Second Quarter 2017 Results 1

Resource Center: 1-800-232-6643 

Contact: Pete Bakel 

202-752-2034

Date: August 3, 2017

Fannie Mae Reports Net Income of $3.2 billion and 

Comprehensive Income of $3.1 billion for Second Quarter 2017

• Fannie Mae paid a $2.8 billion dividend to Treasury in June 2017. Through the second quarter of 2017, the 

company has paid $162.7 billion in dividends to Treasury.

• Fannie Mae was the largest provider of liquidity to the mortgage market in the second quarter of 2017, 

providing approximately $135 billion in mortgage financing that enabled families to buy, refinance, or rent 

homes.

• Fannie Mae has transitioned from a portfolio-focused business to a guaranty-focused business. Income 

from the company’s guaranty business accounted for more than 75 percent of the company’s net interest 

income in the first half of 2017. Fannie Mae expects net interest income from the company’s guaranty 

business to account for an increasing portion of net interest income as its retained mortgage portfolio 

continues to shrink.

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

delivering increased speed, simplicity, and certainty to customers and serving their needs by building a 

company that is efficient, innovative, and continuously improving;

implementing innovations that deliver greater value and reduced risk to lenders, such as the company’s 

Day 1 CertaintyTM initiative with verification tools to expand representation and warranty relief; and 

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

available to families across the country.

• Fannie Mae continues to 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 through its credit risk transfer 

transactions, which transfer a portion of the mortgage credit risk on some of the recently acquired loans in 

its single-family book of business. As of June 30, 2017, $798 billion in single-family mortgages or 

approximately 28 percent of the loans in the company’s single-family conventional guaranty book of 

business, measured by unpaid principal balance, were covered by a credit risk transfer transaction. 

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

$3.1 billion for the second quarter of 2017. The company reported a positive net worth of $3.7 billion as of June 30, 

2017. As a result, the company will pay Treasury a $3.1 billion dividend in September 2017 if the Federal Housing 

Finance Agency (FHFA) declares a dividend in this amount. 

“Our results reflect the strength of our business model and the momentum of our strategy,” said Timothy J. 

Mayopoulos, President and Chief Executive Officer. “We are focused on helping lenders save time and money, 

making the mortgage process easier, and expanding access to credit in ways that make sense. We will continue to 

deliver innovative solutions that help our customers succeed, improve the mortgage process, and create safe and 

sustainable opportunities for families to own or rent a home.”

Second Quarter 2017 Results — Fannie Mae’s net income of $3.2 billion for the second quarter of 2017 compares 

to net income of $2.8 billion for the first quarter of 2017. The increase in net income was due primarily to an 

increase in credit-related income and a shift to investment gains in the second quarter from investment losses in the 

first quarter, partially offset by higher fair value losses on the company’s risk management derivatives.
Second Quarter 2017 Results 2

SUMMARY OF SECOND QUARTER 2017 RESULTS

(Dollars in millions) 2Q17 1Q17 Variance 2Q17 2Q16 Variance

Net interest income $ 5,002 $ 5,346 $ (344) $ 5,002 $ 5,286 $ (284)

Fee and other income 353 249 104 353 174 179

Net revenues 5,355 5,595 (240) 5,355 5,460 (105)

Investment gains (losses), net 385 (9) 394 385 398 (13)

Fair value losses, net (691) (40) (651) (691) (1,667) 976

Administrative expenses (686) (684) (2) (686) (678) (8)

Credit-related income

Benefit for credit losses 1,267 396 871 1,267 1,601 (334)

Foreclosed property expense (34) (217) 183 (34) (63) 29

Total credit-related income 1,233 179 1,054 1,233 1,538 (305)

Temporary Payroll Tax Cut Continuation Act of 2011

(TCCA) fees (518) (503) (15) (518) (453) (65)

Other expenses, net (291) (382) 91 (291) (254) (37)

Income before federal income taxes 4,787 4,156 631 4,787 4,344 443

Provision for federal income taxes (1,587) (1,383) (204) (1,587) (1,398) (189)

