Fourth Quarter and Full Year 2013 Results 1

Resource Center: 1-800-732-6643

Contact: Pete Bakel

202-752-2034

Date: February 21, 2014

Fannie Mae Reports Comprehensive Income of $84.8 Billion for 2013 

and $6.6 Billion for Fourth Quarter 2013

Fannie Mae Paid Treasury $82.5 Billion in Dividends in 2013

• Fannie Mae reported annual net income for 2013 of $84.0 billion, which includes the release of 

the company’s valuation allowance against its deferred tax assets, and annual pre-tax income for 

2013 of $38.6 billion. 

• Fannie Mae reported net income of $6.5 billion for the fourth quarter of 2013, the company’s 

eighth consecutive quarterly profit, and pre-tax income of $8.3 billion for the fourth quarter of 

2013.

• Fannie Mae will pay Treasury $7.2 billion in dividends in March 2014. With the March dividend 

payment, Fannie Mae will have paid a total of $121.1 billion in dividends to Treasury in 

comparison to $116.1 billion in draw requests since 2008. Dividend payments do not offset prior 

Treasury draws.

• Fannie Mae has funded the mortgage market with approximately $4.1 trillion in liquidity since 

2009, enabling families to buy, refinance, or rent a home. 

• Fannie Mae is supporting the housing recovery by providing access to affordable mortgages and 

by helping to build a safer, transparent, and sustainable housing finance system.

• While Fannie Mae expects to be profitable for the foreseeable future, the company does not 

expect to repeat its 2013 financial results, as those results were positively affected by the release 

of the company’s valuation allowance against its deferred tax assets, a significant increase in 

home prices during the year, and the large number of resolutions the company reached relating to 

representation and warranty matters and servicing matters.

WASHINGTON, DC — Fannie Mae (FNMA/OTC) reported annual net income of $84.0 billion and 

annual pre-tax income of $38.6 billion in 2013. This compares to net income of $17.2 billion and pre-tax 

income of $17.2 billion in 2012. Fannie Mae reported net income of $6.5 billion for the fourth quarter of 

2013, the company’s eighth consecutive quarterly profit, and pre-tax income of $8.3 billion for the fourth 

quarter of 2013. The company’s comprehensive income of $6.6 billion for the fourth quarter of 2013 

contributed to Fannie Mae’s positive net worth of $9.6 billion as of December 31, 2013.

Fannie Mae will pay Treasury $7.2 billion in March 2014 as a dividend on the senior preferred stock, 

marking the first time in which the company’s cumulative dividend payments to Treasury will exceed its 

total draws. Under the senior preferred stock purchase agreement, the payment of dividends does not 

offset prior draws. 

Fannie Mae’s strong 2013 pre-tax results were driven by continued stable revenues, credit-related income, 

and fair value gains. Credit-related income was positively affected by an increase in home prices, a decline 
Fourth Quarter and Full Year 2013 Results 2

in serious delinquency rates, and updated assumptions and data used to estimate the company’s allowance 

for loan losses in 2013. Fannie Mae’s 2013 financial results also were positively affected by the release of 

the company’s valuation allowance against its deferred tax assets and the large number of resolutions the 

company entered into during the year relating to representation and warranty matters and servicing 

matters.

While Fannie Mae remains under conservatorship and subject to the restrictions of the senior preferred 

stock purchase agreement with Treasury, the company has undergone significant changes over the past 

several years resulting in improved financial performance and a stronger book of business. Fannie Mae 

expects to remain profitable for the foreseeable future. While the company expects its annual earnings to 

remain strong over the next few years, it expects its net income in future years will be substantially lower 

than its net income for 2013. For more information about Fannie Mae’s expectations for its future 

financial performance, see the company’s annual report on Form 10-K for the year ended December 31, 

2013, filed with the SEC on February 21, 2014.

ABOUT FANNIE MAE’S CONSERVATORSHIP

Fannie Mae has operated under the conservatorship of the Federal Housing Finance Agency (“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 the U.S. 

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, 2013, Fannie Mae has requested cumulative draws totaling $116.1 billion and paid $113.9 

billion in dividends to Treasury. Following the company’s March 2014 dividend payment of $7.2 billion to 

Treasury, Fannie Mae’s cumulative dividend payments to Treasury will exceed total draws from Treasury. 

