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Date: November 7, 2012 

 

Fannie Mae Reports Net Income of $1.8 Billion for Third Quarter 2012 

Company Generates Net Income of $9.7 Billion for First Nine Months of 2012; 

Expects to Report Annual Net Income for First Time Since 2006

Credit Quality

• High-quality new book of business accounts for 63 percent of single-family guaranty book of 

business as of September 30, 2012.

• Single-family serious delinquency (“SDQ”) rate declined ten consecutive quarters as of third 

quarter 2012; SDQ rate is substantially lower than private market levels.

Support to the Market Since January 1, 2009

• Funded the mortgage market with approximately $3.0 trillion in liquidity providing financing for

▪ 2.5 million home purchases and 8.9 million mortgage refinancings, and

▪ 1.5 million units of quality rental housing.

• Enabled homeowners in distress to retain their homes or avoid foreclosure; completed 

approximately 1.3 million loan workouts, including more than 839,000 modifications.

WASHINGTON, DC – Fannie Mae (FNMA/OTC) today reported net income of $1.8 billion in the third 

quarter of 2012, compared with a net loss of $5.1 billion in the third quarter of 2011. For the first nine 

months of 2012, the company has reported $9.7 billion in net income. Lower credit-related expenses 

resulting from an increase in actual and expected home prices, higher sales prices on the company’s realestate owned (“REO”) properties, and a decline in fair value losses contributed to the continued 

improvement in the company’s financial results. 

The company reported comprehensive income of $2.6 billion in the third quarter of 2012. The company is 

able to pay its third-quarter dividend of $2.9 billion to the Department of the Treasury without any draw 

under its senior preferred stock purchase agreement. 

“We are seeing signs of sustained improvement in housing and our actions to support the housing 

recovery have generated strong financial results in 2012,” said Timothy J. Mayopoulos, president and 

chief executive officer. “Fannie Mae’s priorities are well aligned with the public interest. Our financial 

condition has improved markedly. We have paid the Treasury $8.7 billion in 2012 and our expected 

ability to pay taxpayers is growing. We continue to fund the mortgage market, assist homeowners in 

distress, and lay the foundation for a better housing finance system.” 

“We reported strong revenue for the first nine months of 2012 and expect to report annual net income for 

the first time since 2006,” said Susan McFarland, executive vice president and chief financial officer. 

“The improvement in our financial condition was driven primarily by a substantial reduction in credit 

expense due, in large part, to higher home prices and a reduction in seriously delinquent loans. We 

continue to focus on foreclosure prevention solutions to reduce delinquencies and to keep homeowners in 

their homes.” 

Third Quarter 2012 Results 1
Third Quarter 2012 Results 2

As a result of the company’s positive net worth as of September 30, 2012, the company will not request a 

draw from Treasury for the third quarter of 2012 under the senior preferred stock purchase agreement 

between Fannie Mae and Treasury. The total liquidation preference of Treasury’s senior preferred stock 

remains at $117.1 billion, which requires a dividend payment of $2.9 billion for the fourth quarter of 

2012. Through September 30, 2012, Fannie Mae has paid $28.5 billion in cash dividends to Treasury on 

the senior preferred stock. 

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

were amended. Beginning in 2013, the required senior preferred stock dividends each quarter will equal 

the amount, if any, by which the company’s net worth as of the end of the preceding quarter exceeds an 

applicable capital reserve amount. The applicable capital reserve amount will be $3.0 billion for each 

quarter of 2013 and will be reduced by $600 million each year until it reaches zero in 2018. 

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

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

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

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

31, 2011.

Treasury Draw Requests and Dividend Payments

(1) Treasury draw requests are shown in the period for which they were 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.

HURRICANE SANDY MORTGAGE RELIEF

Fannie Mae is taking steps to help homeowners impacted by Hurricane Sandy. The company has 

authorized its mortgage servicers to provide a full range of mortgage relief options to homeowners with 

mortgages owned or guaranteed by Fannie Mae whose homes were damaged or who experienced a 

disruption in income as a result of Hurricane Sandy. Options available to Fannie Mae servicers include: 

extending forbearance on mortgage payments for up to 12 months, where appropriate; providing loan 

modifications; waiving late payment charges; suspending the reporting of forbearance or delinquency to 

credit bureaus for a homeowner who has been granted relief; and suspending the initiation of a foreclosure 

action. 
Third Quarter 2012 Results 3

PROVIDING LIQUIDITY AND SUPPORT TO THE MARKET

Fannie Mae provided approximately $3.0 trillion in liquidity to the mortgage market from January 1, 2009 

through September 30, 2012 through its purchases and guarantees of loans, which enabled borrowers to 

complete 8.9 million mortgage refinancings and 2.5 million home purchases, and provided financing for 

1.5 million units of multifamily housing. 