Net income $ 3,200 $ 2,773 $ 427 $ 3,200 $ 2,946 $ 254

Total comprehensive income $ 3,117 $ 2,779 $ 338 $ 3,117 $ 2,869 $ 248

Dividends distributed or available for distribution to

senior preferred stockholder $ (3,117) $ (2,779) $ (338) $ (3,117) $ (2,869) $ (248)

Net revenues, which consist of net interest income and fee and other income, were $5.4 billion for the second 

quarter of 2017, compared with $5.6 billion for the first quarter of 2017. 

The company has two primary sources of net interest income: (1) the guaranty fees it receives for managing the 

credit risk on loans underlying Fannie Mae mortgage-backed securities held by third parties; and (2) the difference 

between interest income earned on the assets in its retained mortgage portfolio and the interest expense 

associated with the debt that funds those assets.

Net interest income was $5.0 billion for the second quarter of 2017, compared with $5.3 billion for the first quarter of 

2017. The decrease in net interest income for the second quarter of 2017 was due to lower guaranty fee income as 

a result of lower amortization income, which was driven by lower mortgage prepayments due to lower refinance 

activity. 
Second Quarter 2017 Results 3

In recent periods, 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 shift has been driven by both the guaranty 

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

More than 75 percent of the company’s net interest income in the first half of 2017 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.

__________

* Guaranty fee income reflects the impact of a 10 basis point guaranty fee increase implemented in 2012 pursuant to the 

Temporary Payroll Tax Cut Continuation Act of 2011, the incremental revenue from which is remitted to Treasury and not 

retained by us.

Net fair value losses were $691 million in the second quarter of 2017, compared with $40 million in the first quarter 

of 2017. Net fair value losses for the second quarter of 2017 were due primarily to decreases in the fair value of the 

company’s risk management derivatives due to declines in longer-term swap rates during the second quarter of 

2017 and to decreases in the fair value of the company’s mortgage commitments due to an increase in prices as 

interest rates decreased during the commitment period. The company recognized additional fair value losses in 

second quarter of 2017 on Connecticut Avenue SecuritiesTM debt reported at fair value resulting from tightening 

spreads between Connecticut Avenue Securities debt yields and LIBOR during the period. The estimated fair value 

of the company’s derivatives and securities 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. 
Second Quarter 2017 Results 4

Credit-related income consists of a benefit for credit losses and foreclosed property expense. Credit-related 

income was $1.2 billion in the second quarter of 2017, compared with $179 million in the first quarter of 2017. The 

increase in credit-related income for the second quarter of 2017 was driven primarily by a higher benefit for credit 

losses due primarily to a redesignation of loans from held for investment to held for sale and decreases in actual 

and projected interest rates, as well as a decrease in foreclosed property expense during the quarter.

Investment gains were $385 million in the second quarter of 2017, compared with investment losses of $9 million

in the first quarter of 2017. The shift to investment gains was driven by the sale of available-for-sale securities and 

reperforming loans in the second quarter of 2017.
Second Quarter 2017 Results 5

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 limited and declining capital reserves (which decrease to zero in 2018) 

and the potential for significant volatility in its financial results, the company could experience a net worth deficit in a 

future quarter. If Fannie Mae experiences a net worth deficit in a future quarter, the company will be required to 

draw additional funds from Treasury under the senior preferred stock purchase agreement to avoid being placed 

into receivership. 

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, corporate income tax reform legislation, and 

changes in accounting standards. For example, the current Administration proposes reducing the U.S. corporate 

income tax rate. Under applicable accounting standards, a significant reduction in the U.S. corporate income tax 

rate would require the company to record a substantial reduction in the value of its deferred tax assets in the quarter 

in which the legislation is enacted. Thus, if legislation significantly lowering the U.S. corporate income tax rate is 

enacted, the company expects to incur a significant net loss and net worth deficit for the quarter in which the 

legislation is enacted and could potentially incur a net loss for that year. If the company experiences a net worth 

deficit in a future quarter, it will be required to draw additional funds from Treasury under the senior preferred stock 

purchase agreement in order to avoid being placed into receivership. For additional information on factors that affect 

the company’s financial results, please refer to the company’s quarterly report on Form 10-Q for the quarter ended 

June 30, 2017 (the “Second Quarter 2017 Form 10-Q”).

