Portfolio Detail 33 

Table 5a. Fannie Mae Retained Mortgage Portfolio Detail - Part 1, Whole Loans 34 

Table 5a. Fannie Mae Retained Mortgage Portfolio Detail - Part 2a, Mortgage-Related Securities 35 

Table 5a. Fannie Mae Retained Mortgage Portfolio Detail - Part 2b, Mortgage-Related Securities 36 

Table 6. Fannie Mae Financial Derivatives 37 

Table 7. Fannie Mae Non-Mortgage Investments 38 

Table 8. Fannie Mae Asset-Liability Mix 39 

Table 9. Fannie Mae Mortgage Asset Quality 40 

Table 10. Fannie Mae Capital 41 

Table 11. Freddie Mac Mortgage Purchases 42 

Table 11a. Freddie Mac Mortgage Purchases Detail, By Loan Type 43 

Table 11b. Freddie Mac Purchases of Mortgage-Related Securities 44 

Table 12. Freddie Mac MBS Issuances 45 

Table 13. Freddie Mac Earnings 46 

Table 14. Freddie Mac Balance Sheet 47 

Table 14a. Freddie Mac Total MBS Outstanding Detail 48 

Table 15. Freddie Mac Retained Mortgage Portfolio Detail 49 

Table 15a. Freddie Mac Retained Mortgage Portfolio Detail, Part 1, Whole Loans 50 

Table 15a. Freddie Mac Retained Mortgage Portfolio Detail, Part 2a, Mortgage-Related Securities 51 

Table 15a. Freddie Mac Retained Mortgage Portfolio Detail, Part 2b, Mortgage-Related Securities 52 

Table 16. Freddie Mac Financial Derivatives 53 

Table 17. Freddie Mac Non-Mortgage Investments 54 

Table 18. Freddie Mac Asset Mix 55 

Table 19. Freddie Mac Mortgage Asset Quality 56 

Table 20. Freddie Mac Capital 57 

Table 21. Combined Purchases 58 

Table 21a. Combined Mortgage Purchases Detail, by Type of Loan 59 

Table 21b. Combined Purchases of Mortgage-Related Securities 60 

Table 22. Combined MBS Issuances 61 

Table 23. Combined Earnings 62 

Table 24. Combined Balance Sheet 63 

Table 24a. Combined Total MBS Outstanding Detail 64 

Table 25. Combined Financial Derivatives 65 

Table 26. Combined Non-Mortgage Investments 66 

Table 27. Combined Capital 67 

Table 28. Loan Limits 68 

Table 29. Mortgage Interest Rates 69 

Table 30. Housing Market Activity 70 

Table 31. Weighted Repeat Sales House Price Index 71 

25
Table 1. Fannie Mae Mortgage Purchases1

($) ($) ($) ($)

 4Q04 127,757 4,608 132,365 38,260

 3Q04 129,923 3,862 133,785 51,083

 2Q04 186,611 4,944 191,555 66,220

 1Q04 143,635 2,980 146,615 20,822

2004 587,926 16,394 604,320 176,385

2003 1,322,026 30,878 1,352,904 408,625

2002 800,316 16,611 816,927 268,934 

2001 567,673 19,131 586,804 209,124 

2000 227,069 10,377 237,446 129,716 

1999 316,136 10,012 326,148 169,905 

1998 354,920 11,428 366,348 147,260

1997 159,921 6,534 166,455 50,317

1996 164,456 6,451 170,907 46,743

1995 126,003 4,966 130,969 36,258

1994 158,229 3,839 162,068 25,905

1993 289,826 4,135 293,961 6,606

1992 248,603 2,956 251,559 5,428

1991 133,551 3,204 136,755 3,080

1990 111,007 3,180 114,187 1,451

1989 80,510 4,325 84,835 Not Available

1988 64,613 4,170 68,783 Before 1990

1987 73,942 1,733 75,675

1986 77,223 1,877 79,100

1985 42,543 1,200 43,743

1984 27,713 1,106 28,819

1983 26,339 140 26,479

1982 25,929 10 25,939

1981 6,827 2 6,829

1980 8,074 27 8,101

1979 10,798 9 10,807

1978 12,302 3 12,305

1977 4,650 134 4,784

1976 3,337 295 3,632

1975 3,646 674 4,320

1974 4,746 2,273 7,019

1973 4,170 2,082 6,252

1972 2,596 1,268 3,864

1971 2,742 1,298 4,040

Source: Fannie Mae

1 This information is subject to change as a result of the pending re-audit and restatement of Fannie Mae's financial statements.

2

 Cash purchases plus securitizations; excludes non-Fannie Mae mortgage-related securities and repurchased Fannie Mae MBS. 

3

 Not included in total mortgage purchases. Includes purchases of Fannie Mae MBS for the retained mortgage portfolio.

 

 

 Business Activity ($ in Millions) 

 Purchases 

 Annual Data 

 Single-Family Multifamily 

Mortgage-Related 

Securities3 Total Mortgages2 

 Period 

26
Table 1a. Fannie Mae Mortgage Purchases Detail, By Type of Loan1

Fixed-Rate3 

 AdjustableRate Seconds Total Fixed-Rate4 Adjustable- Rate Total Conventional FHA/RHS 

 Period ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($)

1971 0 0 0 0 2,742 0 2,742 2,742 0 1,298 1,298 4,040 1972 55 0 0 55 2,541 0 2,541 2,596 0 1,268 1,268 3,864 1973 939 0 0 939 3,231 0 3,231 4,170 0 2,082 2,082 6,252 1974 1,128 0 0 1,128 3,618 0 3,618 4,746 0 2,273 2,273 7,019 1975 547 0 0 547 3,099 0 3,099 3,646 0 674 674 4,320 1976 2,513 0 0 2,513 824 0 824 3,337 0 295 295 3,632 1977 2,366 0 0 2,366 2,284 0 2,284 4,650 0 134 134 4,784 1978 5,682 0 0 5,682 6,620 0 6,620 12,302 0 3 3 12,305 1979 5,410 0 0 5,410 5,388 0 5,388 10,798 0 9 9 10,807 1980 2,802 0 0 2,802 5,272 0 5,272 8,074 0 27 27 8,101 1981 4,260 107 176 4,543 2,284 0 2,284 6,827 0 2 2 6,829 1982 19,311 3,210 1,552 24,073 1,856 0 1,856 25,929 0 10 10 25,939 1983 18,136 4,853 1,408 24,397 1,942 0 1,942 26,339 128 12 140 26,479 1984 17,998 8,049 937 26,984 729 0 729 27,713 1,106 0 1,106 28,819 1985 29,993 10,736 871 41,600 927 16 943 42,543 1,200 0 1,200 43,743 1986 58,251 7,305 498 66,054 11,155 14 11,169 77,223 1,877 0 1,877 79,100 1987 60,434 10,675 139 71,248 2,649 45 2,694 73,942 1,463 270 1,733 75,675 1988 35,767 27,492 433 63,692 823 98 921 64,613 4,149 21 4,170 68,783 1989 60,794 17,692 521 79,007 1,489 14 1,503 80,510 4,309 16 4,325 84,835 1990 95,011 14,528 654 110,193 799 15 814 111,007 3,165 15 3,180 114,187 1991 114,321 17,187 705 132,213 1,300 38 1,338 133,551 3,183 21 3,204 136,755 1992 226,332 21,001 136 247,469 1,055 79 1,134 248,603 2,845 111 2,956 251,559 1993 274,402 14,420 29 288,851 855 120 975 289,826 3,919 216 4,135 293,961 1994 139,815 16,340 8 156,163 1,953 113 2,066 158,229 3,620 219 3,839 162,068 1995 104,901 17,978 9 122,888 3,009 106 3,115 126,003 4,677 289 4,966 130,969 1996 146,154 15,550 3 161,707 2,415 334 2,749 164,456 6,199 252 6,451 170,907 1997 136,329 21,095 3 157,427 2,062 432 2,494 159,921 5,936 598 6,534 166,455 1998 334,367 14,273 1 348,641 5,768 511 6,279 354,920 10,844 584 11,428 366,348 1999 293,188 12,138 1,198 306,524 8,529 1,084 9,613 316,137 8,858 1,153 10,011 326,148 2000 187,236 33,809 726 221,771 4,378 920 5,298 227,069 9,127 1,250 10,377 237,446 2001 534,115 25,648 1,137 560,900 5,671 1,102 6,773 567,673 17,849 1,282 19,131 586,804 2002 730,659 66,772 41 797,472 1,296 1,548 2,844 800,316 13,950 2,661 16,611 816,927 2003 1,190,831 126,760 93 1,317,684 1,298 3,044 4,342 1,322,026 18,648 12,230 30,878 1,352,9042004 461,757 121,171 51 582,979 1,074 3,873 4,947 587,926 15,643 751 16,394 604,320

 1Q04 120,201 22,265 13 142,479 326 830 1,156 143,635 2,303 677 2,980 146,615  2Q04 149,865 35,512 9 185,386 327 898 1,225 186,611 4,895 49 4,944 191,555  3Q04 99,490 29,176 8 128,674 228 1,021 1,249 129,923 3,841 21 3,862 133,785  4Q04 92,201 34,218 21 126,440 193 1,124 1,317 127,757 4,604 4 4,608 132,365 

1 

Source: Fannie Mae

This information is subject to change as a result of the pending re-audit and restatement of Fannie Mae's financial statements.

2 Cash purchases plus securitizations; excludes non-Fannie Mae mortgage-related securities and repurchased Fannie Mae MBS. 3 Includes balloons/resets. 4 Includes loans guaranteed by the Rural Housing Service. 

 Single-Family Mortgages Multifamily Mortgages 

Purchases ($ in Millions)2

Total Mortgage 

Purchases 

 Annual Data 

 Conventional FHA/VA 

 Total SingleFamily 

Mortgages 

Total 

Mortgages 

Multifamily 

27
Table 1b. Fannie Mae Purchases of Mortgage-Related Securities1

Home Equity3 

Manufactured 

Housing Other

Total 

PrivateLabel 

 Period ($) ($) ($) ($) ($) ($) ($) ($) ($)

 4Q04 8,129 1,594 0 21,638 0 5,296 26,934 1,603 38,260 

 3Q04 15,419 5,696 0 20,628 0 7,990 28,618 1,350 51,083 

 2Q04 34,083 6,472 0 14,409 0 9,252 23,661 2,004 66,220 

 1Q04 7,094 1,012 0 9,925 0 1,624 11,549 1,167 20,822 

2004 64,725 14,774 0 66,600 0 24,162 90,762 6,124 176,385 

2003 348,413 19,955 36 25,769 0 8,207 33,976 6,245 408,625 

2002 245,039 7,957 4,425 5,543 56 1,617 7,216 4,297 268,934 

2001 180,582 20,072 333 1,466 Not Available 2,047 3,513 4,624 209,124 

2000 104,904 10,171 2,493 Not Available Before 2002 8,466 8,466 3,682 129,716 

1999 125,498 6,861 17,561 Before 2001 16,511 16,511 3,474 169,905 

1998 104,728 21,274 2,738 15,721 15,721 2,799 147,260 

1997 39,033 2,119 3,508 4,188 4,188 1,469 50,317 

1996 41,263 779 2,197 777 777 1,727 46,743 

1995 30,432 2,832 20 752 752 2,222 36,258 

1994 21,660 571 2,321 0 0 1,353 25,905 

1993 6,275 0 0 0 0 331 6,606 

1992 4,930 0 0 0 0 498 5,428 

1991 2,384 0 0 0 0 696 3,080 

1990 977 0 0 0 0 474 1,451 

Source: Fannie Mae

1 This information is subject to change as a result of the pending re-audit and restatement of Fannie Mae's financial statements. 2 Not included in total mortgage purchases. Includes purchases of Fannie Mae MBS for the retained mortgage portfolio.

3 Purchases include securities specifically identified as home equity or seconds. Other security purchases may include some underlying loans that are

 home equity or seconds.

Purchases ($ in millions)2

 Annual Data 

 Others' Securities 

Total 

MortgageRelated 

Securities 

 Fannie Mae 

Securities 

 Freddie 

Mac Ginnie Mae 

 Private-Label 

 Mortgage 

Revenue 

Bonds 

28
Table 2. Fannie Mae MBS Issuances1

 Single-Family 

MBS Multifamily MBS Total MBS 

Multiclass 

MBS2

Period ($) ($) ($) ($) 

 4Q04 115,575 1,648 117,223 20,144

 3Q04 127,059 1,416 128,475 16,216

 2Q04 171,123 2,066 173,189 34,690

 1Q04 131,686 1,724 133,410 23,636

2004 545,443 6,854 552,297 94,686

2003 1,196,561 23,018 1,219,579 260,919

2002 727,257 12,338 739,595 170,795

2001 514,621 13,801 528,422 139,403

2000 204,066 7,596 211,662 39,544

1999 292,192 8,497 300,689 55,160

1998 315,120 11,028 326,148 84,147

1997 143,615 5,814 149,429 85,415

1996 144,201 5,668 149,869 30,780

1995 106,269 4,187 110,456 9,681

1994 128,385 2,237 130,622 73,365

1993 220,485 959 221,444 210,630

1992 193,187 850 194,037 170,205

1991 111,488 1,415 112,903 112,808

1990 96,006 689 96,695 68,291

1989 66,489 3,275 69,764 41,715

1988 51,120 3,758 54,878 17,005

1987 62,067 1,162 63,229 9,917

1986 60,017 549 60,566 2,400

1985 23,142 507 23,649 Not Issued

1984 13,087 459 13,546 Before 1986

1983 13,214 126 13,340

1982 13,970 Not Issued 13,970

1981 717 Before 1983 717

Source: Fannie Mae

1 This information is subject to change as a result of the pending re-audit and restatement of Fannie 

 Mae's financial statements. 

2

 Includes Real Estate Mortgage Investment Conduits (REMICs) and stripped MBS.

Annual Data

 Business Activity ($ in Millions) 

 MBS Issuances 

29
Table 3. Fannie Mae Earnings1

Net 

Interest 

Income2

Guarantee Fee 

Income

Average 

Guarantee Fee

Administrative 

Expenses 

CreditRelated 

Expenses3

Net Income Return on 

Equity4

Period ($) ($) (basis points) ($) ($) ($) ($) 

 4Q04 N/A N/A N/A N/A N/A N/A N/A

 3Q04 N/A N/A N/A N/A N/A N/A N/A

 2Q04 N/A N/A N/A N/A N/A N/A N/A

 1Q04 N/A N/A N/A N/A N/A N/A N/A

2004 N/A N/A N/A N/A N/A N/A N/A

2003 13,569 2,411 20.2 1,463 112 7,905 49.9

2002 10,566 1,816 19.1 1,219 92 4,619 30.1

2001 8,090 1,482 19.0 1,017 78 5,894 39.8

2000 5,674 1,351 19.5 905 94 4,448 25.6

1999 4,894 1,282 19.3 800 127 3,912 25.2

1998 4,110 1,229 20.2 708 261 3,418 25.2

1997 3,949 1,274 22.7 636 375 3,056 24.6

1996 3,592 1,196 22.4 560 409 2,725 24.1

1995 3,047 1,086 22.0 546 335 2,144 20.9

1994 2,823 1,083 22.5 525 378 2,132 24.3

1993 2,533 961 21.3 443 305 1,873 25.3

1992 2,058 834 21.2 381 320 1,623 26.5

1991 1,778 675 21.0 319 370 1,363 27.7

1990 1,593 536 21.1 286 310 1,173 33.7

1989 1,191 408 21.3 254 310 807 31.1

1988 837 328 21.6 218 365 507 25.2

1987 890 263 22.1 197 360 376 24

1986 384 175 23.8 175 306 105 10

1985 139 112 25.6 142 206 (7) (1)

1984 (90) 78 26.2 112 86 (71) (7)

1983 (9) 54 26.3 81 48 49 5

1982 (464) 16 27.2 60 36 (192) (19)

1981 (429) 0 25.0 49 (28) (206) (17)

1980 21 Not Available Not Available 44 19 14 0.9

1979 322 Before 1981 Before 1981 46 35 162 11.3

1978 294 39 36 209 16.5

1977 251 32 28 165 15.3

1976 203 30 25 127 13.8

1975 174 27 16 115 14.1

1974 142 23 17 107 14.7

1973 180 18 12 126 20.3

1972 138 13 5 96 18.8

1971 49 15 4 61 14.4

Source: Fannie Mae

N/A = not available

1 This information is subject to change as a result of the pending re-audit and restatement of Fannie Mae's financial statements. 2

 Interest income net of interest expense.

