Third Quarter 2016 Results 1

Resource Center: 1-800-232-6643 

Contact: Pete Bakel 

202-752-2034

Date: November 3, 2016

Fannie Mae Reports Net Income of $3.2 Billion and 

Comprehensive Income of $3.0 Billion for Third Quarter 2016

• Fannie Mae expects to pay $3.0 billion in dividends to Treasury in December 2016. With the 

expected December dividend payment, the company will have paid a total of $154.4 billion in 

dividends to Treasury. 

• Fannie Mae was the largest provider of liquidity to the mortgage market in the third quarter of 

2016, providing approximately $184 billion in mortgage financing that enabled families to buy, 

refinance, or rent homes.

• Fannie Mae is focused on providing value to the housing finance system by:

delivering increased speed, simplicity, and certainty to customers;

implementing innovations that deliver greater value and reduced risk to lenders, such as 

verification tools to expand representation and warranty relief; and 

helping make predictable long-term fixed-rate mortgages, including the 30-year fixed-rate 

mortgage, a reality for families across the country.

• Fannie Mae continued to lay off risk to private capital in the mortgage market and reduce taxpayer 

risk through its Connecticut Avenue SecuritiesTM (CAS), Credit Insurance Risk TransferTM 

(CIRTTM), and other types of risk-sharing transactions. As of September 30, 2016, approximately 

21 percent of the loans in the company’s single-family conventional guaranty book of business, 

measured by unpaid principal balance, were covered by a CAS or CIRT transaction.

WASHINGTON, DC — Fannie Mae (FNMA/OTC) reported net income of $3.2 billion and 

comprehensive income of $3.0 billion for the third quarter of 2016. The company reported a positive net 

worth of $4.2 billion as of September 30, 2016. As a result, the company expects to pay Treasury a $3.0 

billion dividend in December 2016.

“Today’s results reflect the strength of our business and our commitment to delivering innovations that 

make the mortgage process better for lenders,” said Timothy J. Mayopoulos, president and chief executive 

officer. “Fannie Mae is delivering tools and technologies that reduce costs and increase efficiency for our 

customers. We have partnered with lenders to develop new solutions that meet their most important needs. 

We will continue to innovate so that we can help customers create a faster, safer, and, ultimately, fullydigitized mortgage experience for borrowers.”

Third Quarter 2016 Results — Fannie Mae’s net income of $3.2 billion and comprehensive income of 

$3.0 billion for the third quarter of 2016 compares to net income of $2.9 billion and comprehensive 

income of $2.9 billion for the second quarter of 2016. The increase in net income was due primarily to: 

• Lower fair value losses on the company’s derivatives, partially offset by a decrease in credit-related 

income in the third quarter of 2016.
Third Quarter 2016 Results 2

SUMMARY OF THIRD QUARTER 2016 RESULTS

(Dollars in Millions) 3Q16 2Q16 Variance 3Q16 3Q15 Variance

Net interest income $ 5,435 $ 5,286 $ 149 $ 5,435 $ 5,588 $ (153)

Fee and other income 175 174 1 175 259 (84)

Net revenues 5,610 5,460 150 5,610 5,847 (237)

Investment gains, net 467 398 69 467 299 168

Fair value losses, net (491) (1,667) 1,176 (491) (2,589) 2,098

Administrative expenses (661) (678) 17 (661) (952) 291

Credit-related income

Benefit for credit losses 673 1,601 (928) 673 1,550 (877)

Foreclosed property expense (110) (63) (47) (110) (497) 387

Total credit-related income 563 1,538 (975) 563 1,053 (490)

Temporary Payroll Tax Cut Continuation Act of 2011

(TCCA) fees (465) (453) (12) (465) (413) (52)

Other expenses, net (300) (254) (46) (300) (215) (85)

Income before federal income taxes 4,723 4,344 379 4,723 3,030 1,693

Provision for federal income taxes (1,527) (1,398) (129) (1,527) (1,070) (457)

Net income attributable to Fannie Mae $ 3,196 $ 2,946 $ 250 $ 3,196 $ 1,960 $ 1,236

Total comprehensive income attributable to Fannie Mae $ 2,989 $ 2,869 $ 120 $ 2,989 $ 2,213 $ 776

Dividends distributed or available for distribution to

senior preferred stockholder $ (2,977) $ (2,869) $ (108) $ (2,977) $ (2,202) $ (775)

Net revenues, which consist of net interest income and fee and other income, were $5.6 billion for the 

third quarter of 2016, compared with $5.5 billion for the second quarter of 2016. 

Net interest income, which includes guaranty fee revenue, was $5.4 billion for the third quarter of 2016

compared with $5.3 billion for the second quarter of 2016. Net interest income for the third quarter of 

2016 was driven by guaranty fee revenue, amortization income from mortgage prepayments, and interest 

income earned on mortgage assets in the company’s retained mortgage portfolio. 