SUMMARY OF SECOND QUARTER 2017 BUSINESS SEGMENT RESULTS

Fannie Mae’s two reportable business segments—Single-Family and Multifamily—engage in complementary 

business activities in pursuing Fannie Mae’s vision 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 by building a company that is efficient, innovative, 

and continuously improving.
Second Quarter 2017 Results 6

(Dollars in millions) 2Q17 1Q17 Variance 2Q17 2Q16 Variance

Single-Family Segment:

Net interest income $ 4,366 $ 4,756 $ (390) $ 4,366 $ 4,730 $ (364)

Fee and other income 111 76 35 111 78 33

Net revenues 4,477 4,832 (355) 4,477 4,808 (331)

Credit-related income 1,223 184 1,039 1,223 1,535 (312)

Investment gains (losses), net 321 (50) 371 321 280 41

Fair value losses, net (685) (12) (673) (685) (1,679) 994

Administrative expenses (600) (601) 1 (600) (597) (3)

TCCA fees (518) (503) (15) (518) (453) (65)

Other expenses (155) (256) 101 (155) (252) 97

Income before federal income taxes 4,063 3,594 469 4,063 3,642 421

Provision for federal income taxes (1,401) (1,252) (149) (1,401) (1,254) (147)

Net income $ 2,662 $ 2,342 $ 320 $ 2,662 $ 2,388 $ 274

Multifamily Segment:

Net interest income $ 636 $ 590 $ 46 $ 636 $ 556 $ 80

Fee and other income 242 173 69 242 96 146

Net revenues 878 763 115 878 652 226

Credit-related income (expense) 10 (5) 15 10 3 7

Fair value gains (losses), net (6) (28) 22 (6) 12 (18)

Administrative expenses (86) (83) (3) (86) (81) (5)

Other income (expense) (72) (85) 13 (72) 116 (188)

Income before federal income taxes 724 562 162 724 702 22

Provision for federal income taxes (186) (131) (55) (186) (144) (42)

Net income $ 538 $ 431 $ 107 $ 538 $ 558 $ (20)

Single-Family Business

• Single-Family net income was $2.7 billion in the second quarter of 2017, compared with $2.3 billion in the first 

quarter of 2017. Net income for the second quarter of 2017 was driven primarily by net interest income and 

credit-related income.

• Single-Family net interest income was $4.4 billion in the second quarter of 2017, compared with $4.8 billion in 

the first quarter of 2017. The decrease in net interest income for the second quarter of 2017 was due to lower 

guaranty fee income as a result of lower amortization income, which was driven by lower mortgage 

prepayments due to lower refinance activity. 

• Single-Family credit-related income was $1.2 billion in the second quarter of 2017, compared with $184 million

in the first quarter of 2017. The increase in credit-related income in the second quarter of 2017 was driven 

primarily by a higher benefit for credit losses due primarily to a redesignation of loans from held for investment 

to held for sale and decreases in actual and projected interest rates, as well as a decrease in foreclosed 

property expense during the quarter.

• Single-Family net fair value losses were $685 million in the second quarter of 2017, compared with $12 million

in the first quarter of 2017. Net fair value losses for the second quarter of 2017 were due primarily to decreases 

in the fair value of the company’s risk management derivatives due to declines in longer-term swap rates during 

the second quarter of 2017 and to decreases in the fair value of the company’s mortgage commitments due to 

an increase in prices as interest rates decreased during the commitment period. The company recognized 

additional fair value losses in the second quarter of 2017 on Connecticut Avenue SecuritiesTM debt reported at 

fair value resulting from tightening spreads between Connecticut Avenue Securities debt yields and LIBOR 
Second Quarter 2017 Results 7

during the period. The estimated fair value of the company’s derivatives and securities 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. 

