A Report on Fannie Mae’s Mission Activities

May 2012
In this Mission Report, the company has presented a number of estimates, forecasts, expectations,

and other forward-looking statements, including statements regarding the profitability of the

company’s loans; the performance and caliber of loans it has acquired and will acquire; its credit loss

reduction efforts; its efforts to promote sustainable lending; its efforts to improve aspects of the

housing market and mortgage finance industry; its future decisions, focus, and execution against its

corporate priorities; and macroeconomic factors, such as future conditions in the U.S. economy,

employment, housing activity, and future rental and multifamily market conditions. These estimates,

forecasts, expectations, and statements are forward-looking statements and are based on the

company's current assumptions regarding numerous factors, including assumptions about future

home prices and the future performance of its loans.

The company's future expectations, as well as actual outcomes, may differ materially from what is

expressed in these statements as a result of many factors, including home price changes; interest

rate changes; unemployment; other macroeconomic variables; government policy matters; changes

in generally accepted accounting principles; credit availability; social behaviors, including increases in

the number of underwater borrowers who strategically default on their mortgage loan; the volume of

loans it modifies; the nature, volume, and effectiveness of its loss mitigation strategies and activities;

management of its real estate owned inventory and pursuit of contractual remedies; changes in the

fair value of its assets and liabilities; impairments of its assets; the adequacy of its loss reserves;

future legislative or regulatory requirements that have a significant impact on the company’s

business such as a requirement that the company implement a principal forgiveness program; future

updates to the company’s models relating to loss reserves, including the assumptions used by these

models; changes to the company’s accounting policies; failures by its mortgage seller-servicers to

fulfill their repurchase obligations to it; its ability to maintain a positive net worth; effects from

activities the company takes to support the mortgage market and help homeowners; the

conservatorship and its effect on the company’s business; the investment by Treasury and its effect

on the company’s business; changes in the structure and regulation of the financial services

industry; the company’s ability to access the debt markets; disruptions in the housing, credit, and

stock markets; government investigations and litigation; the performance of the company’s

servicers; conditions in the foreclosure environment; and many other factors. Changes in the

company's underlying assumptions and actual outcomes, which could be affected by the economic

environment, government policy, and many other factors, including those discussed in the “Risk

Factors” section of and elsewhere in the company's quarterly report on Form 10-Q for the quarter

ended March 31, 2012 and its annual report on Form 10-K for the year ended December 31, 2011, and

in its other filings made with the SEC from time to time, could result in actual results being materially

different from what is set forth in the forward-looking statements.

Any forward-looking statements made by Fannie Mae speak only as of the date on which they are

made. Fannie Mae is under no obligation to, and expressly disclaims any obligation to, update or alter

its forward-looking statements, whether as a result of new information, subsequent events, or

otherwise.

May 1, 2012

© 2012 Fannie Mae
Fannie Mae Mission Report 2012 3

In 2011, we focused on achieving results in three critical areas: building a strong new book

of business, helping distressed homeowners and stabilizing communities, and improving

our company to contribute to a sustainable housing market for the future. We made

tremendous progress. At the end of 2011, our new book was strong, profitable, and growing.

Our loss mitigation and foreclosure prevention efforts helped limit losses on the legacy

book of business and our credit-related expenses decreased substantially.

Since 2009, we have provided $2.3 trillion in liquidity to the single-family and multifamily

markets. We’ve helped 6.6 million households refinance and enabled 2 million buyers to

purchase a home. We’ve provided financing for over 1 million units of quality rental

housing and enabled nearly 1 million homeowners to avoid foreclosure.

These are important results but we are committed to doing more. Our progress is a product

of the diligence and determination of our Board, our management, and our employees.

Fannie Mae employees approach each day and each challenge with tremendous resolve to

help build a better housing finance system.

We are proud of our employees for their unrelenting focus. The work they do affects real

people in the real world. This report tells the stories of how we are putting our resources to

work for the industry and for the American people.

Phil Laskawy

Chairman of the Board

Mike Williams

President and Chief Executive Officer

A Message from

Phil Laskawy

and Mike Williams
4 Fannie Mae Mission Report 2012

A strong, stable housing market is critical to America’s economic recovery. Fannie Mae, a $3 trillion financial services

business, is the leading provider of mortgage credit. As a

secondary market participant, we do not lend directly to

consumers. We are a government-sponsored enterprise

(GSE) chartered by Congress to keep liquidity flowing to

mortgage lenders such as local and national banks, thrifts,

credit unions, and other financial institutions. We purchase

and guarantee their loans to enable families to buy homes,

refinance their existing mortgages, or access affordable

rental housing. We package the loans into bonds and sell

them to global investors.

In 2008, the federal government placed Fannie Mae under

conservatorship with a mandate to continue day-to-day

efforts to support the U.S. housing market, while delivering

initiatives to speed the housing recovery and contribute to

a sustainable housing finance system. We have made

substantial progress. Fannie Mae has responded effectively

to the housing crisis by ensuring funding for the market,

assisting distressed homeowners, stabilizing neighborhoods,

reducing credit losses on the legacy (pre-2009) book of

business, and building a high quality new book. As a result,

the company’s financial performance has improved significantly since entering conservatorship.

Let’s take a closer look at the outcomes of our mandate

to ensure funding for the market. As the leading source

of liquidity for the single-family and multifamily mortgage

markets, Fannie Mae provided $2.3 trillion in liquidity from

2009 through 2011 to enable homeownership and affordable rental housing.

■ Fannie Mae’s conventional single-family book of business had 17.7 million loans totaling approximately $2.8

trillion in unpaid principal balance. Ninety-three percent

of these loans were current and performing as of the

end of 2011.

■ The company purchased or guaranteed more than

8.5 million single-family mortgage loans. This enabled

6.6 million mortgages to be refinanced and almost

2 million households to purchase a home. The new book

of business comprises more than half of the total

single-family book.

■ Fannie Mae provided approximately $62 billion in

financing for more than 1 million units of quality rental

housing. More than 85 percent of those units are

affordable to families earning at or below the median

income in their area. Through Fannie Mae’s early

funding products, we provided more than $319 billion in

short-term liquidity for small and medium-sized lenders

so they could continue to meet the demands of their

customers.

These data points represent 2009-2011 unless

otherwise noted.

Priorities

and Progress
Fannie Mae Mission Report 2012 5

In 2011, the housing market and mortgage finance industry

remained under pressure as the U.S. economy continued its

slow recovery. Against this backdrop, Fannie Mae worked to

meet the urgent needs of the current market while building

a stronger foundation for housing in the future. The company’s priorities and the results of our actions aligned with

this dual responsibility:

■ Keep funds flowing. We serve as a stable source of liquidity for the purchase of new homes and refinancing of

existing mortgages, as well as the financing of multifamily

rental housing. In 2011, Fannie Mae accounted for an

estimated 41 percent of the single-family market and an

estimated 34 percent of the multifamily market. We guaranteed or purchased approximately $653 billion in loans,

enabling lenders to finance roughly 2,680,000 singlefamily conventional loans and loans for 423,000 units in

multifamily properties.

■ Assist distressed homeowners. Millions of homeowners

struggle to keep their homes. Everyone loses when

families are faced with a foreclosure. The impact is high

for homeowners, their neighborhoods, the market, and

taxpayers.

Fannie Mae has the largest foreclosure prevention

operation in America. We have assisted almost 1 million

homeowners to retain their homes or otherwise avoid

foreclosure since 2009.