Under the senior preferred stock purchase agreement, the payment of dividends does not offset prior 

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

preferred stock.

Treasury Draws and Dividend Payments

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

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

not offset prior Treasury draws.

(2) The company’s dividend for the first quarter of 2014 is calculated based on the company’s net worth of $9.6 billion as of December 

31, 2013 less the applicable capital reserve amount of $2.4 billion.

(3) Amounts may not sum due to rounding.
Fourth Quarter and Full Year 2013 Results 3

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 $3.0 billion for each 

quarterly dividend period in 2013, decreased to $2.4 billion for dividend periods in 2014 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.

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, 2013.

PROVIDING LIQUIDITY AND SUPPORT TO THE MARKET

Fannie Mae provided approximately $4.1 trillion in liquidity to the mortgage market from January 1, 2009 

through December 31, 2013 through its purchases and guarantees of loans, which enabled borrowers to 

complete 12.3 million mortgage refinancings and 3.7 million home purchases, and provided financing for 

2.2 million units of multifamily housing.

Fannie Mae’s market share remained high in 2013 as the company has continued to meet the needs of the 

single-family mortgage market in the absence of substantial issuances of mortgage-related securities by 

private institutions during the year. The company remained the largest single issuer of single-family 

mortgage-related securities in the secondary market during the fourth quarter of 2013, with an estimated 

market share of new single-family mortgage-related securities issuances of 46 percent, compared with 48

percent in the fourth quarter of 2012 and 47 percent for all of 2013.
Fourth Quarter and Full Year 2013 Results 4

Fannie Mae also remained a continuous source of liquidity in the multifamily market in 2013. As of 

September 30, 2013 (the latest date for which information is available), the company owned or guaranteed 

approximately 21 percent of the outstanding debt on multifamily properties.

HELPING TO BUILD A SUSTAINABLE HOUSING FINANCE SYSTEM

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

significant resources toward helping to build a sustainable housing finance system for the future, primarily 

through pursuing the strategic goals identified by its conservator, FHFA. 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.

CREDIT QUALITY

New Single-Family Book of Business: While continuing to make it possible for families to purchase, 

refinance, or rent a home, Fannie Mae has established responsible credit standards. Since 2009, Fannie 

Mae has seen the effect of 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. As of December 31, 2013, 77 percent of Fannie Mae’s single-family guaranty book of 

business consisted of loans it had purchased or guaranteed since the beginning of 2009. Given their strong 

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

loans 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.
Fourth Quarter and Full Year 2013 Results 5

Single-family conventional loans acquired by Fannie Mae in 2013 had a weighted average borrower FICO 

credit score at origination of 753 and an average original loan-to-value (“LTV”) ratio of 76 percent. 

Loss Reserves: The company’s total loss reserves decreased to $47.3 billion as of December 31, 2013

from $62.6 billion as of December 31, 2012. The company’s total loss reserves peaked at $76.9 billion as 

of December 31, 2011.

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

2010, and was 2.38 percent as of December 31, 2013, 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.
Fourth Quarter and Full Year 2013 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 approximately 39,000 loan modifications 

during the fourth quarter of 2013 and approximately 160,000 for the full year of 2013.

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

offers alternatives to foreclosure. We provided approximately 234,000 loan workouts in 2013 to help 

homeowners stay in their homes or otherwise avoid foreclosure. These efforts helped to stabilize 

neighborhoods, home prices and the housing market. 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. 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,

2013 2012 2011 2010

Unpaid

Principal

Balance

Number

of Loans

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 $ 28,801 160,007 $ 30,640 163,412 $ 42,793 213,340 $ 82,826 403,506

Repayment plans and forbearances

completed 1,594 12,022 3,298 23,329 5,042 35,318 4,385 31,579

HomeSaver Advance first-lien loans — — — — — — 688 5,191

Total home retention strategies 30,395 172,029 33,938 186,741 47,835 248,658 87,899 440,276

Foreclosure alternatives:

Short sales 9,786 46,570 15,916 73,528 15,412 70,275 15,899 69,634

Deeds-in-lieu of foreclosure 2,504 15,379 2,590 15,204 1,679 9,558 1,053 5,757

Total foreclosure alternatives 12,290 61,949 18,506 88,732 17,091 79,833 16,952 75,391