Multifamily Business

• Multifamily net income was $538 million in the second quarter of 2017, compared with $431 million in the first 

quarter of 2017. Net income in the second quarter of 2017 was driven primarily by net interest income and fee 

and other income. 

• Multifamily net interest income was $636 million in the second quarter of 2017, compared with $590 million in 

the first quarter of 2017. The increase in net interest income was due primarily to higher guaranty fee income as 

the company’s multifamily guaranty book of business grew and loans with higher guaranty fees became a larger 

part of its book, while loans with lower guaranty fees continued to liquidate.

• Multifamily fee and other income was $242 million in the second quarter of 2017, compared with $173 million in 

the first quarter of 2017. Fee and other income in the second quarter of 2017 increased primarily due to higher 

yield maintenance revenue driven by an increase in prepayment volumes. 

• Multifamily new business and other rental volume totaled $30.6 billion for the first half of 2017, of which 

approximately 52 percent counted toward FHFA’ s 2017 multifamily volume cap. 

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.

ABOUT FANNIE MAE’S CONSERVATORSHIP AND AGREEMENTS WITH TREASURY

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

commitment under a senior preferred stock purchase agreement to provide funding to Fannie Mae under certain 

circumstances if the company has a net worth deficit. Pursuant to this agreement and the senior preferred stock the 

company issued to Treasury in 2008, the Director of FHFA has declared and directed Fannie Mae to pay dividends 

to Treasury on a quarterly basis since the company entered into conservatorship in 2008. 

The chart below shows the funds the company has drawn from Treasury pursuant to the senior preferred stock 

purchase agreement, as well as the dividend payments the company has made to Treasury on the senior preferred 

stock, since entering into conservatorship.
Second Quarter 2017 Results 8

__________

(1) Under the terms of the senior preferred stock purchase agreement, dividend payments the company makes to Treasury do 

not offset the company’s prior draws of funds from Treasury, and the company is not permitted to pay down draws it has 

made under the agreement except in limited circumstances. Accordingly, the current aggregate liquidation preference of the 

senior preferred stock is $117.1 billion, due to the initial $1.0 billion liquidation preference of the senior preferred stock (for 

which the company did not receive cash proceeds) and the $116.1 billion the company has drawn from Treasury. Amounts 

may not sum due to rounding.

(2) Treasury draws are shown in the period for which requested, not when the funds were received by the company. Fannie 

Mae has not requested a draw for any period since 2012.

Fannie Mae will pay Treasury a dividend of $3.1 billion for the third quarter of 2017 by September 30, 2017 if FHFA

declares a dividend in this amount before September 30, 2017. With such a dividend payment, Fannie Mae will 

have paid a total of $165.8 billion in dividends to Treasury. The dividend amount is based on the company’s net 

worth of $3.7 billion as of June 30, 2017, less the current capital reserve amount of $600 million. 

The dividend provisions of the senior preferred stock provide for quarterly dividends consisting of 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 $600 million for each quarter of 2017 and will decrease to 

zero in 2018. To the extent that these quarterly dividends are not paid, they will accumulate and be added to the 

liquidation preference of the senior preferred stock. This would not affect the amount of available funding from 

Treasury under the senior preferred stock purchase agreement.

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, 2016 (the “2016 Form 

10-K”). 
Second Quarter 2017 Results 9

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 some of the recently acquired loans in its 

single-family book of business in order to reduce the economic risk to the company and taxpayers of future 

borrower defaults. Fannie Mae’s primary method of achieving this goal has been through the issuance of its 

Connecticut Avenue SecuritiesTM (CAS) and its Credit Insurance Risk TransferTM (CIRTTM) transactions. In these 

transactions, the company transfers to investors a portion of the mortgage credit risk associated with losses on a 

reference pool of mortgage loans and in exchange pays investors a premium that effectively reduces the guaranty 

fee income the company retains on the loans.

