Fourth Quarter and Full Year 2014 Results 1

Resource Center: 1-800-732-6643

Contact: Pete Bakel

202-752-2034

Date: February 20, 2015

Fannie Mae Reports Net Income of $14.2 Billion and

Comprehensive Income of $14.7 Billion for 2014

Company Reports Net Income of $1.3 Billion and 

Comprehensive Income of $1.3 Billion for Fourth Quarter 2014

• Fannie Mae reported annual net income for 2014 of $14.2 billion and comprehensive income of 

$14.7 billion. Fannie Mae reported net income of $1.3 billion and comprehensive income of $1.3 

billion for the fourth quarter of 2014. 

• Fannie Mae paid a total of $20.6 billion in dividends to Treasury in 2014. The company expects 

to pay Treasury $1.9 billion in dividends in March 2015. With the expected March 2015 

dividend payment, the company will have paid a total of $136.4 billion in dividends to Treasury. 

Dividend payments do not reduce prior Treasury draws, which total $116.1 billion since 2008.

• Fannie Mae provided approximately $434 billion in liquidity to the mortgage market in 2014, 

including approximately $128 billion in liquidity in the fourth quarter of 2014, enabling families 

to buy, refinance, or rent homes.

• Fannie Mae helped distressed families retain their homes or avoid foreclosure through 

approximately 165,000 workout solutions in 2014, including approximately 34,000 loan 

workouts during the fourth quarter of 2014.

WASHINGTON, DC — Fannie Mae (FNMA/OTC) reported annual net income of $14.2 billion and 

annual comprehensive income of $14.7 billion in 2014. This compares to net income of $84.0 billion and 

comprehensive income of $84.8 billion in 2013, which included the release of the company’s valuation 

allowance against its deferred tax assets. Fannie Mae’s 2014 results were driven by strong revenues from 

net interest income and income from settlement agreements related to private-label mortgage-related 

securities sold to Fannie Mae, as well as credit-related income due primarily to increasing home prices 

during the year. These results were partially offset by a provision for federal income taxes and fair value 

losses on risk management derivatives due to declines in longer-term interest rates in 2014.

Fannie Mae recognized a provision for federal income taxes of $6.9 billion for the year ended 2014, which 

resulted in an effective tax rate of 32.8 percent.

Fannie Mae’s net income of $1.3 billion and comprehensive income of $1.3 billion for the fourth quarter 

of 2014 compares to net income of $3.9 billion and comprehensive income of $4.0 billion for the third 

quarter of 2014. Fannie Mae’s fourth quarter results were driven by net interest income, partially offset by 

fair value losses on risk management derivatives due to declines in longer-term interest rates in the 

quarter. The company reported a positive net worth of $3.7 billion as of December 31, 2014, resulting in a 

dividend obligation to Treasury of $1.9 billion, which the company expects to pay in March 2015.
Fourth Quarter and Full Year 2014 Results 2

“Fannie Mae had another strong year of financial performance. We continued to manage our business 

effectively, put the legacy issues from the financial crisis behind us, and implement innovations to lead the 

industry toward a sustainable housing finance system for today and the future,” said Timothy J. 

Mayopoulos, president and chief executive officer. “We are committed to serving our partners and focused 

on reducing barriers to lending to qualified borrowers.”

SUMMARY OF FOURTH QUARTER AND FULL YEAR 2014 RESULTS

(Dollars in millions) 4Q14 3Q14 Variance FY 2014 FY 2013 Variance

Net interest income $ 5,142 $ 5,184 $ (42) $ 19,968 $ 22,404 $ (2,436)

Fee and other income 323 826 (503) 5,887 3,930 1,957

Net revenues 5,465 6,010 (545) 25,855 26,334 (479)

Investment gains, net 187 177 10 936 1,127 (191)

Fair value (losses) gains, net (2,502) (207) (2,295) (4,833) 2,959 (7,792)

Administrative expenses (702) (706) 4 (2,777) (2,545) (232)

Credit-related income

Benefit for credit losses 466 1,085 (619) 3,964 8,949 (4,985)

Foreclosed property (expense) income (369) (249) (120) (142) 2,839 (2,981)

Total credit-related income 97 836 (739) 3,822 11,788 (7,966)

Other non-interest expenses(1) (415) (418) 3 (1,853) (1,096) (757)

Net (losses) gains and (expense) income (3,335) (318) (3,017) (4,705) 12,233 (16,938)

Income before federal income taxes 2,130 5,692 (3,562) 21,150 38,567 (17,417)

(Provision) benefit for federal income taxes (818) (1,787) 969 (6,941) 45,415 (52,356)

Net income 1,312 3,905 (2,593) 14,209 83,982 (69,773)

Less: Net (income) attributable to the

noncontrolling interest — — — (1) (19) 18

Net income attributable to Fannie Mae $ 1,312 $ 3,905 $ (2,593) $ 14,208 $ 83,963 $ (69,755)

Total comprehensive income attributable to Fannie

Mae $ 1,335 $ 4,000 $ (2,665) $ 14,738 $ 84,782 $ (70,044)

Dividends distributed or available for distribution to

senior preferred stockholder $ (1,920) $ (3,999) $ 2,079 $ (15,323) $ (85,419) $ 70,096

(1)Consists of TCCA fees, debt extinguishment gains, net and other expenses.

