Fourth Quarter and Full Year 2018 Results 1

Contact: Pete Bakel Resource Center: 1-800-732-6643

202-752-2034 

Date: February 14, 2019

Fannie Mae Reports Net Income of $16.0 Billion and

Comprehensive Income of $15.6 Billion for 2018

Fannie Mae Reports Net Income of $3.2 Billion and

Comprehensive Income of $3.2 Billion for Fourth Quarter 2018

Fourth Quarter and Full Year 2018 Results

“We enjoyed a solid quarter 

based on a strong credit 

environment in a business 

that is driven by guarantee 

fee income rather than the 

retained mortgage 

investment portfolio, which 

continues to decline.

“The core of our business is 

helping our customers 

provide America’s 

homeowners and renters 

with the best possible 

experience. Customers are 

at the core of everything we 

do.

“Looking ahead, we will 

continue working with our 

customers and other 

partners on critical 

challenges, such as 

increasing the supply of 

affordable housing and 

driving digital transformation 

of the mortgage industry.”

Hugh R. Frater, 

Chief Executive Officer

Fannie Mae reported 2018 net income of $16.0 billion and fourth quarter 2018

net income of $3.2 billion, reflecting the strength of the company’s underlying

business fundamentals.

Fannie Mae expects to pay a $3.2 billion dividend to Treasury by March 31,

2019. Through the fourth quarter of 2018, the company has paid $175.8 billion

in dividends to Treasury.

Business Highlights

Fannie Mae provided approximately $512 billion in liquidity to the mortgage

market in 2018 and was the largest issuer of single-family mortgage-related

securities in the secondary market for the full year and fourth quarter of 2018.

More than 56% of the single-family mortgage loans the company acquired

were affordable to families earning at or below 120% of the area median

income, providing support for both affordable and workforce housing. The

company’s estimated market share of new single-family mortgage-related

securities issuances was 39% for full year 2018 and 37% for the fourth quarter

of 2018.

Fannie Mae completed its first Connecticut Avenue Securities® (CAS) offering 

under a Real Estate Mortgage Investment Conduit (CAS REMICTM) structure 

in November 2018. This new structure achieves insurance accounting 

treatment for CAS, which aligns the timing of the recognition of CAS benefits 

with credit losses. The structure also is designed to promote the continued 

growth of the market by expanding the potential investor base for these 

securities and limiting investor exposure to Fannie Mae counterparty risk, 

without disrupting the To-Be-Announced (TBA) MBS market. 

Fannie Mae has transferred a portion of the credit risk on single-family

mortgages with an unpaid principal balance of more than $1.5 trillion since

2013, measured at the time of the transactions, including approximately

$354.0 billion in 2018. As of December 31, 2018, $1.1 trillion in single-family

mortgages or approximately 39% 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.

Fannie Mae provided $65.4 billion in multifamily financing in 2018, which

supported 777,000 units of multifamily housing. More than 90% of the

multifamily units the company financed were affordable to families earning at

or below 120% of the area median income, providing support for both

affordable and workforce housing. Fannie Mae was one of the largest issuers

of Green Bonds in the world in 2018, issuing more than $20 billion in Green

MBS during the year and increasing the multifamily green financing book of

business to more than $50 billion.

Fannie Mae continued to share credit risk with lenders on nearly 100% of the 

company’s new multifamily business volume through its Delegated 

Underwriting and Servicing (DUS®) program. To complement the company’s 

lender loss sharing program, the company completed its third and fourth 

multifamily Credit Insurance Risk TransferTM (CIRTTM) transactions in 2018, 

which covered multifamily loans with an unpaid principal balance of 

approximately $22.0 billion. 
Fourth Quarter and Full Year 2018 Results 2

WASHINGTON, DC — Fannie Mae (FNMA/OTC) reported annual net income of $16.0 billion and annual 

comprehensive income of $15.6 billion. For the fourth quarter of 2018, Fannie Mae reported net income and 

comprehensive income of $3.2 billion. The company reported a net worth of $6.2 billion as of December 31, 2018. 

As a result, Fannie Mae expects to pay a $3.2 billion dividend to Treasury by March 31, 2019. 

SUMMARY OF FANNIE MAE’S FINANCIAL PERFORMANCE

Consolidated Results

(Dollars in billions)

Fannie Mae’s pre-tax income was $20.1 billion in 2018, compared with $18.4 billion in 2017. The increase in the 

company’s pre-tax income in 2018 compared with 2017 was driven primarily by a shift to fair value gains from fair 

value losses and an increase in credit-related income, partially offset by a decrease in fee and other income.

