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

 202-752-2034 

Date: August 8, 2012 

Fannie Mae Reports Net Income of $5.1 Billion for Second Quarter 2012 

Net Income of $7.8 Billion for First Half 2012 Demonstrates 

Company’s Long-Term Earnings Potential

Credit Quality

• High-quality new book of business accounts for 59 percent of single-family guaranty book of 

business as of June 30, 2012.

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

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 $2.7 trillion in liquidity providing financing for

▪ 2.2 million home purchases and 8.1 million mortgage refinancings, and

▪ 1.3 million units of quality rental housing.

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

approximately 1.2 million loan workouts, including more than 797,000 modifications.

WASHINGTON, DC – Fannie Mae (FNMA/OTC) today reported net income of $5.1 billion in the 

second quarter of 2012, compared with net income of $2.7 billion in the first quarter of 2012. Combined 

with first-quarter results, the company has reported $7.8 billion in net income for the first half of 2012. 

The company’s continued improvement in financial results in the second quarter of 2012 was almost 

entirely due to credit-related income, resulting primarily from an improvement in home prices, improved 

sales prices on the company’s real-estate owned (“REO”) properties, and a decline in the company’s 

single-family serious delinquency rate. The company’s comprehensive income of $5.4 billion in the 

second quarter of 2012 is sufficient to pay its second-quarter dividend of $2.9 billion to the Department of 

the Treasury. 

“Better market conditions and our actions to strengthen Fannie Mae’s new business and limit losses from 

the company’s legacy business contributed to positive second-quarter results,” said Timothy J. 

Mayopoulos, president and chief executive officer. “While it is too early to declare a national housing 

recovery, and our results for the second half of 2012 may not be as strong as the first half, we expect our 

financial results in 2012 to be substantially better than the past few years. With our high-quality new book 

of business and diminishing legacy expenses, Fannie Mae has strong potential earnings power that can 

deliver considerable value to taxpayers over the long term.” 

“We saw a confluence of positive factors in the second quarter, including improved home prices, 

improvement in REO sales execution, and a continued decline in our single-family serious delinquency 

rate. These factors had a positive effect on our financial performance,” said Susan McFarland, executive 

Second Quarter 2012 Results 1
vice president and chief financial officer. “Most notably, an improvement in home prices during the 

quarter resulted in a reduction in our loss reserves, which resulted in credit-related income for the quarter. 

While our financial results each quarter are significantly affected positively or negatively by economic 

factors outside our control, we manage our business in a manner that positions Fannie Mae to provide 

value to taxpayers.” 

Fannie Mae’s net worth of $2.8 billion as of June 30, 2012 reflects the company’s total comprehensive 

income of $5.4 billion, partially offset by its payment to Treasury of $2.9 billion in senior preferred stock 

dividends in the second quarter of 2012. As a result of the company’s positive net worth as of June 30, 

2012, the company will not request a draw from Treasury for the quarter under the senior preferred stock 

purchase agreement. The total liquidation preference of Treasury’s senior preferred stock remains at 

$117.1 billion, which requires an annualized dividend payment of $11.7 billion. Through June 30, 2012, 

Fannie Mae has paid $25.6 billion in cash dividends to Treasury on the senior preferred stock. This 

represents 22 percent of the company’s cumulative draws received under the senior preferred stock 

purchase agreement with Treasury. The table below shows the amount of Fannie Mae’s requested draws 

from Treasury and dividend payments to Treasury since entering into conservatorship on September 6, 

2008. 

Treasury Draw Requests and Dividend Payments

$ in Billions 

Cumulative Total as of 

June 30, December 31,

2012 2011 

Treasury Draw Requests(1) $ 116.1 $ 116.1

Dividend Payments $ 25.6 $ 19.8

Cumulative Net Treasury Draws(2) $ 90.5 $ 96.3

Cumulative Percentage of 

Dividends to Treasury Draws 22.0% 17.1%

(1) Treasury draw requests 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.