As of June 30, 2017, $798 billion in outstanding unpaid principal balance of the company’s single-family loans, or 

approximately 28 percent of the loans in its single-family conventional guaranty book of business measured by 

unpaid principal balance, were included in a reference pool for a credit risk transfer transaction. During the first half 

of 2017, the company transferred a portion of the mortgage credit risk on single-family mortgages with unpaid 

principal balance of $180 billion at the time of the transactions.

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. 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.

The chart below shows as of the dates specified the total outstanding unpaid principal balance of Fannie Mae’s 

single-family loans, as well as the percentage of the company’s total single-family conventional guaranty book of 

business measured by unpaid principal balance, that were included in a reference pool for a credit risk transfer 

transaction. The risk in force of these transactions, which refers to the maximum amount of losses that could be 

absorbed by credit risk transfer investors, was approximately $25 billion as of June 30, 2017.

CREDIT QUALITY

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

responsible credit standards. Since 2009, 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 reflect the risks associated with loans the 

company acquires or guarantees. Single-family conventional loans acquired by Fannie Mae in the second quarter of 

2017 had a weighted average borrower FICO credit score at origination of 745 and a weighted average original 

loan-to-value ratio of 76 percent.

As of June 30, 2017, 89 percent of the company’s single-family conventional guaranty book of business consisted of 

loans acquired since 2009. 
Second Quarter 2017 Results 10

__________

* Fannie Mae has acquired HARP loans and other Refi Plus loans under its Refi PlusTM initiative since 2009. Fannie Mae’s 

Refi Plus initiative offers refinancing flexibility to eligible borrowers who are current on their loans and whose loans are 

owned or guaranteed by the company and meet certain additional criteria. HARP loans, which have loan-to-value (“LTV”) 

ratios at origination greater than 80 percent, refers to loans the company has acquired pursuant to the Home Affordable 

Refinance Program® (“HARP®”). Other Refi Plus loans, which have LTV ratios at origination of 80 percent or less, refers to 

loans the company has acquired under its Refi Plus initiative other than HARP loans. Loans the company acquires under 

Refi Plus and HARP are refinancings of loans that were originated prior to June 2009.

The single-family serious delinquency rate for Fannie Mae’s book of business has decreased for 29 

consecutive quarters since the first quarter of 2010 and was 1.01 percent as of June 30, 2017, compared with 5.47 

percent as of March 31, 2010. 

Fannie Mae expects its single-family serious delinquency rate to continue to decline; however, as the single-family 

serious delinquency rate has already declined significantly over the past several years, the company expects more 

modest declines in this rate in the future. The company’s single-family serious delinquency rate and the period of 

time that loans remain seriously delinquent continue to be negatively affected by the length of time required to 

complete a foreclosure in some states. Other factors that affect the company’s single-family serious delinquency 

rate include the pace of loan modifications, the timing and volume of nonperforming loan sales we make, servicer 

performance, and changes in home prices, unemployment levels and other macroeconomic conditions.
Second Quarter 2017 Results 11

Combined 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 $20.7 billion as of June 30, 2017 from $22.5 billion as of March 31, 2017. The decrease in the 

company’s combined loss reserves for the second quarter of 2017 was driven primarily by redesignations of loans 

from held for investment to held for sale, liquidations, and an increase in actual and forecasted home prices. The 

company’s loss reserves have declined in recent years and are expected to decline further in 2017. 

PROVIDING LIQUIDITY AND SUPPORT TO THE MARKET

Liquidity

Fannie Mae provided approximately $135 billion in liquidity to the mortgage market in the second quarter of 2017, 

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

• Approximately 316,000 home purchases 

• Approximately 222,000 mortgage refinancings 

• Approximately 162,000 units of multifamily housing financed
Second Quarter 2017 Results 12

The company was the largest issuer of single-family mortgage-related securities in the secondary market in the 

second quarter of 2017. The company’s estimated market share of new single-family mortgage-related securities 

issuances was 39 percent in both the second and first quarter of 2017, compared with 38 percent in the second 

quarter of 2016. 