In recent years, an increasing portion of Fannie Mae’s net interest income has been derived from guaranty 

fees rather than from the company’s retained mortgage portfolio assets. This is a result of both the impact 

of guaranty fee increases implemented in 2012 and the reduction of the company’s retained mortgage 

portfolio. More than two-thirds of the company’s net interest income in the third quarter of 2016 was 

derived from its guaranty business. The company expects that guaranty fees will continue to account for 

an increasing portion of its net interest income.
Third Quarter 2016 Results 3

Net fair value losses were $491 million in the third quarter of 2016, compared with $1.7 billion in the 

second quarter of 2016. Fair value losses for the third quarter of 2016 were due primarily to losses on 

Connecticut Avenue Securities debt carried at fair value due primarily to tightening spreads between 

Connecticut Avenue Securities debt yields and LIBOR during the quarter. The estimated fair value of the 

company’s financial instruments may fluctuate substantially from period to period because of changes in 

interest rates, the yield curve, mortgage and credit spreads, implied volatility, and activity related to these 

financial instruments. 

Credit-related income, which consists of a benefit for credit losses and foreclosed property expense, was 

$563 million in the third quarter of 2016, compared with $1.5 billion in the second quarter of 2016. 

Credit-related income in the third quarter of 2016 was driven by a benefit for credit losses during the 

quarter, which was due primarily to an increase in home prices, including distressed property valuations. 
Third Quarter 2016 Results 4

VARIABILITY OF FINANCIAL RESULTS 

Fannie Mae expects to remain profitable on an annual basis for the foreseeable future; however, certain 

factors, such as changes in interest rates or home prices, could result in significant volatility in the 

company’s financial results from quarter to quarter or year to year. Fannie Mae’s future financial results 

also will be affected by a number of other factors, including: the company’s guaranty fee rates; the volume 

of single-family mortgage originations in the future; the size, composition, and quality of its retained 

mortgage portfolio and guaranty book of business; and economic and housing market conditions. 

Although Fannie Mae expects to remain profitable on an annual basis for the foreseeable future, due to the 

company’s expectation of continued declining capital and the potential for significant volatility in its 

financial results, the company could experience a net worth deficit in a future quarter, particularly as the 

company’s capital reserve amount approaches or reaches zero. The company’s expectations for its future 

financial results do not take into account the impact on its business of potential future legislative or 

regulatory changes, which could have a material impact on the company’s financial results, particularly 

the enactment of housing finance reform legislation. For additional information on factors that affect the 

company’s financial results, please refer to “Executive Summary” in the company’s quarterly report on 

Form 10-Q for the quarter ended September 30, 2016 (Third Quarter 2016 Form 10-Q).

SUMMARY OF THIRD QUARTER 2016 BUSINESS SEGMENT RESULTS

Fannie Mae’s vision is to be America’s most valued housing partner and to provide liquidity, access to 

credit and affordability in all U.S. housing markets at all times, while effectively managing and reducing 

risk to Fannie Mae’s business, taxpayers, and the housing finance system. In support of this vision, Fannie 

Mae is focused on: advancing a sustainable and reliable business model that reduces risk to the housing 

finance system and taxpayers; providing reliable, large-scale access to affordable mortgage credit for 

qualified borrowers and helping struggling homeowners; and serving customer needs and improving the 

company’s business efficiency. In the third quarter of 2016, Fannie Mae’s Single-Family business, 

Multifamily business, and Capital Markets group engaged in complementary business activities in pursuit 

of Fannie Mae’s vision.
Third Quarter 2016 Results 5

(Dollars in Millions) 3Q16 2Q16 Variance 3Q16 3Q15 Variance

Single-Family Segment:

Guaranty fee income $ 3,305 $ 3,260 $ 45 $ 3,305 $ 3,145 $ 160

Credit-related income 531 1,535 (1,004) 531 1,029 (498)

TCCA fees (465) (453) (12) (465) (413) (52)

Other (623) (599) (24) (623) (682) 59

Income before federal income taxes 2,748 3,743 (995) 2,748 3,079 (331)

Provision for federal income taxes (808) (1,093) 285 (808) (1,040) 232

Net income $ 1,940 $ 2,650 $ (710) $ 1,940 $ 2,039 $ (99)

Multifamily Segment:

Guaranty fee income $ 431 $ 400 $ 31 $ 431 $ 367 $ 64

Credit-related income 32 3 29 32 24 8

Other (39) (24) (15) (39) (50) 11

Income before federal income taxes 424 379 45 424 341 83

Provision for federal income taxes (49) (40) (9) (49) (17) (32)

Net income $ 375 $ 339 $ 36 $ 375 $ 324 $ 51

Capital Markets Segment:

Net interest income $ 1,049 $ 1,080 $ (31) $ 1,049 $ 1,401 $ (352)

Investment gains, net 2,232 2,088 144 2,232 1,608 624

Fair value losses, net (530) (1,730) 1,200 (530) (2,697) 2,167

Other (262) (287) 25 (262) (322) 60

Income (loss) before federal income taxes 2,489 1,151 1,338 2,489 (10) 2,499

Provision for federal income taxes (670) (265) (405) (670) (13) (657)

Net income (loss) $ 1,819 $ 886 $ 933 $ 1,819 $ (23) $ 1,842

Single-Family Business

• Single-Family net income was $1.9 billion in the third quarter of 2016, compared with $2.7 billion in 

the second quarter of 2016. Net income in the third quarter of 2016 was driven primarily by guaranty 

fee income and credit-related income.