Fannie Mae’s net income of $16.0 billion for 2018 compares with net income of $2.5 billion for 2017. The increase in 

net income for 2018 compared with 2017 was driven primarily by the absence of a $9.9 billion one-time charge for 

federal income taxes recorded in 2017 and the lower corporate tax rate in effect as a result of the Tax Cuts and 

Jobs Act of 2017.
Fourth Quarter and Full Year 2018 Results 3

Summary of Financial Results

(Dollars in millions) 4Q18 3Q18 Variance 2018 2017 Variance

Net interest income $ 4,973 $ 5,369 $ (396) $ 20,951 $ 20,733 $ 218

Fee and other income 149 271 (122) 979 2,227 (1,248)

Net revenues 5,122 5,640 (518) 21,930 22,960 (1,030)

Investment gains, net 259 166 93 952 1,522 (570)

Fair value gains (losses), net (539) 386 (925) 1,121 (1,211) 2,332

Administrative expenses (814) (740) (74) (3,059) (2,737) (322)

Credit-related income

Benefit for credit losses 1,080 716 364 3,309 2,041 1,268

Foreclosed property expense (157) (159) 2 (617) (521) (96)

Total credit-related income 923 557 366 2,692 1,520 1,172

Temporary Payroll Tax Cut Continuation Act of 2011

(“TCCA”) fees (586) (576) (10) (2,284) (2,096) (188)

Other expenses, net (307) (377) 70 (1,253) (1,511) 258

Income before federal income taxes 4,058 5,056 (998) 20,099 18,447 1,652

Provision for federal income taxes (828) (1,045) 217 (4,140) (15,984) 11,844

Net income $ 3,230 $ 4,011 $ (781) $ 15,959 $ 2,463 $ 13,496

Total comprehensive income $ 3,239 $ 3,975 $ (736) $ 15,611 $ 2,257 $ 13,354

Net revenues, which consist of net interest income and fee and other income, were $5.1 billion for the fourth 

quarter of 2018, compared with $5.6 billion for the third quarter of 2018. For the year, net revenues were $21.9 

billion, compared with $23.0 billion in 2017. 

Net interest income was $5.0 billion for the fourth quarter of 2018, compared with $5.4 billion for the third quarter of 

2018. For 2018, net interest income was $21.0 billion, compared with $20.7 billion for 2017. The decrease in net 

interest income for the fourth quarter was due primarily to lower amortization income driven by lower mortgage 

prepayment activity, partially offset by higher base guaranty fee income. The increase in net interest income for the 

year was due primarily to an increase in the size of the company’s guaranty book of business and loans with higher 

base guaranty fees compared with 2017, partially offset by lower amortization income.

Fannie Mae’s net interest income is derived from two primary sources: guaranty fees the company receives for 

managing the credit risk on loans underlying Fannie Mae MBS held by third parties; and the difference between 

interest income earned on the assets in the company’s retained mortgage portfolio and its other investments 

portfolio and the interest expense associated with the debt that funds those assets. More than 75 percent of Fannie 
Fourth Quarter and Full Year 2018 Results 4

Mae’s 2018 net interest income was derived from the loans underlying Fannie Mae MBS in consolidated trusts, 

which primarily generate income through guaranty fees. 

Net fair value losses were $539 million in the fourth quarter of 2018, compared with $386 million in gains in the 

third quarter of 2018. Net fair value losses in the fourth quarter of 2018 were due primarily to decreases in interest 

rates at the end of the fourth quarter of 2018. For the year, net fair value gains were $1.1 billion, compared with $1.2 

billion in losses in 2017. Net fair value gains for 2018 were due primarily to increasing interest rates in the first three 

quarters of the year and widening spreads between CAS yields and LIBOR during the year resulting in fair value 

gains. The estimated fair value of the company’s derivatives, trading securities, and other financial instruments 

carried at fair value 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 (expense) consists of a benefit or provision for credit losses and foreclosed property 

expense. Credit-related income was $923 million in the fourth quarter of 2018, compared with $557 million in the 

third quarter of 2018. The increase in credit-related income in the fourth quarter was driven primarily by lower 

projected future interest rates and higher forecasted home prices. Credit-related income was $2.7 billion in 2018, 

compared with $1.5 billion in 2017. The increase in credit-related income for the year was driven primarily by the 

redesignation of certain reperforming and nonperforming mortgage loans from held-for-investment to held-for-sale 

and higher actual home prices.
Fourth Quarter and Full Year 2018 Results 5

PROVIDING LIQUIDITY AND SUPPORT TO THE MARKET

Fannie Mae provided approximately $512 billion in liquidity to the mortgage market in 2018, including approximately 

$122.5 billion in liquidity in the fourth quarter of 2018. Through its purchases and guarantees of mortgage loans in 

2018, Fannie Mae acquired approximately 1.9 million mortgage loans.