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

secondary market in the third quarter of 2012, with an estimated market share of new single-family 

mortgage-related securities issuances of 52 percent, compared with 43 percent in the third quarter of 2011. 

Fannie Mae also remained a constant source of liquidity in the multifamily market. As of June 30, 2012 

(the latest date for which information is available), the company owned or guaranteed approximately 22 

percent of the outstanding debt on multifamily properties.

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

significant resources towards helping to build a new housing finance system for the future, primarily 

through pursuing the strategic goals identified by its conservator, the Federal Housing Finance Agency. 

These strategic goals are: build a new infrastructure for the secondary mortgage market; gradually 

contract the company’s dominant presence in the marketplace while simplifying and shrinking its 

operations; and maintain foreclosure prevention activities and credit availability for new and refinanced 

mortgages. 
Third Quarter 2012 Results 4

CREDIT QUALITY

New Single-Family Book of Business: 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. Sixty-three percent of 

Fannie Mae’s single-family guaranty book of business as of September 30, 2012 consisted of loans it had 

purchased or guaranteed since the beginning of 2009. While it is too early to know how the single-family 

loans the company has acquired since January 1, 2009 will ultimately perform, given their strong credit 

risk profile and based on their performance so far, the company expects that these loans, in the aggregate, 

will be profitable over their lifetime, meaning the company’s fee income on these loans will exceed the 

company’s credit losses and administrative costs for them. If future conditions turn out to be more 

unfavorable than the company’s expectations, these loans could become unprofitable. 

Single-family conventional loans acquired by Fannie Mae in the first nine months of 2012 had a weighted 

average FICO credit score at origination of 761 and an average original loan-to-value (“LTV”) ratio of 74 

percent. The average original LTV ratio for the company’s acquisitions increased in the first nine months 

of 2012 because the company acquired more loans with higher LTV ratios in that period than in prior 

periods as changes to the Home Affordable Refinance Program (“HARP”) were implemented. 
Third Quarter 2012 Results 5

Fannie Mae’s Expectations Regarding Future Loss Reserves and Credit-Related Expenses: The 

company’s total loss reserves decreased to $66.9 billion as of September 30, 2012 from $76.9 billion as of 

December 31, 2011. The company expects the trends of stabilizing home prices and declining singlefamily serious delinquency rates will continue, although it expects serious delinquency rates to decline at 

a slower pace than in recent periods. As a result, the company believes that its total loss reserves peaked 

as of December 31, 2011. Accordingly, the company does not expect total loss reserves to increase above 

$76.9 billion in the foreseeable future. The company also believes that its credit-related expenses will be 

significantly lower in 2012 than in 2011. Although the company expects these positive trends to continue, 

the amount of credit-related expenses the company recognizes in future periods could vary significantly 

from period to period, and may be affected by many different factors. For information on factors that may 

affect future credit-related expenses and other risk factors, please refer to the company’s quarterly report 

on Form 10-Q for the quarter ended September 30, 2012. 

Fannie Mae’s single-family serious delinquency rate has declined each quarter since the first quarter of 

2010, and was 3.41 percent as of September 30, 2012, compared with 5.47 percent as of March 31, 2010. 

This decrease is primarily the result of home retention solutions, foreclosure alternatives, and completed 

foreclosures, as well as the company’s acquisition of loans with stronger credit profiles since the 

beginning of 2009. 
Third Quarter 2012 Results 6

HOME RETENTION SOLUTIONS AND FORECLOSURE ALTERNATIVES

To reduce the credit losses Fannie Mae ultimately incurs on its legacy 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. Fannie Mae completed nearly 42,000 loan modifications during the 

third quarter of 2012, bringing the total number of loan modifications the company has completed since 

January 1, 2009 to more than 839,000. 

