Second Quarter 2013 Results 1

Resource Center: 1-800-732-6643 

Contact: Pete Bakel

202-752-2034

Date: August 8, 2013

Fannie Mae Reports Net Income of $10.1 Billion and 

Comprehensive Income of $10.3 Billion for Second Quarter 2013

• Fannie Mae reported net income of $10.1 billion, the company’s sixth consecutive quarterly profit, 

and comprehensive income of $10.3 billion for the second quarter of 2013. 

• Fannie Mae will pay taxpayers $10.2 billion in dividends in September 2013. After the September 

dividend payment, Fannie Mae will have paid an aggregate of approximately $105 billion in 

dividends to Treasury. Senior preferred stock outstanding and held by Treasury remained at $117.1 

billion at June 30, 2013, as dividend payments do not offset Treasury draws. 

• Fannie Mae has funded the mortgage market with approximately $3.7 trillion in liquidity since 

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

• Fannie Mae continues to support the housing recovery and contribute to building a sustainable 

housing finance system for the future.

WASHINGTON, DC - Fannie Mae (FNMA/OTC) reported net income of $10.1 billion for the second 

quarter of 2013, compared with net income of $5.1 billion for the second quarter of 2012. Fannie Mae’s 

net income for the second quarter of 2013 was the company’s sixth consecutive quarterly profit. Fannie 

Mae reported comprehensive income of $10.3 billion for the second quarter of 2013, compared with 

comprehensive income of $5.4 billion for the second quarter of 2012. Fannie Mae reported a positive net 

worth of $13.2 billion as of June 30, 2013 and will pay $10.2 billion to taxpayers as a dividend on the 

senior preferred stock. 

Fannie Mae reported a strong second quarter in 2013 driven primarily by continued stable revenues and 

boosted by a significant increase in home prices in the quarter, which resulted in a reduction in the 

company’s loss reserves. Year-over-year improvement was due primarily to 1) gains on Fannie Mae’s 

assets recorded at fair value in the second quarter of 2013 as a result of increases in interest rates, 

compared with fair value losses in the second quarter of 2012, and 2) an increase in credit-related income.

Fannie Mae expects to remain profitable for the foreseeable future. While the company expects its 

revenues to be stable and its annual earnings to remain strong over the next few years, its earnings may 

vary significantly from quarter to quarter due to many different factors, such as changes in interest rates or 

home prices. In addition to dividend payments, the company expects to make substantial federal income 

tax payments to Treasury going forward. 
Second Quarter 2013 Results 2

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 June 

30, 2013, Fannie Mae has requested cumulative draws totaling $116.1 billion and paid $95.0 billion in 

dividends to Treasury. Under the senior preferred stock purchase agreement, the payment of dividends 

cannot be used to 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 cannot 

be used to offset prior Treasury draws.

(2) The company’s dividend for the third quarter of 2013 is calculated based on the company’s net worth of $13.2 billion as of June 30, 

2013 less the applicable capital reserve amount of $3.0 billion.

(3) Amounts may not sum due to rounding.

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

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

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

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

applicable capital reserve amount. The applicable capital reserve amount is $3.0 billion for each quarter of 

2013 and will be reduced by $600 million annually until it reaches zero in 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, 

2012.
Second Quarter 2013 Results 3

PROVIDING LIQUIDITY AND SUPPORT TO THE MARKET

Fannie Mae provided approximately $3.7 trillion in liquidity to the mortgage market from January 1, 2009 

through June 30, 2013 through its purchases and guarantees of loans, which enabled borrowers to 

complete 11.4 million mortgage refinancings and 3.1 million home purchases, and provided financing for 

1.9 million units of multifamily housing.

One of FHFA’s strategic goals for the company’s conservatorship involves gradually contracting Fannie 

Mae’s dominant presence in the marketplace. Despite this goal, Fannie Mae’s market share remained large 

in the first half of 2013 as the company has continued to meet the needs of the single-family mortgage 

market in the absence of substantial private capital. The company remained the largest single issuer of 

single-family mortgage-related securities in the secondary market in the second quarter of 2013, with an 

estimated market share of new single-family mortgage-related securities issuances of 45 percent, 

compared with 48 percent in the first quarter of 2013 and 46 percent in the second quarter of 2012.

Fannie Mae also remained a constant source of liquidity in the multifamily market. As of March 31, 2013 

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

percent of the outstanding debt on multifamily properties.
Second Quarter 2013 Results 4

HELPING TO BUILD A NEW 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 new housing finance system for the future, including 

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 making it possible for families to purchase, refinance, or 

rent a home, Fannie Mae has established responsible credit standards to protect homeowners as well as 

taxpayers. 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. As of June 30, 2013, 72 percent of Fannie 

Mae’s single-family guaranty book of business consisted of loans it had purchased or guaranteed since the 

beginning of 2009. While Fannie Mae does not yet 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.