(2) Represents cumulative Treasury draws less senior preferred stock dividend payments to Treasury.

(3) Fannie Mae paid dividends to Treasury of $31 million in the fourth quarter of 2008 and $25 million in the first quarter of 2009.

(4) Represents the draw required and requested based on Fannie Mae’s net worth deficit for the quarters presented. Draw

 requests were funded in the quarter following each quarterly net worth deficit. 

(5) Represents quarterly cash dividends paid during the quarters presented by Fannie Mae to Treasury, based on an annual rate of 10% 

per year on the aggregate liquidation preference of the senior preferred stock.

Second Quarter 2012 Results 2
PROVIDING LIQUIDITY AND SUPPORT TO THE MARKET

Fannie Mae has continued to provide liquidity and support to the U.S. mortgage market in a number of 

important ways: 

• The company has served as a stable source of liquidity for purchases of homes and financing of 

multifamily rental housing, as well as for refinancing existing mortgages. Fannie Mae provided 

approximately $2.7 trillion in liquidity to the mortgage market from January 1, 2009 through 

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

8.1 million mortgage refinancings and 2.2 million home purchases, and provided financing for 1.3 

million units of multifamily housing.

• The company has strengthened its underwriting and eligibility standards to support sustainable 

homeownership, enabling borrowers to have access to a variety of conforming mortgage products, 

including long-term, fixed-rate mortgages, such as the prepayable 30-year fixed-rate mortgage that 

protects homeowners from interest rate swings. As a result, the company’s new single-family book 

of business has a strong credit risk profile. 

• The company helped 1.1 million homeowners stay in their homes or otherwise avoid foreclosure 

from January 1, 2009 through June 30, 2012, which helped to support neighborhoods, home 

prices, and the housing market. Moreover, borrowers’ ability to pay their modified loans has 

improved in recent periods as the company has enhanced the structure of its modifications. One 

year after modification, 75 percent of the modifications the company made in the second quarter of 

2011 were current or paid off, compared with 70 percent of modifications the company made in 

the second quarter of 2010.

• The company helped borrowers refinance loans through its Refi Plus initiative, which includes 

loans refinanced under the Administration's Home Affordable Refinance Program ("HARP"). The 

Refi Plus initiative provides expanded refinance opportunities for eligible Fannie Mae borrowers. 

From April 1, 2009, the date the company began accepting delivery of Refi Plus loans, through 

June 30, 2012, the company acquired approximately 2.2 million loans refinanced under its Refi 

Plus initiative. Refinances delivered to Fannie Mae through Refi Plus in the second quarter of 

2012 reduced borrowers’ monthly mortgage payments by an average of $208. 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.

• The company supports affordability in the multifamily rental market. More than 85 percent of the 

multifamily units it financed from 2009 through 2011 were affordable to families earning at or 

below the median income in their area.

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

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

mortgage-related securities issuances of 46 percent, compared with 51 percent in the first quarter 

of 2012 and 43 percent in the second quarter of 2011. Fannie Mae also remained a constant source 

of liquidity in the multifamily market. As of March 31, 2012 (the latest date for which information 

is available), the company owned or guaranteed approximately 21 percent of the outstanding debt 

on multifamily properties.

Second Quarter 2012 Results 3
• During the first half of 2012, Fannie Mae purchased or guaranteed approximately $416 billion in 

loans, measured by unpaid principal balance. These activities enabled its lender customers to 

finance approximately 1.8 million single-family conventional loans and loans for approximately 

236,000 units in multifamily properties during the first half of 2012.

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. Fifty-nine percent of 

Fannie Mae’s single-family guaranty book of business as of June 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 macroeconomic 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 half of 2012 had a weighted average 

FICO credit score at origination of 762 and an average original loan-to-value (“LTV”) ratio of 73 percent. 