3

 Credit-related expenses include the provision for losses and foreclosed property expenses. 4

 Calculated as annualized net income available to common stockholders divided by average common stockholders' equity. 

 Earnings ($ in Millions) 

Annual Data

30
Table 4. Fannie Mae Balance Sheet1

Total 

Assets2

Total 

Retained 

Mortgage 

Portfolio3

NonMortgage 

Investments4

Debt 

Outstanding 

Shareholders' 

Equity Core Capital5

Fair Value 

of Net 

Assets

Total MBS 

Outstanding6

Multiclass 

MBS 

Outstanding7

 ($) ($) ($) ($) ($) ($) ($) ($) ($) 

 4Q04 N/A N/A N/A N/A N/A 32,641 N/A 1,402,761 368,567

 3Q04 N/A N/A N/A N/A N/A 28,856 N/A 1,377,680 374,179

 2Q04 N/A N/A N/A N/A N/A 36,115 N/A 1,360,045 385,151

 1Q04 N/A N/A N/A N/A N/A 35,701 N/A 1,345,892 394,149

2004 N/A N/A N/A N/A N/A 32,641 N/A 1,402,761 367,567

2003 1,009,569 901,880 59,493 961,732 22,373 34,405 31,582 1,300,166 405,772

2002 887,515 801,122 39,293 850,982 16,288 28,079 22,130 1,029,456 401,486

2001 799,948 706,803 65,982 763,467 18,118 25,182 22,675 858,965 392,457

2000 675,224 607,731 52,347 642,682 20,838 20,827 20,677 706,722 334,508

1999 575,308 523,103 37,299 547,619 17,629 17,876 20,525 679,145 335,514

1998 485,146 415,434 58,515 460,291 15,453 15,465 14,885 637,143 361,613

1997 391,673 316,592 64,596 369,774 13,793 13,793 15,982 579,138 388,360

1996 351,041 286,528 56,606 331,270 12,773 12,773 14,556 548,173 339,798

1995 316,550 252,868 57,273 299,174 10,959 10,959 11,037 513,230 353,528

1994 272,508 220,815 46,335 257,230 9,541 9,541 10,924 486,345 378,733

1993 216,979 190,169 21,396 201,112 8,052 8,052 9,126 471,306 381,865

1992 180,978 156,260 19,574 166,300 6,774 Not Applicable 9,096 424,444 312,369

1991 147,072 126,679 9,836 133,937 5,547 Before 1993 Not Available 355,284 224,806

1990 133,113 114,066 9,868 123,403 3,941 Before 1992 288,075 127,278

1989 124,315 107,981 8,338 116,064 2,991 216,512 64,826

1988 112,258 100,099 5,289 105,459 2,260 170,097 26,660

1987 103,459 93,665 3,468 97,057 1,811 135,734 11,359

1986 99,621 94,123 1,775 93,563 1,182 95,568 Not Available

1985 99,076 94,609 1,466 93,985 1,009 54,552 Before 1987

1984 87,798 84,135 1,840 83,719 918 35,738

1983 78,383 75,247 1,689 74,594 1,000 25,121

1982 72,981 69,356 2,430 69,614 953 14,450

1981 61,578 59,629 1,047 58,551 1,080 717

1980 57,879 55,589 1,556 54,880 1,457 Not Issued

1979 51,300 49,777 843 48,424 1,501 Before 1981

1978 43,506 42,103 834 40,985 1,362

1977 33,980 33,252 318 31,890 1,173

1976 32,393 31,775 245 30,565 983

1975 31,596 30,820 239 29,963 861

1974 29,671 28,666 466 28,168 772

1973 24,318 23,589 227 23,003 680

1972 20,346 19,652 268 19,239 559

1971 18,591 17,886 349 17,672 460

Source: Fannie Mae

N/A = not available

1 This information is subject to change as a result of the pending re-audit and restatement of Fannie Mae's financial statements. 2 Beginning in 1998, the guaranty liability for MBS held in the portfolio is classified as a liability. 

3 Gross retained portfolio net of unamortized purchase premium, discounts and deferred price adjustments, and, beginning in 2002, unrealized gain/loss on available-for-sale 

 securities. The amounts for 1999 through 2002 include certain loans held for investment that were previously classified as non-mortgage investments. 4 Values for years 1999 through 2003 exclude securities included in new balance sheet line item, "Loans held for securitization and sale", and in the retained mortgage 

 portfolio. 

5 The sum of (a) the stated value of common stock, (b) the stated value of outstanding noncumulative perpetual preferred stock, (c) paid-in capital, and (d) retained earnings, 

 less treasury stock.

6 Total Fannie Mae MBS outstanding net of Fannie Mae MBS in the retained mortgage portfolio.

7

 Includes REMICs and stripped MBS.

Annual Data 

 Mortgage-Backed Securities 

Outstanding Balance Sheet 

End of 

Period

($ in Millions) ($ in Millions)

31
Table 4a. Fannie Mae Total MBS Outstanding Detail1

 Fixed-Rate 

 AdjustableRate Seconds Total Fixed-Rate Adjustable-Rate Total Conventional FHA/RHS Total Multifamily 

 ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) 

1989 Not Available Not Available Not Available Not Available Not Available Not Available Not Available Not Available Not Available Not Av1990 225,981 42,443 121 268,545 11,380 0 11,380 7,807 343 8,150 288,0751991 290,038 45,110 89 335,237 11,112 0 11,112 8,599 336 8,935 355,2841992 360,619 45,718 43 406,380 9,438 0 9,438 8,295 331 8,626 424,4441993 405,383 49,987 28 455,398 7,549 0 7,549 8,034 325 8,359 471,3061994 415,692 55,780 18 471,490 5,628 0 5,628 8,908 319 9,227 486,3451995 431,755 63,436 13 495,204 5,043 91 5,134 12,579 313 12,892 513,2301996 460,866 65,682 9 526,557 4,402 191 4,593 16,912 111 17,023 548,1731997 483,982 70,106 7 554,095 3,872 213 4,085 20,824 134 20,958 579,1381998 545,680 56,903 98 602,681 5,340 587 5,927 28,378 157 28,535 637,1431999 586,069 51,474 1,212 638,755 7,159 1,010 8,169 31,518 703 32,221 679,1452000 599,999 61,495 1,165 662,659 6,778 1,298 8,076 35,207 780 35,987 706,7222001 737,121 62,617 772 800,510 12,246 1,300 13,546 43,728 1,181 44,909 858,9652002 879,113 92,485 338 971,936 5,147 1,262 6,409 50,127 984 51,111 1,029,4562003 1,074,917 154,019 109 1,229,045 3,499 1,319 4,818 65,938 365 66,303 1,300,1662004 1,152,758 183,799 58 1,336,615 1,968 984 2,953 62,870 323 63,193 1,402,761

 1Q04 1,111,077 163,999 94 1,275,170 3,299 1,255 4,553 65,807 362 66,169 1,345,892 2Q04 1,118,324 172,088 79 1,290,491 3,023 1,131 4,154 65,054 346 65,400 1,360,045 3Q04 1,141,466 168,291 68 1,309,825 2,673 1,047 3,721 63,800 334 64,134 1,377,680 4Q04 1,152,758 183,799 58 1,336,615 1,968 984 2,953 62,870 323 63,193 1,402,761

ailable 216,512

19871988 Before 1990 Before 1990 Before 1990 Before 1990 Before 1990 Before 1990 Before 1990 Before 1990 Before 1990 Before 1990 170,097

135,734

1986 95,5681985 54,5521984 35,7381983 25,1211982 14,4501981 7171980 Not Issued

Before 1981

1 

Source: Fannie Mae

This information is subject to change as a result of the pending re-audit and restatement of Fannie Mae's financial statements.

2 Total Fannie Mae MBS outstanding net of Fannie Mae MBS in the retained mortgage portfolio.

Annual Data

 Single-Family Mortgages 

($ in Millions) 

 Conventional 

Total MBS 

Outstanding2

Period 

 End of 

Multifamily Mortgages 

($ in Millions) 

 FHA/VA 

32
Table 5. Fannie Mae Retained Mortgage Portfolio Detail1

Whole Loans2,3 Fannie Mae Securities2

Other Mortgage-Related 

Securities2 

Unamortized Premiums, 

Discounts, Deferred 

Adjustments, and 

Unrealized Gains/Losses 

on Available-for-Sale 

Securities4 

Total Retained 

Mortgage Portfolio

 ($) ($) ($) ($) ($) 

 4Q04 246,838 492,855 164,862 N/A N/A

 3Q04 243,206 514,737 146,600 N/A N/A

 2Q04 238,873 518,964 133,373 N/A N/A

 1Q04 235,980 532,137 112,794 N/A N/A

2004 246,838 492,855 164,862 N/A N/A

2003 234,699 556,880 106,859 3,442 901,880

2002 189,151 508,831 96,168 6,972 801,122

2001 167,388 431,484 110,035 (2,104) 706,803

2000 152,634 351,066 106,551 (2,520) 607,731

1999 149,231 281,714 93,122 (964) 523,103

1998 155,779 197,375 61,361 919 415,434

1997 160,102 130,444 26,132 (86) 316,592

1996 167,891 102,607 16,554 (525) 286,528

1995 171,481 69,729 12,301 (643) 252,868

1994 170,909 43,998 7,150 (1,242) 220,815

1993 163,149 24,219 3,493 (692) 190,169

1992 134,597 20,535 2,987 (1,859) 156,260

1991 109,251 16,700 3,032 (2,304) 126,679

1990 101,797 11,758 3,073 (2,562) 114,066

1989 95,729 11,720 3,272 (2,740) 107,981

1988 92,220 8,153 2,640 (2,914) 100,099

1987 89,618 4,226 2,902 (3,081) 93,665

1986 94,167 1,606 2,060 (3,710) 94,123

1985 97,421 435 793 (4,040) 94,609

1984 87,205 477 427 (3,974) 84,135

1983 77,983 Not Available 273 (3,009) 75,247

1982 71,777 Before 1984 37 (2,458) 69,356

1981 61,411 1 (1,783) 59,629

1980 57,326 1 (1,738) 55,589

1979 51,096 1 (1,320) 49,777

1978 43,315 Not Available (1,212) 42,103

1977 34,377 Before 1979 (1,125) 33,252

1976 32,937 (1,162) 31,775

1975 31,916 (1,096) 30,820

1974 29,708 (1,042) 28,666

1973 24,459 (870) 23,589

1972 20,326 (674) 19,652

1971 18,515 (629) 17,886

Source: Fannie Mae

N/A = not available

1 This information is subject to change as a result of the pending re-audit and restatement of Fannie Mae's financial statements.

2

 Unpaid principal balance.

3

 The balance of whole loans at December 31, 1999 through December 31, 2002 includes certain loans held for investment that were previously classified as 

 non-mortgage investments and excludes loans held for securitization or sale.

4

 Beginning in 2002, includes unrealized gains/losses on available-for-sale securities.

End of 

Period

Annual Data 

($ in Millions) 

33
Table 5a. Fannie Mae Retained Mortgage Portfolio Detail - Part 1, Whole Loans1

Fixed-Rate3,4 AdjustableRate Seconds Total Total 

FHA/VA5 Conventional FHA/RHS Total 

 ($) ($) ($) ($) ($) ($) ($) ($) ($)

 4Q04 192,418 17,301 175 209,894 9,964 26,083 897 26,980 246,838

 3Q04 192,801 16,511 176 209,488 9,102 23,678 938 24,616 243,206

 2Q04 192,511 15,172 197 207,880 8,328 21,679 985 22,665 238,873

 1Q04 193,855 13,878 217 207,950 7,651 19,348 1,031 20,379 235,980

2004 192,418 17,301 175 209,894 9,964 26,083 897 26,980 246,838

2003 194,654 13,185 231 208,070 7,063 18,475 1,091 19,566 234,699

2002 160,553 9,045 524 170,122 5,458 12,217 1,354 13,571 189,151

2001 140,454 10,410 917 151,781 5,069 8,987 1,551 10,538 167,388

2000 125,786 13,244 480 139,510 4,763 6,547 1,814 8,361 152,634

1999 130,614 6,058 176 136,848 4,472 5,564 2,347 7,911 149,231

1998 135,351 7,633 206 143,190 4,404 5,590 2,595 8,185 155,779

1997 134,543 10,389 268 145,200 4,631 7,388 2,883 10,271 160,102

1996 137,507 12,415 323 150,245 4,739 9,756 3,151 12,907 167,891

1995 137,032 14,756 423 152,211 4,780 11,175 3,315 14,490 171,481

1994 133,882 16,475 537 150,894 4,965 11,681 3,369 15,050 170,909

1993 123,308 19,175 772 143,255 5,305 11,143 3,446 14,589 163,149

1992 91,500 22,637 1,355 115,492 6,097 9,407 3,601 13,008 134,597

1991 69,130 19,763 2,046 90,939 6,962 7,641 3,709 11,350 109,251

1990 61,873 19,558 1,851 83,282 8,524 6,142 3,849 9,991 101,797

1989 55,638 20,751 1,614 78,003 9,450 3,926 4,350 8,276 95,729

1988 53,090 20,004 1,561 74,655 10,480 2,699 4,386 7,085 92,220

1987 55,913 13,702 1,421 71,036 11,652 2,448 4,482 6,930 89,618

1986 Not Available Not Available Not Available Not Available Not Available Not Available Not Available Not Available 94,167

1985 Before 1987 Before 1987 Before 1987 Before 1987 Before 1987 Before 1987 Before 1987 Before 1987 97,421

1984 87,205

1983 77,983

1982 71,777

1981 61,411

1980 57,326

1979 51,096

1978 43,315

1977 34,377

1976 32,937

1975 31,916

1974 29,708

1973 24,459

1972 20,326

1971 18,515

Source: Fannie Mae

1 This information is subject to change as a result of the pending re-audit and restatement of Fannie Mae's financial statements.

2

 Unpaid principal balance.

4

 Includes balloon/reset loans.

5

 Includes loans guaranteed by the Rural Housing Service.

Whole Loans ($ in Millions)2,3

 Single-Family 

Total Whole 

Loans End of 

Period 

 Multifamily 

3

 The balance of whole loans at December 31, 1999 through December 31, 2002 includes certain loans held for investment that were previously classified as 

 non-mortgage investments and excludes loans held for securitization or sale.