To reach families in need, we created innovative outreach and education programs, including brick-andmortar and online solutions. In 12 hard-hit communities

across America, we established Fannie Mae Mortgage

Help Centers, where homeowners work one-on-one

with counselors to determine the best solution for

their individual needs. Our online educational initiative

KnowYourOptions.com provides homeowners with

the information they need to make informed housing

decisions.

Our efforts to assist distressed homeowners are

unprecedented in scope. They not only help families,

but also stabilize communities and enable Fannie Mae

to reduce losses.

■ Encourage sustainable lending. We are working to

address the causes of the housing crisis and contribute

to a healthier housing finance system. For example, we

strengthened lending standards, which helps ensure

that working Americans buy homes they can afford over

the long term. We offer long-term, fixed-rate mortgages

— loans that protect homeowners from interest rate

swings. We require better credit quality, documentation,

and property appraisals. We offer tools for lenders to

understand the quality of a loan before they sell it to

Fannie Mae — helping the lenders and Fannie Mae to

reduce future risks.

We’re also committed to developing a better model

for servicing mortgages in a consistent and timely way.

When the mortgage crisis hit, we turned to servicers to

help hundreds of thousands of borrowers avoid losing

their homes. But the existing servicing model provided

little incentive for this different and greater responsibility. To address this problem, we introduced new

2011 Outcomes
6 Fannie Mae Mission Report 2012

2011 Outcomes

standards for mortgage servicers as part of a new

servicing model required by our regulator, the Federal

Housing Finance Agency (FHFA). The new model establishes consistent policies and processes for servicing

delinquent loans owned or guaranteed by the GSEs,

and directs servicers to reach families earlier, communicate more frequently and clearly, and provide relief for

families. It is a major step toward creating a consistent

and transparent process that enables homeowners to

make better-informed decisions.

From improving loan quality to rethinking the servicing

model, we are committed to creating long-term value for

the industry, customers, investors, and communities.

■ Support rental housing. Fannie Mae is the leading

provider of liquidity to the rental housing market.

Demand for quality, affordable rental housing continues

to grow. According to the Harvard Joint Center for

Housing Studies, the number of households in America

is expected to surge over the next decade — up to

1 million new households per year.

We have made steady and measurable progress since

2009, but still have important work ahead to continue to

improve the company’s financial performance, reduce risk,

assist struggling homeowners, and help build a better

housing finance system.
Fannie Mae Mission Report 2012 7

Despite the recent housing crisis, many Americans continue

to have strong aspirations to own a home, according to

Fannie Mae's fourth-quarter 2011 National Housing Survey.

While financial constraints and employment concerns may

keep potential homebuyers from acting in the near term,

future improvements in these areas coupled with stabilizing

home prices may move Americans to pursue homeownership.

Fannie Mae enables new home sales and the refinancing

of existing home loans by providing liquidity to the singlefamily market.

Predictable, Sustainable Mortgage Options

We have strengthened underwriting and eligibility standards

to support sustainable homeownership, enabling borrowers

to have access to a variety of conforming mortgage products. This includes long-term, fixed-rate mortgages, such

as the 15- and 30-year fixed-rate mortgage that protect

homeowners from interest rate swings.

The fixed-rate mortgage has been a staple of mortgage lending since the 1930s when it was created to help

America recover from the Great Depression. As of June

2011, single-family fixed-rate mortgages constituted 86

percent of total mortgage debt outstanding. Fully amortizing

fixed-rate mortgages made up 93 percent of the loans we

guaranteed or purchased in 2011.

At Fannie Mae, we see the positive relationship between

the fixed-rate mortgage and sustainable homeownership.

Our experience shows that borrowers more effectively maintain homeownership when they have a loan with stable payments, combined with greater equity in the property and a

higher credit score. With a fixed-rate mortgage, homeowners

know exactly the amount and duration of their monthly principal and interest payment. We are committed to working

with our customers to ensure the best mortgage products

are available — products that help homeowners, support

taxpayers, and strengthen America's housing

market for the long term.

Commitment to

Homeownership

What Lenders Say About Fannie Mae

"Our relationship with Fannie Mae is the true definition

of 'partnership.' Over the years, no matter what the

issue, Fannie Mae has always been there to support

and guide us as our business grew. Our dialogues are

open and collaborative, and always with a sense of

their willingness to cooperate."

— Grace Currid, Senior Vice President, Real Estate

Mortgage Network (REMN)

"Fannie Mae, through its dedicated employees, plays

an indispensable role in the U.S housing market in

providing products, services, and liquidity in a manner

that is second to none in this global economy."

— Ping-Yin Chai, Executive Vice President,

Salem Five Bank
8 Fannie Mae Mission Report 2012

Commitment to Homeownership

Focused on Customer Engagement

At Fannie Mae, we are working to make it easier for

customers to do business with us. Since 2009, we have

improved customer engagement to provide a more consistent experience while better understanding customer

needs and delivering solutions to meet those needs.

■ We have focused on helping our single-family customers deliver consistent, quality loans into the secondary market, which reduces loan repurchase risk in

the future. Using Fannie Mae's EarlyCheckTM feature,

lenders can verify loan eligibility against Fannie Mae's

delivery guidelines earlier in their business process.

Also, in collaboration with FHFA, we helped implement

strong new industry standards for loan delivery and

appraisal data through the Uniform Mortgage Data

Program® (UMDP®).

■ We established quality control standards such as those

detailed in our Beyond the Guide publication, which

offers lenders insight on appropriate control points,

feedback cycles, and accountability that helps ensure

loan quality is an essential aspect of loan origination.

■ We are helping homeowners facing different situations,

from distressed or underwater borrowers to those

current on their mortgage. We do this by raising the level

of service provided through programs such as the Home

Affordable Modification Program (HAMP), Home Affordable Refinance Program (HARP), the Servicing Alignment

Initiative (SAI), and our Servicer Total Achievement and

RewardsTM (STAR)TM Performance Scorecard.

Fannie Mae's involvement in the market provides an outlet

for large and mid-sized lenders to make loans — whether

the borrower is refinancing or purchasing a home. Smaller

lenders also play an important role. We have focused on

their needs by streamlining and updating our lender

approval process, increasing our focus on business development, and creating a dedicated customer engagement

channel to serve this segment of the market. We also

provide specific business solutions that help small lenders

provide liquidity to the housing market faster and more

efficiently via our new whole loan e-Committing process,

early funding products, and Servicing Execution Tool

(SETTM) program offerings.

The customer engagement team works with lenders

individually and directly to help them deliver value to their

customers. We offer a wide range of loan execution options,

comprehensive training through webinars and live forums,

and customer management teams with expertise in capital

markets, risk, servicing, and technology.

Fannie Mae's Loan Quality Focus:

Strengthening the Market

One Loan at a Time

Fannie Mae's focus on improving loan quality is

designed to assist the lender in collecting more accurate mortgage data early in the loan process. This helps

to identify loans that don't meet Fannie Mae standards

for quality and eligibility before they are delivered to us.

Our standards help all stakeholders in the mortgage

process chain. By following our requirements, lenders

have the information they need to better manage risk.

Borrowers have access to safer, more sustainable loans

that they can afford for the long term. We also provide

ongoing reporting tools, training, and feedback to

lenders so they have the information they need to

originate loans that meet our delivery eligibility

guidelines.
Fannie Mae Mission Report 2012 9

While Fannie Mae works to support single-family mortgage

lenders, we also remain committed to working with multifamily lenders to ensure the continued supply of affordable

rental housing. Nearly 100 million American households

currently pay rent and analysts expect renters to account

for 36 percent of U.S. households by 2015. For more than

25 years, Fannie Mae’s multifamily mortgage business has

successfully and consistently provided a stable, reliable

secondary market for participants in the multifamily housing industry. We do this primarily through securitizing loans

that finance multifamily rental housing properties.