Fannie Mae’s Expectations Regarding Future Loss Reserves and Credit-Related Income or 

Expenses: The company’s total loss reserves decreased to $68.0 billion as of June 30, 2012 from $76.9 

billion as of December 31, 2011. The company expects the trends of stabilizing home prices and declining 

single-family 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; thus, 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 lower in 2012 than in 2011. 

Although the company expects these positive trends to continue, the amount of credit-related income or 

expenses the company recognizes in future periods could vary significantly from period to period, and 

may be affected by many different factors, including: a drop in actual or expected home prices; an 

increase in the company’s serious delinquency rate; an increase in interest rates; an increase in 

unemployment rates; 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 its loss reserves, including the assumptions used by 

these models; future changes to accounting policies relating to the company’s loss reserves; significant 

changes in modification and foreclosure activity; changes in borrower behavior, such as an increasing 

number of underwater borrowers who strategically default on their mortgage loan; failures by the 

company’s mortgage seller/servicers to fulfill their repurchase obligations in full; failures by the 

company’s mortgage insurers to fulfill their obligations in full; and many other factors. Due to the large 

size of the company’s guaranty book of business, even small changes in these factors could have a 

significant impact on the company’s financial results for a particular period. Moreover, although the 

company believes that its total loss reserves peaked as of December 31, 2011, it expects that its loss 

reserves will remain significantly elevated relative to historical levels for an extended period because (1) 

it expects future defaults on loans in its legacy (pre-2009) book of business and the resulting charge-offs 

will occur over a period of years and (2) a significant portion of its reserves represents concessions 

Second Quarter 2012 Results 4
granted to borrowers upon modification of their loans and will remain in the company’s reserves until the 

loans are fully repaid or default. 

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

2010, and was 3.53 percent as of June 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, as these loans are now 59 percent of the single-family guaranty book of business, 

resulting in a smaller percentage of the company’s loans becoming seriously delinquent. The company 

expects the percentage of its loans that are seriously delinquent will continue to be affected in the future 

by home price changes, changes in other macroeconomic conditions, the length of the foreclosure process 

and the volume of loan modifications. In addition, due to circumstances in the foreclosure environment, 

foreclosures are proceeding at a slow pace, which has resulted in loans remaining seriously delinquent in 

the company’s book of business for a longer time. The company expects the number of its single-family 

loans that are seriously delinquent to remain well above pre-2008 levels for years. In addition, the 

company anticipates that it will take a significant amount of time before its REO inventory is reduced to 

pre-2008 levels. 

STRATEGIES TO REDUCE CREDIT LOSSES ON THE LEGACY BOOK

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 more than 35,000 loan modifications during 

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

since January 1, 2009 to more than 797,000. 

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 that enable them 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 June 30, 2012, the company completed approximately 241,000 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. 

HOME RETENTION SOLUTIONS AND FORECLOSURE ALTERNATIVES

Loan Workouts: During the second quarter of 2012, Fannie Mae completed more than 65,000 singlefamily loan workouts, including more than 41,000 home-retention solutions (modifications, repayment 

plans, and forbearances). Details of the company’s home-retention solutions and foreclosure alternatives 

include: 

▪ Loan modifications were 35,332 in the second quarter of 2012, compared with 46,671 in the first 

quarter of 2012. 

▪ Repayment plans/forbearances were 5,894 in the second quarter of 2012, compared with 8,864 

in the first quarter of 2012.

▪ Short sales and deeds-in-lieu of foreclosure were 24,013 in the second quarter of 2012, 

compared with 22,213 in the first quarter of 2012.