• Single-Family guaranty fee income was $3.3 billion for both the third quarter of 2016 and the second 

quarter of 2016.

• Single-Family credit-related income was $531 million in the third quarter of 2016, compared with $1.5 

billion in the second quarter of 2016. Credit-related income in the third quarter of 2016 was due to a 

benefit for credit losses for the quarter attributable primarily to an increase in home prices, including 

distressed property valuations.

• The Single-Family guaranty book of business was $2.82 trillion as of both September 30, 2016 and 

June 30, 2016.
Third Quarter 2016 Results 6

Multifamily Business

• Multifamily net income was $375 million in the third quarter of 2016, compared with $339 million in 

the second quarter of 2016. Net income in the third quarter of 2016 was driven primarily by guaranty 

fee income.

• Multifamily guaranty fee income was $431 million for the third quarter of 2016, compared with $400 

million for the second quarter of 2016. 

• Multifamily new business volume totaled $40.7 billion for the first nine months of 2016, of which 

approximately 66 percent counted toward the Federal Housing Finance Agency’s (FHFA) 2016 

multifamily production volume cap. 

• The Multifamily guaranty book of business was $236.2 billion as of September 30, 2016, compared 

with $225.2 billion as of June 30, 2016. 

Capital Markets

• Capital Markets had net income of $1.8 billion in the third quarter of 2016, compared with $886 

million in the second quarter of 2016. Capital Markets’ net income in the third quarter of 2016 was 

driven primarily by net investment gains and net interest income, partially offset by fair value losses.

• Capital Markets net investment gains were $2.2 billion in the third quarter of 2016, compared with 

$2.1 billion in the second quarter of 2016. Net investment gains for the third quarter of 2016 were due 

primarily to the sale of mortgage-related securities during the quarter. 

• Capital Markets net interest income was $1.0 billion in the third quarter of 2016, compared with $1.1 

billion in the second quarter of 2016. Net interest income was driven primarily by interest income 

earned on mortgage assets in the company’s retained mortgage portfolio.

• Capital Markets net fair value losses were $530 million in the third quarter of 2016, compared with 

$1.7 billion in the second quarter of 2016. Net fair value losses for the third quarter of 2016 were due 

primarily to losses on Connecticut Avenue Securities debt carried at fair value due primarily to 

tightening spreads between Connecticut Avenue Securities debt yields and LIBOR during the quarter.

• Capital Markets retained mortgage portfolio balance decreased to $306.5 billion as of September 30, 

2016, compared with $316.3 billion as of June 30, 2016, as a result of purchases of $93.1 billion and 

sales and liquidations of $102.9 billion during the third quarter of 2016. 

BUILDING A SUSTAINABLE HOUSING FINANCE SYSTEM

In addition to continuing to provide liquidity and support to the mortgage market, Fannie Mae has 

invested significant resources toward helping to maintain a safer and sustainable housing finance system 

for today and build a safer and sustainable housing finance system for the future. The company is pursuing 

the strategic goals identified by its conservator, FHFA. These strategic goals are: maintain, in a safe and 

sound manner, credit availability and foreclosure prevention activities for new and refinanced mortgages 

to foster liquid, efficient, competitive, and resilient national housing finance markets; reduce taxpayer risk 

through increasing the role of private capital in the mortgage market; and build a new single-family 

infrastructure for use by Fannie Mae and Freddie Mac and adaptable for use by other participants in the 

secondary market in the future.
Third Quarter 2016 Results 7

ABOUT FANNIE MAE’S CONSERVATORSHIP

Fannie Mae has operated under the conservatorship of FHFA since September 6, 2008. Fannie Mae has 

not received funds from Treasury since the first quarter of 2012. The funding the company has received 

under its senior preferred stock purchase agreement with Treasury has provided the company with the 

capital and liquidity needed to fulfill its mission of providing liquidity and support to the nation’s housing 

finance markets and to avoid a trigger of mandatory receivership under the Federal Housing Finance 

Regulatory Reform Act of 2008. For periods through September 30, 2016, Fannie Mae has requested 

cumulative draws totaling $116.1 billion and paid $151.4 billion in dividends to Treasury. Under the 

senior preferred stock purchase agreement, the payment of dividends does not offset prior draws. As a 

result, Treasury maintains a liquidation preference of $117.1 billion on the company’s senior preferred 

stock. 

Treasury Draws and Dividend Payments

(1) Treasury draw requests are shown in the period for which requested and do not include the initial $1.0 billion liquidation preference 

of Fannie Mae’s senior preferred stock, for which Fannie Mae did not receive any cash proceeds. The payment of dividends does 

not offset prior Treasury draws.

(2) Fannie Mae expects to pay a dividend for the fourth quarter of 2016 calculated based on the company’s net worth of $4.2 billion as 

of September 30, 2016 less a capital reserve amount of $1.2 billion.

(3) Amounts may not sum due to rounding.