As the company works to reduce credit losses, it also seeks to assist struggling borrowers, help stabilize 

communities, and support the housing market. In dealing with struggling borrowers, Fannie Mae first 

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

foreclosure alternatives. If the company is unable to provide a viable home retention solution for a 

struggling borrower, the company seeks to offer a foreclosure alternative and complete it in a timely 

manner. From January 1, 2009 through September 30, 2012, the company completed approximately 

264,000 preforeclosure sales (also known as short sales) and deeds-in-lieu of foreclosure. When there is 

no viable home retention solution or foreclosure alternative that can be applied, the company seeks to 

move to foreclosure expeditiously. The goal of these efforts is to help minimize delinquencies that can 

adversely impact local home values and destabilize communities, as well as lower costs to Fannie Mae. 

REFINANCING INITIATIVES

Through the company’s Refi PlusTMinitiative, which provides expanded refinance opportunities for 

eligible Fannie Mae borrowers and includes HARP, the company acquired approximately 312,000 loans 

in the third quarter of 2012. Some borrowers’ monthly payments increased as they took advantage of the 

ability to refinance through Refi Plus to reduce the term of their loan, to switch from an adjustable-rate 

mortgage to a fixed-rate mortgage, or to switch from an interest-only mortgage to a fully amortizing 

mortgage. Even taking these into account, refinancings delivered to Fannie Mae through Refi Plus in the 

third quarter of 2012 reduced borrowers’ monthly mortgage payments by an average of $221. 
Third Quarter 2012 Results 7

FORECLOSURES AND REO

Fannie Mae acquired 41,884 single-family REO properties, primarily through foreclosure, in the third 

quarter of 2012, compared with 43,783 in the second quarter of 2012. As of September 30, 2012, the 

company’s inventory of single-family REO properties was 107,225, compared with 109,266 as of June 30, 

2012. The carrying value of the company’s single-family REO was $9.3 billion as of September 30, 2012. 

The company’s single-family foreclosure rate was 1.01 percent for the first nine months of 2012. This 

reflects the annualized 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, fair 

value balance sheets, and other matters in its quarterly report on Form 10-Q for the quarter ended 

September 30, 2012, which was filed today with the Securities and Exchange Commission. Further 

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

the drivers of its credit losses, its foreclosure-prevention efforts, and other measures is contained in the 

“2012 Third-Quarter Credit Supplement” on Fannie Mae’s Web site, www.fanniemae.com. 

# # # 

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

statements regarding the company's future earnings and financial results; the value the company can deliver to taxpayers; the company's future loss reserves 

and credit-related expenses; the profitability of its loans; its draws from dividends to be paid to Treasury; the trends of stabilizing home prices and declining 
Third Quarter 2012 Results 8

serious delinquency rates; the impact of the company's actions on its future losses, delinquencies, costs and credit losses; and future volatility in the fair value 

of the company's trading securities and derivatives. These estimates, forecasts, expectations, and statements are forward looking statements based on the 

company's current assumptions regarding numerous factors, including future home prices and the future performance of its loans. 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 variables, government policy, credit availability, social behaviors, including increases in the number of underwater 

borrowers who strategically default on their mortgage loan, the volume of loans it modifies, the nature, volume and effectiveness of its loss mitigation 

strategies and activities, management of its real estate owned inventory and pursuit of contractual remedies, changes in the fair value of its assets and 

liabilities, impairments of its assets, the adequacy of its loss reserves, future legislative or regulatory requirements that have a significant impact on the 

company's business such as a requirement that the company implement a principal forgiveness program, future updates to the company's models relating to 

loss reserves, including the assumptions used by these models; changes in generally accepted accounting principles, changes to the company's accounting 

policies, failures by its mortgage seller-servicers to fulfill their repurchase obligations to it, its ability to maintain a positive net worth, effects from activities 

the company takes to support the mortgage market and help homeowners, the conservatorship and its effect on the company's business, the investment by 

Treasury and its effect on the company's business, changes in the structure and regulation of the financial services industry, the company's ability to access the 

debt markets, disruptions in the housing, credit, and stock markets, government investigations and litigation, the performance of the company's servicers, 

conditions in the foreclosure environment, natural or other disasters, and many other factors, including those discussed in the “Risk Factors” section of and 

elsewhere in the company's quarterly report on Form 10-Q for the quarter ended September 30, 2012 and its annual report on Form 10-K for the year ended 