Total loan workouts $ 42,685 233,978 $ 52,444 275,473 $ 64,926 328,491 $ 104,851 515,667

Loan workouts as a percentage of singlefamily guaranty book of business 1.48% 1.33% 1.85% 1.57% 2.29% 1.85% 3.66% 2.87%
Fourth Quarter and Full Year 2013 Results 7

REFINANCING INITIATIVES

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

borrowers and includes HARP, the company acquired approximately 139,000 loans in the fourth quarter of 

2013 and approximately 1 million loans for the full year of 2013. 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 interestonly mortgage to a fully amortizing mortgage. Even taking these into account, refinancings delivered to 

Fannie Mae through Refi Plus in 2013 reduced borrowers’ monthly mortgage payments by an average of 

$223.

FORECLOSURES AND REO

Fannie Mae acquired 32,208 single-family REO properties, primarily through foreclosure, in the fourth

quarter of 2013, compared with 37,353 in the third quarter of 2013. As of December 31, 2013, the 

company’s inventory of single-family REO properties was 103,229, compared with 100,941 as of 

September 30, 2013. The carrying value of the company’s single-family REO was $10.3 billion as of 

December 31, 2013.

The company’s single-family foreclosure rate was 0.82 percent for the full year of 2013. This reflects the 

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.
Fourth Quarter and Full Year 2013 Results 8

For the Year Ended December 31,

2013 2012 2011

Single-family foreclosed properties (number of properties):

Beginning of period inventory of single-family foreclosed properties (REO) 105,666 118,528 162,489

Total properties acquired through foreclosure 144,384 174,479 199,696

Dispositions of REO (146,821) (187,341) (243,657)

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

Carrying value of single-family foreclosed properties (dollars in millions) $ 10,334 $ 9,505 $ 9,692

Single-family foreclosure rate 0.82 % 0.99 % 1.13 %

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

value balance sheets, and other matters in its annual report on Form 10-K for the year ended December 31, 

2013, which was filed today with the Securities and Exchange Commission. Additional information about 

the company’s credit performance, the characteristics of its guaranty book of business, its foreclosureprevention efforts, and other measures is contained in the “2013 Credit Supplement” at 

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, including its profitability; the company’s future loss reserves; the profitability of its 

loans; its future dividend payments to Treasury; 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 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 and housing market variables, the company’s future serious 

delinquency rates, 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 nature, volume and 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, impairments of its assets, 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, effects from activities the company takes to support the mortgage market and help borrowers, 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, the company’s future guaranty fee pricing and the impact of that pricing on the company’s competitive environment, challenges the company faces in 

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

company’s credit ratings, defaults by one or more institutional counterparties, resolution or settlement agreements the company may enter into with its 

counterparties, operational control weaknesses, changes in the 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 annual report on Form 10-K for the year ended December 31, 2013, 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 a home.

Visit us at: www.fanniemae.com/progress

Follow us on Twitter: http://twitter.com/FannieMae
Fourth Quarter and Full Year 2013 Results 9

APPENDIX

SUMMARY OF FOURTH QUARTER AND FULL YEAR 2013 RESULTS

Fannie Mae reported net income of $6.5 billion for the fourth quarter of 2013, compared with net income 

of $8.7 billion for the third quarter of 2013 and net income of $7.6 billion for the fourth quarter of 2012. 

The company reported net income of $84.0 billion for 2013, compared with net income of $17.2 billion 

for 2012. 