Net revenues, which consist of net interest income and fee and other income, were $5.5 billion for the 

fourth quarter of 2014, compared with $6.0 billion for the third quarter of 2014. For the year, net revenues 

were $25.9 billion, compared with $26.3 billion in 2013. 

Net interest income, which includes guaranty fee revenue, was $5.1 billion for the fourth quarter of 2014, 

compared with $5.2 billion for the third quarter of 2014. For the year, net interest income was $20.0 

billion for 2014, compared with $22.4 billion for 2013. The decrease in net interest income compared to 

2013 was due primarily to lower interest income from retained mortgage portfolio assets due to a decline 

in the size of the company’s retained mortgage portfolio, partially offset by an increase in net interest 

income from guaranty fees.

An increasing portion of Fannie Mae’s net interest income in recent years has been derived from guaranty 

fees rather than from interest income earned on the company’s retained mortgage portfolio assets. This is a 

result of both the shrinking of the retained mortgage portfolio and the impact of guaranty fee increases. 
Fourth Quarter and Full Year 2014 Results 3

The company estimates that the percentage of net interest income derived from guaranty fees on loans 

underlying Fannie Mae MBS increased to approximately half in 2014, compared with more than one-third 

in 2013. The company expects that guaranty fees will continue to account for an increasing portion of its 

net interest income.

Fee and other income was $323 million for the fourth quarter of 2014, compared with $826 million for the 

third quarter of 2014. Fee and other income decreased in the fourth quarter compared with the third 

quarter due to income recognized by the company in the third quarter of 2014 from settlement agreements 

related to private-label mortgage-related securities sold to Fannie Mae. For the year, fee and other income 

was $5.9 billion for 2014, compared with $3.9 billion for 2013. The increase in fee and other income for 

the year was due primarily to an increase in the amount of income recognized by the company from 

settlement agreements related to private-label mortgage-related securities sold to Fannie Mae.

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

income, was $97 million in the fourth quarter of 2014, compared with $836 million in the third quarter of 

2014. Credit-related income decreased in the fourth quarter of 2014 compared with the third quarter of 

2014 primarily driven by relatively flat home prices in the fourth quarter compared with home prices 

increasing in the third quarter. For the year, credit-related income was $3.8 billion, compared with $11.8 

billion in 2013. The decline in credit-related income for 2014 was primarily attributable to home prices 

increasing at a slower pace in 2014 as compared with 2013. In addition, 2013 benefited from foreclosed 

property income primarily due to the recognition of income related to compensatory fee agreements.
Fourth Quarter and Full Year 2014 Results 4

Net fair value losses were $2.5 billion in the fourth quarter of 2014, compared with $207 million in the 

third quarter of 2014. For the year, net fair value losses were $4.8 billion, compared with net fair value 

gains of $3.0 billion in 2013. The company recorded fair value losses in the fourth quarter and full year of 

2014 due primarily to declines in longer-term interest rates negatively impacting the value of the 

company’s risk management derivatives. 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 spreads, implied volatility, and activity related to these financial instruments.

VARIABILITY OF FINANCIAL RESULTS 

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

company expects its earnings in future years will be substantially lower than its earnings for 2014, due 

primarily to the company’s expectation of substantially lower income from resolution agreements, 

continued declines in net interest income from its retained mortgage portfolio assets, and lower creditrelated income. In addition, 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. The company’s expectations for its future financial results do not take into account the 

impact on its business of potential future legislative or regulatory changes, which could have a material 

impact on the company’s financial results, particularly the enactment of housing finance reform 

legislation. For additional information on factors that affect the company’s financial results, please refer to 

“Executive Summary” in the company’s annual report on Form 10-K for the year ended December 31, 

2014 (the “2014 Form 10-K”).

SUMMARY OF FOURTH QUARTER AND FULL YEAR 2014 BUSINESS SEGMENT RESULTS

The business groups running Fannie Mae’s three reporting segments – its Single-Family business, its 

Multifamily business, and its Capital Markets group – engage in complementary business activities in 

pursuing the company’s goals of providing liquidity to the market, expanding access to credit, and helping 

the U.S. housing market recover.
Fourth Quarter and Full Year 2014 Results 5

(Dollars in millions) 4Q14 3Q14 Variance 2014 2013 Variance

Single-Family Segment:

Guaranty fee income $ 2,994 $ 2,945 $ 49 $ 11,702 $ 10,468 $ 1,234

Credit-related income 94 748 (654) 3,625 11,205 (7,580)

Other (875) (794) (81) (3,352) (2,507) (845)

Income before federal income taxes 2,213 2,899 (686) 11,975 19,166 (7,191)

(Provision) benefit for federal income taxes (599) (837) 238 (3,496) 29,110 (32,606)

Net income $ 1,614 $ 2,062 $ (448) $ 8,479 $ 48,276 $ (39,797)

Multifamily Segment:

Guaranty fee income $ 337 $ 332 $ 5 $ 1,297 $ 1,217 $ 80

Credit-related income 3 88 (85) 197 583 (386)