Fannie Mae also financed approximately 777,000 units of multifamily housing in 2018, including approximately 

229,000 in the fourth quarter of 2018.
Fourth Quarter and Full Year 2018 Results 6

SUMMARY OF FOURTH QUARTER AND FULL YEAR 2018 BUSINESS SEGMENT RESULTS

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

business activities 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. 

Fannie Mae is pursuing four strategic objectives: advancing a sustainable and reliable business model with low risk 

to the housing finance system and taxpayers; providing great service to its customers and partners, enabling them 

to serve the needs of American households more effectively; supporting and sustainably increasing access to credit 

and affordable housing; and building a simple, efficient, innovative, and continuously improving company. 

Business Segments

Single-Family Business

(Dollars in millions) 4Q18 3Q18 Variance 2018 2017 Variance

Single-Family Segment:

Net interest income $ 4,208 $ 4,670 $ (462) $18,162 $18,212 $ (50)

Fee and other income 144 79 65 450 1,378 (928)

Net revenues 4,352 4,749 (397) 18,612 19,590 (978)

Investment gains, net 210 146 64 850 1,352 (502)

Fair value gains (losses), net (519) 417 (936) 1,210 (1,188) 2,398

Administrative expenses (703) (636) (67) (2,631) (2,391) (240)

Credit-related income 934 582 352 2,709 1,550 1,159

TCCA fees (586) (576) (10) (2,284) (2,096) (188)

Other expenses, net (328) (282) (46) (1,012) (1,004) (8)

Income before federal income taxes 3,360 4,400 (1,040) 17,454 15,813 1,641

Provision for federal income taxes (710) (938) 228 (3,708) (14,301) 10,593

Net income $ 2,650 $ 3,462 $ (812) $13,746 $ 1,512 $ 12,234

Financial Results

• Single-Family net income was $2.7 billion in the fourth quarter of 2018, compared with $3.5 billion in the 

third quarter of 2018. The decrease in net income in the fourth quarter was driven primarily by: 

fair value losses in the fourth quarter compared to fair value gains in the third quarter, driven by a 

decrease in interest rates in the fourth quarter, and 

lower net interest income driven primarily by lower amortization income in the fourth quarter, resulting 

from decreased mortgage prepayment rates. 

For the year, single-family net income was $13.7 billion, compared with $1.5 billion in 2017. The increase in 

single-family net income in 2018 was driven primarily by the absence of a one-time charge for federal 

income taxes recorded in 2017 that resulted from the enactment of the Tax Cuts and Jobs Act of 2017.

Business Highlights

• The single-family guaranty book of business continued to grow in the fourth quarter of 2018, while the 

average charged guaranty fee, net of Temporary Payroll Tax Cut Continuation Act of 2011 (TCCA) fees, on 

the single-family guaranty book in the fourth quarter increased slightly from the prior quarter to 43.0 basis 

points.

• Fannie Mae’s single-family business provided $446.6 billion in liquidity to the mortgage market in 2018. 

Through its purchases and guarantees of mortgage loans in 2018, the company acquired approximately 1.9 

million mortgage loans that comprised 1.2 million home purchases and 713,000 refinancings.
Fourth Quarter and Full Year 2018 Results 7

• The single-family serious delinquency rate decreased from 0.82% as of September 30, 2018 to 0.76% as of 

December 31, 2018, driven by improved loan payment performance and nonperforming loan sales.

Multifamily Business

(Dollars in millions) 4Q18 3Q18 Variance 2018 2017 Variance

Multifamily Segment:

Net interest income $ 765 $ 699 $ 66 $ 2,789 $ 2,521 $ 268

Fee and other income 5 192 (187) 529 849 (320)

Net revenues 770 891 (121) 3,318 3,370 (52)

Fair value losses, net (20) (31) 11 (89) (23) (66)

Administrative expenses (111) (104) (7) (428) (346) (82)

Credit-related income (expense) (11) (25) 14 (17) (30) 13

Other income (expense) 70 (75) 145 (139) (337) 198

Income before federal income taxes 698 656 42 2,645 2,634 11

Provision for federal income taxes (118) (107) (11) (432) (1,683) 1,251

Net income $ 580 $ 549 $ 31 $ 2,213 $ 951 $ 1,262

Financial Results

• Multifamily net income was $580 million in the fourth quarter of 2018, compared with $549 million in the 

third quarter of 2018. The increase in net income for the fourth quarter of 2018 was driven partially by an 

increase in guaranty fee revenue as the multifamily book grew during the quarter. 

• Multifamily net income was $2.2 billion in 2018, compared with $951 million in 2017. The increase in 

multifamily net income in 2018 was driven primarily by the absence of a one-time charge for federal income 

taxes recorded in 2017 that resulted from the enactment of the Tax Cuts and Jobs Act of 2017. The 

increase also was driven by an increase in guaranty fee revenue as the multifamily book grew during the 

year. This was partially offset by a decrease in fee and other income driven by lower yield maintenance 

revenue as a result of rising interest rates.