Annual Data

 Conventional 

34
Table 5a. Fannie Mae Retained Mortgage Portfolio Detail - Part 2a, Mortgage-Related Securities1

Home Equity3 

Manufactured 

Housing Other Total Pri

 ($) ($) ($) ($) ($) ($) 

 4Q04 492,855 37,801 4,053 64,802 6,382 29,568 

 

 3Q04 514,737 38,011 4,547 49,818 6,654 25,936 

 

 2Q04 518,964 34,138 5,191 46,536 6,942 19,422 

 

 1Q04 532,137 30,323 6,096 36,722 7,338 11,785 

 

2004 492,855 37,801 4,053 64,802 6,382 29,568 

 

2003 556,880 31,152 6,974 29,640 7,604 10,978 

 

2002 508,831 32,826 15,587 9,992 9,525 8,600 

 

2001 431,484 42,921 19,138 7,571 Not Available 22,008 

 

2000 351,066 33,290 23,768 9,472 Before 2002 24,794 

 

1999 281,714 25,577 23,701 Not Available 31,673 

 

1998 197,375 23,453 8,638 Before 2000 19,585 

 

1997 130,444 5,262 7,696 5,554 

 

1996 102,607 3,623 4,780 1,486 

 

1995 69,729 3,233 2,978 747 

 

1994 43,998 564 3,182 1 

 

1993 24,219 Not Available 972 2 

 

1992 20,535 Before 1994 168 3 

 

1991 16,700 180 93 

 

1990 11,758 191 352 

 

1989 11,720 202 831 

 

1988 8,153 26 810 

 

1987 4,226 Not Available 1,036 

 

1986 1,606 Before 1988 1,591 

 

1985 435 Not Available No

1984 477 Before 1986 B

1983 Not Available

Before 1984

Source: Fannie Mae

1 This information is subject to change as a result of the pending re-audit and restatement of Fannie Mae's financial statements. 2 Unpaid principal balance. 3 Balances incorporate securities identified as home equity or seconds. Other securities may include some underlying loans which are home equity or seconds.

Annual Data 

 End of 

Period 

Mortgage-Related Securities ($ in Millions)2

Others' Securities 

 Private-Label 

 Total Fannie Mae 

Securities Freddie Mac Ginnie Mae 
Table 5a. Fannie Mae Retained Mortgage Portfolio Detail - Part 2b, Mortgage-Related Securities 1

 ($) ($) ($) ($) 

4Q04 22,256 657,717 N/A N/A

3Q04 21,634 661,337 N/A N/A

2Q04 21,144 652,337 N/A N/A

1Q04 20,530 644,931 N/A N/A

2004 22,256 657,717 N/A N/A

2003 20,510 663,738 3,442 901,880

2002 19,638 604,999 6,972 801,122

2001 18,397 541,519 (2,104) 706,803

2000 15,227 457,617 (2,520) 607,731

1999 12,171 374,836 (964) 523,103

1998 9,685 258,736 919 415,434

1997 7,620 156,576 (86) 316,592

1996 6,665 119,161 (525) 286,527

1995 5,343 82,030 (643) 252,868

1994 3,403 51,148 (1,242) 220,815

1993 2,519 27,712 (692) 190,169

1992 2,816 23,522 (1,859) 156,260

1991 2,759 19,732 (2,304) 126,679

1990 2,530 14,831 (2,562) 114,066

1989 2,239 14,992 (2,740) 107,981

1988 1,804 10,793 (2,914) 100,099

1987 1,866 7,128 (3,081) 93,665

1986 469 Not Available (3,710) 94,123

1985 Not Available Before 1986 (4,040) 95,250

1984 Before 1986 (3,974) 84,695

1983 (3,009) 75,782

1982 (2,458) 69,842

1981 (1,783) 59,949

1980 (1,738) 55,878

1979 (1,320) 49,777

1978 (1,212) 42,103

1977 (1,125) 33,252

1976 (1,162) 31,775

1975 (1,096) 30,821

1974 (1,042) 28,665

1973 (870) 23,579

1972 (674) 19,650

1971 (629) 17,886

Source: Fannie Mae

N/A = not available

1 This information is subject to change as a result of the pending re-audit and restatement of Fannie Mae's financial statements. 

2 Unpaid principal balance.

3

 Beginning in 2002, includes unrealized gains/losses on available-for-sale securities.

 Total Mortgage-Related 

Securities 

Unamortized Premiums, 

Discounts, Deferred 

Adjustments, and 

Unrealized Gains/Losses 

on Available-for-Sale 

Securities3 

Mortgage-Related Securities ($ in Millions)

Annual Data 

Mortgage Revenue 

Bonds2

 Total Retained Mortgage 

Portfolio 

End of 

Period

36
Table 6. Fannie Mae Financial Derivatives1

 Interest 

Rate 

Swaps 

 Interest 

Rate Caps, 

Floors, 

and 

Corridors 

 Foreign 

Currency 

Contracts 

OTC 

Futures, 

Options, and 

Forward Rate 

Agreements 

Mandatory 

Mortgage 

Purchase & 

Sell 

Commitments Other Total

 ($) ($) ($) ($) ($) ($) ($) 

 4Q04 242,459 104,150 10,743 331,400 34,131 0 722,883

 3Q04 516,999 123,500 8,452 340,345 51,327 0 1,040,623

 2Q04 533,657 129,950 5,814 332,156 42,902 0 1,044,479

 1Q04 500,904 135,650 5,392 324,900 64,445 0 1,031,291

2004 242,459 104,150 10,743 331,400 34,131 0 722,883

2003 569,884 130,350 4,712 335,650 38,492 0 1,079,088

2002 246,508 122,393 4,019 283,675 Not Available 0 656,595

2001 299,953 75,893 8,493 148,800 Before 2003 0 533,139

2000 227,651 33,663 9,511 53,915 0 324,740

1999 192,032 28,950 11,507 41,081 1,400 274,970

1998 142,846 14,500 12,995 13,481 3,735 187,557

1997 149,673 100 9,968 0 1,660 161,401

1996 158,140 300 2,429 0 350 161,219

1995 125,679 300 1,224 29 975 128,207

1994 87,470 360 1,023 0 1,465 90,317

1993 49,458 360 1,023 0 1,425 52,265

1992 24,130 0 1,177 0 1,350 26,658

1991 9,100 0 Not Available 50 1,050 10,200

1990 4,800 0 Before 1992 25 1,700 6,525

Source: Fannie Mae

1 This information is subject to change as a result of the pending re-audit and restatement of Fannie Mae's

 financial statements. 

Annual Data 

End of 

Period 

Financial Derivatives - Notional Amount Outstanding ($ in Millions)

37
Table 7. Fannie Mae Non-Mortgage Investments1

 Federal Funds 

and Eurodollars 

 Asset Backed 

Securities 

Repurchase 

Agreements3 

Commercial 

Paper and 

Corporate Debt Other Total 

 ($) ($) ($) ($) ($) ($) 

 4Q04 N/A N/A N/A N/A N/A N/A

 3Q04 N/A N/A N/A N/A N/A N/A

 2Q04 N/A N/A N/A N/A N/A N/A

 1Q04 N/A N/A N/A N/A N/A N/A

2004 N/A N/A N/A N/A N/A N/A

2003 12,575 26,900 111 16,743 3,164 59,493

2002 1,548 22,311 181 14,075 1,178 39,293

2001 16,089 20,937 808 23,805 4,343 65,982

2000 7,539 17,512 87 8,893 18,316 52,347

1999 4,837 19,207 122 1,723 11,410 37,299

1998 7,926 20,993 7,556 5,155 16,885 58,515

1997 19,212 16,639 6,715 11,745 10,285 64,596

1996 21,734 14,635 4,667 6,191 9,379 56,606

1995 19,775 9,905 10,175 8,629 8,789 57,273

1994 17,593 3,796 9,006 7,719 8,221 46,335

1993 4,496 3,557 4,684 0 8,659 21,396

1992 6,587 4,124 3,189 0 5,674 19,574

1991 2,954 2,416 2,195 0 2,271 9,836

1990 5,329 1,780 951 0 1,808 9,868

1989 5,158 1,107 0 0 2,073 8,338

1988 4,125 481 0 0 683 5,289

1987 2,559 25 0 0 884 3,468

1986 1,530 0 0 0 245 1,775

1985 1,391 0 0 0 75 1,466

1984 1,575 0 0 0 265 1,840

1983 1,462 0 0 0 227 1,689

1982 1,799 0 0 0 631 2,430

1981 Not Available Not Available Not Available Not Available Not Available 1,047

1980 Before 1982 Before 1982 Before 1982 Before 1982 Before 1982 1,556

1979 843

1978 834

1977 318

1976 245

1975 239

1974 466

1973 227

1972 268

1971 349

Source: Fannie Mae

N/A = not available

1

 This information is subject to change as a result of the pending re-audit and restatement of Fannie Mae's financial statements. 2

 Prior to 1982, the majority of non-mortgage investments were comprised of U.S. government securities and agency securities.

 exclude securities included in "Loans held for securitization and sale" and the retained mortgage portfolio.

Annual Data 

End of 

Period

Non-Mortgage Investments ($ in Millions)2

3

 As of 1999, Repurchase Agreements consist primarily of overnight investments that mature daily. Values for 1999 through 2003 

38
Table 8. Fannie Mae Asset - Liability Mix1

 Total Retained 

Mortgage Portfolio / 

Total Assets 

Non-Mortgage 

Investments / Total 

Assets 

Callable Debt / Total 

Effective Long-Term 

Debt

2

Total Effective LongTerm Debt / Total 

Debt

3

 (%) (%) (%) (%)

 4Q04 N/A N/A N/A N/A

 3Q04 N/A N/A N/A N/A

 2Q04 N/A N/A N/A N/A

 1Q04 N/A N/A N/A N/A

2004 N/A N/A N/A N/A

2003 89.3 5.9 73.9 72.6

2002 90.3 4.4 73.5 76.6

2001 88.4 8.2 48.2 82.2

2000 90.0 7.8 45.4 84.6

1999 90.9 6.5 45.0 87.1

1998 85.6 12.1 42.9 76.4

1997 80.8 16.5 46.4 79.4

1996 81.6 16.1 47.5 80.5

1995 79.9 18.1 48.0 73.9

1994 81.0 17.0 54.6 72.6

1993 87.6 9.9 58.1 80.0

1992 86.3 10.8 48.8 77.9

1991 86.1 6.7 36.0 85.5

1990 85.7 7.4 21.9 82.6

1989 86.9 6.7 10.1 80.1

1988 89.2 4.7 3.6 78.7

1987 90.5 3.4 Not Available Not Available

1986 94.5 1.8 Before 1988 Before 1988

1985 95.5 1.5

1984 95.8 2.1

1983 96.0 2.2

1982 95.0 3.3

1981 96.8 1.7

1980 96.0 2.7

1979 97.0 1.6

1978 96.8 1.9

1977 97.9 0.9

1976 98.1 0.8

1975 97.5 0.8

1974 96.6 1.6

1973 97.0 1.0

1972 96.6 1.3

1971 96.2 1.8

Source: Fannie Mae

N/A = not available

1 This information is subject to change as a result of the pending re-audit and restatement of Fannie Mae's financial statements.

3 Total effective long-term debt represents debt with an effective repricing date greater than one year.

Annual Data 

End of 

Period 

 Asset - Liability Ratios 

2

 In 1999 through 2003, pay-fixed swaptions are included in callable debt. Previous periods have not been restated.

 Asset Mix Liability Mix 

39
Table 9. Fannie Mae Mortgage Asset Quality1

Single-Family 

Delinquency Rate2

Multifamily Delinquency 

Rate3

Credit Losses / Total MBS 

Outstanding plus Retained 

Mortgage Portfolio4 

REO / Total MBS 

Outstanding plus 

Retained Mortgage 

Portfolio5 

Credit-Enhanced 

Outstanding / Total 

MBS Outstanding 

plus Retained 

Mortgage Portfolio6 

(%) (%) (%) (%) (%)

 4Q04 0.63 0.10 N/A N/A N/A

 3Q04 0.59 0.12 N/A N/A N/A

 2Q04 0.57 0.14 N/A N/A N/A

 1Q04 0.58 0.17 N/A N/A N/A

2004 0.63 0.10 N/A N/A N/A

2003 0.60 0.27 0.01 0.07 24.3

2002 0.57 0.05 0.01 0.06 29.6

2001 0.55 0.27 0.01 0.04 34.2

2000 0.45 0.07 0.01 0.05 40.4

1999 0.47 0.11 0.01 0.06 20.9

1998 0.56 0.23 0.03 0.08 17.5

1997 0.62 0.37 0.04 0.10 12.8

1996 0.58 0.68 0.05 0.11 10.5

1995 0.56 0.81 0.05 0.08 10.6

1994 0.47 1.21 0.06 0.10 10.2

1993 0.48 2.34 0.04 0.10 10.6

1992 0.53 2.65 0.04 0.09 15.6

1991 0.64 3.62 0.04 0.07 22.0

1990 0.58 1.70 0.06 0.09 25.9

1989 0.69 3.20 0.07 0.14 Not Available

1988 0.88 6.60 0.11 0.15 Before 1990

1987 1.12 Not Available 0.11 0.18

1986 1.38 Before 1988 0.12 0.22

1985 1.48 0.13 0.32

1984 1.65 0.09 0.33

1983 1.49 0.05 0.35

1982 1.41 0.01 0.20

1981 0.96 0.01 0.13

1980 0.90 0.01 0.09

1979 0.56 0.02 0.11

1978 0.55 0.02 0.18

1977 0.46 0.02 0.26

1976 1.58 0.03 0.27

1975 0.56 0.03 0.51

1974 0.51 0.02 0.52

1973 Not Available 0.00 0.61

1972 Before 1974 0.02 0.98

1971 0.01 0.59

Source: Fannie Mae

N/A = not available

1 This information is subject to change as a result of the pending re-audit and restatement of Fannie Mae's financial statements.

2

 Beginning with 1998, data include all seriously delinquent conventional loans with and without third-party credit enhancement. Prior to 1998, data include loans for 

 which Fannie Mae has primary risk of loss. Data prior to 1992 include loans in relief or bankruptcy, even if they are less than 90 days delinquent.

3

 Beginning in 1998, data include all loans that are two or more months delinquent. Data prior to 1998 include loans for which Fannie Mae has primary risk of loss. 4

 Credit losses are charge-offs plus real estate owned expense; average balances used to calculate ratios subsequent to 1994; quarterly data are annualized. 5

 Real estate owned balances reflect end-of-period amounts. Beginning with 1995, data reflect adoption of SFAS 114.

6

 Beginning in 2000, "credit-enhanced" is expanded to include primary mortgage insurance. Prior to 2000, reflect proportion of the retained mortgage portfolio with 

 additional recourse from a third party to accept some or all of the expected losses on defaulted mortgages.

Annual Data 

End of Period 

Mortgage Asset Quality

40
Table 10. Fannie Mae Capital1

Core Capital1

 Minimum Capital 

Requirement Surplus (Deficit)

Minimum Capital 

2 Total Capital3

Risk-Based Capital 

Requirement4

Risk-Based Capital 

Surplus (Deficit)5

Market 

Capitalization6

Core Capital/Total 

Assets

Core Capital / Total MBS 

Outstanding plus Total 

Assets

Common Share Dividend 

Payout Rate7

 ($) ($) ($) ($) ($) ($) ($) (%) (%) (%)

 4Q04 32,641 32,166 475 35,878 10,039 25,839 69,010 N/A N/A N/A 3Q04 28,856 31,837 (2,981) 38,762 18,342 20,420 61,414 N/A N/A N/A

1999 17,876 17,770 106 18,6772000 20,827 20,294 533 21,634 Before 2002 Before 2002 86,643 3.08 1.51 26.02001 25,182 24,182 1,000 25,976 Not Applicable Not Applicable 79,281 3.15 1.52 23.02002 28,079 27,203 877 28,871 17,434 11,437 63,612 3.16 1.46 20.92003 34,405 31,520 2,885 35,182 27,221 7,960 72,838 3.41 1.49 23.02004 32,641 32,166 475 35,878 10,039 25,839 69,010 N/A N/A N/A

 1Q04 35,701 31,354 4,347 36,481 25,961 10,520 72,158 N/A N/A N/A 2Q04 36,115 31,188 4,927 36,862 24,391 12,471 69,075 N/A N/A N/A

63,651 3.11 1.42 28.8

1998 15,465 15,334 131 16,257 75,881 3.19 1.38 29.51997 13,793 12,703 1,090 14,575 59,167 3.52 1.42 29.41996 12,773 11,466 1,307 13,520 39,932 3.64 1.42 30.41995 10,959 10,451 508 11,703 33,812 3.46 1.32 34.61994 9,541 9,416 126 10,368 19,882 3.50 1.26 30.81993 8,052 7,876 176 8,893 21,387 3.71 1.17 26.81992 Not Applicable Not Applicable Not Applicable Not Applicable 20,874 Not Applicable Not Applicable 23.21991 Before 1993 Before 1993 Before 1993 Before 1993 18,836 Before 1993 Before 1993 21.31990 8,490 14.71989 8,092 12.81988 3,992 11.21987 2,401 11.71986 3,006 8.0

1985 1,904 30.11984 1,012 Not Applicable

1983 1,514 13.91982 1,603 Not Applicable

1981 502 Not Applicable

1980 702 464.2

1979 Not Available 45.7

1978 Before 1980 30.31977 31.81976 33.61975 31.81974 29.61973 18.11972 15.21971 18.7

 This information is subject to change as a result of the pending re-audit and restatement of Fannie Mae's financial statements 1

N/A = not availableSource: Fannie Mae and OFHEO

.