Other 154 1 153 127 345 (218)

Income before federal income taxes 494 421 73 1,621 2,145 (524)

(Provision) benefit for federal income taxes (121) (37) (84) (158) 7,924 (8,082)

Net income $ 373 $ 384 $ (11) $ 1,463 $ 10,069 $ (8,606)

Capital Markets Segment:

Net interest income $ 1,651 $ 1,845 $ (194) $ 7,243 $ 9,764 $ (2,521)

Investment gains, net 1,878 1,516 362 6,378 4,847 1,531

Fair value (losses) gains, net (2,706) (335) (2,371) (5,476) 3,148 (8,624)

Other (277) 169 (446) 3,256 1,383 1,873

Income before federal income taxes 546 3,195 (2,649) 11,401 19,142 (7,741)

(Provision) benefit for federal income taxes (98) (913) 815 (3,287) 8,381 (11,668)

Net income $ 448 $ 2,282 $ (1,834) $ 8,114 $ 27,523 $ (19,409)

Single-Family Business

• Single-Family net income was $1.6 billion in the fourth quarter of 2014, compared with $2.1 

billion in the third quarter of 2014. The decrease in net income in the fourth quarter compared to 

the third quarter was driven by lower credit-related income. For the year, the Single-Family 

business had net income of $8.5 billion, compared with $48.3 billion in 2013. The decrease in 

annual net income was due primarily to the release of the company’s valuation allowance against 

its deferred tax assets in 2013, as well as a decrease in credit-related income, partially offset by an 

increase in guaranty fee income.

• Single-Family guaranty fee income was $11.7 billion in 2014, compared with $10.5 billion in 

2013. Single-Family guaranty fee income increased in 2014 compared with 2013 as loans with 

higher guaranty fees have become a larger part of the company’s Single-Family guaranty book of 

business due to the cumulative impact of guaranty fee price increases implemented in 2012. The 

Single-Family guaranty book of business was $2.85 trillion as of December 31, 2014 and 

September 30, 2014 and $2.89 trillion as of December 31, 2013.

• Single-Family credit-related income was $94 million in the fourth quarter of 2014, compared with 

$748 million in the third quarter of 2014. The decrease in credit-related income in the fourth 

quarter compared to the third quarter was due primarily to home prices remaining relatively flat in 

the quarter compared with increases in home prices in the third quarter. For the year, Single-
Fourth Quarter and Full Year 2014 Results 6

Family credit-related income was $3.6 billion, compared with $11.2 billion in 2013. The decrease 

in annual credit-related income was due primarily to slower home price appreciation in 2014 as 

compared with 2013. In addition, 2013 Single-Family credit-related income benefited from 

foreclosed property income due primarily to the recognition of income related to compensatory fee 

arrangements.

Multifamily Business

• Multifamily net income was $373 million in the fourth quarter of 2014, compared with $384 

million in the third quarter of 2014. The decrease in net income in the fourth quarter compared to 

the third quarter was driven primarily by a decrease in credit-related income and an increase in the 

provision for federal income taxes, offset by an increase in gains from sales of partnership 

investments. For the year, Multifamily net income was $1.5 billion, compared with $10.1 billion in 

2013. The decline in annual net income was due primarily to the release of the company’s 

valuation allowance against its deferred tax assets in 2013, as well as a decrease in credit-related 

income in 2014 compared with 2013.

• Multifamily guaranty fee income was $337 million for the fourth quarter of 2014, compared with 

$332 million for the third quarter of 2014. For the year, Multifamily guaranty fee income was $1.3 

billion in 2014 compared with $1.2 billion in 2013. Multifamily guaranty fee income increased in 

2014 compared with 2013 as loans with higher guaranty fees have become a larger part of the 

company’s Multifamily guaranty book of business, while loans with lower guaranty fees continue 

to liquidate. The Multifamily guaranty book of business was $203.3 billion as of December 31, 

2014, compared with $200.2 billion as of September 30, 2014 and $200.6 billion as of December 

31, 2013.

• Multifamily credit-related income was $3 million for the fourth quarter of 2014, compared with 

$88 million for the third quarter of 2014. The decrease in credit-related income in the fourth 

quarter compared to the third quarter was driven primarily by smaller improvements in property 

valuations. For the year, Multifamily credit-related income was $197 million compared with $583 

million in 2013. The decline was due primarily to smaller improvements in property valuations in 

2014 compared with 2013, as well as improvements in loss severity trends in 2013.

Capital Markets

• Capital Markets net income was $448 million in the fourth quarter of 2014, compared with $2.3 

billion in the third quarter of 2014. The decrease in net income in the fourth quarter was driven 

primarily by fair value losses on the company’s risk management derivatives. The group had net 

income of $8.1 billion for the year, compared with $27.5 billion for 2013. The decline in annual 

net income was due primarily to the release of the company’s valuation allowance against its 

deferred tax assets in 2013, the recognition of fair value losses in 2014 compared to fair value 

gains in 2013, and a decline in net interest income. These declines were partially offset by 

increases in both other income and investment gains.