December 31, 2011, 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 exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a 

federal charter and operates in America’s secondary mortgage market to enhance the liquidity of the mortgage market by purchasing or guaranteeing 

mortgage loans originated by mortgage bankers and other lenders so that they may lend to home buyers. Our job is to help those who house America.
Third Quarter 2012 Results 9

APPENDIX

SUMMARY OF THIRD QUARTER 2012 RESULTS

Fannie Mae reported net income of $1.8 billion for the third quarter of 2012, compared with net income of 

$5.1 billion for the second quarter of 2012 and a net loss of $5.1 billion for the third quarter of 2011. As a 

result of the company’s positive net worth as of September 30, 2012, which takes into account dividends 

paid on senior preferred stock held by Treasury, the company will not request a draw for the quarter from 

Treasury under the senior preferred stock purchase agreement. 

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

Net revenues were $5.7 billion in the third quarter of 2012, compared with $5.8 billion in the second 

quarter of 2012. Net interest income was $5.3 billion, compared with $5.4 billion in the second quarter of 

2012. The decrease in net interest income compared with the second quarter of 2012 was due primarily to 

decreasing interest income on the company’s mortgage securities and loans held in its retained portfolio 

partially offset by lower interest expense on its Fannie Mae debt. 
Third Quarter 2012 Results 10

 

Credit-related expenses, which consist of the provision for credit losses and foreclosed property 

expense, were $2.0 billion in the third quarter of 2012, compared with $3.1 billion in credit-related 

income in the second quarter of 2012. The shift to credit-related expenses in the third quarter of 2012 

from credit-related income in the second quarter of 2012 was due primarily to an increase in the expected 

lives of modified loans as the company updated its assumptions with more recent data, which increased 

the expected cost related to concessions the company has granted to borrowers. While the company’s 

expectations of credit loss decreased due to better performance of its modified loans, the concessions 

granted to borrowers from modifications increased due to the longer average life of the loans. In addition, 

the company’s provision for credit losses in the third quarter of 2012 was negatively impacted by a 

change in its accounting for loans to certain borrowers who have received bankruptcy relief. This change 

led to an increase in the number of loans the company classifies as troubled debt restructurings, resulting 

in an increase in its provision for credit losses. 

Credit losses, which the company defines as net charge-offs plus foreclosed property expense, excluding 

the effect of certain fair-value losses, were $3.5 billion in the third quarter of 2012, compared with $3.8 

billion in the second quarter of 2012. The decrease in credit losses was due primarily to improved REO 

prices, and a decrease in volume of foreclosure and short sale activity. 
Third Quarter 2012 Results 11

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, were $66.9 billion as of September 30, 2012, compared with $68.0 billion as of June 30, 2012 

and $76.9 billion as of December 31, 2011. The total loss reserve coverage to total nonperforming loans 

was 26 percent as of September 30, 2012, compared with 28 percent as of June 30, 2012 and 31 percent as 

of December 31, 2011. 

Net fair value losses were $1.0 billion in the third quarter of 2012, compared with net fair value losses of 

$2.4 billion in the second quarter of 2012. Fair value losses declined in the third quarter of 2012 due to 

lower derivative losses because interest rates declined less in the third quarter of 2012 than they did in the 

second quarter of 2012. The estimated fair value of the company’s trading securities and derivatives may 

fluctuate substantially from period to period because of changes in interest rates, credit spreads, and 

interest rate volatility, as well as activity related to these financial instruments. 
Third Quarter 2012 Results 12

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 mission of providing liquidity, stability, and affordability to the U.S. housing 

market. The company’s Single-Family and Multifamily businesses work with Fannie Mae’s lender 

customers, who deliver mortgage loans that the company purchases and securitizes into Fannie Mae MBS. 

The Capital Markets group manages the company’s investment activity in mortgage-related assets and 

other interest-earning non-mortgage investments, funding investments in mortgage-related assets 

primarily with proceeds received from the issuance of Fannie Mae debt securities in the domestic and 

international capital markets. The Capital Markets group also provides liquidity to the mortgage market 

through short-term financing and other activities. 