In August 2012, the terms governing the company’s dividend obligations on the senior preferred stock 

were amended. The amended senior preferred stock purchase agreement does not allow the company to 

build a capital reserve. Beginning in 2013, the required senior preferred stock dividends each quarter equal 

the amount, if any, by which the company’s net worth as of the end of the immediately preceding fiscal 

quarter exceeds an applicable capital reserve amount. The capital reserve amount is $1.2 billion for each 

quarter of 2016 and will be reduced by $600 million each year until it reaches zero in 2018. 

The amount of remaining funding available to Fannie Mae under the senior preferred stock purchase 

agreement with Treasury is currently $117.6 billion. If the company were to draw additional funds from 

Treasury under the agreement in a future period, the amount of remaining funding under the agreement 

would be reduced by the amount of the company’s draw. Dividend payments Fannie Mae makes to 

Treasury do not restore or increase the amount of funding available to the company under the agreement.

Fannie Mae is not permitted to redeem the senior preferred stock prior to the termination of Treasury’s 

funding commitment under the senior preferred stock purchase agreement. The limited circumstances 

under which Treasury’s funding commitment will terminate are described in “Business—Conservatorship 

and Treasury Agreements” in the company’s annual report on Form 10-K for the year ended December 31, 

2015 (2015 Form 10-K). 
Third Quarter 2016 Results 8

CREDIT RISK TRANSFER TRANSACTIONS

In late 2013, Fannie Mae began entering into credit risk transfer transactions with the goal of transferring, 

to the extent economically sensible, a portion of the mortgage credit risk on a portion of the recently 

acquired loans in its single-family book of business in order to reduce the economic risk to the company 

and to taxpayers of future borrower defaults. In exchange for taking on a portion of the mortgage credit 

risk on these loans, Fannie Mae pays investors a premium that effectively reduces the guaranty fee income 

the company earns on the loans. Fannie Mae’s primary method of achieving this goal has been through the 

issuance of its Connecticut Avenue Securities (CAS) and its Credit Insurance Risk Transfer (CIRT) 

transactions. 

These transactions transfer a portion of the mortgage credit risk associated with losses on specified 

reference pools of single-family mortgage loans to investors in CAS or to panels of reinsurers or insurers 

in CIRT transactions. Approximately 21 percent of the loans in the company’s single-family conventional 

guaranty book of business as of September 30, 2016, measured by unpaid principal balance, were covered 

by a CAS or CIRT transaction. The company also has executed other types of risk-sharing transactions in 

addition to its CAS and CIRT transactions. During the first nine months of 2016, the company transferred 

a significant portion of the mortgage credit risk on single-family mortgages with unpaid principal balance 

of over $250 billion at the time of the transactions.

Fannie Mae generally includes approximately half of its recent single-family acquisitions in credit risk 

transfer transactions, as the company only targets certain types of loan categories for credit risk transfer 

transactions. Loan categories the company has targeted for credit risk transfer transactions generally 

consist of fixed-rate 30-year single-family conventional loans that meet certain credit performance 

characteristics, are non-Refi PlusTM and have loan-to-value (LTV) ratios between 60 percent and 97 

percent. These targeted loan categories constituted over half of the company’s loan acquisitions for the 

twelve months ended October 2015, and over 95 percent of the loans in these categories that the company 

acquired in the twelve months ended October 2015 were included in a subsequent credit risk transfer 

transaction. Loans are included in reference pools for credit risk transfer transactions on a lagged basis; 

typically, about six months to one year after the company initially acquires the loans. The portion of 

Fannie Mae’s single-family loan acquisitions it includes in credit risk transfer transactions can vary from 

period to period based on market conditions and other factors.

These transactions increase the role of private capital in the mortgage market and reduce the risk to Fannie 

Mae’s business, taxpayers, and the housing finance system. The company intends to continue to engage in 

credit risk transfer transactions on an ongoing basis, subject to market conditions. Over time, the company 

expects that a larger portion of its single-family conventional guaranty book of business will be covered 

by credit risk transfer transactions. 

CREDIT QUALITY

While continuing to make it possible for families to buy, refinance, or rent homes, Fannie Mae has 

maintained responsible credit standards. Fannie Mae has seen the effect of the actions it took, beginning in 

2008, to significantly strengthen its underwriting and eligibility standards to promote sustainable 

homeownership and stability in the housing market. Fannie Mae actively monitors the credit risk profile 

and credit performance of the company’s single-family loan acquisitions, in conjunction with housing 

market and economic conditions, to determine if its pricing, eligibility, and underwriting criteria 

accurately reflects the risk associated with loans the company acquires or guarantees. Single-family 

conventional loans acquired by Fannie Mae in the third quarter of 2016 had a weighted average borrower 

FICO credit score at origination of 752 and a weighted average original LTV ratio of 74 percent.
Third Quarter 2016 Results 9

Fannie Mae’s single-family conventional guaranty book of business as of September 30, 2016 consisted of 

single-family loans acquired prior to 2009; non-Refi Plus loans acquired beginning in 2009; loans 

acquired through the Administration’s Home Affordable Refinance Program® (HARP®); and other loans 

acquired pursuant to the company’s Refi Plusinitiative, excluding HARP loans. The company’s Refi Plus 

initiative, which started in April 2009 and includes HARP, provides expanded refinance opportunities for 

eligible Fannie Mae borrowers, and may involve the refinance of existing Fannie Mae loans with high 

LTV ratios, including loans with LTV ratios in excess of 100 percent. 