The chart below shows the company’s market share of single-family mortgage-related securities issuances in the 

second quarter of 2017 compared with that of its primary competitors.

Fannie Mae also remained a continuous source of liquidity in the multifamily market in the second quarter of 2017. 

As of March 31, 2017 (the latest date for which information is available), the company owned or guaranteed 

approximately 20 percent of the outstanding debt on multifamily properties.
Second Quarter 2017 Results 13

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 24,000 loans in the second quarter of 2017. Refinancings 

delivered to Fannie Mae through Refi Plus in the second quarter of 2017 reduced borrowers’ monthly mortgage 

payments by an average of $176.

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 Six Months Ended June 30,

2017 2016

Unpaid

Principal

Balance

Number of

Loans

Unpaid

Principal

Balance

Number of

Loans

(Dollars in millions)

Home retention solutions:

Modifications $ 6,878 41,467 $ 7,003 42,177

Repayment plans and forbearances completed 524 3,703 395 2,825

Total home retention solutions 7,402 45,170 7,398 45,002

Foreclosure alternatives:

Short sales 881 4,280 1,214 5,887

Deeds-in-lieu of foreclosure 346 2,285 502 3,317

Total foreclosure alternatives 1,227 6,565 1,716 9,204

Total loan workouts $ 8,629 51,735 $ 9,114 54,206

Loan workouts as a percentage of single-family guaranty book of

business 0.60% 0.60% 0.65% 0.63%

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 52,000 loan workouts during the first six months of 2017 enabling 

borrowers to avoid foreclosure.

• Fannie Mae completed approximately 41,500 loan modifications during the first six months of 2017.
Second Quarter 2017 Results 14

FORECLOSURES AND REAL ESTATE OWNED (REO) PROPERTIES

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 Six Months Ended June 30,

2017 2016

Single-family foreclosed properties (number of properties):

Beginning of period inventory of single-family foreclosed properties (REO) 38,093 57,253

Total properties acquired through foreclosure 21,074 30,371

Dispositions of REO (27,796) (41,643)

End of period inventory of single-family foreclosed properties (REO) 31,371 45,981

Carrying value of single-family foreclosed properties (dollars in millions) $ 3,545 $ 5,301

Single-family foreclosure rate 0.25% 0.35%

• Fannie Mae acquired 21,074 single-family REO properties, primarily through foreclosure, in the first six 

months of 2017, compared with 30,371 in the first six months of 2016. 

• As of June 30, 2017, the company’s inventory of single-family REO properties was 31,371, compared with 

45,981 as of June 30, 2016. The carrying value of the company’s single-family REO was $3.5 billion as of 

June 30, 2017.

• The company’s single-family foreclosure rate was 0.25 percent for the six months ended June 30, 2017. 

This reflects the annualized total number of single-family properties acquired through foreclosure or deedsin-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 second quarter of 2017 are available in the accompanying Annex; 

however, investors and interested parties should read the company’s Second Quarter 2017 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 Second Quarter 2017 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 “2017 Second 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; its work to help customers, improve the 

mortgage process, and create housing opportunities for families; 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 company’s future serious delinquency rates and the factors that will affect 

the company’s future single-family serious delinquency rates; 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. 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; 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; the volume of loans it modifies; the effectiveness of its loss mitigation strategies; significant 

changes in modification and foreclosure activity; the volume and pace of future nonperforming and reperforming 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 
Second Quarter 2017 Results 15

finance reform legislation or corporate income tax reform legislation; actions by FHFA, Treasury, the Department of Housing and 

Urban Development or other regulators that affect the company’s business; the size, composition and quality of the company’s 

guaranty book of business and retained mortgage portfolio; the company’s market share; the life of the loans in the company’s 

guaranty book of business; 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 the Single Security Initiative for Fannie Mae and Freddie Mac; 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 executives and other 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 implementation of 

the Federal Reserve’s balance sheet normalization program; 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 or threats; and many other factors, including those discussed in the “Risk 