Single-Family business had a net loss of $822 million in the third quarter of 2012, compared with net 

income of $4.4 billion in the second quarter of 2012. The shift to a net loss in the third quarter of 2012 

was due primarily to credit-related expenses of $2.1 billion. The Single-Family guaranty book of business 

was $2.85 trillion as of September 30, 2012, compared with $2.84 trillion as of June 30, 2012. SingleFamily guaranty fee income was $2.0 billion for both the third quarter of 2012 and the second quarter of 

2012. 

Multifamily had net income of $427 million in the third quarter of 2012, compared with $358 million in 

the second quarter of 2012. The Multifamily guaranty book of business was $202.2 billion as of 

September 30, 2012, compared with $198.5 billion as of June 30, 2012. Multifamily recorded creditrelated income of $99 million in the third quarter of 2012, compared with $96 million in the second 

quarter of 2012. Multifamily guaranty fee income was $265 million for the third quarter of 2012 and $252 

million for the second quarter of 2012. 

Capital Markets group had net income of $4.1 billion in the third quarter of 2012, compared with $1.5 

billion in the second quarter of 2012. Capital Markets’ net interest income for the third quarter of 2012 

was $3.2 billion, compared with $3.4 billion for the second quarter of 2012. Fair value losses were $1.0 

billion, compared with fair value losses of $2.5 billion in the second quarter of 2012. The Capital Markets 
mortgage investment portfolio balance decreased to $654.3 billion as of September 30, 2012, compared 

with $708.4 billion as of December 31, 2011, resulting from purchases of $199.1 billion, liquidations of 

$104.9 billion, and sales of $148.3 billion during the year. 

Third Quarter 2012 Results 13
Third Quarter 2012 Results 14

ANNEX I

FANNIE MAE

(In conservatorship)

Condensed Consolidated Balance Sheets – (Unaudited)

(Dollars in millions, except share amounts)

As of 

September 30,

December 

31, 

2012 2011 

ASSETS 

Cash and cash equivalents............................................................................................................................ $ 20,674 $ 17,539

Restricted cash (includes $54,750 and $45,900, respectively, related to consolidated trusts).......................................... 59,944 50,797

Federal funds sold and securities purchased under agreements to resell or similar arrangements..................................... 45,500 46,000

Investments in securities: 

Trading, at fair value ............................................................................................................................... 42,522 74,198

Available-for-sale, at fair value (includes $1,042 and $1,191, respectively, related to consolidated trusts)..................... 66,352 77,582

Total investments in securities................................................................................................................. 108,874 151,780

Mortgage loans: 

Loans held for sale, at lower of cost or fair value (includes $95 and $66, respectively, related to consolidated trusts)....... 490 311

Loans held for investment, at amortized cost: 

Of Fannie Mae .................................................................................................................................... 363,064 380,134

Of consolidated trusts (includes $7,840 and $3,611, respectively, at fair value and loans pledged as collateral that may 

be sold or repledged of $1,040 and $798, respectively) .............................................................................. 2,642,354 2,590,332

Total loans held for investment................................................................................................................ 3,005,418 2,970,466

Allowance for loan losses ...................................................................................................................... (63,012 ) (72,156 )

Total loans held for investment, net of allowance....................................................................................... 2,942,406 2,898,310

Total mortgage loans........................................................................................................................ 2,942,896 2,898,621

Accrued interest receivable, net (includes $8,358 and $8,466, respectively, related to consolidated trusts) ........................ 9,963 10,000

Acquired property, net ................................................................................................................................ 10,278 11,373

Other assets (includes cash pledged as collateral of $2,038 and $1,109, respectively) .................................................. 28,121 25,374

Total assets........................................................................................................................................... $ 3,226,25

0 $ 3,211,484

LIABILITIES AND EQUITY (DEFICIT) 

Liabilities: 

Accrued interest payable (includes $8,856 and $9,302, respectively, related to consolidated trusts) ............................. $ 11,732 $ 12,648

Debt: 

Of Fannie Mae (includes $830 and $838, respectively, at fair value) ................................................................. 652,971 732,444

Of consolidated trusts (includes $7,368 and $3,939, respectively, at fair value).................................................... 2,543,739 2,457,428

Other liabilities (includes $715 and $629, respectively, related to consolidated trusts).............................................. 15,396 13,535

Total liabilities.................................................................................................................................... 3,223,838 3,216,055