The single-family serious delinquency rate for Fannie Mae’s book of business has decreased for 26 

consecutive quarters since the first quarter of 2010 and was 1.24 percent as of September 30, 2016, 

compared with 5.47 percent as of March 31, 2010. This decrease is primarily the result of home retention 

solutions, foreclosure alternatives and completed foreclosures, improved loan payment performance, and 

the company’s acquisition of loans with stronger credit profiles since the beginning of 2009. In recent 

periods, nonperforming loan sales have also contributed to the decrease in the company’s serious 

delinquency rate. The company’s single-family serious delinquency rate and the period of time that loans 

remain seriously delinquent continue to be negatively impacted by the length of time required to complete 

a foreclosure in some states. Longer foreclosure timelines result in these loans remaining in the company’s 

book of business for a longer time, which has caused the company’s serious delinquency rate to decrease 

more slowly in the last few years than it would have if the pace of foreclosures had been faster. The slow 

pace of foreclosures in certain areas of the country has negatively affected the company’s single-family 

serious delinquency rates, foreclosure timelines, and financial results, and may continue to do so. Other 

factors such as the pace of loan modifications, the timing and volume of future nonperforming loan sales 

the company makes, servicer performance, changes in home prices, unemployment levels, and other 

macroeconomic conditions also influence serious delinquency rates. 
Third Quarter 2016 Results 10

Total loss reserves, which reflect the company’s estimate of the probable losses the company has incurred 

in its guaranty book of business, including concessions it granted borrowers upon modification of their 

loans, decreased to $23.1 billion as of September 30, 2016 from $24.2 billion as of June 30, 2016. The 

decrease in the company’s total loss reserves for the third quarter of 2016 was driven primarily by an 

increase in home prices and loan liquidations. The company’s loss reserves have declined substantially 

from their peak and are expected to decline further. 

SERVING CUSTOMER NEEDS AND IMPROVING BUSINESS EFFICIENCY

Fannie Mae is engaged in various initiatives to better serve its customers’ needs and improve its business 

efficiency. The company is committed to providing its lender partners with the products, services, and 

tools they need to serve the market more effectively and efficiently. To further this commitment, Fannie 

Mae is focused on continuing to revise and clarify lenders’ representation and warranty obligations, 

implementing innovative new and enhanced tools that deliver greater value and certainty to lenders, and 

making its customers’ interactions with Fannie Mae simpler and more efficient. For additional information 

on the company’s efforts to serve its customer needs and improve its business efficiency, please refer to 

“Executive Summary” in the company’s Third Quarter 2016 Form 10-Q and 2015 Form 10-K.
Third Quarter 2016 Results 11

PROVIDING LIQUIDITY AND SUPPORT TO THE MARKET

Liquidity

Fannie Mae provided approximately $184 billion in liquidity to the mortgage market in the third quarter of 

2016, through its purchases of loans and guarantees of loans and securities, which resulted in 

approximately: 

• 338,000 home purchases 

• 375,000 mortgage refinancings 

• 240,000 units of multifamily housing financed

The company was one of the largest issuers of single-family mortgage-related securities in the secondary 

market in the third quarter of 2016. The company’s estimated market share of new single-family 

mortgage-related securities issuances was 38 percent in both the third and second quarter of 2016, 

compared with 36 percent in the third quarter of 2015. 

Fannie Mae also remained a continuous source of liquidity in the multifamily market in the third quarter 

of 2016. As of June 30, 2016 (the latest date for which information is available), the company owned or 

guaranteed approximately 19 percent of the outstanding debt on multifamily properties.

Refinancing Initiatives

Through the company’s Refi Plus initiative, which offers refinancing flexibility to eligible Fannie Mae 

borrowers and includes HARP, the company acquired approximately 35,000 loans in the third quarter of 

2016. Refinancings delivered to Fannie Mae through Refi Plus in the third quarter of 2016 reduced 

borrowers’ monthly mortgage payments by an average of $219. The company expects the volume of 

refinancings under HARP to continue to remain a small percentage of its acquisitions between now and 

the program’s expiration on September 30, 2017, due to the small population of borrowers with loans that 

have high LTV ratios who are willing to refinance and would benefit from refinancing.
Third Quarter 2016 Results 12

Home Retention Solutions and Foreclosure Alternatives

To reduce the credit losses Fannie Mae ultimately incurs on its book of business, the company has been 

focusing its efforts on several strategies, including reducing defaults by offering home retention solutions, 

such as loan modifications. 