(Dollars in millions) 4Q13 3Q13 Variance FY 2013 FY 2012 Variance

Net interest income $ 4,851 $ 5,582 $ (731) $ 22,404 $ 21,501 $ 903

Fee and other income 2,136 741 1,395 3,930 1,487 2,443

Net revenues 6,987 6,323 664 26,334 22,988 3,346

Investment gains, net 135 648 (513) 1,191 487 704

Net other-than-temporary impairments (22) (27) 5 (64) (713) 649

Fair value gains (losses), net 961 335 626 2,959 (2,977) 5,936

Administrative expenses (632) (646) 14 (2,545) (2,367) (178)

Credit-related income

Benefit for credit losses — 2,609 (2,609) 8,949 852 8,097

Foreclosed property income 1,082 1,165 (83) 2,839 254 2,585

Total credit-related income 1,082 3,774 (2,692) 11,788 1,106 10,682

Other non-interest expenses(1) (237) (308) 71 (1,096) (1,304) 208

Net gains (losses) and income (expenses) 1,287 3,776 (2,489) 12,233 (5,768) 18,001

Income before federal income taxes 8,274 10,099 (1,825) 38,567 17,220 21,347

(Provision) benefit for federal income taxes (1,816) (1,355) (461) 45,415 — 45,415

Net income 6,458 8,744 (2,286) 83,982 17,220 66,762

Less: Net (income) loss attributable to the

noncontrolling interest (1) (7) 6 (19) 4 (23)

Net income attributable to Fannie Mae $ 6,457 $ 8,737 $ (2,280) $ 83,963 $ 17,224 $ 66,739

Total comprehensive income attributable to Fannie

Mae $ 6,590 $ 8,603 $ (2,013) $ 84,782 $ 18,843 $ 65,939

Preferred stock dividends $ (7,191) $ (8,617) $ 1,426 $ (85,419) $ (15,827) $ (69,592)

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

Net revenues were $7.0 billion for the fourth quarter of 2013, compared with $6.3 billion for the third 

quarter of 2013. For the year, net revenues were $26.3 billion, up from $23.0 billion in 2012. 

Net interest income was $4.9 billion for the fourth quarter of 2013, compared with $5.6 billion for the 

third quarter of 2013. The decrease in net interest income compared to the third quarter of 2013 was due to 

lower amortization driven by prepayment volumes and lower interest income from retained mortgage 

portfolio assets due to a decline in the company’s retained mortgage portfolio. For the year, net interest 

income was $22.4 billion for 2013, compared with net interest income of $21.5 billion for 2012. The 

increase in net interest income compared to 2012 was due primarily to higher amortization driven by 

prepayment volumes and an increase in guaranty fees, partially offset by lower interest income from 

retained mortgage portfolio assets due to a decline in the company’s retained mortgage portfolio. 
Fourth Quarter and Full Year 2013 Results 10

Fee and other income was $2.1 billion for the fourth quarter of 2013, compared with $741 million for the 

third quarter of 2013. For the year, fee and other income was $3.9 billion for 2013, compared with $1.5 

billion for 2012. The increases in fee and other income were due primarily to funds the company received 

in 2013 pursuant to settlement agreements resolving certain lawsuits relating to private-label mortgagerelated securities sold to Fannie Mae. 

Credit-related income, which consists of recognition of a benefit for credit losses and foreclosed 

property income, was $1.1 billion in the fourth quarter of 2013, compared with $3.8 billion in the third 

quarter of 2013. Credit-related income decreased in the fourth quarter of 2013 compared with the third 

quarter of 2013 due primarily to slower home price improvement in the quarter. For the year, credit-related 

income was $11.8 billion, compared with credit-related income of $1.1 billion in 2012. The company’s 

credit results for 2013 and 2012 were positively impacted by increases in home prices, which resulted in 

reductions in our loss reserves. Credit-related income improved year over year due primarily to a decline 

in the number of delinquent loans in the company’s single-family guaranty book of business; recognition 

of compensatory fee income in 2013 related to servicing matters and gains resulting from resolution 

agreements reached in 2013 related to representation and warranty matters; and updates to assumptions 

and data used to estimate the company’s allowance for loan losses of individually impaired single-family 

loans, which resulted in a decrease to the company’s allowance for loan losses. 
Fourth Quarter and Full Year 2013 Results 11

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

the effect of certain fair-value losses, were $260 million in the fourth quarter of 2013, compared with $1.1 

billion in the third quarter of 2013. For the year, credit losses were $4.5 billion compared with $14.6 

billion in 2012. Credit losses decreased in 2013 compared with 2012 due primarily to the recognition of 

compensatory fee income in 2013 related to servicing matters and gains resulting from resolution 

agreements reached in 2013 related to representation and warranty matters. Also contributing to the 

decrease in credit losses in 2013 was an improvement in sales prices on Fannie Mae-owned properties and 

lower REO acquisitions driven primarily by lower delinquencies. 