Rising demand and a diminishing new supply of rental

housing have produced strong multifamily fundamentals.

With job growth slowly improving and a lack of new apartment supply coming online during the next 12 to 18 months,

it is expected that rental demand will continue to outstrip

supply, producing lower vacancy levels and allowing for rent

growth. As a result, the business outlook remains positive

for the multifamily sector.

Fannie Mae played a critical role in 2011 and will continue to

do so by keeping capital flowing to the multifamily market,

particularly as other institutional sources have been slow

to re-emerge since the financial downturn of 2008. As

the cornerstone of Fannie Mae's multifamily business,

our unique Delegated Underwriting and Servicing (DUS®)

program incorporates sustainable credit standards, delegation of underwriting and servicing to a network of lenders,

and risk-sharing of potential losses with those lenders over

the life of the loans. DUS has had a successful track record

as reflected by its reputation in the marketplace among

borrowers, lenders, and investors, and has outperformed

other commercial mortgage-backed securities.

Commitment to Affordable

Multifamily Rental Housing

What Lenders Say About Fannie Mae

"Fannie Mae has consistently provided needed

capital in the marketplace, which has allowed Walker &

Dunlop to finance high-quality apartment projects for

workforce rental housing. Through Fannie Mae's DUS

program, we know our loans will be executed quickly

and at market-competitive rates, which helps our

customers. We also know that loans completed

through DUS tend to perform better for the long term.

We're proud to be a DUS-approved lender and we look

forward to our continued partnership with Fannie Mae."

— William Walker, Chairman, President, and CEO,

Walker & Dunlop
Estimated National Rental Level and Vacancy Rates

Source: Fannie Mae Multifamily Economics and Market Research * Preliminary estimate

10 Fannie Mae Mission Report 2012

Commitment to Affordable Multifamily Rental Housing

Addressing the Need

for Workforce Rental Housing

While a strong business outlook can benefit those who own or

invest in multifamily properties, we understand that finding

affordable rental housing is an issue for many Americans.

Through the secondary mortgage market we support rental

housing for the workforce, senior citizens, students, members

of the military, and families with significant economic need.

Multifamily rental housing accounts for a significant portion

of all affordable housing available today. There are three

primary segments of the multifamily market: Public Housing,

Subsidized, and Conventional Market Rate Housing. Fannie

Mae supports the affordable multifamily market by financing

both conventional market rate rental properties and government-subsidized rental properties that are privately owned.

■ As the demand for quality, affordable rental housing

increased in 2011, Fannie Mae and our lender partners

provided more than $24 billion in debt financing for 2,763

mortgage loans. Approximately 98 percent ($23.8 billion)

of the debt that Fannie Mae financed in 2011 was delivered through the MBS execution.

■ Fannie Mae has targeted the middle of the rental market.

Eighty-nine percent of the nearly 423,000 multifamily

units we financed in 2011 were affordable to families

earning at or below the median income in their area.

Specifically, more than 301,000 housing units were affordable to families with incomes no higher than 80

percent of the area media income. More than 84,000

units were affordable to families at or below 50 percent

of the area median income.

$1,060

$1,040

$1,020

$1,000

$980

$960

$940

$920

$900

8%

8%

7%

6%

5%

4%

3%

2%

1%

0%

2005Q3

2005Q4

2006Q1

2006Q22006Q3

2006Q4

2007Q1

2007Q2

2007Q3

2007Q4

2008Q1

2008Q2

2008Q3

2008Q4

2009Q1

2009Q2

2009Q3

2009Q4

2010Q1

2010Q2

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4p*

■ Rental Level ■ Vacancy Rate

$1,045 (2011Q4p*) 6.25% (2011Q4p*)

Green Program Supports Developers,

Owners, and Renters

In June of 2011, the U.S. Department of Housing and

Urban Development (HUD) and Fannie Mae launched

Green Preservation Plus, a product enhancement to

Fannie Mae’s existing risk sharing program. The

program provides additional financing to affordable

housing owners and developers to invest in property

improvements and in energy- and water-efficiency

measures at the time of refinance of an existing loan or

acquisition of a new property.

Green Preservation Plus supports our ongoing commitment to creating a more sustainable rental housing

market that is affordable to low- and moderate-income

families. The program provides more renters with

renovated apartments in which to live, allows building

owners to better manage their energy costs, and helps

communities by reducing the environmental footprint

of rental properties.

The program gained positive traction in 2011, and we are

in the process of broadening its scope to offer enhancements that help more borrowers and owners in 2012.
Fannie Mae Mission Report 2012 11

Commitment to Affordable Multifamily Rental Housing

Promoting Environmental Sustainability

and Affordability for Multifamily Housing

The nation’s inventory of affordable multifamily housing is

aging. Half of all multifamily properties are over 30 years old

and more than 10 percent were built before 1940. As the

multifamily housing stock continues to age, small to significant investments are required to preserve the quality of

aging properties and, importantly, to keep them affordable

for owners to operate and tenants to rent. At the same time,

property owners and tenants alike are facing rising utility

rates, resulting in higher costs to heat, cool, and provide

water to common areas and units.

In 2010, Fannie Mae launched the Multifamily Green Initiative to integrate the benefits of energy- and water-efficiency

measures into multifamily properties and financing products and processes. We help owners identify opportunities

to save on energy and water costs while improving housing

quality and extending the useful life of affordable and workforce housing properties.

In a joint effort with the Urban Land Institute, the National

Multi Housing Council, and the Commercial Real Estate

Council®, Fannie Mae began a market research project in

2011 to gather and analyze energy and water usage and

cost information from multifamily rental properties across

the United States. We expect this research will be of value to

apartment managers and owners of apartment complexes,

as well as tenants. The data are expected to be released in

2012 and will be shared with the U.S. Environmental Protection Agency as it explores the development of an ENERGY

STAR energy performance rating system for multifamily

properties. This rating already exists for many other property

types, including offices and schools.

Converting Foreclosures into Affordable Multifamily Rentals

As rental demand increases, the number of housing

units that minimum wage households can afford has

fallen, declining by nearly 16 percent from 1997 to

2007, according to the 2010 State of the Nation’s

Housing Report, published by the Harvard Joint

Center for Housing Studies. Older, lower-rent buildings are being demolished or abandoned, or they

are converted into higher-end rentals or condos.

Unfortunately, the production of new affordable

rentals is not keeping pace with the loss of older

units. This is an increasingly critical challenge at a

time when more individuals and families need a safe,

affordable place to live.

In 2011, we marketed multifamily real estate owned

(REO) properties to non-profits and public entities

who would reinvest in the properties and preserve

them as affordable rental housing. In one example,

UMOM New Day Centers acquired a Fannie Mae

multifamily REO property with plans to redevelop it

as permanently affordable and supportive housing.

UMOM is a non-profit housing and social services

provider for homeless families and individuals in

Phoenix, AZ. UMOM sought to redevelop North Mountain Lodge — a Fannie Mae foreclosed property — to

create affordable, supportive housing for the families

on their waiting lists.

Fannie Mae foreclosed on North Mountain Lodge

Apartments in May of 2011. At the same time, Fannie

Mae was working with the Corporation for Supportive

Housing (CSH), a national non-profit committed to

helping communities create permanent housing

services to prevent and end homelessness. With a

predevelopment and acquisition loan from CSH,

UMOM had the financing available to make a competitive offer on the apartment complex. UMOM acquired

North Mountain Lodge in November of 2011.