For the Nine Months Ended September 30,

2016 2015

Unpaid

Principal

Balance

Number of

Loans

Unpaid

Principal

Balance

Number of

Loans

(Dollars in Millions)

Home retention solutions:

Modifications $ 10,553 62,979 $ 12,560 75,113

Repayment plans and forbearances completed 631 4,491 667 4,795

Total home retention solutions 11,184 67,470 13,227 79,908

Foreclosure alternatives:

Short sales 1,777 8,577 2,396 11,593

Deeds-in-lieu of foreclosure 702 4,631 895 5,723

Total foreclosure alternatives 2,479 13,208 3,291 17,316

Total loan workouts $ 13,663 80,678 $ 16,518 97,224

Loan workouts as a percentage of single-family guaranty book of business 0.65% 0.63% 0.78% 0.75%

Fannie Mae views foreclosure as a last resort. For homeowners and communities in need, the company 

offers alternatives to foreclosure. In dealing with homeowners in distress, the company first seeks home 

retention solutions, which enable borrowers to stay in their homes, before turning to foreclosure 

alternatives.

• Fannie Mae provided approximately 26,500 loan workouts during the third quarter of 2016

enabling borrowers to avoid foreclosure.

• Fannie Mae completed approximately 21,000 loan modifications during the third quarter of 2016.
Third Quarter 2016 Results 13

FORECLOSURES AND REO

When there is no viable home retention solution or foreclosure alternative that can be applied, the 

company seeks to move to foreclosure expeditiously in an effort to minimize prolonged delinquencies that 

can hurt local home values and destabilize communities.

For the Nine Months Ended

September 30,

2016 2015

Single-family foreclosed properties (number of properties):

Beginning of period inventory of single-family foreclosed properties (REO) 57,253 87,063

Total properties acquired through foreclosure 42,773 61,886

Dispositions of REO (58,053) (87,991)

End of period inventory of single-family foreclosed properties (REO) 41,973 60,958

Carrying value of single-family foreclosed properties (dollars in millions) $ 4,833 $ 7,245

Single-family foreclosure rate 0.33% 0.48%

• Fannie Mae acquired 12,402 single-family REO properties, primarily through foreclosure, in the 

third quarter of 2016, compared with 14,004 in the second quarter of 2016. 

• As of September 30, 2016, the company’s inventory of single-family REO properties was 41,973, 

compared with 45,981 as of June 30, 2016. The carrying value of the company’s single-family 

REO was $4.8 billion as of September 30, 2016.

• The company’s single-family foreclosure rate was 0.33 percent for the nine months ended 

September 30, 2016. This reflects the annualized total number of single-family properties acquired 

through foreclosure or deeds-in-lieu of foreclosure as a percentage of the total number of loans in 

Fannie Mae’s single-family guaranty book of business.

Fannie Mae’s financial statements for the third quarter of 2016 are available in the accompanying Annex; 

however, investors and interested parties should read the company’s Third Quarter 2016 Form 10-Q, 

which was filed today with the Securities and Exchange Commission and is available on Fannie Mae’s 

website, www.fanniemae.com. The company provides further discussion of its financial results and 

condition, credit performance, and other matters in its Third Quarter 2016 Form 10-Q. Additional 

information about the company’s credit performance, the characteristics of its guaranty book of business, 

its foreclosure-prevention efforts, and other measures is contained in the “2016 Third Quarter Credit 

Supplement” at www.fanniemae.com.

# # #

In this release, the company has presented a number of estimates, forecasts, expectations, and other forward-looking statements, including 

statements regarding: its future dividend payments to Treasury; the impact of and future plans with respect to the company’s credit risk 

transfer transactions; the sources of its future net interest income; the company’s future profitability; the factors that will affect the company’s 

future financial results; the factors that will affect the company’s future single-family serious delinquency rates; the future volume of its HARP

refinancings; the future fair value of the company’s financial instruments; the company’s future loss reserves; and the impact of the company’s 

actions to reduce credit losses. These estimates, forecasts, expectations, and statements are forward-looking statements based on the 

company’s current assumptions regarding numerous factors, including future interest rates and home prices, the future performance of its 

loans and the future guaranty fee rates applicable to the loans the company acquires. Actual results, and future projections, could be 

materially different from what is set forth in the forward-looking statements as a result of: home price changes; interest rate changes, 

including negative interest rates; changes in unemployment rates; other macroeconomic and housing market variables; the company’s future 

serious delinquency rates; the company’s future guaranty fee pricing and the impact of that pricing on the company’s guaranty fee revenues 

and competitive environment; government policy; credit availability; changes in borrower behavior, including increases in the number of 

underwater borrowers who strategically default on their mortgage loans; the volume of loans it modifies; the effectiveness of its loss 
Third Quarter 2016 Results 14

mitigation strategies; significant changes in modification and foreclosure activity; the volume and pace of future nonperforming loan sales 

and their impact on the company’s results and serious delinquency rates; the effectiveness of its management of its real estate owned 

inventory and pursuit of contractual remedies; changes in the fair value of its assets and liabilities; future legislative or regulatory 

requirements or changes that have a significant impact on the company’s business, such as the enactment of housing finance reform 

legislation; future updates to the company’s models relating to loss reserves, including the assumptions used by these models; changes in 

generally accepted accounting principles; changes to the company’s accounting policies; whether the company’s counterparties meet their 