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 $47.3 billion as of December 31, 2013, compared with $48.4 billion as of September 30, 2013 

and $62.6 billion as of December 31, 2012. The total loss reserve coverage to total nonaccrual loans was 

57 percent as of December 31, 2013, compared with 55 percent as of December 31, 2012 and 54 percent 

as of December 31, 2011.

Net fair value gains were $1.0 billion in the fourth quarter of 2013, compared with $335 million in the 

third quarter of 2013. For the year, net fair value gains were $3.0 billion, compared with net fair value 

losses of $3.0 billion in 2012. The company recorded fair value gains in the fourth quarter of 2013 and for 

the full year of 2013 due primarily to fair value gains on risk management derivatives as interest rates 

increased during the year. 
Fourth Quarter and Full Year 2013 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 mortgage-related assets and other interest-earning 

non-mortgage investments, funding purchases of 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 net income of $2.1 billion in the fourth quarter of 2013, compared with net 

income of $4.7 billion in the third quarter of 2013. The decrease in net income in the fourth quarter 

compared to the third quarter was driven by lower credit-related income due primarily to slower home 

price improvement in the quarter. For the year, the Single-Family business had net income of $48.3 

billion, compared with net income of $6.3 billion in 2012. The improvement in annual net income was 

due primarily to the release of the company’s valuation allowance against its deferred tax assets, as well as 

an increase in credit-related income. In addition, guaranty fee income increased in 2013 compared with 

2012 due to the impact of guaranty fee increases. The single-family guaranty book of business was $2.89 

trillion as of December 31, 2013, compared with $2.88 trillion as of September 30, 2013 and $2.83 trillion

as of December 31, 2012. 

Multifamily business had net income of $706 million in the fourth quarter of 2013, compared with $478 

million in the third quarter of 2013. The increase in net income in the fourth quarter compared to the third 

quarter was driven primarily by increased credit-related income due to improvements in property 

valuations, as well as increased gains from partnership investments as the continued strength of national 

multifamily market fundamentals resulted in improved property-level operating performance and 

increased gains on the sale of investments. For the year, Multifamily had net income of $10.1 billion, 

compared with $1.5 billion in 2012. The improvement in annual net income was due primarily to the 

release of the company’s valuation allowance against its deferred tax assets, as well as increased creditrelated income due to improvements in default and loss severity trends and improvements in property 
Fourth Quarter and Full Year 2013 Results 13

valuations. The Multifamily guaranty book of business was $200.6 billion as of December 31, 2013, 

compared with $203.7 billion as of September 30, 2013 and $206.2 billion as of December 31, 2012.

Capital Markets group had net income of $4.5 billion in the fourth quarter of 2013, compared with $3.8 

billion in the third quarter of 2013. The increase in quarterly net income was due primarily to settlement 

agreements resolving certain lawsuits relating to private-label mortgage-related securities sold to Fannie 

Mae and fair value gains on the company’s risk management derivatives as interest rates increased during 

the quarter. The group had net income of $27.5 billion for the year, compared with $14.2 billion for 2012. 

The improvement in annual net income was due primarily to the release of the company’s valuation 

allowance against its deferred tax assets, the recognition of fair value gains in 2013 compared with fair 

value losses in 2012, and the increase in fee and other income as a result of funds the company received 

pursuant to settlement agreements resolving certain lawsuits relating to private-label mortgage-related 

securities sold to Fannie Mae. The improvement in net income was partially offset by a decline in net 

interest income due to a decline in the company’s retained mortgage portfolio. The Capital Markets 

retained mortgage portfolio balance decreased to $490.7 billion as of December 31, 2013, compared with 

$633.1 billion as of December 31, 2012, resulting from purchases of $269.4 billion and liquidations and 

sales of $411.8 billion during the year.