• Capital Markets net interest income was $1.7 billion for the fourth quarter of 2014, compared with 

$1.8 billion for the third quarter of 2014. For the year, Capital Markets net interest income was 

$7.2 billion compared with $9.8 billion in 2013. The decrease in annual net interest income was 

due primarily to a decline in the average balance of the company’s retained mortgage portfolio. 
Fourth Quarter and Full Year 2014 Results 7

• Capital Markets other losses was $277 million for the fourth quarter of 2014, compared with other 

income of $169 million for the third quarter of 2014. For the year, Capital Markets other income 

was $3.3 billion compared with $1.4 billion in 2013. The increase in annual other income was due 

to an increase in the amount of income recognized from settlement agreements related to privatelabel mortgage-backed securities sold to Fannie Mae.

• Capital Markets net investment gains were $1.9 billion in the fourth quarter of 2014, compared 

with $1.5 billion in the third quarter of 2014. For the year, Capital Markets net investment gains 

were $6.4 billion compared with $4.8 billion in 2013. The increase in annual net investment gains 

was due primarily to higher gains on the sale of Fannie Mae MBS available-for-sale securities 

driven by a decline in interest rates in 2014.

• Capital Markets net fair value losses were $2.7 billion in the fourth quarter of 2014, compared with 

$335 million in the third quarter of 2014. For the year, Capital Markets net fair value losses were 

$5.5 billion compared with fair value gains of $3.1 billion in 2013. Net fair value losses for the 

fourth quarter and the year were due to fair value losses on risk management derivatives driven by 

declines in longer-term interest rates during the period.

• Capital Markets retained mortgage portfolio balance decreased to $413.3 billion as of 

December 31, 2014, compared with $490.7 billion as of December 31, 2013, resulting from 

purchases of $178.3 billion and liquidations and sales of $255.7 billion during the year.

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, the Federal Housing Finance Agency (“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 securitization 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

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

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

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

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

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

Regulatory Reform Act of 2008. For periods through December 31, 2014, Fannie Mae has requested 

cumulative draws totaling $116.1 billion and paid $134.5 billion in dividends to Treasury. Under the 

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

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

stock.
Fourth Quarter and Full Year 2014 Results 8

Treasury Draws and Dividend Payments

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

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

not offset prior Treasury draws.

(2) Fannie Mae expects to pay a dividend for the first quarter of 2015 calculated based on the company’s net worth of $3.7 billion as of 

December 31, 2014 less a capital reserve amount of $1.8 billion.

(3) Amounts may not sum due to rounding.

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

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

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

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

quarter exceeds an applicable capital reserve amount. The capital reserve amount was $2.4 billion for each 

quarterly dividend period in 2014, decreased to $1.8 billion for dividend periods in 2015 and will continue 

to be reduced by $600 million each year until it reaches zero on January 1, 2018. 

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

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

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

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

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

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

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

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

and Treasury Agreements” in the company’s 2014 Form 10-K.

CREDIT QUALITY

While continuing to make it possible for families to purchase, 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 and change its 

pricing to promote sustainable homeownership and stability in the housing market. Single-family 

conventional loans acquired by Fannie Mae in 2014 had a weighted average borrower FICO credit score at 

origination of 744 and a weighted average original loan-to-value ratio of 77 percent.

Fannie Mae’s single-family conventional guaranty book of business as of December 31, 2014 consisted of 

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

acquired through the Administration’s Home Affordable Refinance Program® (“HARP®”); and other loans 
Fourth Quarter and Full Year 2014 Results 9

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

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

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

loan-to-value ratios, including loans with loan-to-value ratios in excess of 100 percent.

The single-family serious delinquency rate for Fannie Mae’s book of business has declined for 19 

consecutive quarters since the first quarter of 2010, and was 1.89 percent as of December 31, 2014, 

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

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

well as the company’s acquisition of loans with stronger credit profiles since the beginning of 2009. 

Although Fannie Mae’s single-family serious delinquency rate has declined, the pace of declines has 

slowed in recent months and the company expects this trend to continue. The company’s single-family 

serious delinquency rate and the period of time that loans remain seriously delinquent continue to be 

negatively impacted by the length of time required to complete a foreclosure in some states. High levels of 

foreclosures, changes in state foreclosure laws, new federal and state servicing requirements imposed by 

regulatory actions and legal settlements, and the need for servicers to adapt to these changes have 

lengthened the time it takes to foreclose on a mortgage loan in a number of states, particularly in New 

York, Florida, and New Jersey. Other factors such as the pace of loan modifications, changes in home 

prices, unemployment levels, and other macroeconomic conditions also influence serious delinquency 

rates.
Fourth Quarter and Full Year 2014 Results 10

Total Loss Reserves, which reflect the company’s estimate of the probable losses the company has 

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

their loans, decreased to $38.2 billion as of December 31, 2014 from $47.3 billion as of December 31, 

2013. The total loss reserve coverage to total nonaccrual loans was 59 percent as of December 31, 2014, 

compared with 58 percent as of September 30, 2014 and 57 percent as of December 31, 2013.