2 The difference between Core Capital and Minimum Capital Requirement. 3 Total Capital is Core Capital plus the total allowance for loan losses and guaranty liability for MBS, less any specific loss allowances.4 The Risk-Based Capital Requirement is the amount of Total Capital that an Enterprise must hold to absorb projected losses flowing from future adverse interest rate and credit risk conditions and is specified by the Federal Housing Enterprise5 

 Financial Safety and Soundness Act of 1992.

The difference between Total Capital and the Risk-Based Capital Requirement.

6 Stock price at the end of the period multiplied by number of outstanding common shares.7 Common dividends paid as a percentage of core net income available to common stockholders. 

Annual Data

End of Period

 Capital ($ in Millions) 

 Minimum Capital Requirement Risk-Based Capital Requirement 

41
Table 11. Freddie Mac Mortgage Purchases1 

 Single-Family Multifamily Total Mortgages3 Mortgage-Related Securities4

 Period ($) ($) ($) ($)

 4Q04 74,129 2,581 76,710 52,617

 3Q04 77,983 2,979 80,962 64,078

 2Q04 115,695 2,245 117,940 69,874

 1Q04 87,005 4,907 91,912 36,730

2004 354,812 12,712 367,524 223,299

2003 701,483 15,292 716,775 385,078

2002 533,194 10,654 543,848 299,674

2001 384,124 9,510 393,634 248,466

2000 168,013 6,030 174,043 91,896

1999 232,612 7,181 239,793 101,898

1998 263,490 3,910 267,400 128,446

1997 115,160 2,241 117,401 35,385

1996 122,850 2,229 125,079 36,824

1995 89,971 1,565 91,536 39,292

1994 122,563 847 123,410 19,817

1993 229,051 191 229,242 Not Available

1992 191,099 27 191,126 Before 1994

1991 99,729 236 99,965

1990 74,180 1,338 75,518

1989 76,765 1,824 78,589

1988 42,884 1,191 44,075

1987 74,824 2,016 76,840

1986 99,936 3,538 103,474

1985 42,110 1,902 44,012

1984 Not Available Not Available 21,885

1983 Before 1985 Before 1985 22,952

1982 23,671

1981 3,744

1980 3,690

1979 5,716

1978 6,524

1977 4,124

1976 1,129

1975 1,716

1974 2,185

1973 1,334

1972 1,265

1971 778

Source: Freddie Mac

1

 For the period 2001 through 2003, data are based on restated and revised financial results.

2

 Based on unpaid principal balances and excludes mortgage loans and mortgage-related securities traded, but not yet settled.

3

 Loans purchased from lenders. Excludes repurchased Freddie Mac MBS and structured securities. 4

 Not included in total mortgages. Includes non-Freddie Mac mortgage-related securities and repurchased Freddie Mac MBS and structured securities. 

 For the period 2002 through 2004, amounts include non-Freddie Mac mortgage-related securities purchased for structured securities (e.g. alternative 

 collateral deals and structured securities backed by Ginnie Mae MBS). For years prior to 2002, includes alternative collateral deals and excludes 

 structured securities backed by Ginnie Mae MBS.

Business Activity ($ in Millions)

Purchases2

Annual Data 

42
Table 11a. Freddie Mac Mortgage Purchases Detail, By Type of Loan 1 

FixedRate4AdjustableRate5 Seconds Total 

 FixedRate  AdjustableRate Total Conventional FHA/ 

RHS 

 ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($)

60,351 13,779 0 74,130 0 0 0 74,130 2,581 0 2,581 76,711

60,030 17,952 0 77,982 0 0 0 77,982 2,979 0 2,979 80,961

99,479 16,216 0 115,695 0 0 0 115,695 2,245 0 2,245 117,940

74,006 12,680 0 86,686 319 0 319 87,005 4,907 0 4,907 91,912

293,866 60,627 0 354,493 319 0 319 354,812 12,712 0 12,712 367,524

617,796 82,270 0 700,066 1,417 0 1,417 701,483 15,292 0 15,292 716,775

468,901 63,448 0 532,349 845 0 845 533,194 10,654 0 10,654 543,848

353,056 30,780 0 383,836 288 0 288 384,124 9,507 3 9,510 393,634

145,744 21,201 0 166,945 1,068 0 1,068 168,013 6,030 0 6,030 174,043

224,040 7,443 0 231,483 1,129 0 1,129 232,612 7,181 0 7,181 239,793

256,008 7,384 0 263,392 98 0 98 263,490 3,910 0 3,910 267,400

106,174 8,950 0 115,124 36 0 36 115,160 2,241 0 2,241 117,401

116,316 6,475 0 122,791 59 0 59 122,850 2,229 0 2,229 125,079

75,867 14,099 0 89,966 5 0 5 89,971 1,565 0 1,565 91,536

105,902 16,646 0 122,548 15 0 15 122,563 847 0 847 123,410

208,322 20,708 1 229,031 20 0 20 229,051 191 0 191 229,242

175,515 15,512 7 191,034 65 0 65 191,099 27 0 27 191,126

91,586 7,793 206 99,585 144 0 144 99,729 236 0 236 99,965

56,806 16,286 686 73,778 402 0 402 74,180 1,338 0 1,338 75,518

57,100 17,835 1,206 76,141 624 0 624 76,765 1,824 0 1,824 78,589

34,737 7,253 59 42,049 835 0 835 42,884 1,191 0 1,191 44,075

69,148 4,779 69 73,996 828 0 828 74,824 2,016 0 2,016 76,840

96,105 2,262 90 98,457 1,479 0 1,479 99,936 3,538 0 3,538 103,474

40,226 605 34 40,865 1,245 0 1,245 42,110 1,902 0 1,902 44,012

Source: Freddie Mac

1

 For the period 2001 through 2003, data are based on restated and revised financial results.

2

 Based on unpaid principal balances and excludes mortgage loans and mortgage-related securities traded, but not yet settled. 

3

 Loans purchased from lenders. Excludes repurchased Freddie Mac MBS and structured securities.

4

 For the period 2002 through 2004, includes loans guaranteed by the Rural Housing Service.

5

 For the period 2001 through 2004, includes balloons/resets. 

Not Available 

Before 1985

Not Available 

Before 1985

Not 

Available 

Before 

1985

Not Available 

Before 1985

Not 

Available 

Before 1985

Not 

Available 

Before 

1985

Not Available 

Before 1985

Not Available 

Before 1985

Not 

Available 

Before 

1985

Not Available 

Before 1985

Not Available 

Before 1985

Not 

Available 

Before 

1985

 1Q04 

 2Q04 

 3Q04 

 4Q04 

Purchases ($ in millions)2,3

Single-Family Mortgages Multifamily Mortgages 

 Total 

Multifamily 

Mortgages 

Total 

Mortgage 

Purchases 

Period 

 Conventional FHA/VA 

Total 

SingleFamily 

Mortgages 

2003

Annual Data 

2004

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1981

1980

1989

1988

1987

1986

1985

1984

1983

1982

1973

1972

1971

1977

1976

1975

1974

1979

1978

43
Table 11b. Freddie Mac Purchases of Mortgage-Related Securities1 

 Manufactured 

Housing Other3 Total Private-Label 

($) ($) ($) ($) ($) ($) ($) ($)

18,493 1,244 0 0 32,207 32,207 673 52,617

27,279 1,677 0 0 34,473 34,473 649 64,078

35,690 775 0 0 32,923 32,923 486 69,874

14,773 342 0 0 21,479 21,479 136 36,730

96,235 4,038 0 0 121,082 121,082 1,944 223,299

266,989 47,806 166 0 69,154 69,154 963 385,078

192,817 45,798 820 318 59,058 59,376 863 299,674

157,339 64,508 1,444 0 24,468 24,468 707 248,466

58,516 18,249 3,339 15 10,289 10,304 1,488 91,896

69,219 12,392 3,422 3,293 11,970 15,263 1,602 101,898

107,508 3,126 319 1,630 14,081 15,711 1,782 128,446

31,296 897 326 36 1,458 1,494 1,372 35,385

33,338 Not Available Not Available Not Available Not Available Not Available Not Available 36,824

32,534 Before 1997 Before 1997 Before 1997 Before 1997 Before 1997 Before 1997 39,292

19,817 19,817

Not Available Not Available

Before 1994 Before 1994

Source: Freddie Mac

 2002, amounts include non-Freddie Mac mortgage-related securities purchased for structured securities (e.g. alternative collateral deals and structured securities backed by 

 Ginnie Mae MBS). For 2001, includes alternative collateral deals and excludes structured securities backed by Ginnie Mae MBS.

Others' Securities

 Period 

Fannie Mae Ginnie Mae 

Private-Label 

1995

1997

2001

Purchases ($ in Millions)2 

Freddie Mac 

Securities

Total 

MortgageRelated 

Securities4

Mortgage 

Revenue Bonds 

2003

2002

 4Q04 

2004

 3Q04 

 2Q04 

 1Q04 

Annual Data 

3

 Includes home equity securities.

4

 Not included in total mortgages. Includes non-Freddie Mac mortgage-related securities and repurchased Freddie Mac MBS and structured securities. For 2004, 2003 and 

1994

2000

2

 Based on unpaid principal balances and excludes mortgage loans and mortgage-related securities traded, but not yet settled. 

1993

1999

1998

1996

1

 For the period 2001 through 2003, data are based on restated and revised financial results.

44
Table 12. Freddie Mac MBS Issuances1 

Single Family MBS3 Multifamily MBS Total MBS3 Multiclass MBS4

 ($) ($) ($) ($) 

77,188 513 77,701 48,846

77,540 216 77,756 52,580

118,702 186 118,888 61,239

87,503 3,260 90,763 52,765

360,933 4,175 365,108 215,430

705,450 8,337 713,787 298,118

543,716 3,596 547,312 331,672

387,234 2,357 389,591 192,437

165,115 1,786 166,901 48,202

230,986 2,045 233,031 119,565

249,627 937 250,564 135,162

113,758 500 114,258 84,366

118,932 770 119,702 34,145

85,522 355 85,877 15,372

116,901 209 117,110 73,131

208,724 0 208,724 143,336

179,202 5 179,207 131,284

92,479 0 92,479 72,032

71,998 1,817 73,815 40,479

72,931 587 73,518 39,754

39,490 287 39,777 12,985

72,866 2,152 75,018 0

96,798 3,400 100,198 2,233

37,583 1,245 38,828 2,625

Not Available Not Available 18,684 1,805

Before 1985 Before 1985 19,691 1,685

24,169 Not Issued

3,526 Before 1983

2,526

4,546

6,412

4,657

1,360

950

46

323

494

65

Source: Freddie Mac

1

 For the period 2001 through 2003, data are based on restated and revised financial results.

2

 Based on unpaid principal balances and excludes mortgage loans and mortgage-related securities traded, but not yet settled.

3

 Includes MBS and structured securities backed by non-Freddie Mac mortgage-related securities. For the period 2002 through 2004, includes 

 structured securities backed by Ginnie Mae MBS. For years prior to 2002, excludes structured securities backed by Ginnie Mae MBS. 4

 Includes activity related to multi-class structured securities, primarily Real Estate Mortgage Investment Conduits (REMICs) as well as principal-only 

 strips and other structured securities. These amounts exclude resecuritizations of MBS into single-class securities, but includes resecuritization of MBS into 

 multiclass securities.

1973

1972

1971

1977

1976

1975

1974

1981

1980

1979

1978

1985

1984

1983

1982

1989

1988

1987

1986

Business Activity ($ in Millions)

MBS Issuances2

Period

1990

 1Q04 

Annual Data 

2004

 4Q04 

 3Q04 

 2Q04 

2003

2002

2000

2001

1999

1998

1997

1996

1991

1995

1994

1993

1992

45
Table 13. Freddie Mac Earnings1

Net Interest 

Income2

Guarantee 

Fee Income2

Average 

Guarantee Fee2

Administrative 

Expenses 

Credit-Related 

Expenses3 Net Income Return on 

Equity4

 ($) ($) (basis points) ($) ($) ($) (%)

2,065 367 18 546 59 377 4.8 

2,321 380 19 442 55 (1,506) (24.4)

2,625 251 13 426 27 2,754 40.5 

2,126 384 20 407 (1) 1,312 18.0 

9,137 1,382 18 1,821 140 2,937 10.2 

9,498 1,653 23 1,877 2 4,816 17.2 

9,525 1,527 22 1,406 126 10,090 47.2 

7,448 1,381 24 1,024 39 3,158 20.2 

3,758 1,243 24 825 75 3,666 39.0 

2,926 1,019 20 655 159 2,223 25.5 

2,215 1,019 21 578 342 1,700 22.6 

1,847 1,082 23 495 529 1,395 23.1 

1,705 1,086 23 440 608 1,243 22.6 

1,396 1,087 24 395 541 1,091 22.1 

1,112 1,108 24 379 425 983 23.3 

772 1,009 24 361 524 786 22.3 

695 936 25 329 457 622 21.2 

683 792 24 287 419 555 23.6 

619 654 22 243 474 414 20.4 

517 572 23 217 278 437 25.0 

492 465 22 194 219 381 27.5 

319 472 24 150 175 301 28.2 

299 301 22 110 120 247 28.5 

312 188 22 81 79 208 30.0 

213 158 25 71 54 144 52.0 

125 132 26 53 46 86 44.5 

30 77 25 37 26 60 21.9 

34 36 20 30 16 31 13.1 

54 23 14 26 23 34 14.7 

55 18 13 19 20 36 16.2 

37 14 15 14 13 25 13.4 

31 9 19 12 8 21 12.4 

18 3 14 10 (1) 14 9.5 

31 3 25 10 11 16 11.6 

42 2 26 8 33 5 4.0 

31 2 32 7 15 12 9.9 

10 1 39 5 4 4 3.5 

10 1 Not Available Not Available Not Available 6 5.5 

Before 1972 Before 1972 Before 1972

Source: Freddie Mac

1 For the period 2000 through 2003, data are based on restated and revised financial results. 2 In 1993, Freddie Mac adopted a change in reporting of uncollectible interest on single-family mortgages. Pre-1993 amounts do not reflect 

that change. 3 Defined as provision for credit losses plus real estate owned operations expense. From 1988 to 1990, data include real estate owned 

disposition loss provisions instead of expense, and before 1988 only mortgage loan loss provision. 4 Ratio computed as annualized net income available to common stockholders divided by the simple average of beginning and ending 

stockholders' equity, net of preferred stock (at redemption value).