Business Highlights

• The multifamily guaranty book of business continued to grow in the fourth quarter of 2018, reaching over 

$300 billion, while the average charged guaranty fee on the multifamily book decreased slightly to 75.4

basis points as of December 31, 2018.

• New multifamily business volume was $21.4 billion in the fourth quarter of 2018, an increase from $18.2 

billion in the third quarter. Multifamily new business volume totaled $65.4 billion for 2018, of which 

approximately 46% counted toward the Federal Housing Finance Agency’s (FHFA) 2018 multifamily volume 

cap.

• Fannie Mae’s multifamily financing in 2018 supported 777,000 units of multifamily housing. More than 90% 

of the multifamily units the company financed were affordable to families earning at or below 120% of the 

area median income, providing support for both affordable and workforce housing. 

• The multifamily serious delinquency rate decreased from 0.07% as of September 30, 2018 to 0.06% as of 

December 31, 2018, driven primarily by a decrease in hurricane-impacted loans with interim forbearances.
Fourth Quarter and Full Year 2018 Results 8

CREDIT RISK TRANSFER TRANSACTIONS

Fannie Mae continues to innovate and improve its credit risk transfer programs, expanding the types of loans 

covered and promoting the continued growth of the credit risk transfer market. For single-family mortgages, Fannie 

Mae has relied principally on two types of transactions to transfer credit risk: its Connecticut Avenue Securities®

(CAS) transactions and its Credit Insurance Risk Transfer (CIRT) transactions. In these transactions, the company 

transfers to investors a portion of the 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. 

In November 2018, Fannie Mae completed its first CAS offering under a new Real Estate Mortgage Investment 

Conduit (REMIC) structure. This new structure achieves insurance accounting treatment for CAS, which aligns the 

timing of the recognition of CAS benefits with credit losses. The structure also is designed to promote the continued 

growth of the market by expanding the potential investor base for these securities and limiting investor exposure to 

Fannie Mae counterparty risk, without disrupting the To-Be-Announced (TBA) MBS market. For a description of the 

CAS REMIC structure, see “Management’s Discussion and Analysis of Financial Condition and Results of 

Operations—Single-Family Business—Single-Family Credit Risk Transfer Transactions” in the company’s 2018 

Form 10-K.

Fannie Mae continued to transfer a portion of the credit risk on multifamily mortgages, and nearly 100% of the 

company’s new multifamily business volume had lender risk-sharing primarily through the company’s Delegated 

Underwriting and Servicing (DUS®) model in 2018. To complement the company’s lender loss sharing program 

through DUS, Fannie Mae also transferred a portion of the mortgage credit risk on multifamily loans in its multifamily 

guaranty book of business to insurers or reinsurers through multifamily CIRT transactions. In 2018, the company 

completed its third and fourth multifamily CIRT transactions. 

COMMON SECURITIZATION PLATFORM AND SINGLE SECURITY INITIATIVE

In pursuit of the strategic goals identified by Fannie Mae’s conservator, for the past several years the company has 

been working with FHFA, Freddie Mac, and Common Securitization Solutions (CSS) on the development of a 

common securitization platform that Fannie Mae expects to use to perform certain aspects of the securitization 

process beginning in 2019. The company has also been working toward developing and implementing a singlefamily uniform mortgage-backed security (UMBS) for Fannie Mae and Freddie Mac.

The intended purpose of the common securitization platform, which is operated by CSS, is to replace certain 

elements of Fannie Mae’s and Freddie Mac’s proprietary systems for securitizing mortgages and performing 

associated back office and administrative functions. In addition, FHFA specified that the design of the common 

securitization platform should allow for the integration of additional market participants in the future.

The UMBS is intended to maximize liquidity for both Fannie Mae and Freddie Mac mortgage-backed securities in 

the TBA market. In March 2018, FHFA announced that Fannie Mae and Freddie Mac will start issuing these UMBS 

in June 2019. 

Once UMBS are issued, lender customers, securities dealers, and other investors will be able to swap UMBS 

issued by either Fannie Mae or Freddie Mac for a new form of structured security issued and guaranteed by Fannie 

Mae that combines collateral and provides Fannie Mae’s guaranty of principal and interest on the underlying UMBS, 

even if that UMBS was not issued by Fannie Mae. The company expects that once it begins issuing UMBS, the vast 

majority of its single-family MBS will be issued as UMBS.