PROVIDING LIQUIDITY AND SUPPORT TO THE MARKET

Liquidity

Fannie Mae provided approximately $434 billion in liquidity to the mortgage market in 2014, including 

approximately $128 billion in liquidity in the fourth quarter of 2014, through its purchases and guarantees 

of loans, which resulted in:

• 887,000 home purchases in 2014, including approximately 243,000 in the fourth quarter of 2014

• 937,000 mortgage refinancings in 2014, including approximately 264,000 in the fourth quarter of 

2014

• 446,000 units of multifamily housing in 2014, including approximately 157,000 in the fourth

quarter of 2014
Fourth Quarter and Full Year 2014 Results 11

The company remained the largest single issuer of single-family mortgage-related securities in the 

secondary market in the fourth quarter of 2014, with an estimated market share of new single-family 

mortgage-related securities issuances of 40 percent, compared with 46 percent in the fourth quarter of 

2013 and 40 percent for all of 2014.

Fannie Mae also remained a continuous source of liquidity in the multifamily market in 2014. As of 

September 30, 2014 (the latest date for which information is available), the company owned or guaranteed 

approximately 19 percent of the outstanding debt on multifamily properties.

Refinancing Initiatives

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

borrowers and includes HARP, the company acquired approximately 60,000 loans in the fourth quarter of 

2014 and approximately 302,000 loans for the full year of 2014. Refinancings delivered to Fannie Mae 

through Refi Plus in the fourth quarter of 2014 reduced borrowers’ monthly mortgage payments by an 

average of $172. The company expects the volume of refinancings under HARP to continue to decline, 

due to a decrease in the population of borrowers with loans that have high LTV ratios who are willing to 

refinance and would benefit from refinancing.
Fourth Quarter and Full Year 2014 Results 12

Home Retention Solutions and Foreclosure Alternatives

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

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

such as loan modifications. 

For the Year Ended December 31,

2014 2013 2012

Unpaid

Principal

Balance

Number

of Loans

Unpaid

Principal

Balance

Number

of Loans

Unpaid

Principal

Balance

Number

of Loans

(Dollars in millions)

Home retention strategies:

Modifications $ 20,686 122,823 $ 28,801 160,007 $ 30,640 163,412

Repayment plans and forbearances completed 986 7,309 1,594 12,022 3,298 23,329

Total home retention strategies 21,672 130,132 30,395 172,029 33,938 186,741

Foreclosure alternatives:

Short sales 4,795 23,188 9,786 46,570 15,916 73,528

Deeds-in-lieu of foreclosure 1,786 11,292 2,504 15,379 2,590 15,204

Total foreclosure alternatives 6,581 34,480 12,290 61,949 18,506 88,732

Total loan workouts $ 28,253 164,612 $ 42,685 233,978 $ 52,444 275,473

Loan workouts as a percentage of single-family guaranty book of business 0.99% 0.94% 1.48% 1.33% 1.85% 1.57%

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 34,000 loan workouts during the fourth quarter of 2014 and 

approximately 165,000 for the full year of 2014 enabling borrowers to avoid foreclosure.

• Fannie Mae completed approximately 26,000 loan modifications during the fourth quarter of 2014

and approximately 123,000 for the full year of 2014.
Fourth Quarter and Full Year 2014 Results 13

FORECLOSURES AND REO

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

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

can hurt local home values and destabilize communities.

For the Year Ended December 31,

2014 2013 2012

Single-family foreclosed properties (number of properties):

Beginning of period inventory of single-family foreclosed properties (REO) 103,229 105,666 118,528

Total properties acquired through foreclosure 116,637 144,384 174,479

Dispositions of REO (132,803) (146,821) (187,341)

End of period inventory of single-family foreclosed properties (REO) 87,063 103,229 105,666

Carrying value of single-family foreclosed properties (dollars in millions) $ 9,745 $ 10,334 $ 9,505

Single-family foreclosure rate 0.67 % 0.82 % 0.99 %

• Fannie Mae acquired 25,265 single-family REO properties, primarily through foreclosure, in the 

fourth quarter of 2014, compared with 27,798 in the third quarter of 2014. 

• As of December 31, 2014, the company’s inventory of single-family REO properties was 87,063, 

compared with 92,386 as of September 30, 2014. The carrying value of the company’s singlefamily REO was $9.7 billion as of December 31, 2014.

• The company’s single-family foreclosure rate was 0.67 percent for the full year of 2014. This 

reflects the total number of single-family properties acquired through foreclosure or deeds-in-lieu 

of foreclosure as a percentage of the total number of loans in Fannie Mae’s single-family guaranty 

book of business.

The company provides further discussion of its financial results and condition, credit performance, and 

other matters in its 2014 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 “2014 Credit Supplement” at www.fanniemae.com.