Factors” and “Forward-Looking Statements” sections of and elsewhere in the company’s annual report on Form 10-K for the year 

ended December 31, 2016 and the company’s quarterly report on Form 10-Q for the quarter ended June 30, 2017, 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.
Second Quarter 2017 Results 16

ANNEX

FANNIE MAE

(In conservatorship)

Condensed Consolidated Balance Sheets — (Unaudited)

(Dollars in millions, except share amounts)

As of

June 30, December 31,

2017 2016

ASSETS

Cash and cash equivalents $ 16,904 $ 25,224

Restricted cash (includes $26,279 and $31,536, related to consolidated trusts) 30,999 36,953

Federal funds sold and securities purchased under agreements to resell or similar arrangements 29,220 30,415

Investments in securities:

Trading, at fair value (includes $1,007 and $1,277, respectively, pledged as collateral ) 39,274 40,562

Available-for-sale, at fair value (includes $98 and $107, respectively, related to consolidated trusts) 6,408 8,363

Total investments in securities 45,682 48,925

Mortgage loans:

Loans held for sale, at lower of cost or fair value 5,322 2,899

Loans held for investment, at amortized cost:

Of Fannie Mae 180,318 204,318

Of consolidated trusts 2,960,174 2,896,001

Total loans held for investment (includes $11,406 and $12,057, respectively, at fair value) 3,140,492 3,100,319

Allowance for loan losses (20,399) (23,465)

Total loans held for investment, net of allowance 3,120,093 3,076,854

Total mortgage loans 3,125,415 3,079,753

Deferred tax assets, net 31,402 33,530

Accrued interest receivable (includes $7,223 and $7,064, respectively, related to consolidated trusts) 7,840 7,737

Acquired property, net 3,696 4,489

Other assets 18,072 20,942

Total assets $ 3,309,230 $ 3,287,968

LIABILITIES AND EQUITY

Liabilities:

Accrued interest payable (includes $8,389 and $8,285, respectively, related to consolidated trusts) $ 9,473 $ 9,431

Debt:

Of Fannie Mae (includes $9,008 and $9,582, respectively, at fair value) 303,120 327,097

Of consolidated trusts (includes $34,866 and $36,524, respectively, at fair value) 2,984,547 2,935,219

Other liabilities (includes $340 and $390, respectively, related to consolidated trusts) 8,373 10,150

Total liabilities 3,305,513 3,281,897

Commitments and contingencies — —

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, 1,158,087,567 and

1,158,082,750 shares outstanding, respectively 687 687

Accumulated deficit (126,531) (124,253)

Accumulated other comprehensive income 682 759

Treasury stock, at cost, 150,675,136 and 150,679,953 shares, respectively (7,400) (7,401)

Total equity 3,717 6,071

Total liabilities and equity $ 3,309,230 $ 3,287,968

See Notes to Condensed Consolidated Financial Statements in the Second Quarter 2017 Form 10-Q
Second Quarter 2017 Results 17

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

Ended June 30,

For the Six Months

Ended June 30,

2017 2016 2017 2016

Interest income:

Trading securities $ 176 $ 128 $ 318 $ 248

Available-for-sale securities 91 170 192 373

Mortgage loans (includes $25,033 and $23,866, respectively, for the three months

ended and $49,987 and $48,492, respectively, for the six months ended related to

consolidated trusts) 27,011 26,256 54,058 53,217

Other 115 46 209 94

Total interest income 27,393 26,600 54,777 53,932

Interest expense:

Short-term debt 57 57 101 108

Long-term debt (includes $20,705 and $19,521, respectively, for the three months

ended and $41,013 and $40,179, respectively, for the six months ended related to

consolidated trusts) 22,334 21,257 44,328 43,769

Total interest expense 22,391 21,314 44,429 43,877

Net interest income 5,002 5,286 10,348 10,055

Benefit for credit losses 1,267 1,601 1,663 2,785

Net interest income after benefit for credit losses 6,269 6,887 12,011 12,840

Investment gains, net 385 398 376 467

Fair value losses, net (691) (1,667) (731) (4,480)