Second Quarter 2012 Results 5
Homeowner Initiatives: Fannie Mae continued to maintain programs and invest in initiatives designed to 

help keep people in homes, assist prospective homeowners, and support the mortgage and housing 

markets overall. As of June 30, 2012, Fannie Mae had established 12 Mortgage Help Centers across the 

nation to accelerate the response time for struggling borrowers with loans owned by Fannie Mae. For the 

first half of 2012, these centers helped borrowers obtain nearly 12,200 home retention plans. The 

company’s Mortgage Help Centers are complemented in their efforts by partnerships with 17 local nonprofit organizations in 16 cities, collectively known as its Mortgage Help Network. The Mortgage Help 

Network represents a contractual relationship with select not-for-profit counseling agencies located in the 

company’s top delinquent mortgage markets to provide borrowers with loans owned by Fannie Mae 

foreclosure prevention counseling, documentation assistance, and assistance with pending loan workout 

solutions. The company also uses direct mail, phone calls, and some advertising to encourage 

homeowners to visit KnowYourOptions.com to pursue home retention solutions and foreclosure 

alternatives. 

Refinancing Initiatives: Through the company’s Refi Plusinitiative, which provides expanded refinance 

opportunities for eligible Fannie Mae borrowers and includes HARP, the company acquired 

approximately 247,000 loans in the second quarter of 2012. Some borrower’s 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 refinancings into account, refinancings 

delivered to Fannie Mae through Refi Plus in the second quarter of 2012 reduced borrowers’ monthly 

mortgage payments by an average of $208. 

Loans Fannie Mae acquires under Refi Plus and HARP represent refinancings of loans that are already in 

the company’s guaranty book of business. The credit risk associated with loans it acquires under Refi Plus 

and HARP essentially replaces the credit risk that the company already held prior to the refinancing. 

Loans the company acquires under Refi Plus and HARP have higher serious delinquency rates and may 

not perform as well as the other loans acquired since the beginning of 2009. However, the company 

expects these loans will perform better than the loans they replace because Refi Plus and HARP loans 

should reduce the borrowers’ monthly payments or provide more stable terms than the borrowers’ old 

loans (for example, by refinancing into a mortgage with a fixed interest rate instead of an adjustable rate). 

In the second quarter of 2012, the volume of loans Fannie Mae acquired under HARP increased 

significantly from the first quarter as changes designed to make the benefits of HARP available to more 

borrowers were fully implemented. The approximately 128,000 loans the company acquired under HARP 

in the second quarter of 2012 constituted 15 percent of the company’s single-family acquisitions for the 

period, measured by unpaid principal balance, compared with 10 percent of single-family acquisitions in 

the first quarter of 2012. 

As a result of recently implemented changes to HARP, the company expects that if interest rates remain 

low it will continue to acquire a high volume of refinancings under HARP. In particular, the company 

expects to acquire many refinancings with LTV ratios greater than 125 percent, because borrowers were 

unable to refinance loans with LTV ratios greater than 125 percent in large numbers until changes to 

HARP were fully implemented in the second quarter of 2012. The company expects the elevated volume 

of HARP refinancings will decrease when interest rates rise sufficiently or when there is no longer a large 

population of borrowers with loans that have high LTV ratios who would benefit from refinancing. HARP 

is scheduled to end in December 2013. 

Second Quarter 2012 Results 6
Second Quarter 2012 Results 7

FORECLOSURES AND REO

Fannie Mae acquired 43,783 single-family REO properties, primarily through foreclosure, in the second 

quarter of 2012, compared with 47,700 in the first quarter of 2012. Fannie Mae disposed of 48,674 singlefamily REO in the second quarter of 2012, compared with 52,071 in the first quarter of 2012. As of 

June 30, 2012, the company’s inventory of single-family REO properties was 109,266, compared with 

114,157 as of March 31, 2012. The carrying value of the company’s single-family REO was $9.4 billion 

as of June 30, 2012. 

The company’s single-family foreclosure rate was 1.04 percent in the first half 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. 

SUMMARY OF SECOND-QUARTER 2012 RESULTS

Fannie Mae reported net income of $5.1 billion for the second quarter of 2012, compared with net income 

of $2.7 billion for the first quarter of 2012 and a net loss of $2.9 billion for the second quarter of 2011. As 

a result of the company’s positive net worth as of June 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. 