UMOM will now use the North Mountain Lodge site to

create 48 units of permanently affordable, supportive

housing for chronically homeless people, low-income

families, and returning veterans and their families

who are homeless or at risk of homelessness. Social

services will be provided for the tenants including

after-school programs, job development services,

substance abuse counseling, medical outreach,

behavioral health support, and community recreation.

By the Numbers

We are a primary source of financing across the

spectrum of the multifamily housing market. In 2011,

Fannie Mae enabled:

■ $2.3 billion in rent-restricted housing

■ $2.4 billion in small loans (loans up to $3 million,

or $5 million in high-cost areas)

■ $6.9 billion in large loans (loans $25 million or higher)

■ $2 billion in structured transactions

■ $1.4 billion in seniors housing

■ $535 million in manufactured housing
12 Fannie Mae Mission Report 2012

Commitment to Affordable Multifamily Rental Housing

Manufactured Housing Communities

Manufactured housing provides affordable homes for

many low- and moderate-income borrowers, especially in

high-cost and rural areas. In fact, nearly 7 percent of the

nation's occupied housing units are manufactured homes.

Fannie Mae supports manufactured housing to expand

affordable homeownership by providing liquidity to this

growing market segment. Through our multifamily mortgage

business, we offer financing options through lender partners for residential real estate developments where

the borrower owns the manufactured housing community

(MHC) sites and manages associated common amenities

and infrastructure. Here, individual tenants can lease a

lot in the community and connect their home to utility services, providing them with an affordable place to live.

Agency financing for MHCs exists only through Fannie Mae's

nationwide network of approved lenders. We provide lowcost capital and a steady source of funding to lenders active

in the manufactured housing sector through standardized

underwriting, valuation, and documentation processes. Our

MHC business has grown substantially and typically serves

an older and lower area median income population.

Using Fannie Mae's products, Grandbridge Real Estate Capital LLC financed

Azalea Gardens, a manufactured housing community near Tacoma, WA.

Fannie Mae Financing Provides

Options for Seniors

In 2011, Fannie Mae helped refinance a maturing loan for

a 68-unit assisted living and Alzheimer's care facility

in Erie, PA. The borrower on the loan is a local, privately

owned company that develops and operates its properties within the northern Great Lakes markets. By refinancing the loan, the borrower received immediate

cash-out proceeds to use in the development of a new

seniors housing property. The structure of the 10-year

fixed-rate loan also enabled the borrower to lock in lowcost, long-term financing so that affordable rents for

current and future residents could be maintained.

Seniors Housing: An In-Demand Industry

The segment of the U.S. population aged 65 and older,

representing nearly 40 million people, is expected to

increase over the next few decades in large part due to

the aging of the baby boomer generation, who are reaching

their mid-60’s and living longer, healthier lives. Many

Americans within this growing segment live in single-family

homes. Others are choosing seniors rental housing, which

may include independent living, assisted living, or

Alzheimer's care facilities.

Financing for the seniors housing sector is highly specialized and combines aspects of traditional rental housing

with the business of seniors’ care. As with our conventional

multifamily customers, today’s seniors housing borrowers

require flexibility, certainty of execution, and competitive

pricing. Fannie Mae’s seniors housing team partners with

a targeted group of lenders through our DUS platform to

provide customized financing solutions that meet the

unique needs of the seniors housing industry.

Providing quality housing for America’s aging population is

important and Fannie Mae continues to serve this market by

offering various financing options. In 2011, we provided $1.4

billion in senior debt financing to non-profit organizations

and other borrowers, including private equity investors,

publicly traded operators, and private and public real estate

investment trusts, which helped produce and/or preserve

nearly 12,000 seniors rental units across 151 U.S. cities

and towns.
Fannie Mae Mission Report 2012 13

Fannie Mae’s capital markets group supports the singlefamily and multifamily businesses by providing lender

customers various avenues to sell the mortgages they

originate. This enables customers to replenish their funds,

make more loans, and hedge their risks in a cost-efficient

manner.

The capital markets group also promotes general liquidity in

the mortgage market. As America’s largest single issuer of

mortgage-backed securities (MBS), Fannie Mae has helped

create a reliable securitization market that supports the

recovery and growth of U.S. housing. To achieve our business

objectives, we must excel in evaluating, pricing, and managing credit risk and deliver superior MBS and fixed-income

products to the capital markets.

With dedicated teams in both the single-family and multifamily capital markets space, we provide a diverse line of

product offerings and transaction alternatives aimed at

meeting investor needs. Fannie Mae's current business

activity is focused on making short-term use of our balance

sheet, rather than long-term investments. To do so, the

capital markets team works with lender customers to

provide funds to the mortgage market through short-term

financing and investing activities, including but not limited

to the following:

■ The Whole Loan Conduit — Whole Loan Conduit activities involve our purchase of loans principally for the

purpose of securitizing them. We purchase loans from

a large group of lenders and securitize them as Fannie

Mae MBS, which may then be sold to dealers and

investors. In 2011, Whole Loan Conduit volumes totaled

$85 billion.

■ Early Funding — Through our Early Funding products,

we can purchase whole loans or pools of loans on an

accelerated basis. This allows lenders to replenish their

funds faster and to continue originating new loans.

Programs like Early Funding have proven to be a critical

source of liquidity during challenging economic times.

In 2011, early funding volumes totaled $111 billion and

have exceeded $319 billion since 2009.

■ REMICs and Other Structured Securitizations — We

issue structured Fannie Mae MBS (including REMICs,

SMBS, and Megas), typically for lender customers or

securities dealer customers, in exchange for a transaction fee. In 2011, structured transactions volumes

totaled $770 billion.

■ MBS Trading — We regularly enter into purchase and

sale transactions with other market participants involving mortgage-backed securities issued by Fannie Mae,

Freddie Mac, and Ginnie Mae, which we refer to as

"agency MBS." These transactions can provide for the

future delivery of MBS with underlying loans that share

certain general characteristics (often referred to as the

"TBA market"), or specifically identified MBS with loans

having other characteristics that some investors seek

(often referred to as the "Specified Pools market").

Through our trading activity in the TBA and Specified

Pools markets, we provide significant liquidity to the

agency MBS markets. In 2011, these MBS trading

volumes totaled $112 billion.

Through our capital markets activities, Fannie Mae contributes to a stronger housing finance industry by providing

immediate liquidity to the market and by helping lenders

conduct their business more efficiently.

Our Role in

Capital Markets
Fannie Mae GeMSTM

When the U.S. economy began to contract in 2007, many

financial institutions exited the multifamily financing

market. Fannie Mae stayed in the game and raised our

stake, keeping credit flowing as more families sought

affordable workforce rental housing. Today, we are the

market leader in financing U.S. multifamily mortgages.

And, Fannie Mae's suite of multifamily MBS products are

helping provide a continuous source of stable funding to

support the nation’s rental housing market. Our GeMSTM

executions are a big part of this success.

Fannie Mae GeMS are Guaranteed Multifamily Structures.

Introduced in late 2011, they provide a platform for designing structured securities from the multifamily MBS in

our portfolio. GeMS help us reduce balance sheet usage

and operate more efficiently, and we tailor them to meet

investors’ specific needs based on market conditions.

We took the first step toward GeMS in 2009 when we

started to shift production in the multifamily business

14 Fannie Mae Mission Report 2012

from whole loans we bought and held in the portfolio

toward a more market-driven, MBS-style execution that

resulted in securities we could sell to others. Through this

shift, we have been able to provide competitive, transparent, auction-style pricing that allows outside investors

direct access to our multifamily product. Having an MBS

execution means that there are more dealers willing to

commit their resources — including traders, sales,

balance sheet, analytics, and research — which leads

to a more liquid multifamily market.