(Dollars in millions) 4Q13 3Q13 Variance 2013 2012 Variance

Single-Family Segment:

Guaranty fee income $ 2,830 $ 2,719 $ 111 $ 10,468 $ 8,151 $ 2,317

Credit-related income 848 3,642 (2,794) 11,205 919 10,286

Other (877) (865) (12) (2,507) (2,700) 193

Income before federal income taxes 2,801 5,496 (2,695) 19,166 6,370 12,796

(Provision) benefit for federal income taxes (667) (751) 84 29,110 (80) 29,190

Net income $ 2,134 $ 4,745 $ (2,611) $ 48,276 $ 6,290 $ 41,986

Multifamily Segment:

Guaranty fee income $ 315 $ 311 $ 4 $ 1,217 $ 1,040 $ 177

Credit-related income 234 132 102 583 187 396

Other 203 43 160 345 80 265

Income before federal income taxes 752 486 266 2,145 1,307 838

(Provision) benefit for federal income taxes (46) (8) (38) 7,924 204 7,720

Net income $ 706 $ 478 $ 228 $ 10,069 $ 1,511 $ 8,558

Capital Markets Segment:

Net interest income $ 2,031 $ 2,311 $ (280) $ 9,764 $ 13,241 $ (3,477)

Investment gains, net 1,074 1,590 (516) 4,911 6,217 (1,306)

Fair value gains (losses), net 1,061 371 690 3,148 (3,041) 6,189

Other 1,461 123 1,338 1,319 (2,092) 3,411

Income before federal income taxes 5,627 4,395 1,232 19,142 14,325 4,817

(Provision) benefit for federal income taxes (1,103) (596) (507) 8,381 (124) 8,505

Net income $ 4,524 $ 3,799 $ 725 $ 27,523 $ 14,201 $ 13,322
Fourth Quarter and Full Year 2013 Results 14

ANNEX I

FANNIE MAE

(In conservatorship)

Consolidated Balance Sheets

(Dollars in millions, except share amounts)

As of December 31,

2013 2012

ASSETS

Cash and cash equivalents $ 19,228 $ 21,117

Restricted cash (includes $23,982 and $61,976, respectively, related to consolidated trusts) 28,995 67,919

Federal funds sold and securities purchased under agreements to resell or similar arrangements 38,975 32,500

Investments in securities:

Trading, at fair value 30,768 40,695

Available-for-sale, at fair value (includes $998 and $935, respectively, related to consolidated trusts) 38,171 63,181

Total investments in securities 68,939 103,876

Mortgage loans:

Loans held for sale, at lower of cost or fair value (includes $31 and $72, respectively, related to consolidated trusts) 380 464

Loans held for investment, at amortized cost:

Of Fannie Mae 300,159 355,544

Of consolidated trusts (includes $14,268 and $10,800, respectively, at fair value and loans pledged as collateral that

may be sold or repledged of $442 and $943, respectively) 2,769,547 2,652,193

Total loans held for investment 3,069,706 3,007,737

Allowance for loan losses (43,846) (58,795)

Total loans held for investment, net of allowance 3,025,860 2,948,942

Total mortgage loans 3,026,240 2,949,406

Accrued interest receivable, net (includes $7,271 and $7,567, respectively, related to consolidated trusts) 8,319 9,176

Acquired property, net 11,621 10,489

Deferred tax assets, net 47,560 —

Other assets (includes cash pledged as collateral of $1,590 and $1,222, respectively) 20,231 27,939

Total assets $ 3,270,108 $ 3,222,422

LIABILITIES AND EQUITY

Liabilities:

Accrued interest payable (includes $8,276 and $8,645, respectively, related to consolidated trusts) $ 10,553 $ 11,303

Debt:

Of Fannie Mae (includes $1,308 and $793, respectively, at fair value) 529,434 615,864

Of consolidated trusts (includes $14,976 and $11,647, respectively, at fair value) 2,705,089 2,573,653

Other liabilities (includes $488 and $1,059, respectively, related to consolidated trusts) 15,441 14,378

Total liabilities 3,260,517 3,215,198

Commitments and contingencies (Note 19) — —

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, 1,158,080,657 and

1,158,077,970 shares outstanding, respectively 687 687

Accumulated deficit (121,227) (122,766)

Accumulated other comprehensive income 1,203 384

Treasury stock, at cost, 150,682,046 and 150,684,733 shares, respectively (7,401) (7,401)