(Dollars in millions) 2Q12 1Q12 Variance 2Q12 2Q11 Variance 

Net interest income $ 5,428 $ 5,197 $ 231 $ 5,428 $ 4,972 $ 456

Fee and other income 395 375 20 395 265 130

Net revenues 5,823 5,572 251 5,823 5,237 586

Investment gains, net 131 116 15 131 171 (40)

Net other-than-temporary impairments (599) (64) (535) (599 ) (56 ) (543)

Fair value (losses) gains, net (2,449) 283 (2,732) (2,449 ) (1,634 ) (815)

Administrative expenses (567) (564) (3) (567 ) (569 ) 2

Credit-related income (expenses) 

Benefit (provision) for credit losses 3,041 (2,000) 5,041 3,041 (6,537 ) 9,578

Foreclosed property income (expense) 70 (339) 409 70 478 (408)

Total credit-related income (expenses) 3,111 (2,339) 5,450 3,111 (6,059 ) 9,170

Other non-interest expenses(1) (331) (286) (45) (331 ) (75 ) (256)

Net losses and expenses (704) (2,854) 2,150 (704 ) (8,222 ) 7,518

Income (loss) before federal income taxes 5,119 2,718 2,401 5,119 (2,985 ) 8,104

Benefit for federal income taxes — — — — 93 (93)

Net income (loss) 5,119 2,718 2,401 5,119 (2,892 ) 8,011

Less: Net (income) loss attributable to the 

noncontrolling interest (5) 1 (6) (5 ) (1 ) (4)

Net income (loss) attributable to Fannie Mae $ 5,114 $ 2,719 $ 2,395 $ 5,114 $ (2,893 ) $ 8,007

Total comprehensive income (loss) 

attributable to Fannie Mae $ 5,442 $ 3,081 $ 2,361 $ 5,442 $ (2,891 ) $ 8,333

Preferred stock dividends $ (2,929) $ (2,817) $ (112) $ (2,929 ) $ (2,282 ) $ (647)

(1) Consists of debt extinguishment (losses) gains, net and other expenses. 
Net revenues were $5.8 billion in the second quarter of 2012, up 5 percent from $5.6 billion in the first 

quarter of 2012. Net interest income was $5.4 billion, up 4 percent from $5.2 billion in the first quarter of 

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

accelerated net amortization income on mortgage loans and debt of consolidated trusts due to high 

prepayment volumes. 

 

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

property income, was $3.1 billion in the second quarter of 2012, a shift from $2.3 billion in credit-related 

expenses in the first quarter of 2012. The company recognized a benefit for credit losses in the second 

quarter of 2012 due to a decrease in its total loss reserves driven primarily by an improvement in the 

profile of its single-family book of business resulting from an increase in actual home prices, including 

the sales prices of its REO properties. In addition, the company’s single-family serious delinquency rate 

continued to decline. 

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

the effect of certain fair-value losses, were $3.8 billion in the second quarter of 2012, compared with $5.1 

billion in the first quarter of 2012. The decrease in credit losses was due primarily to an improvement in 

actual home prices, including the sales prices of our REO properties, as well as a decline in our REO 

acquisitions. 

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 $68.0 billion as of June 30, 2012, compared with $74.6 billion as of March 31, 2012 and 

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

28 percent as of June 30, 2012, compared with 30 percent as of March 31, 2012. 

Net fair value losses were $2.4 billion in the second quarter of 2012, compared with net fair value gains 

of $283 million in the first quarter of 2012. The losses in the second quarter of 2012 were driven primarily 

by fair value losses on our derivatives as interest rates declined in the second quarter of 2012. The 

estimated fair value of our 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. 

NET WORTH AND U.S. TREASURY FUNDING

As a result of Fannie Mae’s positive net worth as of June 30, 2012, the company does not require funds 

this quarter under the senior preferred stock purchase agreement between Fannie Mae and Treasury. 