obligations in full; effects from activities the company takes to support the mortgage market and help borrowers; the company’s future 

objectives and activities in support of those objectives, including actions the company may take to reach additional underserved creditworthy 

borrowers; actions the company may be required to take by FHFA, in its role as the company’s conservator or as its regulator, such as 

changes in the type of business the company does or the implementation of a single security; limitations on the company’s business imposed 

by FHFA, in its role as the company’s conservator or as its regulator; the conservatorship and its effect on the company’s business; the 

investment by Treasury and its effect on the company’s business; the uncertainty of the company’s future; challenges the company faces in 

retaining and hiring qualified employees; the deteriorated credit performance of many loans in the company’s guaranty book of business; a 

decrease in the company’s credit ratings; defaults by one or more institutional counterparties; resolution or settlement agreements the 

company may enter into with its counterparties; operational control weaknesses; changes in the fiscal and monetary policies of the Federal 

Reserve, including any change in the Federal Reserve’s policy toward the reinvestment of principal payments of mortgage-backed securities 

or any future sales of such securities; 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 company’s 

reliance on and the performance of the company’s servicers; conditions in the foreclosure environment; global political risks; natural 

disasters, environmental disasters, terrorist attacks, pandemics, or other major disruptive events; information security breaches; and many 

other factors, including those discussed in the “Risk Factors” section of and elsewhere in the company’s annual report on Form 10-K for the 

year ended December 31, 2015 and the company’s quarterly report on Form 10-Q for the quarter ended September 30, 2016, and elsewhere 

in this release.

Fannie Mae provides website addresses in its news releases solely for readers’ information. Other content or information appearing on these 

websites is not part of this release. 

Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of Americans. We partner with 

lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home 

buying process easier, while reducing costs and risk. To learn more, visit fanniemae.com and follow us on twitter.com/fanniemae.
Third Quarter 2016 Results 15

ANNEX

FANNIE MAE

(In conservatorship)

Condensed Consolidated Balance Sheets — (Unaudited)

(Dollars in Millions, except share amounts)

As of

September 30, December 31,

2016 2015

ASSETS

Cash and cash equivalents $ 26,559 $ 14,674

Restricted cash (includes $37,856 and $25,865, respectively, related to consolidated trusts) 42,926 30,879

Federal funds sold and securities purchased under agreements to resell or similar arrangements 18,350 27,350

Investments in securities:

Trading, at fair value (includes $1,191 and $135, respectively, pledged as collateral) 40,547 39,908

Available-for-sale, at fair value (includes $110 and $285, respectively, related to consolidated trusts) 9,865 20,230

Total investments in securities 50,412 60,138

Mortgage loans:

Loans held for sale, at lower of cost or fair value 3,405 5,361

Loans held for investment, at amortized cost:

Of Fannie Mae 216,958 233,054

Of consolidated trusts 2,851,304 2,809,180

Total loans held for investment (includes $12,914 and $14,075, respectively, at fair value) 3,068,262 3,042,234

Allowance for loan losses (22,706) (27,951)

Total loans held for investment, net of allowance 3,045,556 3,014,283

Total mortgage loans 3,048,961 3,019,644

Deferred tax assets, net 35,101 37,187

Accrued interest receivable (includes $7,032 and $6,974, respectively, related to consolidated trusts) 7,728 7,726

Acquired property, net 5,041 6,766

Other assets 20,864 17,553

Total assets $ 3,255,942 $ 3,221,917

LIABILITIES AND EQUITY

Liabilities:

Accrued interest payable (includes $8,199 and $8,194, respectively, related to consolidated trusts) $ 9,512 $ 9,794

Debt:

Of Fannie Mae (includes $10,460 and $11,133, respectively, at fair value) 351,568 386,135

Of consolidated trusts (includes $35,453 and $23,609, respectively, at fair value) 2,881,545 2,811,536

Other liabilities (includes $392 and $448, respectively, related to consolidated trusts) 9,141 10,393

Total liabilities 3,251,766 3,217,858

Commitments and contingencies — —

Fannie Mae stockholders’ equity:

Senior preferred stock, 1,000,000 shares issued and outstanding 117,149 117,149

Preferred stock, 700,000,000 shares are authorized—555,374,922 shares issued and outstanding 19,130 19,130

Common stock, no par value, no maximum authorization—1,308,762,703 shares issued and 1,158,082,750 shares

outstanding 687 687

Accumulated deficit (126,312) (126,942)

Accumulated other comprehensive income 923 1,407

Treasury stock, at cost, 150,679,953 shares (7,401) (7,401)

Total Fannie Mae stockholders’ equity 4,176 4,030

Noncontrolling interest — 29

Total equity 4,176 4,059

Total liabilities and equity $ 3,255,942 $ 3,221,917

See Notes to Condensed Consolidated Financial Statements in the Third Quarter 2016 Form 10-Q
Third Quarter 2016 Results 16

FANNIE MAE

(In conservatorship)

Condensed Consolidated Statements of Operations and Comprehensive Income — (Unaudited)

(Dollars and shares in Millions, except per share amounts)

For the Three Months For the Nine Months

Ended September 30, Ended September 30,

2016 2015 2016 2015

Interest income:

Trading securities $ 140 $ 99 $ 388 $ 330

Available-for-sale securities 134 261 507 931

Mortgage loans (includes $23,254 and $24,537, respectively, for the three months ended and

$71,746 and $73,426, respectively, for the nine months ended related to consolidated trusts) 25,611 26,980 78,828 80,706

Other 66 37 160 104

Total interest income 25,951 27,377 79,883 82,071

Interest expense:

Short-term debt 56 37 164 99

Long-term debt (includes $18,814 and $19,891, respectively, for the three months ended and

$58,993 and $59,934, respectively, for the nine months ended related to consolidated trusts) 20,460 21,752 64,229 65,640

Total interest expense 20,516 21,789 64,393 65,739

Net interest income 5,435 5,588 15,490 16,332

Benefit for credit losses 673 1,550 3,458 1,050

Net interest income after benefit for credit losses 6,108 7,138 18,948 17,382

Investment gains, net 467 299 934 1,155

Fair value losses, net (491) (2,589) (4,971) (1,902)

Fee and other income 175 259 552 1,123

Non-interest income (loss) 151 (2,031) (3,485) 376

Administrative expenses:

Salaries and employee benefits 322 317 1,017 999

Professional services 237 219 684 741

Occupancy expenses 45 43 136 129

Other administrative expenses 57 373 190 495

Total administrative expenses 661 952 2,027 2,364

Foreclosed property expense 110 497 507 1,152

Temporary Payroll Tax Cut Continuation Act of 2011 (“TCCA”) fees 465 413 1,358 1,192

Other expenses, net 300 215 818 412

Total expenses 1,536 2,077 4,710 5,120

Income before federal income taxes 4,723 3,030 10,753 12,638

Provision for federal income taxes (1,527) (1,070) (3,475) (4,150)

Net income 3,196 1,960 7,278 8,488

Other comprehensive income (loss):

Changes in unrealized gains on available-for-sale securities, net of reclassification adjustments

and taxes (205) (177) (478) (548)

Other (2) 430 (6) 428

Total other comprehensive income (loss) (207) 253 (484) (120)

Total comprehensive income attributable to Fannie Mae $ 2,989 $ 2,213 $ 6,794 $ 8,368

Net income attributable to Fannie Mae 3,196 1,960 7,278 8,488

Dividends distributed or available for distribution to senior preferred stockholder (2,977) (2,202) (6,765) (8,357)

Net income attributable to common stockholders $ 219 $ (242) $ 513 $ 131

Earnings (loss) per share:

Basic $ 0.04 $ (0.04) 0.09 0.02

Diluted 0.04 (0.04) 0.09 0.02

Weighted-average common shares outstanding:

Basic 5,762 5,762 5,762 5,762

Diluted 5,893 5,762 5,893 5,893

See Notes to Condensed Consolidated Financial Statements in the Third Quarter 2016 Form 10-Q
Third Quarter 2016 Results 17

FANNIE MAE

(In conservatorship)

Condensed Consolidated Statements of Cash Flows— (Unaudited)

(Dollars in Millions)

For the Nine Months

Ended September 30,

2016 2015

Net cash used in operating activities $ (4,749) $ (6,375)

Cash flows provided by investing activities:

Proceeds from maturities and paydowns of trading securities held for investment 1,282 633

Proceeds from sales of trading securities held for investment 1,405 1,028

Proceeds from maturities and paydowns of available-for-sale securities 2,355 3,477

Proceeds from sales of available-for-sale securities 10,481 6,919

Purchases of loans held for investment (168,729) (146,577)

Proceeds from repayments of loans acquired as held for investment of Fannie Mae 18,413 19,145

Proceeds from sales of loans acquired as held for investment of Fannie Mae 3,209 2,315

Proceeds from repayments and sales of loans acquired as held for investment of consolidated trusts 395,561 376,169

Net change in restricted cash (12,047) 2,261

Advances to lenders (96,797) (92,345)

Proceeds from disposition of acquired property and preforeclosure sales 12,478 16,306

Net change in federal funds sold and securities purchased under agreements to resell or similar arrangements 9,000 4,350

Other, net (305) 103

Net cash provided by investing activities 176,306 193,784

Cash flows used in financing activities:

Proceeds from issuance of debt of Fannie Mae 736,239 337,748

Payments to redeem debt of Fannie Mae (772,380) (381,487)

Proceeds from issuance of debt of consolidated trusts 290,146 259,254

Payments to redeem debt of consolidated trusts (406,968) (397,025)

Payments of cash dividends on senior preferred stock to Treasury (6,647) (8,075)

Other, net (62) 68

Net cash used in financing activities (159,672) (189,517)

Net increase (decrease) in cash and cash equivalents 11,885 (2,108)

Cash and cash equivalents at beginning of period 14,674 22,023

Cash and cash equivalents at end of period $ 26,559 $ 19,915

Cash paid during the period for:

Interest $ 78,281 $ 78,584

Income taxes 1,141 470

See Notes to Condensed Consolidated Financial Statements in the Third Quarter 2016 Form 10-Q