Earnings ($ in Millions)

1978

1977

1976

1982

1981

1980

1979

1986

1985

1971

1975

1974

1973

1972

1991

1984

1983

1990

1989

1988

1987

1994

1993

1999

1992

1995

1996

1998

1997

2003

Annual Data 

2004

2000

2002

2001

 3Q04 

 2Q04 

 1Q04 

Period

 4Q04 

46
Table 14. Freddie Mac Balance Sheet

1 

 Total 

Assets 

Total Retained 

Mortgage 

Portfolio3

Non-Mortgage 

Investments4

Debt 

Outstanding 

Stockholders' 

Equity Core Capital5

Fair Value 

of Net 

Assets

Total MBS 

Outstanding6

Multiclass 

MBS 

Outstanding7

 ($) ($) ($) ($) ($) ($) ($) ($) ($) 

795,284 664,582 62,027 731,697 31,416 35,009 30,900 852,270 390,636

807,756 672,762 55,841 747,171 31,672 34,871 29,400 808,864 N/A

805,385 650,667 72,420 744,335 28,653 36,578 29,200 795,046 N/A

807,570 655,471 60,262 737,674 33,880 34,058 28,000 775,184 N/A

795,284 664,582 62,027 731,697 31,416 35,009 30,900 852,270 390,636

803,449 660,531 53,124 739,613 31,487 32,985 27,300 752,164 347,833

752,249 589,899 91,871 665,696 31,330 28,990 22,900 729,809 392,545

641,100 503,769 89,849 578,368 19,624 20,181 18,300 653,084 299,652

459,297 385,451 43,521 426,899 14,837 14,380 Not Available 576,101 309,185

386,684 322,914 34,152 360,711 11,525 12,692 Before 2001 537,883 316,168

321,421 255,670 42,160 287,396 10,835 10,715 478,351 260,504

194,597 164,543 16,430 172,842 7,521 7,376 475,985 233,829

173,866 137,826 22,248 156,981 6,731 6,743 473,065 237,939

137,181 107,706 12,711 119,961 5,863 5,829 459,045 246,366

106,199 73,171 17,808 93,279 5,162 5,169 460,656 264,152

83,880 55,938 18,225 49,993 4,437 4,437 439,029 265,178

59,502 33,629 12,542 29,631 3,570 Not Applicable 407,514 218,747

46,860 26,667 9,956 30,262 2,566 Before 1993 359,163 146,978

40,579 21,520 12,124 30,941 2,136 316,359 88,124

35,462 21,448 11,050 26,147 1,916 272,870 52,865

34,352 16,918 14,607 26,882 1,584 226,406 15,621

25,674 12,354 10,467 19,547 1,182 212,635 3,652

23,229 13,093 15,375 953 169,186 5,333

16,587 13,547 12,747 779 99,909 5,047

13,778 10,018 10,999 606 70,026 3,214

8,995 7,485 7,273 421 57,720 1,669

5,999 4,679 4,991 296 42,952 Not Issued

6,326 5,178 5,680 250 19,897 Before 1983

5,478 5,006 4,886 221 16,962

4,648 4,003 4,131 238 15,316

3,697 3,038 3,216 202 12,017

3,501 3,204 3,110 177 6,765

4,832 4,175 4,523 156 2,765

5,899 4,878 5,609 142 1,643

4,901 4,469 4,684 126 780

2,873 2,521 2,696 121 791

1,772 1,726 1,639 110 444

1,038 935 915 107 64

Source: Freddie Mac

N/A = not available

1 For the period 2001 through 2003, data are based on restated and revised financial results. Certain data for 2004 do not reflect minimum capital reports previously 

submitted to OFHEO and are subject to change. 2 Based on unpaid principal balances and excludes mortgage loans and mortgage-related securities traded, but not yet settled. 3 Excludes "Reserve for losses on mortgage loans held for investment." 4 Based on fair value. Consists of Freddie Mac's cash and investments portfolio, excluding cash and cash equivalents and mortgage-related securities within that portfolio. 5 The sum of (a) the stated value of outstanding common stock, (b) the stated value of outstanding noncumulative perpetual preferred stock, (c) paid-in capital, and 

(d) retained earnings, less Treasury stock. 6 Represents MBS and structured securities that are held by third parties. For years prior to 2002, includes MBS and structured securities in Freddie Mac's 

cash and investments portfolio. 7 Represents total multiclass MBS held by third parties.

 Not Available 

Before 1987

Balance Sheet ($ in Millions)

Mortgage-Backed Securities 

Outstanding 

($ in Millions)2

End of 

Period 

2003

Annual Data 

2004

 4Q04 

 3Q04 

 2Q04 

 1Q04 

2000

1999

1998

2002

2001

1997

1996

1995

1994

1985

1984

1993

1992

1991

1990

1989

1988

1987

1986

1974

1973

1972

1971

1975

1981

1980

1979

1978

1983

1982

1977

1976

47
Table 14a. Freddie Mac Total MBS Outstanding Detail

1

Fixed-Rate3 AdjustableRate4 Seconds 5 Total Total FHA/VA 6 Conventional FHA/RHS Multifamily 

Mortgages 

Total MBS 

Outstanding7

 ($) ($) ($) ($) ($) ($) ($) ($) ($) 

736,332 91,329 70 827,731 9,254 15,285 0 15,285 852,270 

695,274 87,168 82 782,524 10,239 16,101 0 16,101 808,864 

683,254 83,538 99 766,891 11,476 16,679 0 16,679 795,046 

667,159 78,445 119 745,723 12,089 17,372 0 17,372 775,184 

736,332 91,329 70 827,731 9,254 15,285 0 15,285 852,270 

649,699 74,409 140 724,248 12,157 15,759 0 15,759 752,164 

647,603 61,110 5 708,718 12,361 8,730 0 8,730 729,809 

609,290 22,525 10 631,825 14,127 7,132 0 7,132 653,084 

533,331 36,266 18 569,615 778 5,708 0 5,708 576,101 

499,671 33,094 29 532,794 627 4,462 0 4,462 537,883 

Not Available Not Available Not Available Not Available Not Available Not Available Not Available Not Available 478,351 

Before 1999 Before 1999 Before 1999 Before 1999 Before 1999 Before 1999 Before 1999 Before 1999 475,985 

473,065 

459,045 

460,656 

439,029 

407,514 

359,163 

316,359 

272,870 

226,406 

212,635 

169,186 

99,909 

70,026 

57,720 

42,952 

19,897 

16,962 

15,316 

12,017 

6,765 

2,765 

1,643 

780 

791 

444 

64 

Source: Freddie Mac

1 For the period 2001 through 2003, data are based on restated and revised financial results.

2 Based on unpaid principal balances. 

3 Includes Rural Housing Service and other federally guaranteed loans, and certain alternative collateral deals for the period 2002 through 2004. 4 For the period 2002 through 2004, includes balloons/resets and certain alternative collateral deals.

5 For the period 2002 through 2004, includes certain alternative collateral deals.

6 For the period 2002 through 2004, includes structured securities backed by Ginnie Mae MBS and certain alternative collateral deals. 7 Represents MBS and structured securities that are held by third parties. For the period 2002 through 2004, amounts include structured securities backed by all nonFreddie Mac securities (including Ginnie Mae MBS). For years prior to 2002, also includes MBS and structured securities in Freddie Mac's cash and investments portfolio.

Single-Family Mortgages ($ in Millions)2 Multifamily Mortgages 

($ in Millions)2

 Conventional 

 4Q04 

 3Q04 

 End of 

Period 

2002

2001

2000

 2Q04 

 1Q04 

2003

Annual Data 

2004

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

1979

1978

1977

1972

1971

1976

1975

1974

1973

48
Table 15. Freddie Mac Retained Mortgage Portfolio Detail1

Whole Loans2

Freddie Mac 

Securities2

Other MortgageRelated Securities2

Unamortized Premiums, 

Discounts, Deferred 

Fees, Plus Unrealized 

Gains/Losses on 

Available-for-Sale 

Securities3

Total Retained 

Mortgage Portfolio4

 End of 

Period ($) ($) ($) ($) ($) 

61,360 356,698 234,878 11,646 664,582

60,808 372,760 226,381 12,813 672,762

59,817 373,680 210,920 6,250 650,667

60,724 376,114 199,334 19,299 655,471

61,360 356,698 234,878 11,646 664,582 

60,270 393,135 192,061 15,065 660,531 

63,886 341,287 162,099 22,627 589,899 

62,792 308,427 126,420 6,130 503,769 

59,240 246,209 80,244 (242) 385,451 

56,676 211,198 56,569 (1,529) 322,914 

57,084 168,108 29,817 661 255,670 

48,454 103,400 Not Available 122 164,543 

46,504 81,195 Before 1998 71 137,826 

43,753 56,006 282 107,706 

Not Available 30,670 Not Available 73,171 

Before 1995 15,877 Before 1995 55,938 

6,394 33,629 

Not Available 26,667 

Before 1992 21,520 

21,448 

16,918 

12,354 

13,093 

13,547 

10,018 

7,485 

4,679 

5,178 

5,006 

4,003 

3,038 

3,204 

4,175 

4,878 

4,469 

2,521 

1,726 

935 

Source: Freddie Mac

1 For the period 2001 through 2003, data are based on restated and revised financial results. 2 Based on unpaid principal balances and excludes mortgage loans and mortgage-related securities traded, but not yet settled. 3 Includes premiums, discounts, deferred fees and other basis adjustments on mortgage loans and mortgage-related securities 

plus unrealized gains or losses on mortgage-related securities and MBS residuals, at fair value. 4 Excludes "Reserve for losses on mortgage loans held for investment."

 2Q04 

 1Q04 

($ in Millions)

 4Q04 

 3Q04 

2003

2002

2001

Annual Data

2004

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

1979

1978

1973

1972

1971

1977

1976

1975

1974

49
Table 15a. Freddie Mac Retained Mortgage Portfolio Detail - Part 1, Whole Loans1

Multifamily

Fixed-Rate3 AdjustableRate Seconds Total Total 

FHA/VA Convention

al 

 FHA/RHS Total Total Whole 

Loans

 ($) ($) ($) ($) ($) ($) ($) ($) ($)

22,055 990 0 23,045 344 37,968 3 37,971 61,360 

22,147 881 0 23,028 375 37,402 3 37,405 60,808 

22,947 788 1 23,736 411 35,667 3 35,670 59,817 

25,159 812 1 25,972 454 34,295 3 34,298 60,724 

22,055 990 0 23,045 344 37,968 3 37,971 61,360 

25,889 871 1 26,761 513 32,993 3 32,996 60,270 

33,821 1,321 3 35,145 705 28,033 3 28,036 63,886 

38,267 1,073 5 39,345 964 22,480 3 22,483 62,792 

39,537 2,125 9 41,671 1,200 16,369 Not Available 16,369 59,240 

43,210 1,020 14 44,244 77 12,355 Before 2001 12,355 56,676 

47,754 1,220 23 48,997 109 7,978 7,978 57,084 

40,967 1,478 36 42,481 148 5,825 5,825 48,454 

Not Available Not Available Not Available Not Available Not Available 4,746 4,746 46,504 

Before 1997 Before 1997 Before 1997 Before 1997 Before 1997 3,852 3,852 43,753 

Not Available Not Available Not Available 

Before 1995 Before 1995 Before 1995

Source: Freddie Mac

1 For the period 2001 through 2003, data are based on restated and revised financial results.

2 Based on unpaid principal balances. 

3 For the period 2002 through 2004, includes loans guaranteed by the Rural Housing Service.

1995

1994

1999

1998

1997

1996

2002

2001

2000

 2Q04 

 1Q04 

2003

2004

Whole Loans ($ in Millions)2

Annual Data 

 Single-Family 

 Conventional 

 End of 

Period 

 4Q04 

 3Q04 

50
Table 15a. Freddie Mac Retained Mortgage Portfolio Detail - Part 2a, Mortgage-Related Securities1

 End of 

Period 

Total 

Enterprise 

Securities2,3

 Fannie Mae Ginnie Mae 

Manufactured 

Housing Other4

 Total 

PrivateLabel 

Total 

Others' 

Securities 

 ($) ($) ($) ($) ($) ($) ($) 

 4Q04 356,698 58,004 1,711 1,491 164,595 166,086 225,801 

 3Q04 372,760 60,917 1,868 1,593 153,467 155,060 217,845 

 2Q04 373,680 63,858 2,078 1,639 135,289 136,928 202,864 

 1Q04 376,114 69,896 2,401 1,722 117,561 119,283 191,580 

2004 356,698 58,004 1,711 1,491 164,595 166,086 225,801 

2003 393,135 74,529 2,760 1,784 105,216 107,000 184,289 

2002 341,287 78,829 4,878 2,394 68,358 70,752 154,459 

2001 308,427 71,128 5,699 2,462 39,874 42,336 119,163 

2000 246,209 28,303 8,991 2,896 33,101 35,997 73,291 

1999 211,198 13,245 6,615 4,693 26,326 31,019 50,879 

1998 168,108 3,749 4,458 1,711 15,259 16,970 25,177 

1997 103,400 Not Available 6,393 Not Available Not Available Not Available Not Available

1996 81,195 Before 1998 7,434 Before 1998 Before 1998 Before 1998 Before 1998

1995 56,006 Not Available 

1994 30,670 Before 1996

1993 15,877 

1992 6,394 

1991 Not Available 

Before 1992

Source: Freddie Mac

1

 For the period 2001 through 2003, data are based on restated and revised financial results

2

 Based on unpaid principal balances. 

3

 For the period 2001 through 2004, includes structured securities backed by Ginnie Mae MBS which were previously

 classified as non-Freddie Mac mortgage-related securities.

4

 Includes home equity securities.

Mortgage-Related Securities ($ in Millions)

Annual Data 

Others' Securities2

 Private-Label 

51
Table 15a. Freddie Mac Retained Mortgage Portfolio Detail - Part 2b, Mortgage-Related Securities1

 End of 

Period 

Mortgage Revenue 

Bonds2 

Total Mortgage-Related 

Securities3

 ($) ($) ($) ($) 

 4Q04 9,077 603,222 11,646 664,582 

 3Q04 8,536 611,954 12,813 672,762 

 2Q04 8,056 590,850 6,250 650,667 

 1Q04 7,754 594,747 19,299 655,471 

2004 9,077 603,222 11,646 664,582 

2003 7,772 600,261 15,065 660,531 

2002 7,640 526,013 22,627 589,899 

2001 7,257 440,977 6,130 503,769 

2000 6,953 326,211 (242) 385,451 

1999 5,690 266,238 (1,529) 322,914 

1998 4,640 198,586 661 255,670 

1997 3,031 Not Available 122 164,543 

1996 1,787 Before 1998 71 137,826 

1995 Not Available 282 107,706 

1994 Before 1996 Not Available 73,171 

1993 Before 1995 55,938 

1992 33,629 

1991 26,667 

1990 21,520 

1989 21,448 

1988 16,918 

1987 12,354 

1986 13,093 

1985 13,547 

1984 10,018 

1983 7,485 

1982 4,679 

1981 5,178 

1980 5,006 

1979 4,003 

1978 3,038 

1977 3,204 

1976 4,175 

1975 4,878 

1974 4,469 

1973 2,521 

1972 1,726 

1971 935 

Source: Freddie Mac

1

 For the period 2001 through 2003, data are based on restated and revised financial results.

2

 Based on unpaid principal balances. 

3

 Includes premiums, discounts, deferred fees and other basis adjustments on mortgage loans and mortgage-related securities 

 plus unrealized gains or losses on mortgage-related securities and MBS residuals.

4

 Excludes "Reserve for losses on mortgage loans held for investment."