Today, through GeMS and other initiatives, Fannie Mae's

multifamily MBS outstanding has grown to over $100

billion. In the fourth quarter of 2011, we issued $7.2 billion

multifamily MBS, the highest quarterly issuance since

Fannie Mae began reinvigorating our multifamily MBS

business in 2009. Our total new multifamily issuance for

last year was $23.8 billion, up from $16.4 billion in 2010.

This includes $6 billion of DUS MBS resecuritized through

the GeMS program, a significant milestone for the program’s first year.

Our Role in Capital Markets
Fannie Mae Mission Report 2012 15

At Fannie Mae, we work with a variety of industry partners to

meet the needs of America’s homeowners and strengthen

the housing system for the future. Whether supporting a

specialized lender or an organization fighting mortgage

fraud, Fannie Mae is a dedicated partner to those who work

throughout the housing industry.

State Housing Finance Agencies

State Housing Finance Agencies (HFAs) use Fannie Mae

products and pricing to expand homeownership and rental

possibilities for families earning at or below the area median

income. They also focus their business on first-time homebuyers. We provide critical financing to HFAs by purchasing

high-performing loans at preferred rates and terms.

Through our alliance with the National Council of State

Housing Agencies (NCSHA), we help HFAs meet the affordable housing needs of the communities they serve. We do

this by granting participating members access to a suite of

distinct Fannie Mae mortgage lending options designed to

help them bridge the affordable housing gap in their state.

Credit Unions

Fannie Mae's continued support for credit unions remains

strong throughout the economic recovery. As communitybased trusted advisors, credit unions exist to meet their

members’ lifetime financial needs for affordable credit. We

purchase their loans to free up capital so they can issue

more loans to families who rely on credit unions for their

specific banking needs. Through an alliance with the

National Association of Federal Credit Unions (NAFCU) and

the Credit Union National Association (CUNA), we're able to

help credit unions expand the appeal of the mortgage products and services they currently offer their membership.

Progress Through

Partnership

Supporting State Housing

Finance Agencies

While the housing market remains challenging, state

HFAs continue to make homeownership affordable and

sustainable for working families. Over the years, HFAs

have helped millions of families purchase a home or

obtain rental housing.

While the agencies often work with borrowers who are

new to homeownership, HFAs have a solid record of

successful, sustainable lending. Their formula includes

education and counseling that prepares borrowers for

the responsibilities of homeownership and mortgage

debt, as well as providing high-quality mortgage

products with low fixed rates, fully documented,

prudent underwriting, and proactive servicing.

As a result, delinquency and foreclosure rates of HFA

loans are well below those of the conventional market,

according to the NCSHA.

Fannie Mae has provided reliable liquidity for HFA

lending, including support for local HFAs. In 2011,

Fannie Mae acquired nearly 3,500 HFA-originated

loans totaling $518 million. We also launched a new set

of offerings to NCSHA members that simplify pricing

structures and improve underwriting capabilities in

exchange for high-performing, fixed-rate mortgages.
16 Fannie Mae Mission Report 2012

Community Organizations

Through partnerships at the community level, Fannie Mae is

able to meet the needs of families in a far more direct and

impactful way. We work with established organizations in

communities across the country to prevent foreclosure,

revitalize neighborhoods, address homelessness, and much

more. For example, in 2011 we partnered with HomeFree-USA,

local community and elected officials, and area mortgage

servicers to open a Mortgage Help Center in Prince George's

County, MD, to help struggling homeowners in the Washington, DC area. (Read more about Fannie Mae Mortgage Help

Centers on page 19 of this report.) Also, as a result of our

long-standing partnership with Habitat for Humanity, Fannie

Mae employee volunteers built and refurbished homes and

properties in particularly hard-hit communities.

Public Entities Using Neighborhood

Stabilization Program Funds

We work closely with public entities through the Neighborhood Stabilization Program (NSP), established by HUD.

Nearly $7 billion was allocated to state and local governments for the purpose of stabilizing communities that

have suffered from foreclosures and abandonment. To

assist these public entity partners with their neighborhood

stabilization strategies, Fannie Mae created the First LookTM

program that allows a public entity, non-profit, or owneroccupant buyer the exclusive opportunity to purchase

Fannie Mae properties before an investor during the first

15 days of property listing. (Learn more about First Look on

page 21 of this report.)

We also created a pool sale program that allows public

entities to purchase pools of properties that are strategic

to their stabilization strategies. As of December 2011, over

9,500 Fannie Mae properties have been purchased by public

entities, non-profits, and owner occupants using NSP and

other public funds, with sales totaling over $850 million.

Building a Difference in Atlanta

In March 2011, a team of Atlanta employees and their

family members and friends participated in a volunteer

event to help make homeownership a reality for one

family.

The group joined Atlanta Habitat for Humanity for a day

of hammering, dry-walling, painting, and more as part of

a house build to benefit a married couple and their five

children. The homebuyers had to qualify to purchase the

home by meeting Habitat for Humanity's standards.

For more than 20 years, our employees have participated in Atlanta Habitat for Humanity home builds

sponsored by Fannie Mae. “Fannie Mae’s long-standing

partnership with Atlanta Habitat for Humanity has been

a great way for employees to get involved and make a

difference in the community in a very hands-on way,”

said Mac Smith, a customer account risk manager and

event coordinator in Fannie Mae's eastern region. “We

are very proud to be part of these efforts.”

Fannie Mae employees participate in a home build project with

Habitat for Humanity.

Progress Through Partnership
Fannie Mae Mission Report 2012 17

Progress Through Partnership

Land Banks

Fannie Mae works collaboratively with local land banks to

support the acquisition and stabilization strategies of the

local community. Cities, counties, and states across the

country have created land banks to address the increase in

vacant and abandoned properties within their boundaries.

Typically, land banks enable local governments to acquire

neglected, vacant parcels of land or properties, and redevelop them to help transform struggling neighborhoods into

healthier, safer communities. These projects often result in

new affordable housing, commercial facilities, and even

green spaces and parkland.

National and Local Law Enforcement

Mortgage fraud remains a large and growing problem in

the United States, especially because many struggling

homeowners are targeted by foreclosure prevention

scams. Fannie Mae works with partners to help prevent

and stop mortgage fraud, whether it's perpetrated by a

borrower, a lender, or another person or institution.

We collaborate closely with national and local law enforcement by providing detailed, real-time information about

mortgage and financial frauds to assist in their investigations and prosecution. Fannie Mae employees also frequently attend and speak at mortgage fraud training

events designed to familiarize law enforcement with the

trends that we encounter.

Partnering with Detroit Land

Bank Authority

In 2011, Fannie Mae worked closely with the Detroit

Land Bank Authority (DLBA) to identify Fannie Mae

REO properties that would support their mission to

restore six historic neighborhoods to their original

condition. Using First LookTM, the DLBA acquired 55

Fannie Mae REO properties before they were purchased by investors. The homes were renovated with

historic and energy-efficient improvements and resold

to owner occupants who also received homebuyer

education training. Through these efforts, DLBA and

Fannie Mae helped to restore vibrant neighborhoods

and create affordable, sustainable homeownership.
18 Fannie Mae Mission Report 2012

A loan refinance allows the homeowner to take advantage

of today’s historically low interest rates.

■ Through our Refi PlusTM initiative, which provides expanded

refinance opportunities for eligible Fannie Mae borrowers,

we acquired more than 730,000 loans in 2011, for a total of

approximately 1.7 million loans since 2009.