Fannie Mae’s second-quarter 2012 dividend of $2.9 billion on its senior preferred stock held by Treasury 

was declared by FHFA and paid by the company on June 29, 2012. The aggregate liquidation preference 

of the senior preferred stock remains at $117.1 billion as of June 30, 2012, which requires an annualized 

dividend payment of $11.7 billion. The amount of this dividend payment exceeds the company’s reported 

annual net income for every year since its inception. Although we may experience period-to-period 

volatility in earnings and comprehensive income, we do not expect to generate net income or 

comprehensive income in excess of our annual dividend obligation to Treasury over the long term. 

As of June 30, 2012, Fannie Mae has paid an aggregate of $25.6 billion to Treasury in dividends on the 

senior preferred stock. 

Second Quarter 2012 Results 8
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 2011 Form 10-K. 

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 net income of $4.4 billion in the second quarter of 2012, compared with a net 

loss of $1.3 billion in the first quarter of 2012. The shift to net income in the second quarter of 2012 was 

due primarily to credit-related income recognized in the quarter primarily as a result of improved home 

prices. The Single-Family guaranty book of business was $2.84 trillion as of June 30, 2012, compared 

with $2.86 trillion as of March 31, 2012. Single-Family guaranty fee income was $2.0 billion for the 

second quarter of 2012 and $1.9 billion for the first quarter of 2012. 

Multifamily had net income of $358 million in the second quarter of 2012, compared with $279 million 

in the first quarter of 2012. The Multifamily guaranty book of business was $198.5 billion as of June 30, 

2012, compared with $196.9 billion as of March 31, 2012. Multifamily recorded credit-related income of 

$96 million in the second quarter of 2012, compared with $46 million in the first quarter of 2012. 

Capital Markets group had net income of $1.5 billion in the second quarter of 2012, compared with $4.3 

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

$3.4 billion, compared with $3.5 billion for the first quarter of 2012. Fair value losses were $2.5 billion, 

compared with fair value gains of $170 million in the first quarter of 2012. The Capital Markets mortgage 

investment portfolio balance decreased to $672.8 billion as of June 30, 2012, compared with $708.4 

billion as of December 31, 2011, resulting from purchases of $120.2 billion, liquidations of $69.3 billion, 

and sales of $86.5 billion during the year. 

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 June 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 Second-Quarter 

Credit Supplement” on Fannie Mae’s Web site, www.fanniemae.com. 

# # # 

In this release, 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; the profitability of its loans; Fannie 

Mae’s future credit performance, serious delinquency rates, number of delinquent loans, REO inventory, credit losses, credit-related expenses, defaults, and 

charge-offs; its draws from and dividends to be paid to Treasury; the growth, performance, profitability and caliber of loans in its new book of business, 

Second Quarter 2012 Results 9
Second Quarter 2012 Results 10

including Refi Plus and HARP loans; the future volume of the company’s acquisitions of HARP loans, including loans with LTV ratios greater than 125 

percent; the trend of stabilizing home prices; 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’ 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, 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 June 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.
ANNEX I

FANNIE MAE

(In conservatorship)

Condensed Consolidated Balance Sheets – (Unaudited)

(Dollars in millions, except share amounts)

As of 

June 30, December 31, 

2012 2011 

ASSETS 

Cash and cash equivalents $ 24,728 $ 17,539

Restricted cash (includes $51,205 and $45,900, respectively, related to consolidated trusts) 55,985 50,797

Federal funds sold and securities purchased under agreements to resell or similar arrangements 24,000 46,000

Investments in securities: 

Trading, at fair value 50,935 74,198

Available-for-sale, at fair value (includes $998 and $1,191, respectively, related to consolidated trusts) 69,694 77,582

Total investments in securities 120,629 151,780

Mortgage loans: 

Loans held for sale, at lower of cost or fair value (includes $72 and $66, respectively, related to consolidated trusts) 455 311

Loans held for investment, at amortized cost: 