Historically, Fannie Mae MBS had a trading advantage over comparable Freddie Mac PCs. One of FHFA’s stated 

objectives for the Single Security Initiative is to reduce the costs to Freddie Mac and taxpayers that result from 

differences in liquidity of Fannie Mae MBS and Freddie Mac PCs. In the last couple of years, as the implementation 

date of the Single Security Initiative has drawn closer, Fannie Mae MBS and comparable Freddie Mac PCs have 

been trading at or near parity. See “Risk Factors” in the company’s 2018 Form 10-K for a discussion of the risks to 

our business associated with the Single Security Initiative. 
Fourth Quarter and Full Year 2018 Results 9

FINANCIAL PERFORMANCE OUTLOOK

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

could result in significant volatility in the company’s financial results from quarter to quarter or year to year. Fannie 

Mae expects quarterly volatility in its financial results due to a number of factors, particularly changes in market 

conditions that result in fluctuations in the estimated fair value of derivatives and other financial instruments that it 

marks to market through its earnings. Other factors that may result in volatility in the company’s quarterly financial 

results include developments that affect its loss reserves, such as redesignations of loans held for investment to 

held for sale, changes in interest rates, home prices or accounting standards, or events such as natural disasters, 

and other factors, as the company discusses in “Risk Factors” and “MD&A—Consolidated Results of Operations—

Credit-Related Income (Expense)” in the company’s 2018 Form 10-K. 

Additional factors may affect Fannie Mae’s profitability in the future. While the redesignation of reperforming and 

nonperforming loans from held-for-investment to held-for-sale has been a significant driver of credit-related income 

in recent periods, the company may see a reduced impact from this activity in the future to the extent the population 

of loans it is considering for redesignation declines. Further, Fannie Mae’s implementation of the Current Expected 

Credit Loss (CECL) standard on January 1, 2020 may introduce volatility in the company’s results thereafter as 

credit-related income or expense will include expected lifetime losses and thus become more sensitive to 

fluctuations in the factors detailed above. In addition, a rising interest rate environment and possible decreases in 

Fannie Mae’s retained mortgage portfolio could result in a decrease in the company’s net interest income in 2019. 

The potential for significant volatility in the company’s financial results could result in a net loss in a future quarter. 

Fannie Mae is permitted to retain up to $3.0 billion in capital reserves as a buffer in the event of a net loss in a 

future quarter. However, any net loss the company experiences in the future could be greater than the amount of its 

capital reserves, resulting in a net worth deficit for that quarter. 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 to avoid being placed into receivership. See “Risk Factors” in the company’s 2018 Form 10-K for a 

discussion of the risks associated with the limitations on the company’s ability to rebuild its capital reserves, 

including factors that could result in a net loss or net worth deficit in a future quarter.

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 directed Fannie Mae to pay dividends to Treasury on 

a quarterly basis since entering into conservatorship in 2008 for every dividend period for which dividends were 

payable.
Fourth Quarter and Full Year 2018 Results 10

The chart below shows the funds Fannie Mae 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.

Treasury Draws and Dividend Payments: 2008 - 2018

(Dollars in billions)

(1) Under the terms of the senior preferred stock purchase agreement, dividend payments we make to Treasury do not offset our prior draws of 

funds 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 us. Draw requests have been funded in 

the quarter following a net worth deficit.

Fannie Mae expects to pay Treasury a first quarter 2019 dividend of $3.2 billion by March 31, 2019. The senior 

preferred stock provides for dividends each quarter in the amount, if any, by which the company’s net worth as of 

the end of the prior quarter exceeds a $3.0 billion capital reserve amount.

As of the date of this filing, the maximum amount of remaining funding under the agreement is $113.9 billion. If the 

company were to draw additional funds from Treasury under the agreement with respect to a future period, the 

amount of remaining funding under the agreement would be reduced by the amount of our draw. Dividend 

payments the company makes to Treasury do not restore or increase the amount of funding available to it under the 

agreement. 

For a description of the terms of the senior preferred stock purchase agreement and the senior preferred stock, see 

“Conservatorship, Treasury Agreements and Housing Finance Reform—Treasury Agreements” in the company’s 

2018 Form 10-K.

Although Treasury owns Fannie Mae’s senior preferred stock and a warrant to purchase 79.9% percent of the 

company’s common stock, and has made a commitment under a senior preferred stock purchase agreement to 

provide the company with funds to maintain a positive net worth under specified conditions, the U.S. government 

does not guarantee the company’s securities or other obligations.