■ About 29 percent of these refinances have been

completed through MHA's Home Affordable Refinance

Program (HARP) — the refinance program available to

borrowers who have stayed current on their mortgage,

including those who have a mortgage with a higher loanto-value ratio as well as “underwater” borrowers who owe

more on their loan than the value of their home.

In situations where a homeowner has an unsustainable mortgage and homeownership is no longer viable, Fannie Mae

offers alternatives to foreclosure. These alternatives can

enable homeowners to start repairing their credit sooner

than if they go through foreclosure, and some may be able

to get a Fannie Mae mortgage to purchase a home in as little

as two years.

■ Since January 2009, Fannie Mae has completed more

than 195,000 short sales and DIL, including over 79,000

in 2011.

From 2009 through 2011, Fannie Mae helped almost 1 million

homeowners retain their homes or otherwise avoid foreclosure. During the fourth quarter of 2011, we completed more

than 82,000 single-family loan workouts, including more

than 60,000 home retention solutions (modifications,

repayment plans, and forbearances).

In 2011, many homeowners struggled to avoid foreclosure.

Fannie Mae is strongly committed to helping distressed

homeowners stay in their homes whenever possible. Our

efforts focus on encouraging borrowers to work with their

servicers to find the best solution to meet their needs. We

completed more than 328,000 single-family loan workouts

in 2011.

Sometimes foreclosure cannot be avoided. In these situations, Fannie Mae works to help borrowers exit their home

gracefully, through options such as a short sale or deed-inlieu (DIL) of foreclosure. Our REO sales team works on selling

Fannie Mae foreclosed properties for the highest price possible to stabilize communities and minimize taxpayer losses.

Preventing Foreclosures and

Promoting Sustainable Solutions

Fannie Mae uses an array of tools to help distressed homeowners understand their options, get help, and find the

best solution.

Most of Fannie Mae's home retention solutions are loan modifications. A loan modification enables the homeowner

to achieve a more affordable monthly payment, which helps

them sustain payments on the modified loan and remain in

their home.

■ We completed more than 213,000 loan modifications in

2011, for a total of more than 715,000 since January 2009.

■ Homeowners in loan modifications save a median of

$352 per month in principal and interest payments, or

31 percent of the median before-modification payment.

■ About 52 percent of Fannie Mae’s modifications to help

homeowners in 2011 were completed under HAMP. HAMP

is a part of Making Home Affordable (MHA) — a program

created in 2009 by the U.S. Department of the Treasury

(Treasury) and HUD to help struggling homeowners.

Helping Homeowners

and Stabilizing

Hard-Hit Communities
Fannie Mae Mission Report 2012 19

Administrating the MHA Program

In addition to being a participant in MHA, Fannie Mae is the

MHA program administrator in support of the U.S. Department of the Treasury. In this role, Fannie Mae implements

guidelines and policies for the program, develops and

maintains the MHA technology system of record, facilitates

program incentive payments, manages MHA servicer relationships, provides training, and develops and coordinates

borrower outreach events. Since its launch in 2009, MHA has

helped struggling homeowners avoid foreclosure through

programs designed to modify first and second liens, provide

unemployment forbearance, and facilitate short sales and

deeds-in-lieu of foreclosure.

MHA has helped establish industry standards and practices

for affordable modifications, homeowner protections, and

outreach. In 2011, Fannie Mae continued to support Treasury

and HUD's efforts to make the benefits of HAMP and HARP

available to American homeowners:

In 2011, Fannie Mae continued to support the Treasury's

efforts to make the benefits of HAMP and HARP available

to American homeowners:

■ As of the end of 2011, HAMP enabled over 930,000

homeowners to receive permanent modifications of

their mortgages.

■ In November 2011, we helped launch HARP 2.0 to enable

more borrowers take advantage of MHA benefits.

Providing Direct Mortgage Assistance

in Hard-Hit Communities

We provide free education and one-on-one support for

distressed homeowners through a network of new Fannie

Mae Mortgage Help Centers. In cooperation with HUD-certified non-profit agencies, homeowners can speak directly with

on-site English- and Spanish-speaking staff and experienced

housing counselors to discuss their mortgage situation and

the foreclosure prevention options available to them. In addition to providing counseling and access to mortgage education and financial literacy resources, the centers assist

homeowners by coordinating with their mortgage servicers

to help ensure a timely resolution.

We manage centers in 12 of America’s hardest-hit housing

markets: Atlanta, Chicago, Dallas, Jacksonville, Los Angeles

(Culver City), Miami, Philadelphia, Phoenix, Sacramento,

St. Louis (Clayton, MO), Tampa, and Washington, DC (Greenbelt, MD). Each facility supports the metropolitan area

where it is located as well as borrowers from across the

state. These centers helped borrowers obtain nearly 6,100

home retention plans in 2011.

In addition to the Mortgage Help Center facilities, Fannie

Mae has established partnerships with counseling agencies in 16 markets across the country, referred to as

the Mortgage Help Network, to allow more Fannie Mae

customers access to existing housing counselor facilities.

Like the Mortgage Help Centers, these customer outreach

channels provide face-to-face, free, and expedited assistance to struggling borrowers.

Through our expanded partnership with the HOPE Hotline

(888-995-HOPE) — which offers free, comprehensive,

and around-the-clock foreclosure assistance and housing

counseling services — Fannie Mae borrowers anywhere

in the country can now be connected to the Mortgage Help

Network or a Mortgage Help Center. Fannie Mae also provides counseling through partnerships with qualified credit

and debt advisory organizations through a current pilot

program for borrowers who have already received a loan

modification.

Total Single-Family Loan Workouts

Per Month in 2011

50,000

40,000

30,000

20,000

10,000

0

■ Total Workouts

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Helping Homeowners and Stabilizing Hard-Hit Communities
20 Fannie Mae Mission Report 2012

Helping Homeowners and Stabilizing Hard-Hit Communities

Leveraging Technology Solutions

We have created innovative online tools, with a focus on

usability and efficiency, and aligned Fannie Mae's externalfacing websites and resources with those of our partners,

to help consumers access the information they need more

easily and quickly.

■ KnowYourOptions.com is a bilingual consumer education

website that outlines the options that may be available to

homeowners who are looking to refinance or struggling

with their mortgage. Since its debut in August 2010, the

website has logged nearly 700,000 visits (more than

530,000 in 2011 alone) and averages more than 40,000

visits per month. More than eight in 10 visitors are new

to the site, which indicates that a consistent stream of

people are learning about the resource and getting the

information they need to enable them to take action.

■ KnowYourOptions.com also features WaysHomeTM,

a unique and innovative educational video launched

in early 2011. The interactive simulation allows homeowners to participate in real-life scenarios, make

hypothetical choices, learn the consequences of those

choices, and identify the best options for retaining or

exiting their homes. In 2011, users launched the video

and navigated through the simulation nearly 22,000

times. Launch the video simulation

■ HomePath.com lists Fannie Mae-owned properties for

sale and provides information about special financing

options available only on our properties. The website

makes it easy for all potential buyers to search thousands of move-in ready foreclosed properties —

including single-family homes, town houses, and

condominiums — learn about mortgage financing,

access handy tools and resources, and get help with

the buying process.

In August 2009, the first month after HomePath.com

launched, the site logged more than 400,000 visits.

In 2011, it averaged more than 2.2 million visits per

month, roughly one-third of which were unique visits.

Overall, the website has logged over 45 million visits

since its debut, and more than 27 million in 2011 alone.

What Borrowers Say About

Fannie Mae Mortgage Help Centers

In 2011, Fannie Mae opened a Mortgage Help Center

in St. Louis, MO, and provided assistance to borrower

Pete Farley, helping his family avoid foreclosure and

keep their home.