Mortgage-Related Securities ($ in Millions)

Total Retained 

Mortgage Portfolio4

Annual Data 

Unamortized 

Premiums, Discounts, 

Deferred Fees, Plus 

Unrealized 

Gains/Losses on 

Available-for-Sale 

Securities3

52
Table 16. Freddie Mac Financial Derivatives1

Interest 

Rate 

Swaps 

Interest 

Rate 

Caps, 

Floors, 

and 

Corridors

Foreign 

Currency 

Contracts

OTC 

Futures, 

Options, 

and 

Forward 

Rate 

Agreements

TreasuryBased 

Contracts2

ExchangeTraded 

Futures, 

Options, 

and Other 

Derivatives

Credit 

Derivatives3 Commitments4 Other5 Total

End of 

Period ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) 

178,739 9,897 56,850 224,204 2,580 126,530 10,926 32,952 114,100 756,778 

280,993 9,960 46,136 288,897 5,847 150,039 11,627 147,706 120,152 1,061,357 

257,208 11,161 43,256 329,078 6,308 126,539 12,518 102,627 128,337 1,017,032 

254,602 11,219 40,015 368,906 10,975 176,233 14,187 132,508 142,210 1,150,855 

178,739 9,897 56,850 224,204 2,580 126,530 10,926 32,952 114,100 756,778 

287,592 11,308 46,512 349,650 8,549 122,619 15,542 89,520 152,579 1,083,871 

290,096 11,663 43,687 277,869 17,900 210,646 17,301 191,563 117,219 1,177,944 

442,771 12,178 23,995 187,486 13,276 358,500 10,984 121,588 0 1,170,778 

277,888 12,819 10,208 113,064 2,200 22,517 Not Applicable 35,839 474,535 

126,580 19,936 1,097 172,750 8,894 94,987 Before 2000 0 424,244 

57,555 21,845 1,464 63,000 11,542 157,832 0 313,238 

54,172 21,995 1,152 6,000 12,228 0 0 95,547 

46,646 14,095 544 0 651 0 0 61,936 

45,384 13,055 0 0 24 0 0 58,463 

21,834 9,003 0 0 0 0 0 30,837 

17,888 1,500 0 0 0 0 0 19,388 

Source: Freddie Mac

N/A = not available.

1 For the period 2001 through 2003, data are based on restated and revised financial results.

2 2002, 2003 and 2004 amounts are exchange-traded. 

3 Amounts included in "Other" in 2000, not applicable in prior periods.

4 Commitments to purchase and sell mortgage loans, mortgage-related securities, and various debt securities. Amounts included in "Other" in 2000, 

not applicable in prior periods.

5 For 2002 and 2003, consists of a prepayment management agreement. For 2004, includes that agreement and swap guarantee derivatives.

2000

1999

 4Q04 

 3Q04 

2004

2001

Financial Derivatives - Notional Amount Outstanding ($ in millions) 

Annual Data 

2003

2002

 2Q04 

 1Q04 

Not Applicable 

Before 2000

1993

1998

1997

1996

1995

1994

53
Federal 

Funds and 

Eurodollars

Asset 

Backed 

Securities

Repurchase 

Agreements

Commercial 

Paper and 

Corporate Debt Other2 Total 

 ($) ($) ($) ($) ($) ($) 

18,647 21,733 13,550 0 8,097 62,027 

2,695 21,857 15,636 6,808 8,844 55,840 

18,414 20,989 15,833 6,449 10,734 72,419 

10,397 18,259 15,362 5,472 10,772 60,262 

18,647 21,733 13,550 0 8,097 62,027 

7,567 16,648 13,015 5,852 10,042 53,124 

6,129 34,790 16,914 13,050 20,988 91,871 

15,868 26,297 17,632 21,712 8,340 89,849 

2,267 19,063 7,488 7,302 7,401 43,521 

10,545 10,305 4,961 3,916 4,425 34,152 

20,524 7,124 1,756 7,795 4,961 42,160 

2,750 2,200 6,982 3,203 1,295 16,430 

9,968 2,086 6,440 1,058 2,696 22,248 

110 499 9,217 1,201 1,684 12,711 

7,260 0 5,913 1,234 3,401 17,808 

9,267 0 4,198 1,438 3,322 18,225 

5,632 0 4,060 53 2,797 12,542 

2,949 0 4,437 0 2,570 9,956 

1,112 0 9,063 0 1,949 12,124 

3,527 0 5,765 0 1,758 11,050 

4,469 0 9,107 0 1,031 14,607 

3,177 0 5,859 0 1,431 10,467 

Source: Freddie Mac

1 For the period 2001 through 2003, data are based on restated and revised financial results.

2 Includes non-mortgage-related securities classified as trading, debt securities issued by the U.S. Treasury 

and other U.S. government agencies, obligations of states and municipalities, and preferred stock.

1999

Non-Mortgage Investments ($ in Millions)

End of 

Period

 4Q04 

 3Q04 

 2004 

 2Q04 

 1Q04 

Annual Data 

1993

1987

1992

1991

1990

1989

1988

Table 17. Freddie Mac Non-Mortgage Investments1

1996

1995

1994

 2003 

1998

1997

2002

2001

2000

54
Total Retained Non-Mortgage 

Mortgage Portfolio / Investments /

 Total Assets Total Assets

 (%) (%) 

84 8 

83 7 

81 9 

81 7 

84 8 

82 7 

78 12 

79 14 

84 10 

84 9 

80 13 

85 8 

79 13 

79 9 

69 17 

67 22 

57 21 

57 21 

53 30 

60 31 

49 43 

48 41 

56 Not Available

82 Before 1987

73 

83 

78 

82 

91 

86 

82 

91 

86 

82 

92 

88 

97 

90 

Source: Freddie Mac

1 For the period 2001 through 2003, data are based on restated 

and revised financial results.

1978

1977

1972

1971

1976

1975

1974

1973

1982

1981

1980

1979

1986

1985

1984

1983

1990

1989

1988

1987

1994

1993

1992

1991

1998

1997

1996

1995

1999

Annual Data 

 2003 

2002

2001

 2004 

 3Q04 

 2Q04 

 1Q04 

2000

Table 18. Freddie Mac Asset Mix1

Asset Ratios 

End of Period 

 4Q04 

55
Table 19. Freddie Mac Mortgage Asset Quality

(%) (%) (%) (%) (%)

0.73 0.06 0.01 0.05 19 

0.73 0.05 0.01 0.05 20 

0.74 0.05 0.01 0.05 20 

0.83 0.06 0.01 0.06 21 

0.73 0.06 0.01 0.05 19 

0.86 0.05 0.01 0.06 21 

0.77 0.13 0.01 0.05 27.4 

0.62 0.15 0.01 0.04 34.7 

0.49 0.04 0.01 0.04 31.8 

0.39 0.14 0.02 0.05 29.9 

0.50 0.37 0.04 0.08 27.3 

0.55 0.96 0.08 0.11 15.9 

0.58 1.96 0.10 0.13 10.0 

0.60 2.88 0.11 0.14 9.7 

0.55 3.79 0.08 0.18 7.2 

0.61 5.92 0.11 0.16 5.3 

0.64 6.81 0.09 0.12 Not Available 

0.61 5.42 0.08 0.14 Before 1993

0.45 2.63 0.08 0.12 

0.38 2.53 0.08 0.09 

0.36 2.24 0.07 0.09 

0.36 1.49 0.07 0.08 

0.42 1.07 Not Available 0.07 

0.42 0.63 Before 1987 0.10 

0.46 0.42 0.15 

0.47 0.58 0.15 

0.54 1.04 0.12 

0.61 Not Available 0.07 

0.44 Before 1982 0.04 

0.31 0.02 

0.21 0.02 

Not Available 0.03 

Before 1978 0.04 

0.03 

0.02 

Not Available

Before 1974

Source: Freddie Mac

1 For the period 2000 through 2003, data are based on restated and revised financial results, except for the credit-enhanced share of the total 

mortgage portfolio in 2000. 2 Based on the number of mortgages 90 days or more delinquent or in foreclosure. 1994 -1999 data include only loans for which Freddie Mac 

assumed primary default risk. Pre-1994 calculations included all loans. Rates for 2000 through 2004 are based on the total single-family mortgage

portfolio. Includes delinquencies on mortgage loans where Freddie Mac has transferred primary or full default risk to various third parties as well 

as multiclass MBS backed by alternative collateral deals. 3 Based on net carrying value of mortgages 60 days or more delinquent or in foreclosure. 4 Credit losses equal to REO operations expense (income) plus Charge-offs, net. Calculated as credit losses (gains) divided by the average total 

mortgage portfolio, excluding non-Freddie Mac mortgage-related securities and that portion of structured securities that

is backed by Ginnie Mae MBS. 5 Based on the total mortgage portfolio excluding non-Freddie Mac mortgage-related securities and that portion of issued structured securities that

is backed by Ginnie Mae MBS. 6 Includes loans for which the lender or a third party has retained primary default risk by pledging collateral or agreeing to accept losses on loans that 

default. In many cases, the lender's or third party's risk is limited to a specific level of losses at the time the credit enhancement becomes effective.

1976

1975

1980

1979

1978

1977

1974

1973

1990

1989

1982

1981

1988

1987

1986

1985

1984

1983

1994

1993

1992

1991

1998

1997

1996

1995

2002

2001

2000

1999

 2Q04 

 1Q04 

2003

2004

Annual Data 

 4Q04 

 3Q04 

Mortgage Asset Quality

Credit Losses / 

Average Total 

Mortgage Portfolio4 

REO / Total 

Mortgage Portfolio5

Credit-Enhanced6 / 

Total Mortgage 

Portfolio5

End of Period

Single-Family 

Delinquency Rate2

Multifamily 

Delinquency Rate3

56
Table 20. Freddie Mac Capital1

Core Capital 

Minimum 

Capital 

Requirement

Regulatory 

Capital 

Surplus 

(Deficit)2 Total Capital3

Risk-Based 

Capital 

Requirement4

Risk-Based 

Capital Surplus 

(Deficit)5

Market 

Capitalization6

Core Capital / 

Total Assets

Core Capital / 

Total MBS 

Outstanding plus 

Total Assets

Common Share 

Dividend Payout 

Rate7

 ($) ($) ($) ($) ($) ($) ($) (%) (%) (%)

12,692 12,287 405 14,380 14,178 202 Before 2002 Before 2002 Before 2002 47,702 3.13 1.39 20.0 20,181 19,014 1,167 Not Applicable Not Applicable Not Applicable 45,473 3.15 1.56 18.9 28,990 22,339 6,651 24,222 4,743 19,479 40,590 3.85 1.96 6.2 32,985 23,774 9,211 33,436 5,426 28,010 40,158 4.11 2.12 15.6 35,009 24,131 10,878 34,691 11,108 23,583 50,898 4.40 2.12 30.7 34,058 24,029 10,029 34,898 7,131 27,767 40,683 4.22 2.15 16.4 36,578 24,134 12,444 33,081 3,858 29,223 43,624 4.54 2.29 7.7 34,871 24,274 10,597 34,397 5,749 28,648 45,039 4.32 2.16 (13.5)35,009 24,131 10,878 34,691 11,108 23,583 50,898 4.40 2.12 65.0 

32,713 3.28 1.37 20.1 

10,715 10,333 382 44,797 3.33 1.34 20.7 

7,376 7,082 294 28,461 3.79 1.10 21.1 6,743 6,517 226 19,161 3.88 1.04 21.3 5,829 5,584 245 14,932 4.25 0.98 21.1 5,169 4,884 285 9,132 4.87 0.91 20.5 4,437 3,782 655 9,005 5.29 0.85 21.6 

Not Applicable Not Applicable Not Applicable 8,721 Not Applicable Not Applicable 23.1 

Before 1993 Before 1993 Before 1993

4,024 24.3 2,925 23.2 8,247 Before 1993 Before 1993 21.6 

Not Applicable Not Available

Before 1989 Before 1989

1

Source: Freddie Mac and OFHEO

For the period 2001 through 2003, data are based on restated and revised financial results. Certain data for 2004 do not reflect minimum capital reports previously submitted to OFHEO and are subject to change.

2 The difference between Core Capital and Minimum Capital Requirement. 3 Total Capital is Core Capital plus the total allowance for loan losses and guaranty liability for MBS, less any specific loss allowances. For 2002, calculated by OFHEO prior to the restatement of Freddie Mac's

2002 financial results.

4 The Risk-Based Capital Requirement is the amount of Total Capital that an Enterprise must hold to absorb projected losses flowing from future adverse interest rate and credit risk conditions and is specified by

the Federal Housing Enterprises Financial Safety and Soundness Act of 1992.

5 The difference between Total Capital and Risk-Based Capital Requirement. 6 Stock price at the end of the period multiplied by number of outstanding common shares. 7 Common dividends paid as a percentage of net income available to common stockholders. 

198819891990199119921993199419951996199719981999200020012003

Annual Data 

2002

 1Q04 

Capital ($ in Millions) 

Minimum Capital Requirement Risk-Based Capital Requirement

2004

 2Q04  3Q04  4Q04 

End of Period

57
Table 21. Combined Purchases1

($) ($) ($) ($)

 4Q04 201,886 7,189 209,075 90,877

 3Q04 207,906 6,841 214,747 115,161

 2Q04 302,306 7,189 309,495 136,094

 1Q04 230,640 7,887 238,527 57,552

2004 942,738 29,106 971,844 399,684 

2003 2,023,509 46,170 2,069,679 793,703 

2002 1,333,510 27,265 1,360,775 568,608 

2001 951,797 28,641 980,438 457,590 

2000 395,082 16,407 411,489 221,612 

1999 548,748 17,193 565,941 271,803 

1998 618,410 15,338 633,748 275,706 

1997 275,081 8,775 283,856 85,702 

1996 287,306 8,680 295,986 83,567 

1995 215,974 6,531 222,505 75,550 

1994 280,792 4,686 285,478 45,722 

1993 518,877 4,326 523,203 Not Available

1992 439,702 2,983 442,685 Before 1994

1991 233,280 3,440 236,720 

1990 185,187 4,518 189,705 

1989 157,275 6,149 163,424 

1988 107,497 5,361 112,858 

1987 148,766 3,749 152,515 

1986 177,159 5,415 182,574 

1985 84,653 3,102 87,755 

1984 Not Available Not Available 50,704 

1983 Before 1985 Before 1985 49,431 

1982 49,610 

1981 10,573 

1980 11,791 

1979 16,523 

1978 18,829 

1977 8,908 

1976 4,761 

1975 6,036 

1974 9,204 

1973 7,586 

1972 5,129 

1971 4,818 

Sources: Fannie Mae and Freddie Mac

N/A = not available

1

 See notes to Tables 1 and 11.