Total Fannie Mae stockholders’ equity 9,541 7,183

Noncontrolling interest 50 41

Total equity (See Note 1: Impact of U.S. Government Support and (Loss) Earnings per Share for information on our 

dividend obligation to Treasury) 9,591 7,224

Total liabilities and equity $ 3,270,108 $ 3,222,422

See Notes to Consolidated Financial Statements
Fourth Quarter and Full Year 2013 Results 15

FANNIE MAE

(In conservatorship)

Consolidated Statements of Operations and Comprehensive Income (Loss) 

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

For the Year Ended December 31,

2013 2012 2011

Interest income:

Trading securities $ 779 $ 989 $ 1,087

Available-for-sale securities 2,357 3,299 3,277

Mortgage loans (includes $101,448, $110,451, and $123,633, respectively, related to consolidated trusts) 114,238 124,706 138,462

Other 175 196 117

Total interest income 117,549 129,190 142,943

Interest expense:

Short-term debt 131 152 310

Long-term debt (includes $84,751, $95,612, and $108,641, respectively, related to consolidated trusts) 95,014 107,537 123,352

Total interest expense 95,145 107,689 123,662

Net interest income 22,404 21,501 19,281

Benefit (provision) for credit losses 8,949 852 (26,718)

Net interest income (loss) after benefit (provision) for credit losses 31,353 22,353 (7,437)

Investment gains, net 1,191 487 506

Net other-than-temporary impairments (64) (713) (308)

Fair value gains (losses), net 2,959 (2,977) (6,621)

Debt extinguishment gains (losses), net 131 (244) (232)

Fee and other income 3,930 1,487 1,163

Non-interest income (loss) 8,147 (1,960) (5,492)

Administrative expenses:

Salaries and employee benefits 1,218 1,195 1,236

Professional services 910 766 736

Occupancy expenses 189 188 179

Other administrative expenses 228 218 219

Total administrative expenses 2,545 2,367 2,370

Foreclosed property (income) expense (2,839) (254) 780

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

Other expenses, net 226 822 866

Total expenses 933 3,173 4,016

Income (loss) before federal income taxes 38,567 17,220 (16,945)

Benefit for federal income taxes 45,415 — 90

Net income (loss) 83,982 17,220 (16,855)

Other comprehensive income:

Changes in unrealized gains on available-for-sale securities, net of reclassification adjustments and taxes 693 1,735 622

Other 126 (116) (175)

Total other comprehensive income 819 1,619 447

Total comprehensive income (loss) 84,801 18,839 (16,408)

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

Total comprehensive income (loss) attributable to Fannie Mae $ 84,782 $ 18,843 $ (16,408)

Net income (loss) $ 83,982 $ 17,220 $ (16,855)

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

Net income (loss) attributable to Fannie Mae $ 83,963 $ 17,224 $ (16,855)

Dividends distributed or available for distribution to senior preferred stockholder (Note 11) (85,419) (15,827) (9,614)

Net (loss) income attributable to common stockholders (Note 11) $ (1,456) $ 1,397 $ (26,469)

(Loss) earnings per share:

Basic $ (0.25) $ 0.24 $ (4.61)

Diluted (0.25) 0.24 (4.61)

Weighted-average common shares outstanding:

Basic 5,762 5,762 5,737

Diluted 5,762 5,893 5,737

See Notes to Consolidated Financial Statements
Fourth Quarter and Full Year 2013 Results 16

FANNIE MAE

(In conservatorship)

 Consolidated Statements of Cash Flows

(Dollars in millions)

For the Year Ended December 31,

2013 2012 2011

Cash flows provided by (used in) operating activities:

Net income (loss) $ 83,982 $ 17,220 $ (16,855)

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

Amortization of cost basis adjustments (5,104) (2,335) (369)

(Benefit) provision for credit losses (8,949) (852) 26,718

Current and deferred federal income taxes (47,766) 10 1,044

Net change in trading securities 1,575 31,972 (17,048)

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

enhancements (6,024) (6,009) (5,109)

Other, net (4,811) (3,005) (3,619)

Net cash provided by (used in) operating activities 12,903 37,001 (15,238)

Cash flows provided by investing activities:

Purchases of trading securities held for investment (7,521) (3,216) (2,951)

Proceeds from maturities and paydowns of trading securities held for investment 2,491 3,508 2,591