“My daughter and I had applied for a loan modification

on her home, as we were having a difficult time making

the monthly mortgage payments. We had been turned

down three times before learning about a new Fannie

Mae Mortgage Help Center in our area. We were their

first customer!

Our Fannie Mae housing counselor and documentation

review specialist took us through the application

process with ease. Their knowledge, guidance, and

professionalism was a welcomed change from what

we had experienced before, and we were elated to hear

that our application was quickly approved. I truly believe had it not been for their due diligence, persistent

follow-up, and advocating on our behalf, we would have

been turned down again and may have lost our home.

Our Fannie Mae team uncomplicated what was an extremely long and frustrating process and brought it to

a quick and positive resolution. They far exceeded our

expectations.”

— Pete Farley, St. Louis, MO
Fannie Mae Mission Report 2012 21

Helping Homeowners and Stabilizing Hard-Hit Communities

Improving Mortgage Servicing Standards

In an effort to establish greater consistency in the servicing

of delinquent loans, Fannie Mae has implemented

new delinquency management and default prevention

standards, requiring mortgage servicers to use a uniform

approach, consistent guidelines, and clear timelines when

working with delinquent borrowers. Through the FHFAmandated Servicing Alignment Initiative (SAI), the GSEs

have aligned their servicing requirements for borrower

contact, delinquency management practices, loan modifications, and foreclosure timelines. This approach will

allow servicers to streamline and simplify their processes,

resulting in:

■ Improved service to borrowers as well as greater

consistency and clarity in borrower communications.

■ More efficient processing of loan modifications.

■ Consistency, fairness, and efficiency in the foreclosure

process.

■ Increased servicer accountability, reinforced by new

incentives and compensatory fees.

These new servicing standards aim to achieve faster resolution and lessen borrower frustration, with the ultimate goal

of keeping people in their homes whenever possible and

minimizing financial losses to Fannie Mae and to taxpayers.

In accordance with SAI, Fannie Mae launched a new effort

designed to measure and evaluate servicers’ performance

as a way to further promote transparency, accountability,

and excellence in mortgage servicing, while recognizing

and incentivizing those who consistently deliver strong,

customer-driven results.

The Servicer Total Achievement and Rewards (STAR)

Program is a comprehensive performance management

system. It provides clear expectations and specific, consistent measurements to help Fannie Mae servicers increase

their focus on improving customer satisfaction and overall

housing outcomes. The program directly links service

performance to homeowners whom the servicer has helped

as well as the customer’s overall experience with their servicer. A key component of the STAR Program is the Servicer

Performance Scorecard, which provides monthly performance indicators to help servicers effectively assess their

progress.

The STAR Program is designed to:

■ Provide consistent, specific, and measurable

expectations for Fannie Mae servicers.

■ Align servicer activities to Fannie Mae's business goals.

■ Focus on success drivers to help prioritize efforts.

■ Gauge and communicate relative performance.

■ Standardize data feeds to promote future analytic

capabilities.

■ Provide financial incentive and opportunities for

recognition of top performers.

Putting Fannie Mae Properties

Back on the Market

When all other options are exhausted and foreclosure is the

end result, Fannie Mae works to sell foreclosed properties

for the highest price possible and to buyers who will make

the properties their homes. We seek to keep properties in

good condition and, in some cases, conduct repairs to make

them more marketable. This provides quality, affordable

housing options to new homebuyers and also helps to stabilize neighborhoods and home values.

Foreclosed homes become part of Fannie Mae’s real estate

owned (REO) inventory. In 2011, we completed repairs

to approximately 89,800 properties sold from our singlefamily REO inventory. Overall, we sold nearly 244,000

Fannie Mae single-family REO properties in 2011, approximately 44,000 more than we added to our inventory during

the year. Roughly 60 percent of these properties were sold

to individuals, non-profit organizations, or public entities

versus investors.

In particular, through our First LookTM program we give

potential homebuyers the opportunity to make an offer on

our REO properties before investors. Fannie Mae understands that owner occupants are vital to neighborhoods

and communities. Owner occupants tend to work, go to

school, and shop in their neighborhoods. They are also

more likely to make improvements to their residences and

contribute to their communities’ livability. The First Look

period is typically the first 15 days a property is listed on

HomePath.com, during which eligible buyers can apply to

purchase the home before facing investor competition.
22 Fannie Mae Mission Report 2012

Helping Homeowners and Stabilizing Hard-Hit Communities

REOs Provide Homes

for First-time Homebuyers

The GA Dream Homeownership Program — provided

through the Georgia Department of Community Affairs

(DCA), the state’s lead agency in housing finance and

development — is available to first-time homebuyers

and those who purchase a home in targeted areas.

GA Dream makes purchasing a home more affordable

for low- to moderate-income families and provides

free homebuyer education. Applicants seeking down

payment and closing cost assistance are required to

complete a homebuyer education class prior to closing.

Sharing a mission to promote homeownership, in late

2010 Fannie Mae and DCA collaborated to create a

streamlined process for GA Dream homebuyers to

purchase a Fannie Mae-owned home. This collaboration

facilitated more REO purchases by GA Dream homebuyers and further strengthened our relationship with the

Georgia DCA.

In 2011 Fannie Mae sold 230 REO properties to owner

occupants using the GA Dream Homeownership Program. This program not only helps fulfill the dream of

homeownership to first-time homeowners, but also

provides homebuyers the opportunity to learn more

about the process of purchasing a home and the

responsibilities of homeownership, while promoting

affordable housing, community development, and

neighborhood stabilization.

Stabilizing Communities

Through REO Sales

Chicanos Por La Causa (CPLC) is a leading non-profit

organization in the areas of economic development,

community development, education, and social services. It is the largest community development corporation in Arizona with a mission “to build stronger,

healthier communities.”

In 2009, CPLC led a national collaborative in an application for Neighborhood Stabilization Program (NSP) 2

funds. Along with partners in 15 different markets,

in early 2010 they were awarded $137 million — the

second-largest NSP 2 allocation in the nation. With

this funding, they sought to acquire, rehabilitate, and

resell single-family REO assets; acquire, redevelop,

and manage multifamily REO assets; and acquire

and demolish severely blighted homes to establish

a land bank.

In 2011 alone, CPLC and the consortium purchased 95

single-family REO properties from Fannie Mae, making

them one of the largest non-profit REO purchasers of

2011. Though based in Arizona, this collaborative is

building stronger, healthier communities across the

United States. The homes are actively rehabilitated

and sold to qualified homebuyers in Arizona, Colorado,

New Mexico, California, Texas, Illinois, Pennsylvania,

Maryland, and Washington, DC.

First Look has proven to be such a success that it is now

replicated by others in the industry. In 2011, Fannie Mae

sold an average of 3,000 First Look homes per month.

For tens of thousands of First Look buyers, a Fannie Maeowned foreclosed property has become a family home.
Fannie Mae Mission Report 2012 23

Employee Volunteerism

Our commitment to making a positive difference in the

communities where we live and work is reflected in our

mission, our people, and our long-standing spirit of

volunteerism and community support.

Employee volunteer efforts in 2011 not only aligned with

and deepened the impact of Fannie Mae's business, but

also helped build and strengthen relationships with the

communities we serve. In 2011, 50 percent of our employees volunteered over 40,000 hours with more than 500

local community organizations on a wide range of projects

and initiatives.

We encourage employees to use their skills and time to

optimize their contributions to America's communities.

Here are just a few of the ways our people made a difference in 2011:

■ Over 2,000 Fannie Mae employees volunteered nearly

12,000 hours with local non-profits nationwide to help

serve the homeless.