# # #

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

regarding: its future dividend payments to Treasury; the level and sources of its future revenues; the company’s future profitability; the level of the company’s 

earnings in future years as compared with 2014; the drivers of the expected decline in the company’s earnings in future years; the factors that will affect the 

company’s future financial results; the company’s future single-family serious delinquency rates; the future volume of its HARP refinancings; the future fair 

value of the company’s securities and derivatives; and the impact of the company’s actions to reduce credit losses. These estimates, forecasts, expectations, and 

statements are forward-looking statements based on the company’s current assumptions regarding numerous factors, including future home prices, the future 

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

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

other macroeconomic and housing market variables; the company’s future serious delinquency rates; the company’s future guaranty fee pricing, including any 

directive from FHFA to change the company’s guaranty fee pricing, and the impact of that pricing on the company’s guaranty fee revenues and competitive 

environment; government policy; credit availability, borrower behavior, including increases in the number of underwater borrowers who strategically default 

on their mortgage loan; the volume of loans it modifies; the effectiveness of its loss mitigation strategies and activities; significant changes in modification and 

foreclosure activity; 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 a requirement that the company 

implement a principal forgiveness program or the enactment of housing finance reform legislation; the company’s reliance on and 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, as its conservator or as its regulator, such as 

changes in the type of business the company does; the conservatorship and its effect on the company’s business; the investment by Treasury and its effect on the 

company’s business; the uncertainty of the company’s future; challenges the company faces in retaining and hiring qualified employees; the deteriorated credit 

performance of many loans in the company’s guaranty book of business; a decrease in the company’s credit ratings; defaults by one or more institutional 
Fourth Quarter and Full Year 2014 Results 14

counterparties; resolution or settlement agreements the company may enter into with its counterparties; operational control weaknesses; changes in the fiscal 

and monetary policies of the Federal Reserve, including any change in the Federal Reserve’s policy toward the reinvestment of principal payments of 

mortgage-backed securities or any future sales of such securities; changes in the structure and regulation of the financial services industry; the company’s 

ability to access the debt markets; disruptions in the housing, credit, and stock markets; government investigations and litigation; the company’s reliance on 

and the performance of the company’s servicers; conditions in the foreclosure environment; global political risk; natural disasters, terrorist attacks, pandemics, 

or other major disruptive events; information security breaches; and many other factors, including those discussed in the “Risk Factors” section of and 

elsewhere in the company’s annual report on Form 10-K for the year ended December 31, 2014, and elsewhere in this release.

Fannie Mae provides Web site addresses in its news releases solely for readers’ information. Other content or information appearing on these Web sites is not 

part of this release. 

Fannie Mae enables people to buy, refinance, or rent homes.

Visit us at: www.fanniemae.com/progress

Follow us on Twitter: http://twitter.com/FannieMae
Fourth Quarter and Full Year 2014 Results 15

ANNEX

FANNIE MAE

(In conservatorship)

Consolidated Balance Sheets

(Dollars in millions, except share amounts)

As of December 31,

2014 2013

ASSETS

Cash and cash equivalents $ 22,023 $ 19,228

Restricted cash (includes $27,515 and $23,982, respectively, related to consolidated trusts) 32,542 28,995

Federal funds sold and securities purchased under agreements to resell or similar arrangements 30,950 38,975

Investments in securities:

Trading, at fair value 31,504 30,768

Available-for-sale, at fair value (includes $596 and $998, respectively, related to consolidated trusts) 30,654 38,171

Total investments in securities 62,158 68,939

Mortgage loans:

Loans held for sale, at lower of cost or fair value 331 380

Loans held for investment, at amortized cost:

Of Fannie Mae 272,360 300,159

Of consolidated trusts (includes $15,629 and $14,268, respectively, at fair value and loans pledged as collateral that

may be sold or repledged of $0 and $442, respectively) 2,782,344 2,769,547

Total loans held for investment 3,054,704 3,069,706

Allowance for loan losses (35,541) (43,846)

Total loans held for investment, net of allowance 3,019,163 3,025,860

Total mortgage loans 3,019,494 3,026,240

Accrued interest receivable, net (includes $7,169 and $7,271, respectively, related to consolidated trusts) 8,193 8,319

Acquired property, net 10,618 11,621

Deferred tax assets, net 42,206 47,560

Other assets (includes cash pledged as collateral of $1,646 and $1,590, respectively) 19,992 20,231

Total assets $ 3,248,176 $ 3,270,108

LIABILITIES AND EQUITY

Liabilities:

Accrued interest payable (includes $8,282 and $8,276, respectively, related to consolidated trusts) $ 10,232 $ 10,553

Federal funds purchased and securities sold under agreements to repurchase 50 —

Debt:

Of Fannie Mae (includes $6,403 and $1,308, respectively, at fair value) 460,443 529,434

Of consolidated trusts (includes $19,483 and $14,976, respectively, at fair value) 2,761,712 2,705,089

Other liabilities (includes $503 and $488, respectively, related to consolidated trusts) 12,019 15,441

Total liabilities 3,244,456 3,260,517

Commitments and contingencies — —

Fannie Mae stockholders’ equity:

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

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

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

1,158,080,657 shares outstanding, respectively 687 687

Accumulated deficit (127,618) (121,227)

Accumulated other comprehensive income 1,733 1,203

Treasury stock, at cost, 150,679,953 and 150,682,046 shares, respectively (7,401) (7,401)

Total Fannie Mae stockholders’ equity 3,680 9,541

Noncontrolling interest 40 50

Total equity 3,720 9,591

Total liabilities and equity $ 3,248,176 $ 3,270,108

See Notes to Consolidated Financial Statements in 2014 Form 10-K
Fourth Quarter and Full Year 2014 Results 16