Proceeds from sales of trading securities held for investment 14,585 3,861 1,526

Purchases of available-for-sale securities — (34) (192)

Proceeds from maturities and paydowns of available-for-sale securities 10,116 12,636 13,552

Proceeds from sales of available-for-sale securities 15,497 1,306 3,192

Purchases of loans held for investment (195,386) (210,488) (78,099)

Proceeds from repayments and sales of loans acquired as held for investment of Fannie Mae 48,875 31,322 25,190

Proceeds from repayments and sales of loans acquired as held for investment of consolidated trusts 631,088 797,331 544,145

Net change in restricted cash 38,924 (17,122) 12,881

Advances to lenders (139,162) (144,064) (70,914)

Proceeds from disposition of acquired property and preforeclosure sales 38,349 38,685 47,248

Net change in federal funds sold and securities purchased under agreements to resell or similar arrangements (6,475) 13,500 (34,249)

Other, net 1,373 468 468

Net cash provided by investing activities 452,754 527,693 464,388

Cash flows used in financing activities:

Proceeds from issuance of debt of Fannie Mae 372,361 736,065 766,598

Payments to redeem debt of Fannie Mae (459,745) (854,111) (815,838)

Proceeds from issuance of debt of consolidated trusts 409,979 396,513 233,516

Payments to redeem debt of consolidated trusts (707,544) (832,537) (647,695)

Payments of cash dividends on senior preferred stock to Treasury (82,452) (11,608) (9,613)

Proceeds from senior preferred stock purchase agreement with Treasury — 4,571 23,978

Other, net (145) (9) 146

Net cash used in financing activities (467,546) (561,116) (448,908)

Net (decrease) increase in cash and cash equivalents (1,889) 3,578 242

Cash and cash equivalents at beginning of period 21,117 17,539 17,297

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

Cash paid during the period for:

Interest $ 109,240 $ 119,259 $ 128,806

Income taxes 2,350 — —

Non-cash activities:

Net mortgage loans acquired by assuming debt $ 433,007 $ 537,862 $ 448,437

Net transfers from mortgage loans of Fannie Mae to mortgage loans of consolidated trusts 179,097 165,272 33,859

Transfers from advances to lenders to loans held for investment of consolidated trusts 137,074 133,554 69,223

Net transfers from mortgage loans to acquired property 34,024 46,981 56,517

See Notes to Consolidated Financial Statements
Fourth Quarter and Full Year 2013 Results 17

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 January 1, 2011 1 577 1,119 $ 88,600 $ 20,204 $ 667 $ — $ (102,986) $ (1,682) $ (7,402) $ 82 $ (2,517)

Change in investment in noncontrolling

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

Comprehensive loss:

Net loss — — — — — — — (16,855) — — — (16,855)

Other comprehensive income, net of tax

effect:

Changes in net unrealized losses on

available-for-sale securities (net

of tax of $250) — — — — — — — — 465 — — 465

Reclassification adjustment for otherthan-temporary impairments

recognized in net loss (net of tax

of $99) — — — — — — — — 209 — — 209

Reclassification adjustment for gains

included in net loss (net of tax of

$28) — — — — — — — — (52) — — (52)

Prior service cost and actuarial gains,

net of amortization for defined

benefit plans — — — — — — — — (175) — — (175)

Total comprehensive loss (16,408)

Senior preferred stock dividends — — — — — — (1,072) (8,541) — — — (9,613)

Increase to senior preferred liquidation

preference — — — 23,978 — — — — — — — 23,978

Conversion of convertible preferred

stock into common stock — (21) 39 — (1,074) 20 1,054 — — — — —

Other — — — — — — 18 1 — (1) — 18

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 otherthan-temporary impairments

recognized in net income (net of

tax of $250) — — — — — — — — 463 — — 463

Reclassification adjustment for gains

included in net income (net of tax

of $9) — — — — — — — — (17) — — (17)

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 otherthan-temporary impairments

recognized in net income (net of

tax of $22) — — — — — — — — 42 — — 42

Reclassification adjustment for gains

included in net income (net of tax

of $179) — — — — — — — — (332) — — (332)

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

See Notes to Consolidated Financial Statements