■ During the holidays, Fannie Mae Board members and

employees nationwide worked with more than 10 nonprofits to purchase and deliver gifts, toys, and food for

nearly 500 children and families in need.

■ Over 500 employees participated in more than 10 borrower outreach events through the Making Home Affordable Program, Know Your Options®, and other foreclosure

prevention efforts. Through these activities, employees

donated more than 4,300 hours to help thousands of

families across the country keep their homes.

■ More than 200 Fannie Mae employees contributed over

2,000 hours of labor to help build and rehabilitate 37

affordable homes.

■ Through board membership opportunities, more than

80 employees volunteered more than 2,400 hours

applying their professional knowledge and expertise to

help non-profits become stronger, more sustainable

organizations in their local communities.

Diversity and Inclusion

Fannie Mae has a long-standing commitment to diversity

and inclusion as part of our ongoing work to support

America's communities. We recognize the tremendous

opportunities to create value by leveraging the unique

talents and abilities of Fannie Mae's workforce.

In 2011, Fannie Mae's office of diversity and inclusion (ODI)

supported professional development programs to help

employees improve critical business skills to serve customers and communities more effectively. Our mentoring

and employee engagement activities help ensure that

employees are building strong relationships across divisions and can continue to learn and grow throughout their

careers. Fannie Mae has received numerous awards for

leadership in diversity, and we continue to actively seek

ways to enhance current programs and create new, more

innovative opportunities for employees.

The ODI also supports 10 Employee Resource Groups

(ERGs) that promote cultural awareness and are aligned

around common interests and goals. Our ERGs provide

market intelligence, serve as business advisors on cultural

competencies, and work to ensure that all voices are heard

on important business issues. For example, the Muslim ERG

and Christian Salt and Light ERG collaborated to conduct

successful foreclosure outreach events for hundreds of

families at risk of losing their homes. ERGs also supported

many volunteer initiatives that helped connect Fannie Mae

with underserved communities.

Making a Difference

in the Communities

Where We Live and Work
24 Fannie Mae Mission Report 2012

We align our business strategies with diversity and inclusion efforts to further support lenders, partners, and multicultural communities. In 2011, the ODI sponsored a lender

training program that helped customers increase their

awareness of the importance of diversity and inclusion in

housing finance. We also supported financial literacy events

for women in multicultural communities.

Community Investments

In an environment of declining resources and increasing

demand, Fannie Mae’s community investment and engagement activities continue to be an important resource for

partners who are committed to addressing the nation’s

housing challenges.

Fannie Mae makes grants to well-established non-profit

organizations that work to address housing-related issues

and build stronger communities. All investments are monitored regularly to ensure that our funds and our people are

being effectively and appropriately leveraged to produce the

most benefit.

In 2011, Fannie Mae’s investments in non-profit

organizations supported:

■ Foreclosure prevention counseling for more than

250,000 at-risk borrowers, helping over 100,000

families avoid foreclosure.

■ Acquisition of more than 4,400 foreclosed properties

to help stabilize neighborhoods.

■ Rehabilitation of more than 3,700 foreclosed properties

and the sale of over 4,800 REO properties.

■ Education of more than 26,000 potential homebuyers

in hard-hit markets.

■ Preservation of more than 10,000 affordable

housing units.

■ Production of more than 1,300 affordable housing units

and development of a pipeline of over 6,800 units.

■ Delivery of more than 1,100 units of permanent

supportive housing and development of a pipeline

of over 1,600 units.

Help the Homeless®

Fannie Mae’s commitment

to housing-related issues

includes partnering with

communities to address homelessness. Now in its 25th

year, Fannie Mae’s Help the Homeless (HTH) Program is

the nation’s largest fundraising model focused on building

the capacity of non-profits working to prevent and end

homelessness. In 2011, HTH raised more than $6.2 million

and engaged more than 115,000 community members on

behalf of nearly 100 non-profit beneficiary organizations.

This fundraising and community engagement enabled the

beneficiaries to assist more than 180,000 clients and supply more than 6,300 housing units.

The company’s focus on increasing the efficiency and

effectiveness of HTH continues to evolve. In 2012, we will

transition from the centralized walk on the National Mall

in Washington, DC, to regional community walks that will

include five additional markets. Based on best practices

from the historically successful DC-based model, the

community walk model places an emphasis on education

and awareness as well as donations, sponsorships, and volunteerism.

Since its inception in 1988, HTH has raised more than $90

million, positively impacting thousands of families, children,

and veterans who were homeless or at risk of homelessness. Fannie Mae remains committed to partnering with

community-based non-profit organizations who provide

housing opportunities and critical services to these individuals and families.

Making a Difference in the Communities Where We Live and Work
Fannie Mae Mission Report 2012 25

Making a Difference in the Communities Where We Live and Work

Lisa Brown is an outstanding example of Fannie

Mae employees who share their professional

skills and expertise through volunteerism and

make a measurable impact in the community.

In 2009, Lisa, who works in Fannie Mae’s legal

division, was selected to participate in our Nonprofit Board Leadership Training program. After

taking part in an intensive two-day training

workshop, she was paired with a board opportunity at Bright Beginnings, an organization

focused on preventing homelessness in Washington, DC. The opportunity allowed her to focus

on an issue she is deeply passionate about

while giving her the chance to serve and make

a direct impact in her own neighborhood.

Bright Beginnings is a beneficiary of Fannie

Mae’s Help the Homeless Program. Over the

past two decades, the organization has provided education and therapeutic services that

prepare homeless infants, toddlers, and preschool-aged children for kindergarten. They also provide

on-site support services for the children's families and

other essential services and referrals.

“Lisa has enthusiastically pitched in at every opportunity

to help Bright Beginnings succeed,” says Dr. Betty Jo

Gaines, the executive director of Bright Beginnings. “She

is always ready, willing, and able to lend her expertise and

compassion to everything we do. She is one of our most

enthusiastic advocates inside and outside Fannie Mae.”

After being selected to the Bright Beginnings’ board

nearly three years ago, Lisa also served on the finance

and corporate governance committees where her

professional skills were best suited. In 2011, she

volunteered nearly 80 hours with Bright Beginnings

and was appointed the role of board secretary.

Fannie Mae employee Lisa Brown volunteers in the classroom at

Bright Beginnings, a non-profit organization serving homeless

children and families.

This year, Lisa plans to engage even more of her

colleagues in volunteering and visiting Bright Beginnings,

especially through invitations to their Dream Booster

Tours, 20th Anniversary celebration, and Capital

Campaign activities. Also, she will renew her board

membership for a second three-year term in December.

“I’d like to think that my passion for Bright Beginnings

and the work we’re doing is infectious, as many of my

coworkers are seeking ways to get involved. It means

so much to have our leadership in full support of our

volunteer aspirations and to be able to use the skills and

knowledge I’ve gained as a Fannie Mae employee to help

make a positive difference in the lives of those in need.”

Employee Volunteer Profile: Lisa Brown
26 Fannie Mae Mission Report 2012

Fannie Mae in 2012

In 2012, we expect the economy to continue its slow

recovery with slightly stronger growth in housing activity.

We will continue to make sound business decisions that

protect the interests of taxpayers and assist struggling

homeowners. We will focus our expertise and resources

on creating a stronger housing finance system and we

will make progress by executing effectively against our

corporate priorities.

There will be additional challenges ahead but we appreciate

the opportunity to deliver solutions. A healthy housing

finance system is essential for a strong America.
Fannie Mae Mission Report 2012 27
3900 Wisconsin Avenue, NW

Washington, DC 20016-2892

Phone (202) 752-7000

www.fanniemae.com