Fannie Mae’s financial statements for the full year of 2018 are available in the accompanying Annex; however, 

investors and interested parties should read the company’s 2018 Form 10-K, 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 2018 Form 10-K. 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 “Fourth 

Quarter and Full Year 2018 Financial Supplement” at www.fanniemae.com.
Fourth Quarter and Full Year 2018 Results 11

# # #

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

statements regarding: the company’s future profitability, financial condition and results of operations and the factors that will affect them; the 

company’s dividend payments to Treasury; the company’s retained mortgage portfolio; the company’s expectations regarding the implementation 

and its use of the common securitization platform and the implementation and impact of the Single Security Initiative, as well as the company’s 

issuances of UMBS; the company’s plans relating to and the effects of the company’s credit risk transfer transactions; other factors that could 

affect or mitigate the company’s credit risk exposure; payments to HUD and Treasury funds under the GSE Act; the consequences of 

conservatorship, any end or change to conservatorship, and possible receivership; the impact of accounting guidance and accounting changes 

on the company’s business or financial results, including the impact of impairment accounting guidance; the impact of legislation and regulation 

on the company’s business or financial results; mortgage market and economic conditions (including home price appreciation rates) and the 

impact of such conditions on its business or financial results; the company’s serious delinquency rate and the factors that will affect its serious 

delinquency rate; the performance of the loans in the company’s book of business and factors that will affect such performance; the company’s 

loan acquisitions and the credit risk profile of such acquisitions; factors that will affect our liquidity and ability to meet our debt obligations and 

factors relating to the company’s liquidity contingency plans; and the company’s response to legal and regulatory proceedings and their impact 

on our business or financial condition. 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; 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; the stability and adequacy of the 

systems and infrastructure that impact our operations, including the company’s and those of its counterparties and other third parties on which 

the business relies; 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; 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 competitive landscape in which the company operates, including the impact of legislative or other developments on levels 

of competition in its industry and other factors affecting its 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; limitations on the company’s business imposed by FHFA, in its role as the company’s 

conservator or as its regulator; the conservatorship, including any changes to or termination (by receivership or otherwise) of 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; 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; domestic and global political 

risks and uncertainties; natural disasters, environmental disasters, terrorist attacks, pandemics, or other major disruptive events; cyber attacks or 

other 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, 2018, 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.
Fourth Quarter and Full Year 2018 Results 12

ANNEX

FANNIE MAE

(In conservatorship)

Consolidated Balance Sheets

(Dollars in millions)

As of December 31,

2018 2017

ASSETS

Cash and cash equivalents $ 25,557 $ 32,110

Restricted cash (includes $17,849 and $22,132, respectively, related to consolidated trusts) 23,866 28,150

Federal funds sold and securities purchased under agreements to resell or similar arrangements 32,938 19,470

Investments in securities:

Trading, at fair value (includes $3,061 and $747, respectively, pledged as collateral) 41,867 34,679

Available-for-sale, at fair value 3,429 4,843

Total investments in securities 45,296 39,522

Mortgage loans:

Loans held for sale, at lower of cost or fair value 7,701 4,988

Loans held for investment, at amortized cost:

Of Fannie Mae 113,039 162,809

Of consolidated trusts 3,142,858 3,029,812

Total loans held for investment (includes $8,922 and $10,596, respectively, at fair value) 3,255,897 3,192,621

Allowance for loan losses (14,203) (19,084)

Total loans held for investment, net of allowance 3,241,694 3,173,537

Total mortgage loans 3,249,395 3,178,525

Deferred tax assets, net 13,188 17,350

Accrued interest receivable, net (includes $7,928 and $7,560, respectively, related to consolidated trusts) 8,490 8,133

Acquired property, net 2,584 3,220

Other assets 17,004 19,049

Total assets $ 3,418,318 $ 3,345,529

LIABILITIES AND EQUITY (DEFICIT)

Liabilities:

Accrued interest payable (includes $9,133 and $8,598, respectively, related to consolidated trusts) $ 10,211 $ 9,682

Debt:

Of Fannie Mae (includes $6,826 and $8,186, respectively, at fair value) 232,074 276,752

Of consolidated trusts (includes $23,753 and $30,493, respectively, at fair value) 3,159,846 3,053,302

Other liabilities (includes $356 and $492, respectively, related to consolidated trusts) 9,947 9,479

Total liabilities 3,412,078 3,349,215

Commitments and contingencies (Note 16) — —

Fannie Mae stockholders’ equity (deficit):

Senior preferred stock, 1,000,000 shares issued and outstanding 120,836 117,149

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

1,158,087,567 shares outstanding 687 687

Accumulated deficit (127,335) (133,805)

Accumulated other comprehensive income 322 553

Treasury stock, at cost, 150,675,136 shares (7,400) (7,400)

Total stockholders’ equity (deficit) (See Note 1: Senior Preferred Stock Purchase Agreement, Senior 

Preferred Stock and Warrant for information on our dividend obligation to Treasury) 6,240 (3,686)

Total liabilities and equity (deficit) $ 3,418,318 $ 3,345,529

See Notes to Consolidated Financial Statements in 2018 Form 10-K
Fourth Quarter and Full Year 2018 Results 13