Commitments and contingencies.................................................................................................................... — —

Fannie Mae stockholders’ equity (deficit): 

Senior preferred stock, 1,000,000 shares issued and outstanding......................................................................... 117,149 112,578

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

Common stock, no par value, no maximum authorization—1,308,762,703 shares issued, respectively, 1,158,077,970 and 

1,157,767,400 shares outstanding, respectively........................................................................................... 687 687

Accumulated deficit................................................................................................................................ (127,407 ) (128,381 )

Accumulated other comprehensive income (loss) ........................................................................................... 201 (1,235 )

Treasury stock, at cost, 150,684,733 and 150,995,303 shares, respectively ............................................................ (7,401 ) (7,403 )

Total Fannie Mae stockholders’ equity (deficit).............................................................................................. 2,359 (4,624 )

Noncontrolling interest................................................................................................................................ 53 53

Total equity (deficit) ............................................................................................................................... 2,412 (4,571 )

Total liabilities and equity (deficit)................................................................................................................. $ 3,226,25

0

$ 3,211,484

See Notes to Condensed Consolidated Financial Statements 
Third Quarter 2012 Results 15

FANNIE MAE

(In conservatorship)

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) – (Unaudited)

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

For the Three For the Nine

Months Ended Months Ended

September 30, September 30,

2012 2011 2012 2011

Interest income: 

Trading securities...................................................................................................... $ 234 $ 274 $ 756 $ 822

Available-for-sale securities......................................................................................... 789 1,160 2,551 3,525

Mortgage loans (includes $27,057 and $30,633, respectively, for the three months ended and 

$84,482 and $94,111, respectively, for the nine months ended related to consolidated trusts) .... 30,593 34,334 95,186 105,257

Other ..................................................................................................................... 53 26 131 79

Total interest income ............................................................................................... 31,669 35,794 98,624 109,683

Interest expense: 

Short-term debt ...................................................................................................... 38 66 112 254

Long-term debt (includes $23,395 and $27,157, respectively, for the three months ended and 

$73,469 and $82,928, respectively, for the nine months ended related to consolidated trusts).. 26,314 30,542 82,570 94,311

Total interest expense .............................................................................................. 26,352 30,608 82,682 94,565

Net interest income ....................................................................................................... 5,317 5,186 15,942 15,118

Provision for credit losses ............................................................................................... (2,079 ) (4,151 ) (1,038 ) (21,242 )

Net interest income (loss) after provision for credit losses ....................................................... 3,238 1,035 14,904 (6,124 )

Investment gains, net ..................................................................................................... 134 73 381 319

Other-than-temporary impairments.................................................................................... (17 ) (232 ) (293 ) (317 )

Noncredit portion of other-than-temporary impairments recognized in other comprehensive income .. (21 ) (30 ) (408 ) (45 )

Net other-than-temporary impairments............................................................................... (38 ) (262 ) (701 ) (362 )

Fair value losses, net...................................................................................................... (1,020 ) (4,525 ) (3,186 ) (5,870 )

Debt extinguishment losses, net........................................................................................ (54 ) (119 ) (181 ) (149 )

Fee and other income ..................................................................................................... 378 291 1,148 793

Non-interest loss ....................................................................................................... (600 ) (4,542 ) (2,539 ) (5,269 )

Administrative expenses: 

Salaries and employee benefits ..................................................................................... 294 323 892 953

Professional services.................................................................................................. 195 173 542 531

Occupancy expenses .................................................................................................. 48 46 139 131

Other administrative expenses ...................................................................................... 51 49 146 150

Total administrative expenses .................................................................................... 588 591 1,719 1,765

Foreclosed property (income) expense................................................................................ (48 ) 733 221 743

Other expenses............................................................................................................. 285 254 775 638

Total expenses.......................................................................................................... 825 1,578 2,715 3,146

Income (loss) before federal income taxes........................................................................... 1,813 (5,085 ) 9,650 (14,539 )

Benefit for federal income taxes ....................................................................................... — — — 91

Net income (loss).......................................................................................................... 1,813 (5,085 ) 9,650 (14,448 )

Other comprehensive income (loss): 

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

and taxes................................................................................................................. 741 (198 ) 1,416 (20 )

Other ..................................................................................................................... 5 1 20 6