Of Fannie Mae 369,660 380,134

Of consolidated trusts (includes $5,231 and $3,611 respectively, at fair value and loans pledged as collateral that may 

be sold or repledged of $1,126 and $798, respectively) 2,616,502 2,590,332

Total loans held for investment 2,986,162 2,970,466

Allowance for loan losses (63,375) (72,156)

Total loans held for investment, net of allowance 2,922,787 2,898,310

Total mortgage loans 2,923,242 2,898,621

Accrued interest receivable, net (includes $8,107 and $8,466, respectively, related to consolidated trusts) 9,668 10,000

Acquired property, net 10,387 11,373

Other assets (includes cash pledged as collateral of $1,535 and $1,109, respectively) 26,981 25,374

Total assets $ 3,195,620 $ 3,211,484

LIABILITIES AND EQUITY (DEFICIT) 

Liabilities: 

Accrued interest payable (includes $9,018 and $9,302, respectively, related to consolidated trusts) $ 11,858 $ 12,648

Federal funds purchased and securities sold under agreements to repurchase 153 —

Debt: 

Of Fannie Mae (includes $831 and $838, respectively, at fair value) 659,389 732,444

Of consolidated trusts (includes $4,600 and $3,939, respectively, at fair value) 2,504,499 2,457,428

Other liabilities (includes $762 and $629, respectively, related to consolidated trusts) 16,951 13,535

Total liabilities 3,192,850 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 19,130 19,130

Common stock, no par value, no maximum authorization—1,308,762,703 shares issued, 1,158,069,699 and 

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

Accumulated deficit (126,300) (128,381)

Accumulated other comprehensive loss (545) (1,235)

Treasury stock, at cost, 150,693,004 and 150,995,303 shares, respectively (7,401) (7,403)

Total Fannie Mae stockholders’ equity (deficit) 2,720 (4,624)

Noncontrolling interest 50 53

Total equity (deficit) 2,770 (4,571)

Total liabilities and equity (deficit) $ 3,195,620 $ 3,211,484

See Notes to Condensed Consolidated Financial Statements 

Second Quarter 2012 Results 11
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 Six 

Months Ended Months Ended 

June 30, June 30, 

2012 2011 2012 2011 

Interest income: 

Trading securities $ 73 $ 264 $ 522 $ 548

Available-for-sale securities 1,035 1,152 1,762 2,365

Mortgage loans (includes $28,424 and $31,613, respectively, for the three months ended and 

$57,425 and $63,478, respectively, for the six months ended related to consolidated 

trusts) 32,023 35,333 64,593 70,923

Other 40 25 78 53

Total interest income 33,171 36,774 66,955 73,889

Interest expense: 

Short-term debt 32 81 74 188

Long-term debt (includes $24,714 and $27,919, respectively, for the three months ended 

and $50,074 and $55,771, respectively, for the six months ended related to consolidated 

t t ) 27,711 31,721 56,256 63,769

Total interest expense 27,743 31,802 56,330 63,957

Net interest income 5,428 4,972 10,625 9,932

Benefit (provision) for credit losses 3,041 (6,537 ) 1,041 (17,091)

Net interest income (loss) after benefit (provision) for credit losses 8,469 (1,565 ) 11,666 (7,159)

Investment gains, net 131 171 247 246

Other-than-temporary impairments (196) (28 ) (276) (85)

Noncredit portion of other-than-temporary impairments recognized in other comprehensive 

income (403) (28 ) (387) (15)

Net other-than-temporary impairments (599) (56 ) (663) (100)

Fair value losses, net (2,449) (1,634 ) (2,166) (1,345)

Debt extinguishment losses, net (93) (43 ) (127) (30)

Fee and other income 395 265 770 502

Non-interest loss (2,615) (1,297 ) (1,939) (727)

Administrative expenses: 

Salaries and employee benefits 292 310 598 630

Professional services 179 169 347 358

Occupancy expenses 48 43 91 85

Other administrative expenses 48 47 95 101

Total administrative expenses 567 569 1,131 1,174

Foreclosed property (income) expense (70) (478 ) 269 10

Other expenses 238 32 490 384

Total expenses 735 123 1,890 1,568

Income (loss) before federal income taxes 5,119 (2,985 ) 7,837 (9,454)