FANNIE MAE

(In conservatorship)

Consolidated Statements of Operations and Comprehensive Income

(Dollars in millions, except per share amounts)

For the Year Ended December 31,

2018 2017 2016

Interest income:

Trading securities $ 1,336 $ 706 $ 516

Available-for-sale securities 230 335 620

Mortgage loans (includes $107,964, $100,593 and $95,266, respectively, related to consolidated

trusts) 114,605 108,319 104,642

Federal funds sold and securities purchased under agreements to resell or similar arrangements 742 373 141

Other 136 123 102

Total interest income 117,049 109,856 106,021

Interest expense:

Short-term debt (468) (250) (206)

Long-term debt (includes $89,682, $82,580 and $77,575, respectively, related to consolidated

trusts) (95,630) (88,873) (84,520)

Total interest expense (96,098) (89,123) (84,726)

Net interest income 20,951 20,733 21,295

Benefit for credit losses 3,309 2,041 2,155

Net interest income after benefit for credit losses 24,260 22,774 23,450

Investment gains, net 952 1,522 1,256

Fair value gains (losses), net 1,121 (1,211) (1,081)

Fee and other income 979 2,227 966

Non-interest income 3,052 2,538 1,141

Administrative expenses:

Salaries and employee benefits (1,451) (1,328) (1,336)

Professional services (1,032) (933) (955)

Other administrative expenses (576) (476) (450)

Total administrative expenses (3,059) (2,737) (2,741)

Foreclosed property expense (617) (521) (644)

Temporary Payroll Cut Continuation Act of 2011 (“TCCA”) fees (2,284) (2,096) (1,845)

Other expenses, net (1,253) (1,511) (1,028)

Total expenses (7,213) (6,865) (6,258)

Income before federal income taxes 20,099 18,447 18,333

Provision for federal income taxes (4,140) (15,984) (6,020)

Net income 15,959 2,463 12,313

Other comprehensive loss:

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

and taxes (344) (206) (642)

Other, net of taxes (4) — (6)

Total other comprehensive loss (348) (206) (648)

Total comprehensive income 15,611 2,257 11,665

Net income $ 15,959 $ 2,463 $ 12,313

Dividends distributed or available for distribution to senior preferred stockholder (12,613) (8,944) (12,236)

Net income (loss) attributable to common stockholders $ 3,346 $ (6,481) $ 77

Earnings (loss) per share:

Basic $ 0.58 $ (1.12) $ 0.01

Diluted 0.57 (1.12) 0.01

Weighted-average common shares outstanding:

Basic 5,762 5,762 5,762

Diluted 5,893 5,762 5,893

See Notes to Consolidated Financial Statements in 2018 Form 10-K
Fourth Quarter and Full Year 2018 Results 14

FANNIE MAE

(In conservatorship)

 Consolidated Statements of Cash Flows

(Dollars in millions)

For the Year Ended December 31,

2018 2017 2016

Cash flows provided by (used in) operating activities:

Net income $ 15,959 $ 2,463 $ 12,313

Reconciliation of net income to net cash used in operating activities:

Amortization of cost basis adjustments (5,949) (6,641) (6,821)

Benefit for credit losses (3,309) (2,041) (2,155)

Valuation gains (911) (1,573) (472)

Current and deferred federal income taxes 3,680 14,369 4,309

Net gains related to the disposition of acquired property and preforeclosure sales, including

credit enhancements (1,785) (2,426) (3,124)

Other, net 440 (406) (1,778)

Net change in trading securities (5,454) 4,511 (3,005)

Interest payment on discounted debt (423) (4,043) (247)

Net cash provided by (used in) operating activities 2,248 4,213 (980)

Cash flows provided by investing activities:

Proceeds from maturities and paydowns of trading securities held for investment 182 1,206 1,840

Proceeds from sales of trading securities held for investment 96 241 1,618

Proceeds from maturities and paydowns of available-for-sale securities 695 2,009 2,927

Proceeds from sales of available-for-sale securities 760 1,990 11,378

Purchases of loans held for investment (172,155) (189,593) (233,935)

Proceeds from repayments of loans acquired as held for investment of Fannie Mae 15,082 22,557 25,294

Proceeds from sales of loans acquired as held for investment of Fannie Mae 17,511 10,241 5,222

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

trusts 401,045 435,637 543,690

Advances to lenders (108,294) (123,687) (140,147)

Proceeds from disposition of acquired property and preforeclosure sales 9,321 12,221 16,115

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

arrangements (13,468) 10,945 (3,065)

Other, net 78 641 116

Net cash provided by investing activities 150,853 184,408 231,053

Cash flows used in financing activities:

Proceeds from issuance of debt of Fannie Mae 789,355 1,034,742 982,272

Payments to redeem debt of Fannie Mae (834,366) (1,082,427) (1,042,861)