Total other comprehensive income (loss) ...................................................................... 746 (197 ) 1,436 (14 )

Total comprehensive income (loss).................................................................................... 2,559 (5,282 ) 11,086 (14,462 )

Less: Comprehensive loss (income) attributable to the noncontrolling interest........................... 8 — 4 (1 )

Total comprehensive income (loss) attributable to Fannie Mae ................................................. $ 2,567 $ (5,282 ) $ 11,090 $ (14,463 )

Net income (loss).......................................................................................................... $ 1,813 $ (5,085 ) $ 9,650 $ (14,448 )

Less: Net loss (income) attributable to the noncontrolling interest.......................................... 8 — 4 (1 )

Net income (loss) attributable to Fannie Mae ....................................................................... 1,821 (5,085 ) 9,654 (14,449 )

Preferred stock dividends................................................................................................ (2,929 ) (2,494 ) (8,675 ) (6,992 )

Net (loss) income attributable to common stockholders .......................................................... $ (1,108 ) $ (7,579 ) $ 979 $ (21,441 )

(Loss) earnings per share: 

Basic...................................................................................................................... $ (0.19 ) $ (1.32 ) $ 0.17 $ (3.74 )

Diluted ................................................................................................................... (0.19 ) (1.32 ) 0.17 (3.74 )

Weighted-average common shares outstanding: 

Basic...................................................................................................................... 5,762 5,760 5,762 5,730

Diluted ................................................................................................................... 5,762 5,760 5,893 5,730

See Notes to Condensed Consolidated Financial Statements 
Third Quarter 2012 Results 16

FANNIE MAE

(In conservatorship)

Condensed Consolidated Statements of Cash Flows – (Unaudited)

(Dollars in millions)

For the Nine 

Months Ended 

September 30, 

2012 2011 

Net cash provided by (used in) operating activities...............................................................................................$ 32,279 $ (6,714)

Cash flows provided by investing activities: 

Purchases of trading securities held for investment ............................................................................................. (1,542 ) (2,483 )

Proceeds from maturities and paydowns of trading securities held for investment .................................................. 2,671 1,672

Proceeds from sales of trading securities held for investment............................................................................... 1,357 837

Purchases of available-for-sale securities........................................................................................................... (34 ) (44 )

Proceeds from maturities and paydowns of available-for-sale securities................................................................ 9,423 9,995

Proceeds from sales of available-for-sale securities............................................................................................. 923 2,590

Purchases of loans held for investment ..............................................................................................................(141,539 ) (44,276 )

Proceeds from repayments of loans held for investment of Fannie Mae................................................................. 22,540 18,467

Proceeds from repayments of loans held for investment of consolidated trusts....................................................... 568,881 364,500

Net change in restricted cash ............................................................................................................................ (9,147 ) 7,717

Advances to lenders ........................................................................................................................................ (97,508 ) (43,363 )

Proceeds from disposition of acquired property and preforeclosure sales............................................................... 29,822 36,280

Net change in federal funds sold and securities purchased under agreements to resell or similar agreements............. 500 (24,199 )

Other, net ....................................................................................................................................................... 56 137

Net cash provided by investing activities................................................................................................................. 386,403 327,830

Cash flows used in financing activities: 

Proceeds from issuance of debt of Fannie Mae ................................................................................................... 550,087 572,828

Payments to redeem debt of Fannie Mae............................................................................................................(630,546 ) (609,399 )

Proceeds from issuance of debt of consolidated trusts ......................................................................................... 270,552 157,280

Payments to redeem debt of consolidated trusts..................................................................................................(601,523 ) (444,160 )

Payments of cash dividends on senior preferred stock to Treasury........................................................................ (8,679 ) (6,992 )

Proceeds from senior preferred stock purchase agreement with Treasury .............................................................. 4,571 16,187

Other, net ....................................................................................................................................................... (9 ) 150

Net cash used in financing activities........................................................................................................................(415,547 ) (314,106 )

Net increase in cash and cash equivalents 3,135 7,010

Cash and cash equivalents at beginning of period ..................................................................................................... 17,539 17,297

Cash and cash equivalents at end of period ..............................................................................................................$ 20,674 $ 24,307

Cash paid during the period for interest ..............................................................................................................$ 90,338 $ 97,592

See Notes to Condensed Consolidated Financial Statements