Fee and other income 353 174 602 377

Non-interest income (loss) 47 (1,095) 247 (3,636)

Administrative expenses:

Salaries and employee benefits 332 331 676 695

Professional services 234 232 463 447

Occupancy expenses 47 46 93 91

Other administrative expenses 73 69 138 133

Total administrative expenses 686 678 1,370 1,366

Foreclosed property expense 34 63 251 397

Temporary Payroll Tax Cut Continuation Act of 2011 (“TCCA”) fees 518 453 1,021 893

Other expenses, net 291 254 673 518

Total expenses 1,529 1,448 3,315 3,174

Income before federal income taxes 4,787 4,344 8,943 6,030

Provision for federal income taxes (1,587) (1,398) (2,970) (1,948)

Net income 3,200 2,946 5,973 4,082

Other comprehensive loss:

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

adjustments and taxes (81) (75) (73) (273)

Other (2) (2) (4) (4)

Total other comprehensive loss (83) (77) (77) (277)

Total comprehensive income $ 3,117 $ 2,869 $ 5,896 $ 3,805

Net income $ 3,200 $ 2,946 5,973 4,082

Dividends distributed or available for distribution to senior preferred stockholder (3,117) (2,869) (5,896) (3,788)

Net income (loss) attributable to common stockholders $ 83 $ 77 $ 77 $ 294

Earnings per share:

Basic $ 0.01 $ 0.01 0.01 0.05

Diluted 0.01 0.01 0.01 0.05

Weighted-average common shares outstanding:

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

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

See Notes to Condensed Consolidated Financial Statements in the Second Quarter 2017 Form 10-Q
Second Quarter 2017 Results 18

FANNIE MAE

(In conservatorship)

Condensed Consolidated Statements of Cash Flows— (Unaudited)

(Dollars in millions)

For the Six Months

Ended June 30,

2017 2016

Net cash provided by (used in) operating activities $ 262 $ (3,982)

Cash flows provided by investing activities:

Proceeds from maturities and paydowns of trading securities held for investment 937 1,109

Proceeds from sales of trading securities held for investment 124 1,313

Proceeds from maturities and paydowns of available-for-sale securities 1,214 1,778

Proceeds from sales of available-for-sale securities 922 7,584

Purchases of loans held for investment (90,180) (97,024)

Proceeds from repayments of loans acquired as held for investment of Fannie Mae 12,835 11,804

Proceeds from sales of loans acquired as held for investment of Fannie Mae 2,361 1,964

Proceeds from repayments and sales of loans acquired as held for investment of consolidated

trusts 208,576 238,188

Net change in restricted cash 5,954 (6,818)

Advances to lenders (57,533) (57,956)

Proceeds from disposition of acquired property and preforeclosure sales 6,874 8,557

Net change in federal funds sold and securities purchased under agreements to resell or similar

arrangements 1,195 5,025

Other, net (208) (661)

Net cash provided by investing activities 93,071 114,863

Cash flows used in financing activities:

Proceeds from issuance of debt of Fannie Mae 489,301 432,025

Payments to redeem debt of Fannie Mae (514,228) (456,586)

Proceeds from issuance of debt of consolidated trusts 181,764 171,004

Payments to redeem debt of consolidated trusts (250,251) (244,631)

Payments of cash dividends on senior preferred stock to Treasury (8,250) (3,778)

Other, net 11 30

Net cash used in financing activities (101,653) (101,936)

Net increase (decrease) in cash and cash equivalents (8,320) 8,945

Cash and cash equivalents at beginning of period 25,224 14,674

Cash and cash equivalents at end of period $ 16,904 $ 23,619

Cash paid during the period for:

Interest $ 56,207 $ 52,354

Income taxes 1,070 610

See Notes to Condensed Consolidated Financial Statements in the Second Quarter 2017 Form 10-Q