Proceeds from issuance of debt of consolidated trusts 357,846 383,793 437,392

Payments to redeem debt of consolidated trusts (471,151) (514,637) (580,642)

Payments of cash dividends on senior preferred stock to Treasury (9,372) (12,015) (9,624)

Proceeds from senior preferred stock purchase agreement with Treasury 3,687 — —

Other, net 63 6 14

Net cash used in financing activities (163,938) (190,538) (213,449)

Net increase (decrease) in cash, cash equivalents and restricted cash (10,837) (1,917) 16,624

Cash, cash equivalents and restricted cash at beginning of period 60,260 62,177 45,553

Cash, cash equivalents and restricted cash at end of period $ 49,423 $ 60,260 $ 62,177

Cash paid during the period for:

Interest $ 110,415 $ 109,480 $ 104,318

Income taxes 460 3,090 1,711

Non-cash activities:

Net mortgage loans acquired by assuming debt $ 231,478 $ 258,312 $ 275,710

Net transfers from mortgage loans of Fannie Mae to mortgage loans of consolidated trusts 185,310 193,809 223,705

Transfers from advances to lenders to loans held for investment of consolidated trusts 102,865 118,282 130,886

Net transfers from mortgage loans to acquired property 8,131 10,262 13,768

Transfers of mortgage loans from held for investment to held for sale 21,960 12,886 3,878

See Notes to Consolidated Financial Statements in 2018 Form 10-K
Fourth Quarter and Full Year 2018 Results 15

FANNIE MAE

(In conservatorship)

Consolidated Statements of Changes in Equity (Deficit)

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

Fannie Mae Stockholders’ Equity (Deficit)

Shares Outstanding

Senior

Preferred 

Stock

Preferred

Stock

Common

Stock

Accumulated

Deficit

Accumulated 

Other

Comprehensive

Income

Treasury

Stock

Non

Controlling

Interest

Total

Equity 

(Deficit)

Senior

Preferred Preferred Common

Balance as of December 31, 2015 1 556 1,158 $ 117,149 $ 19,130 $ 687 $ (126,942) $ 1,407 $ (7,401) $ 29 $ 4,059

Change in investment in 

noncontrolling interest — — — — — — — — — (29) (29)

Senior preferred stock dividends 

paid ($9,623.37/share) — — — — — — (9,624) — — — (9,624)

Comprehensive income:

Net income — — — — — — 12,313 — — — 12,313

Other comprehensive income, net 

of tax effect:

Changes in net unrealized gains 

on available-for-sale 

securities (net of taxes of $30) — — — — — — — (55) — — (55)

Reclassification adjustment for 

gains included in net income 

(net of taxes of $316) — — — — — — — (587) — — (587)

Other, net of taxes — — — — — — — (6) — — (6)

Total comprehensive income 11,665

Balance as of December 31, 2016 1 556 1,158 $ 117,149 $ 19,130 $ 687 $ (124,253) $ 759 $ (7,401) $ — $ 6,071

Senior preferred stock dividends 

paid ($12,015.34/share) — — — — — — (12,015) — — — (12,015)

Comprehensive income:

Net income — — — — — — 2,463 — — — 2,463

Other comprehensive income, net 

of tax effect:

Changes in net unrealized gains 

on available-for-sale 

securities (net of taxes of $28) — — — — — — — 53 — — 53

Reclassification adjustment for 

gains included in net income 

(net of taxes of $139) — — — — — — — (259) — — (259)

Total comprehensive income 2,257

Other — — — — — — — — 1 — 1

Balance as of December 31, 2017 1 556 1,158 $ 117,149 $ 19,130 $ 687 $ (133,805) $ 553 $ (7,400) $ — $ (3,686)

Senior preferred stock dividends 

paid ($9,372.35/share) — — — — — — (9,372) — — — (9,372)

Increase to senior preferred stock — — — 3,687 — — — — — — 3,687

Comprehensive income:

Net income — — — — — — 15,959 — — — 15,959

Other comprehensive income, net

of tax effect:

Changes in net unrealized gains on 

available-for-sale securities (net 

of taxes of $21) — — — — — — — (79) — — (79)

Reclassification adjustment for 

gains included in net income 

(net of taxes of $70) — — — — — — — (265) — — (265)

Other, net of taxes — — — — — — — (4) — — (4)

Total comprehensive income 15,611

Reclassification related to Tax Cuts 

and Jobs Act — — — — — — (117) 117 — — —

Balance as of December 31, 2018 1 556 1,158 $ 120,836 $ 19,130 $ 687 $ (127,335) $ 322 $ (7,400) $ — $ 6,240

See Notes to Consolidated Financial Statements in 2018 Form 10-K