 Business Activity ($ in Millions) 

 Purchases 

 Annual Data 

 Single-Family Multifamily 

Mortgage-Related 

Total Mortgages Securities

 Period 

58
Table 21a. Combined Mortgage Purchases Detail, By Type of Loan1

 Fixed-Rate 

 AdjustableRate Seconds Total Fixed-Rate Adjustable- Rate Total Conventional FHA/RHS 

 ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($)

 4Q04 152,552 47,997 21 200,570 193 1,124 1,317 201,887 7,185 4 7,189 209,076  3Q04 159,520 47,128 8 206,656 228 1,021 1,249 207,905 6,820 21 6,841 214,746  2Q04 249,344 51,728 9 301,081 327 898 1,225 302,306 7,140 49 7,189 309,495

 1Q04 194,207 34,945 13 229,165 645 830 1,475 230,640 7,210 677 7,887 238,527 

2004 755,623 181,798 51 937,472 1,393 3,873 5,266 942,738 28,355 751 29,106 971,844 2003 1,808,627 209,030 93 2,017,750 2,715 3,044 5,759 2,023,509 33,940 12,230 46,170 2,069,679 2002 1,199,560 130,220 41 1,329,821 2,141 1,548 3,689 1,333,510 24,604 2,661 27,265 1,360,775 2001 887,171 56,428 1,137 944,736 5,959 1,102 7,061 951,797 27,356 1,285 28,641 980,438 2000 332,980 55,010 726 388,716 5,446 920 6,366 395,082 15,157 1,250 16,407 411,489 1999 517,228 19,581 1,198 538,007 9,658 1,084 10,742 548,749 16,039 1,153 17,192 565,941 1998 590,375 21,657 1 612,033 5,866 511 6,377 618,410 14,754 584 15,338 633,748 1997 242,503 30,045 3 272,551 2,098 432 2,530 275,081 8,177 598 8,775 283,856 1996 262,470 22,025 3 284,498 2,474 334 2,808 287,306 8,428 252 8,680 295,986 1995 180,768 32,077 9 212,854 3,014 106 3,120 215,974 6,242 289 6,531 222,505 1994 245,717 32,986 8 278,711 1,968 113 2,081 280,792 4,467 219 4,686 285,478 1993 482,724 35,128 30 517,882 875 120 995 518,877 4,110 216 4,326 523,203 1992 401,847 36,513 143 438,503 1,120 79 1,199 439,702 2,872 111 2,983 442,685 1991 205,907 24,980 911 231,798 1,444 38 1,482 233,280 3,419 21 3,440 236,720 1990 151,817 30,814 1,340 183,971 1,201 15 1,216 185,187 4,503 15 4,518 189,705 1989 117,894 35,527 1,727 155,148 2,113 14 2,127 157,275 6,133 16 6,149 163,424 1988 70,504 34,745 492 105,741 1,658 98 1,756 107,497 5,340 21 5,361 112,858 1987 129,582 15,454 208 145,244 3,477 45 3,522 148,766 3,479 270 3,749 152,515 1986 154,356 9,567 588 164,511 12,634 14 12,648 177,159 5,415 - 5,415 182,574 1985 70,219 11,341 905 82,465 2,172 16 2,188 84,653 3,102 - 3,102 87,755

1984 Not Available Not Available Not Available Not Available Not Available Not Available Not Available Not Available Not Available Not Available Not Available Not Available 

 Before 1985 Before 1985 Before 1985 Before 1985 Before 1985 Before 1985 Before 1985 Before 1985 Before 1985 Before 1985 Before 1985 Before 1985 

1

N/A = not availableSources: Fannie Mae and Freddie Mac

 See notes to Tables 1a and 11a. 

 Single-Family Mortgages Multifamily Mortgages 

Purchases ($ in Millions)

Total 

Mortgage 

Purchases 

 Annual Data 

 Conventional FHA/VA 

Total SingleFamily 

Mortgages 

Total 

Mortgages 

Multifamily 

 Period 

59
Table 21b. Combined Purchases of Mortgage-Related Securities1

 Manufactured 

Housing Other2

 Total PrivateLabel 

Period ($) ($) ($) ($) ($) ($) ($)

 4Q04 29,460 0 0 59,141 59,141 2,276 90,877 

 3Q04 50,071 0 0 63,091 63,091 1,999 115,161 

 2Q04 77,020 0 0 56,584 56,584 2,490 136,094 

 1Q04 23,221 0 0 33,028 33,028 1,303 57,552 

2004 179,772 0 0 211,844 211,844 8,068 399,684 

2003 683,163 202 0 103,130 103,130 7,208 793,703 

2002 491,611 5,245 374 66,218 66,592 5,160 568,608 

2001 422,501 1,777 Not Available 27,981 27,981 5,331 457,590 

2000 191,840 5,832 Before 2002 Not Available 18,770 5,170 221,612 

1999 213,970 20,983 Before 2001 31,774 5,076 271,803 

1998 236,636 3,057 31,432 4,581 275,706 

1997 73,345 3,834 5,682 2,841 85,702 

1996 75,380 Not Available Not Available Not Available 83,567 

1995 65,798 Before 1997 Before 1997 Before 1997 75,550 

1994 42,048 45,722 

1993 Not Available Not Available 

 Before 1994 Before 1994 

 

N/A = not available

1

 See notes to Tables 1b and 11b.

2

 The category 'Other' includes home equity purchases by both Enterprises.

 Sources: Fannie Mae and Freddie Mac

 Purchases ($ in millions) 

 Annual Data 

 Others' Securities 

Total 

MortgageRelated 

Securities 

 Enterprise 

Securities Ginnie Mae 

 Private Label 

 Mortgage 

Revenue 

Bonds 

60
Table 22. Combined MBS Issuances1

 Single-Family 

MBS Multifamily MBS Total MBS Multiclass MBS

Period ($) ($) ($) ($) 

 4Q04 192,763 2,161 194,924 68,990

 3Q04 204,599 1,632 206,231 68,796

 2Q04 289,825 2,252 292,077 95,929

 1Q04 219,189 4,984 224,173 76,401

2004 906,376 11,029 917,405 310,116

2003 1,902,011 31,355 1,933,366 559,037

2002 1,270,973 15,934 1,286,907 502,467

2001 901,855 16,158 918,013 331,840

2000 369,181 9,382 378,563 87,746

1999 523,178 10,542 533,720 174,725

1998 564,747 11,965 576,712 219,309

1997 257,373 6,314 263,687 169,781

1996 263,133 6,438 269,571 64,925

1995 191,791 4,542 196,333 25,053

1994 245,286 2,446 247,732 146,496

1993 429,209 959 430,168 353,966

1992 372,389 855 373,244 301,489

1991 203,967 1,415 205,382 184,840

1990 168,004 2,506 170,510 108,770

1989 139,420 3,862 143,282 81,469

1988 90,610 4,045 94,655 29,990

1987 134,933 3,314 138,247 9,917

1986 156,815 3,949 160,764 4,633

1985 60,725 1,752 62,477 Not Issued

1984 Not Available Not Available 32,230 Before 1986

1983 Before 1985 Before 1985 33,031

1982 38,139

1981 4,243

Sources: Fannie Mae and Freddie Mac

1

 See notes to Tables 2 and 12.

Annual Data

 Business Activity ($ in Millions) 

 MBS Issuances 

61
Table 23. Combined Earnings1 

Net Interest 

Income

Guarantee Fee 

Income

Administrative 

Expenses 

Credit-Related 

Expenses Net Income 

Period ($) ($) ($) ($) ($)

 4Q04 N/A N/A N/A N/A N/A

 3Q04 N/A N/A N/A N/A N/A

 2Q04 N/A N/A N/A N/A N/A

 1Q04 N/A N/A N/A N/A N/A

2004 N/A N/A N/A N/A N/A

2003 23,067 4,064 3,340 114 12,721 

2002 20,091 3,343 2,625 218 14,709 

2001 15,538 2,863 2,041 117 9,052 

2000 9,432 2,594 1,730 169 8,114 

1999 7,820 2,301 1,455 286 6,135 

1998 6,325 2,248 1,286 603 5,118 

1997 5,796 2,356 1,131 904 4,451 

1996 5,297 2,282 1,000 1,017 3,968 

1995 4,443 2,173 941 876 3,235 

1994 3,935 2,191 904 803 3,115 

1993 3,305 1,970 804 829 2,659 

1992 2,753 1,770 710 777 2,245 

1991 2,461 1,467 606 789 1,918 

1990 2,212 1,190 529 784 1,587 

1989 1,708 980 471 588 1,244 

1988 1,329 793 412 584 888 

1987 1,209 735 347 535 677 

1986 683 476 285 426 352 

1985 451 300 223 285 201 

1984 123 236 183 140 73 

1983 116 186 134 94 135 

1982 (434) 93 97 62 (132)

1981 (395) 36 79 (12) (175)

1980 75 Not Available 70 42 48 

1979 377 Before 1981 65 55 198 

1978 331 53 49 234 

1977 282 44 36 186 

1976 221 40 24 141 

1975 205 37 27 131 

1974 184 31 50 112 

1973 211 25 27 138 

1972 148 18 9 100 

1971 59 Not Available Not Available 67 

Before 1972 Before 1972

Sources: Fannie Mae and Freddie Mac

N/A = not available

1 See notes to Tables 3 and 13.

 Earnings ($ in Millions) 

Annual Data

62
Table 24. Combined Balance Sheet1

Total 

Assets

Total 

Retained 

Mortgage 

Portfolio

Non-Mortgage 

Investments

Debt 

Outstanding 

Shareholders' 

Equity Core Capital

Fair Value of 

Net Assets

 ($) ($) ($) ($) ($) ($) ($) ($ in Millions) 

 4Q04 N/A N/A N/A N/A N/A 67,650 N/A 2,255,031

 3Q04 N/A N/A N/A N/A N/A 63,727 N/A 2,186,544

 2Q04 N/A N/A N/A N/A N/A 72,693 N/A 2,155,091

 1Q04 N/A N/A N/A N/A N/A 69,759 N/A 2,121,076

2004 N/A N/A N/A N/A N/A 67,650 N/A 2,255,031

2003 1,813,018 1,562,411 112,617 1,701,345 53,860 67,390 58,882 2,052,330

2002 1,639,764 1,391,021 131,164 1,516,678 47,618 57,069 45,030 1,759,265

2001 1,441,048 1,210,572 155,831 1,341,835 37,742 45,363 40,975 1,512,049

2000 1,134,521 993,182 95,868 1,069,581 35,675 35,207 Not Available 1,282,823

1999 961,992 846,017 71,451 908,330 29,154 30,568 Before 2001 1,217,028

1998 806,567 671,104 100,675 747,687 26,288 26,180 1,115,494

1997 586,270 481,135 81,026 542,616 21,314 21,169 1,055,123

1996 524,907 424,354 78,854 488,251 19,504 19,516 1,021,238

1995 453,731 360,574 69,984 419,135 16,822 16,788 972,275

1994 378,707 293,986 64,143 350,509 14,703 14,710 947,001

1993 300,859 246,107 39,621 251,105 12,489 12,489 910,335

1992 240,480 189,889 32,116 195,931 10,344 Not Applicable 831,958

1991 193,932 153,346 19,792 164,199 8,113 Before 1993 714,447

1990 173,692 135,586 21,992 154,344 6,077 604,434

1989 159,777 129,429 19,388 142,211 4,907 489,382

1988 146,610 117,017 19,896 132,341 3,844 396,503

1987 129,133 106,019 13,935 116,604 2,993 348,369

1986 122,850 107,216 Not Available 108,938 2,135 264,754

1985 115,663 108,156 Before 1987 106,732 1,788 154,461

1984 101,576 94,153 94,718 1,524 105,764

1983 87,378 82,732 81,867 1,421 82,841

1982 78,980 74,035 74,605 1,249 57,402

1981 67,904 64,807 64,231 1,330 20,614

1980 63,357 60,595 59,766 1,678 16,962

1979 55,948 53,780 52,555 1,739 15,316

1978 47,203 45,141 44,201 1,564 12,017

1977 37,481 36,456 35,000 1,350 6,765

1976 37,225 35,950 35,088 1,139 2,765

1975 37,495 35,698 35,572 1,003 1,643

1974 34,572 33,135 32,852 898 780

1973 27,191 26,110 25,699 801 791

1972 22,118 21,378 20,878 669 444

1971 19,629 18,821 18,587 567 64

Sources: Fannie Mae and Freddie Mac

N/A = not available

1 See notes to Tables 4 and 14.

Annual Data 

 Balance Sheet ($ in Millions) 

End of 

Period

Total MortgageBacked Securities 

Outstanding

63
Table 24a. Combined MBS Outstanding Detail 1

 Fixed-Rate 

 AdjustableRate Seconds Total Conventional FHA/RHS

 Total 

Multifamily 

 ($) ($) ($) ($) ($) ($) ($) ($) ($) 

 4Q04 1,889,090 275,128 128 2,164,346 12,207 78,155 323 78,478 2,255,031

 3Q04 1,836,740 255,459 150 2,092,349 13,960 79,901 334 80,235 2,186,544

 2Q04 1,801,578 255,626 178 2,057,382 15,630 81,733 346 82,079 2,155,091

 1Q04 1,778,236 242,444 213 2,020,893 16,642 83,179 362 83,541 2,121,076

2004 1,889,090 275,128 128 2,164,346 12,207 78,155 323 78,478 2,255,031

2003 1,724,616 228,428 249 1,953,293 16,975 81,697 365 82,062 2,052,330

2002 1,526,716 153,595 343 1,680,654 18,770 58,857 984 59,841 1,759,265

2001 1,346,411 85,142 782 1,432,335 27,673 50,860 1,181 52,041 1,512,049

2000 1,133,330 97,761 1,183 1,232,274 8,854 40,915 780 41,695 1,282,823

1999 1,085,740 84,568 1,241 1,171,549 8,796 35,980 703 36,683 1,217,028

1998 Not Available Not Available Not Available Not Available Not Available Not Available Not Available Not Available 1,115,494

1997 Before 1999 Before 1999 Before 1999 Before 1999 Before 1999 Before 1999 Before 1999 Before 1999 1,055,123

1996 1,021,238

1995 972,275

1994 947,001

1993 910,335

1992 831,958

1991 714,447

1990 604,434

1989 489,382

1988 396,503

1987 348,369

1986 264,754

1985 154,461

1984 105,764

1983 82,841

1982 57,402

1981 20,614

1980 16,962

1979 15,316

1978 12,017

1977 6,765

1976 2,765

1975 1,643

1974 780

1973 791

1972 444

1971 64

Sources: Fannie Mae and Freddie Mac

1

 See notes to Tables 4a and 14a.