FANNIE MAE

(In conservatorship)

Consolidated Statements of Operations and Comprehensive Income

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

For the Year Ended December 31,

2014 2013 2012

Interest income:

Trading securities $ 553 $ 779 $ 989

Available-for-sale securities 1,622 2,357 3,299

Mortgage loans (includes $101,835, $101,448, and $110,451, respectively, related to consolidated trusts) 112,120 114,238 124,706

Other 110 175 196

Total interest income 114,405 117,549 129,190

Interest expense:

Short-term debt 94 131 152

Long-term debt (includes $85,835, $84,751, and $95,612, respectively, related to consolidated trusts) 94,343 95,014 107,537

Total interest expense 94,437 95,145 107,689

Net interest income 19,968 22,404 21,501

Benefit for credit losses 3,964 8,949 852

Net interest income after benefit for credit losses 23,932 31,353 22,353

Investment gains (losses), net 936 1,127 (226)

Fair value (losses) gains, net (4,833) 2,959 (2,977)

Debt extinguishment gains (losses), net 66 131 (244)

Fee and other income 5,887 3,930 1,487

Non-interest income (loss) 2,056 8,147 (1,960)

Administrative expenses:

Salaries and employee benefits 1,321 1,218 1,195

Professional services 1,076 910 766

Occupancy expenses 203 189 188

Other administrative expenses 177 228 218

Total administrative expenses 2,777 2,545 2,367

Foreclosed property expense (income) 142 (2,839) (254)

Temporary Payroll Cut Continuation Act of 2011 (“TCCA”) fees 1,375 1,001 238

Other expenses, net 544 226 822

Total expenses 4,838 933 3,173

Income before federal income taxes 21,150 38,567 17,220

(Provision) benefit for federal income taxes (6,941) 45,415 —

Net income 14,209 83,982 17,220

Other comprehensive income:

Changes in unrealized gains on available-for-sale securities, net of reclassification adjustments and taxes 494 693 1,735

Other 36 126 (116)

Total other comprehensive income 530 819 1,619

Total comprehensive income 14,739 84,801 18,839

Less: Comprehensive (income) loss attributable to noncontrolling interest (1) (19) 4

Total comprehensive income attributable to Fannie Mae $ 14,738 $ 84,782 $ 18,843

Net income $ 14,209 $ 83,982 $ 17,220

Less: Net (income) loss attributable to noncontrolling interest (1) (19) 4

Net income attributable to Fannie Mae $ 14,208 $ 83,963 $ 17,224

Dividends distributed or available for distribution to senior preferred stockholder (15,323) (85,419) (15,827)

Net (loss) income attributable to common stockholders $ (1,115) $ (1,456) $ 1,397

(Loss) earnings per share:

Basic $ (0.19) $ (0.25) $ 0.24

Diluted (0.19) (0.25) 0.24

Weighted-average common shares outstanding:

Basic 5,762 5,762 5,762

Diluted 5,762 5,762 5,893

See Notes to Consolidated Financial Statements in 2014 Form 10-K
Fourth Quarter and Full Year 2014 Results 17

FANNIE MAE

(In conservatorship)

 Consolidated Statements of Cash Flows

(Dollars in millions)

For the Year Ended December 31,

2014 2013 2012

Cash flows (used in) provided by operating activities:

Net income $ 14,209 $ 83,982 $ 17,220

Reconciliation of net income to net cash (used in) provided by operating activities:

Amortization of cost basis adjustments (4,265) (5,104) (2,335)

Benefit for credit losses (3,964) (8,949) (852)

Valuation gains (2,159) (2) (1,345)

Current and deferred federal income taxes 4,126 (47,766) 10

Net change in trading securities (2,666) 1,575 31,972

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

enhancements (4,510) (6,024) (6,009)

Other, net (2,109) (4,809) (1,660)

Net cash (used in) provided by operating activities (1,338) 12,903 37,001

Cash flows provided by investing activities:

Purchases of trading securities held for investment — (7,521) (3,216)

Proceeds from maturities and paydowns of trading securities held for investment 1,358 2,491 3,508

Proceeds from sales of trading securities held for investment 1,668 14,585 3,861

Proceeds from maturities and paydowns of available-for-sale securities 5,853 10,116 12,636

Proceeds from sales of available-for-sale securities 3,265 15,497 1,306

Purchases of loans held for investment (132,650) (195,386) (210,488)

Proceeds from repayments and sales of loans acquired as held for investment of Fannie Mae 26,719 48,875 31,322

Proceeds from repayments and sales of loans acquired as held for investment of consolidated trusts 388,348 631,088 797,331

Net change in restricted cash (3,547) 38,924 (17,122)

Advances to lenders (100,045) (139,162) (144,064)

Proceeds from disposition of acquired property and preforeclosure sales 25,476 38,349 38,685

Net change in federal funds sold and securities purchased under agreements to resell or similar arrangements 8,025 (6,475) 13,500

Other, net 197 1,373 434

Net cash provided by investing activities 224,667 452,754 527,693

Cash flows used in financing activities:

Proceeds from issuance of debt of Fannie Mae 380,282 372,361 736,065

Payments to redeem debt of Fannie Mae (450,140) (459,745) (854,111)

Proceeds from issuance of debt of consolidated trusts 275,353 409,979 396,513

Payments to redeem debt of consolidated trusts (405,505) (707,544) (832,537)

Payments of cash dividends on senior preferred stock to Treasury (20,594) (82,452) (11,608)

Proceeds from senior preferred stock purchase agreement with Treasury — — 4,571

Other, net 70 (145) (9)

Net cash used in financing activities (220,534) (467,546) (561,116)

Net increase (decrease) in cash and cash equivalents 2,795 (1,889) 3,578

Cash and cash equivalents at beginning of period 19,228 21,117 17,539

Cash and cash equivalents at end of period $ 22,023 $ 19,228 $ 21,117

Cash paid during the period for:

Interest $ 108,667 $ 109,240 $ 119,259

Income taxes 2,815 2,350 —

Non-cash activities:

Net mortgage loans acquired by assuming debt $ 190,151 $ 433,007 $ 537,862

Net transfers from mortgage loans of Fannie Mae to mortgage loans of consolidated trusts 113,611 179,097 165,272

Transfers from advances to lenders to loans held for investment of consolidated trusts 93,909 137,074 133,554

Net transfers from mortgage loans to acquired property 24,742 34,024 46,981

See Notes to Consolidated Financial Statements in 2014 Form 10-K
Fourth Quarter and Full Year 2014 Results 18

FANNIE MAE

(In conservatorship)

Consolidated Statements of Changes in Equity (Deficit)

(Dollars and shares in millions)

Fannie Mae Stockholders’ Equity (Deficit) 

Shares Outstanding Senior

Preferred

Stock

Preferred

Stock

Common

Stock

Additional

Paid-In

Capital

Retained

Earnings

(Accumulated

Deficit)

Accumulated

Other

Comprehensive

Income (Loss)

Treasury

Stock

Non

Controlling

Interest

Total

Equity

(Deficit) Senior

Preferred Preferred Common

Balance as of December 31, 2011 1 556 1,158 $112,578 $ 19,130 $ 687 $ — $ (128,381) $ (1,235) $ (7,403) $ 53 $ (4,571)

Change in investment in noncontrolling

interest — — — — — — — — — — (8) (8)

Comprehensive income:

Net income — — — — — — — 17,224 — — (4) 17,220

Other comprehensive income, net of tax

effect:

Changes in net unrealized losses on

available-for-sale securities (net

of tax of $702) — — — — — — — — 1,289 — — 1,289

Reclassification adjustment for losses

included in net income (net of tax

of $241) — — — — — — — — 446 — — 446

Prior service cost and actuarial gains,

net of amortization for defined

benefit plans — — — — — — — — (116) — — (116)

Total comprehensive income 18,839

Senior preferred stock dividends — — — — — — 1 (11,609) — — — (11,608)

Increase to senior preferred liquidation

preference — — — 4,571 — — — — — — — 4,571

Other — — — — — — (1) — — 2 — 1

Balance as of December 31, 2012 1 556 1,158 117,149 19,130 687 — (122,766) 384 (7,401) 41 7,224

Change in investment in noncontrolling

interest — — — — — — — — — — (10) (10)

Comprehensive income:

Net income — — — — — — — 83,963 — — 19 83,982

Other comprehensive income, net of tax

effect:

Changes in net unrealized gains on

available-for-sale securities (net

of tax of $529) — — — — — — — — 983 — — 983

Reclassification adjustment for gains

included in net income (net of tax

of $157) — — — — — — — — (290) — — (290)

Prior service cost and actuarial gains,

net of amortization for defined

benefit plans (net of tax of $68) — — — — — — — — 126 — — 126

Total comprehensive income 84,801

Senior preferred stock dividends — — — — — — — (82,452) — — — (82,452)

Other — — — — — — — 28 — — — 28

Balance as of December 31, 2013 1 556 1,158 117,149 19,130 687 — (121,227) 1,203 (7,401) 50 9,591

Change in investment in noncontrolling

interest — — — — — — — — — — (11) (11)

Comprehensive income:

Net income — — — — — — — 14,208 — — 1 14,209

Other comprehensive income, net of tax

effect:

Changes in net unrealized gains on

available-for-sale securities (net

of tax of $389) — — — — — — — — 722 — — 722

Reclassification adjustment for gains

included in net income (net of tax

of $123) — — — — — — — — (228) — — (228)

Prior service cost and actuarial gains,

net of amortization for defined

benefit plans (net of tax of $20) — — — — — — — — 36 — — 36

Total comprehensive income 14,739

Senior preferred stock dividends — — — — — — — (20,594) — — — (20,594)

Other — — — — — — — (5) — — — (5)

Balance as of December 31, 2014 1 556 1,158 $117,149 $ 19,130 $ 687 $ — $ (127,618) $ 1,733 $ (7,401) $ 40 $ 3,720

See Notes to Consolidated Financial Statements in 2014 Form 10-K