Benefit for federal income taxes — (93 ) — (91)

Net income (loss) 5,119 (2,892 ) 7,837 (9,363)

Other comprehensive income (loss): 

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

and taxes 320 (1 ) 675 178

Other 8 3 15 5

Total other comprehensive income 328 2 690 183

Total comprehensive income (loss) 5,447 (2,890 ) 8,527 (9,180)

Less: Comprehensive income attributable to the noncontrolling interest (5) (1 ) (4) (1)

Total comprehensive income (loss) attributable to Fannie Mae $ 5,442 $ (2,891 ) $ 8,523 $ (9,181)

Net income (loss) $ 5,119 $ (2,892 ) $ 7,837 $ (9,363)

Less: Net income attributable to the noncontrolling interest (5) (1 ) (4) (1)

Net income (loss) attributable to Fannie Mae 5,114 (2,893 ) 7,833 (9,364)

Preferred stock dividends (2,929) (2,282 ) (5,746) (4,498)

Net income (loss) attributable to common stockholders $ 2,185 $ (5,175 ) $ 2,087 $ (13,86

2)

Earnings (loss) per share 

Basic $ 0.38 $ (0.90 ) $ 0.36 $ (2.43)

Diluted 0.37 (0.90 ) 0.35 (2.43)

Weighted-average common shares outstanding: 

Basic 5,762 5,730 5,762 5,714

Diluted 5,893 5,730 5,893 5,714

See Notes to Condensed Consolidated Financial Statements 

Second Quarter 2012 Results 12
Second Quarter 2012 Results 13

FANNIE MAE

(In conservatorship)

Condensed Consolidated Statements of Cash Flows – (Unaudited)

(Dollars in millions)

For the Six Months 

Ended June 30, 

2012 2011 

Net cash provided by (used in) operating activities $ 24,135 $ (2,095)

Cash flows provided by investing activities: 

Purchases of trading securities held for investment (1,095) (545)

Proceeds from maturities and paydowns of trading securities held for investment 1,763 1,051

Proceeds from sales of trading securities held for investment 693 516

Purchases of available-for-sale securities (25) (44)

Proceeds from maturities and paydowns of available-for-sale securities 5,972 6,933

Proceeds from sales of available-for-sale securities 696 1,850

Purchases of loans held for investment (81,192) (26,000)

Proceeds from repayments of loans held for investment of Fannie Mae 14,236 11,722

Proceeds from repayments of loans held for investment of consolidated trusts 355,110 226,210

Net change in restricted cash (5,188) 26,099

Advances to lenders (56,489) (27,990)

Proceeds from disposition of acquired property and preforeclosure sales 20,570 24,142

Net change in federal funds sold and securities purchased under agreements to resell or similar agreements 22,000 (7,749)

Other, net (92) (33)

Net cash provided by investing activities 276,959 236,162

Cash flows used in financing activities: 

Proceeds from issuance of debt of Fannie Mae 337,683 345,028

Payments to redeem debt of Fannie Mae (408,557) (401,125)

Proceeds from issuance of debt of consolidated trusts 160,523 117,760

Payments to redeem debt of consolidated trusts (382,520) (305,465)

Payments of cash dividends on senior preferred stock to Treasury (5,750) (4,497)

Proceeds from senior preferred stock purchase agreement with Treasury 4,571 11,100

Net change in federal funds purchased and securities sold under agreements to repurchase 153 —

Other, net (8) 109

Net cash used in financing activities (293,905) (237,090)

Net increase (decrease) in cash and cash equivalents 7,189 (3,023)

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

Cash and cash equivalents at end of period $ 24,728 $ 14,274

Cash paid during the period for interest $ 60,926 $ 65,710

See Notes to Condensed Consolidated Financial Statements