Annual Data

 Single-Family Mortgages ($ in Millions) 

 Conventional 

Total MBS 

Outstanding End of 

Period 

Multifamily Mortgages 

($ in Millions) 

Total 

FHA/VA 

64
Table 25. Combined Financial Derivatives1

Interest 

Rate 

Swaps 

Interest 

Rate Caps, 

Floors, 

and 

Corridors

Foreign 

Contracts 

Currency Forward Rate 

Options, and 

OTC Futures, 

Agreements

TreasuryBased 

Contracts

ExchangeTraded 

Futures, 

Options, and 

Other 

Derivatives 

Credit 

Derivatives Commitments Other Total 

($) ($) ($) ($) ($) ($) ($) ($) ($) ($) 

421,198 114,047 67,593 555,604 2,580 126,530 10,926 67,083 114,100 1,479,661

797,992 133,460 54,588 629,242 5,847 150,039 11,627 199,033 120,152 2,101,980

790,865 141,111 49,070 661,234 6,308 126,539 12,518 145,529 128,337 2,061,511755,506 146,869 45,407 693,806 10,975 176,233 14,187 196,953 142,210 2,182,146

421,198 114,047 67,593 555,604 2,580 126,530 10,926 67,083 114,100 1,479,661

857,476 141,658 51,224 685,300 8,549 122,619 15,542 128,012 152,579 2,162,959

536,604 134,056 47,706 561,544 17,900 210,646 17,301 Not Available 117,219 1,834,539

742,724 88,071 32,488 336,286 13,276 358,500 10,984 Before 2003 0 1,703,917

505,539 46,482 19,719 166,979 2,200 22,517 Not 35,839 799,275

318,612 48,886 12,604 213,831 8,894 94,987 Applicable 1,400 699,214

200,401 36,345 14,459 76,481 11,542 157,832 Before 2000 3,735 500,795

203,845 22,095 11,120 6,000 12,228 0 1,660 256,948

204,786 14,395 2,973 0 651 0 350 223,155171,063 13,355 1,224 29 24 0 975 186,670109,304 9,363 1,023 0 0 0 1,465 121,154

67,346 1,860 1,023 0 0 0 1,425 71,653

Sources: Fannie Mae and Freddie Mac

1 See notes to tables 6 and 16.

19992000

End of

2001

 3Q04  4Q04 

Financial Derivatives - Notional Amount Outstanding ($ in millions) 

Annual Data 

20022003

 1Q04  2Q04 

Period

1993199419951996199719982004

65
Table 26. Combined Non-Mortgage Investments1

Federal 

Funds and 

Eurodollars

Asset 

Backed 

Securities

Repurchase 

Agreements

Commercial 

Paper and 

Corporate 

Debt Other Total 

 ($) ($) ($) ($) ($) ($) 

N/A N/A N/A N/A N/A N/A

N/A N/A N/A N/A N/A N/A

N/A N/A N/A N/A N/A N/A

N/A N/A N/A N/A N/A N/A

N/A N/A N/A N/A N/A N/A

 43,548 20,142 13,126 22,595 13,206 112,617 

 57,101 7,677 17,095 27,125 22,166 131,164 

 47,234 31,957 18,440 45,517 12,683 155,831 

 36,575 9,806 7,575 16,195 25,717 95,868 

 29,512 15,382 5,083 5,639 15,835 71,451 

 28,117 28,450 9,312 12,950 21,846 100,675 

 18,839 21,962 13,697 14,948 11,580 81,026 

 16,721 31,702 11,107 7,249 12,075 78,854 

 10,404 19,885 19,392 9,830 10,473 69,984 

 3,796 24,853 14,919 8,953 11,622 64,143 

 3,557 13,763 8,882 1,438 11,981 39,621 

 4,124 12,219 7,249 53 8,471 32,116 

 2,416 5,903 6,632 0 4,841 19,792 

 1,780 6,441 10,014 0 3,757 21,992 

 1,107 8,685 5,765 0 3,831 19,388 

 481 8,594 9,107 0 1,714 19,896 

 25 5,736 5,859 0 2,315 13,935 

Sources: Fannie Mae and Freddie Mac

N/A = not available

1 See notes to Tables 7 and 17.

1996

1995

1994

1993

1987

1992

1991

1990

1989

1988

1998

1997

2002

2001

2000

1999

Non-Mortgage Investments ($ in Millions)

 4Q04 

 3Q04 

End of 

Period

2003

 2Q04 

 1Q04 

Annual Data

2004

66
Table 27. Combined Capital1

Core Capital

Minimum 

Capital 

Requirement

Regulatory 

Capital 

Surplus 

(Deficit) Total Capital

Risk-Based 

Capital 

Requirement

Risk-Based 

Capital 

Surplus 

(Deficit)

Market 

Capitalization

 ($) ($) ($) ($) ($) ($) ($) 

 56,297 67,650 11,353 70,569 21,147 49,422 119,908 

 56,111 63,727 7,616 73,159 24,091 49,068 106,453 

 55,322 72,693 17,371 69,943 28,249 41,694 112,699 

 55,383 69,759 14,376 71,379 33,092 38,287 112,841 

 56,297 67,650 11,353 70,569 21,147 49,422 119,908 

 55,294 67,390 12,096 68,618 32,647 35,970 112,996 

 49,542 57,069 7,528 53,093 22,177 30,916 104,202 

 43,196 45,363 2,167 Not Applicable Not Applicable Not Applicable 124,754 

 34,472 35,207 735 Before 2002 Before 2002 Before 2002 134,345 

 30,057 30,568 511 96,364 

 25,667 26,180 513 120,678 

 19,785 21,169 1,384 87,628 

 17,983 19,516 1,533 59,093 

 16,035 16,788 753 48,744 

 14,300 14,710 411 29,014 

 11,658 12,489 831 30,392 

Not Applicable Not Applicable Not Applicable 29,595 

Before 1993 Before 1993 Before 1993 27,083 

 11,415

 12,116

Not Applicable 

Before 1989 

Sources: Fannie Mae, Freddie Mac, and OFHEO

N/A = not available

1

 See notes to Tables 10 and 20.

Period

 4Q04 

End of

Capital ($ in Millions) 

Minimum Capital Requirement Risk-Based Capital Requirement

 3Q04 

 2Q04 

 1Q04 

2003

2001

2000

Annual Data

2002

2004

1999

1998

1997

1996

1995

1994

1993

1992

1991

1989

1990

67
Table 28. Loan Limits

Year

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

1979

1977 - 1978

1970 - 1976

Sources: Department of Housing and Urban Development (HUD), Federal Housing Finance Board, Freddie Mac

1

 Conforming Loan Limits are 50 percent higher in Alaska, Hawaii, Guam and the U.S. Virgin Islands.

Year

2005 172,632 312,895 220,992 400,548 267,120 484,155 331,968 601,692

2004 160,176 290,319 205,032 371,621 247,824 449,181 307,992 558,236

2003 154,896 280,749 198,288 359,397 239,664 434,391 297,840 539,835

2002 144,336 261,609 184,752 334,863 223,296 404,724 277,512 502,990

2001 132,000 239,250 168,936 306,196 204,192 370,098 253,776 459,969

2000 121,296 219,849 155,232 281,358 187,632 340,083 233,184 422,646

1999 115,200 208,800 147,408 267,177 178,176 322,944 221,448 401,375

1998 109,032 197,621 139,512 252,866 168,624 305,631 209,568 379,842

1997 81,546 170,362 104,310 205,875 126,103 248,888 156,731 309,338

Sources: Federal Housing Administration

Not Applicable

Not Applicable

205,300

189,000

180,000

Not Applicable

256,000

221,500

218,900

207,900

360,150

360,450

324,150

294,150

390,400

390,400

388,800

367,500

436,000

412,450

397,800

390,400

Not Applicable

Not Applicable

Not Applicable

691,600

641,650

620,500

578,150

528,700

485,800

461,350

167,200

165,100

152,000

145,000

236,650

205,950

178,200

176,100

295,650

289,750

290,000

260,800

314,100

314,100

314,100

312,800

371,200

351,300

331,850

320,050

499,300

465,200

425,400

390,900

120,000

Not Applicable

Not Applicable

Not Applicable

145,800

138,500

136,800

126,000

215,800

195,850

170,450

147,500

258,800

244,650

239,750

239,950

264,750

259,850

259,850

259,850

33,000

460,400

427,150

413,100

384,900

351,950

323,400

307,100

290,650

274,550

98,500

93,750

67,500

60,000

115,300

114,000

108,300

107,000

187,600

168,700

153,100

133,250

203,150

202,300

191,250

187,450

High Cost 

Area Max

Single-Family Conforming Loan Limits1

1-unit 

359,650

1-unit

227,150

214,600

207,000

203,150

203,150

2-units 3-units 4-units

FHA Single-Family Insurable Limits 

Low Cost 

Area Max

Low Cost 

Area Max

Low Cost 

Area Max

Low Cost 

Area Max

High Cost 

Area Max

High Cost 

Area Max

High Cost 

Area Max

2-units 3-units 4-units 

333,700

556,500

516,300

240,000

322,700

300,700

275,000

252,700

68
Table 29. Mortgage Interest Rates

30-Year Fixed Rate One-Year ARMs Fixed-Rate Adjustable Rate

Period (%) (%) (%) (%)

4Q04 5.7 4.1 5.9 5.5 

3Q04 5.9 4.1 6.1 5.4 

2Q04 6.1 3.9 6.0 5.1 

1Q04 5.6 3.6 5.8 4.9 

2004 5.8 3.9 6.0 5.2 

2003 5.8 3.8 5.9 5.0 

2002 6.5 4.6 6.7 5.7 

2001 7.0 5.8 7.1 6.4 

2000 8.1 7.0 8.3 7.1 

1999 7.4 6.0 7.4 6.5 

1998 6.9 5.6 7.2 6.5 

1997 7.6 5.6 7.9 6.9 

1996 7.8 5.7 8.0 7.1 

1995 7.9 6.1 8.2 7.1 

1994 8.4 5.4 8.2 6.4 

1993 7.3 4.6 7.5 5.7 

1992 8.4 5.6 8.5 6.6 

1991 9.3 7.1 9.7 8.3 

1990 10.1 8.4 10.4 9.2 

1989 10.3 8.8 10.5 9.4 

1988 10.3 7.9 10.4 8.5 

1987 10.2 7.8 9.9 8.5 

1986 10.2 8.4 10.5 9.4 

1985 12.4 10.1 12.4 10.9 

1984 13.9 11.5 13.2 12.1 

1983 13.2 Not Available 13.0 12.3 

1982 16.0 Before 1984 15.2 15.4 

1981 16.6 Not Available Not Available

1980 13.8 Before 1982 Before 1982

1979 11.2 

1978 9.6 

1977 8.9

1976 8.9

1975 9.1

1974 9.2

1973 8.0

1972 7.4

1971 Not Available

Before 1972

Effective Rates Source: Federal Housing Finance Board

Average Commitment Rate Source: Freddie Mac

Annual Data

Conventional

Average Commitment Rates on Loans Effective Rates on Closed Loans

Conventional 

69
Table 30. Housing Market Activity1

Period

Single-Family 

Housing Starts

Multifamily Housing 

Starts

Total Housing 

Starts

New Single Family 

Home Sales

Existing Single 

Family Home Sales

4Q042 312 1,664 1,976 1,241 6,877 

3Q042 284 1,686 1,970 1,155 6,797 

2Q042 284 1,635 1,919 1,206 6,900 

1Q042 342 1,601 1,943 1,197 6,317 

2004 1,653 304 1,957 1,203 6,784 

2003 1,532 315 1,847 1,086 6,183 

2002 1,397 308 1,705 973 5,631 

2001 1,310 293 1,603 908 5,296 

2000 1,270 299 1,569 877 5,152 

1999 1,334 307 1,641 880 5,205 

1998 1,314 303 1,617 886 4,970 

1997 1,178 296 1,474 804 4,382 

1996 1,206 271 1,477 757 4,196 

1995 1,110 244 1,354 667 3,812 

1994 1,233 224 1,457 670 3,946 

1993 1,155 133 1,288 666 3,802 

1992 1,061 139 1,200 610 3,520 

1991 876 138 1,014 509 3,220 

1990 932 260 1,193 534 3,211 

1989 1,059 318 1,376 650 3,346 

1988 1,140 348 1,488 676 3,594 

1987 1,212 409 1,621 671 3,526 

1986 1,263 542 1,805 750 3,565 

1985 1,166 576 1,742 688 3,214 

1984 1,206 544 1,750 639 2,868 

1983 1,181 522 1,703 623 2,719 

1982 743 320 1,062 412 1,990 

1981 797 288 1,084 436 2,419 

1980 962 331 1,292 545 2,973 

1979 1,316 429 1,745 709 3,827 

1978 1,558 462 2,020 817 3,986 

1977 1,573 414 1,987 819 3,650 

1976 1,248 289 1,538 646 3,064 

1975 956 204 1,160 549 2,476 

1974 956 382 1,338 519 2,272 

1973 1,250 795 2,045 634 2,334 

1972 1,451 906 2,357 718 2,252 

1971 1,271 781 2,052 656 2,018 

Housing Starts Source and New Single-Family Sales Source: Bureau of the Census

Existing Single-Family Sales Source: National Association of Realtors

1

 Components may not add to totals due to rounding.

2

 Seasonally adjusted annual rates.

Annual Data

(units in thousands)

Housing Starts Home Sales

(units in thousands)

70
Table 31. Weighted Repeat Sales House Price Index (Annual Data)1

Period USA

New 

England

MidAtlanticSouth 

Atlantic

East 

North 

Central

West 

North 

Central

East 

South 

Central

West 

South 

Central Mountain Pacific

1Q05 12.50 12.69 13.76 15.04 6.65 7.30 5.40 4.80 12.96 21.25

4Q04 11.88 12.11 13.13 14.02 6.21 7.01 5.35 5.04 11.59 20.69

3Q04 13.40 15.29 16.13 14.48 7.28 8.72 5.22 4.88 11.77 23.74

2Q04 10.05 11.44 12.15 11.13 5.65 7.30 4.07 3.94 8.16 17.22

1Q04 8.41 10.18 10.68 9.44 4.92 6.22 3.88 3.49 5.98 13.44

2004 11.88 12.11 13.13 14.02 6.21 7.01 5.35 5.04 11.59 20.69

2003 8.07 10.35 10.99 8.43 4.98 6.36 3.74 3.36 5.20 12.51

2002 7.49 11.80 10.58 7.42 4.40 6.27 3.36 4.11 4.39 11.00

2001 7.53 10.89 8.91 7.92 5.21 7.27 5.08 5.84 6.45 9.21

2000 7.58 12.43 7.93 6.52 6.04 7.22 3.91 5.08 6.92 11.26

1999 5.19 9.78 5.29 4.37 4.89 6.18 2.49 4.36 4.26 5.90

1998 4.97 6.48 4.05 4.53 4.16 4.83 4.85 4.98 3.98 7.19

1997 4.59 4.60 3.27 4.49 5.19 4.93 4.70 3.89 4.89 5.28

1996 2.59 1.65 0.41 2.24 5.01 4.08 4.02 2.29 4.21 0.93

1995 4.53 4.13 3.14 4.30 6.06 5.24 5.58 4.22 7.49 2.81

1994 0.83 -3.11 -3.30 0.06 4.93 5.29 4.69 1.55 8.99 -3.41

1993 2.06 0.26 1.29 1.90 3.65 3.90 4.09 4.02 7.85 -1.98

1992 1.87 -1.11 1.72 2.10 3.88 2.98 3.30 3.39 5.31 -1.39

1991 2.56 -2.29 1.47 3.03 4.58 3.79 4.08 3.70 4.66 1.30

1990 0.24 -7.70 -2.87 0.17 3.77 0.53 0.73 0.44 1.92 3.04

1989 6.03 0.65 2.30 5.02 6.10 3.24 3.03 2.86 2.83 19.36

1988 6.15 3.73 6.05 6.87 6.65 2.33 2.49 -2.20 0.21 17.46

1987 6.73 13.31 16.18 6.83 8.06 2.53 4.12 -8.63 -2.70 9.59

1986 8.13 21.03 18.04 6.07 7.32 4.14 5.59 -0.41 3.06 7.22

1985 6.55 24.93 14.26 5.44 4.88 4.39 4.94 -1.36 2.35 4.86

1984 5.27 17.60 13.37 4.03 2.77 4.66 3.70 -0.13 2.13 5.13

1983 4.12 16.22 10.04 3.76 4.60 4.43 4.06 0.84 -2.61 1.16

1982 2.32 4.10 4.60 4.35 -5.02 -0.21 4.77 5.84 6.79 0.89

1981 4.42 5.12 0.26 5.63 2.19 0.11 0.06 11.96 6.81 5.85

1980 6.98 5.93 9.51 8.60 1.62 4.26 7.44 7.59 6.73 11.16

1979 12.06 10.70 16.68 11.74 9.29 8.83 4.69 13.56 15.63 16.26

1978 13.34 16.75 7.49 10.69 13.93 13.57 12.08 17.13 17.13 15.70

1977 13.08 8.62 10.58 7.96 13.27 15.02 9.37 11.61 18.47 25.71

1976 7.60 3.29 2.21 5.30 7.76 5.88 6.66 8.73 9.90 19.91

1

 Annual data are measured based on fourth quarter to fourth quarter percentage change; quarterly data are at annual rates.

Regional Divisions:

New England: Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, Vermont

Mid-Atlantic: New Jersey, New York, Pennsylvania

South Atlantic: Washington, D.C., Delaware, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia

East North Central: Illinois, Indiana, Michigan, Ohio, Wisconsin

West North Central: Iowa, Kansas, Minnesota, Missouri, North Dakota, South Dakota, Nebraska

East South Central: Alabama, Kentucky, Mississippi, Tennessee

West South Central: Arkansas, Louisiana, Oklahoma, Texas

Mountain: Arizona, Colorado, Idaho, Montana, New Mexico, Nevada, Utah, Wyoming

Pacific: Alaska, California, Hawaii, Oregon, Washington

Annual Data

71