Single-family conventional loans acquired by Fannie Mae during the first half of 2013 had a weighted 

average borrower FICO credit score at origination of 756 and an average original loan-to-value (“LTV”) 

ratio of 75 percent. The average original LTV ratio for the company’s acquisitions increased for the full 

year of 2012 and the first half of 2013 as compared to prior periods because the company acquired more 

loans with higher LTV ratios in these periods than in the prior periods as changes to the Home Affordable 

Refinance Program (“HARP”) were implemented.
Second Quarter 2013 Results 5

Loss Reserves: The company’s total loss reserves decreased to $53.1 billion as of June 30, 2013 from 

$60.2 billion as of March 31, 2013 and $62.6 billion as of December 31, 2012. The company’s total loss 

reserves peaked at $76.9 billion as of December 31, 2011. 
Second Quarter 2013 Results 6

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

2010, and was 2.77 percent as of June 30, 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.

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 more than 40,000 loan modifications during 

the second quarter of 2013, bringing the total number of loan modifications the company has completed 

since January 1, 2009 to approximately 962,000.

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

offers alternatives to foreclosure. These solutions have enabled 1.3 million borrowers to avoid foreclosure 

since 2009. 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.
Second Quarter 2013 Results 7

For the Six Months Ended For the Year Ended December 31

June 30, 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 $ 15,130 83,511 $ 30,640 163,412 $ 42,793 213,340 $ 82,826 403,506

Repayment plans and 

forbearances completed 1,030 7,906 3,298 23,329 5,042 35,318 4,385 31,579

HomeSaver Advance first-lien 

loans — — — — — — 688 5,191

Total home retention strategies 16,160 91,417 33,938 186,741 47,835 248,658 87,899 440,276

Foreclosure alternatives:

Short sales 5,452 25,642 15,916 73,528 15,412 70,275 15,899 69,634

Deeds-in-lieu of foreclosure 1,352 8,194 2,590 15,204 1,679 9,558 1,053 5,757

Total foreclosure alternatives 6,804 33,836 18,506 88,732 17,091 79,833 16,952 75,391

Total loan workouts $ 22,964 125,253 $ 52,444 275,473 $ 64,926 328,491 $ 104,851 515,667

Loan workouts as a percentage of

single-family guaranty book of

business 1.62% 1.43% 1.85% 1.57% 2.29% 1.85% 3.66% 2.87%

REFINANCING INITIATIVES

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

borrowers and includes HARP, the company acquired approximately 313,000 loans in the second quarter 

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 fixedrate 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 second quarter of 2013 

reduced borrowers’ monthly mortgage payments by an average of $234.
Second Quarter 2013 Results 8

FORECLOSURES AND REO

Fannie Mae acquired 36,106 single-family REO properties, primarily through foreclosure, in the second 

quarter of 2013, compared with 38,717 in the first quarter of 2013. As of June 30, 2013, the company’s 

inventory of single-family REO properties was 96,920, compared with 101,449 as of March 31, 2013. The 

carrying value of the company’s single-family REO was $9.1 billion as of June 30, 2013.

The company’s single-family foreclosure rate was 0.86 percent for the first six months of 2013. This 

reflects the annualized total number of single-family properties acquired through foreclosure or deeds-inlieu of foreclosure as a percentage of the total number of loans in Fannie Mae’s single-family guaranty 

book of business.

For the Six Months Ended June 30,

2013 2012

Single-family foreclosed properties (number of properties):

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

Total properties acquired through foreclosure 74,823 91,483

Dispositions of REO (83,569) (100,745)

End of period inventory of single-family foreclosed properties (REO) 96,920 109,266

Carrying value of single-family foreclosed properties (dollars in millions) $ 9,075 $ 9,421

Single-family foreclosure rate 0.86 % 1.04 %

Fannie Mae’s financial data for the second quarter of 2013 are available in the accompanying Appendix; 

however, investors and interested parties should read the company’s Second Quarter 2013 Form 10-Q, 

which was filed today with the Securities and Exchange Commission and is available on Fannie Mae’s 

Web site, www.fanniemae.com. The company provides further discussion of its financial results and 

condition, credit performance, fair value balance sheets, and other matters in its Second Quarter 2013 

Form 10-Q. Additional information about the company’s credit performance, the characteristics of its 

guaranty book of business, its foreclosure-prevention efforts, and other measures is contained in the “2013 

Second Quarter 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 financial results, including its profitability; the company’s future loss reserves; the company’s future revenues; the 

profitability of its loans; its future dividend payments to Treasury; the impact of the company’s actions to reduce credit losses; and the future 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 and housing market variables, 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, 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, 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, operational control weaknesses, changes in the structure and regulation of the financial services industry, limitations on 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 
Second Quarter 2013 Results 9

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, 2012 and the company’s quarterly report on Form 10-Q for 

the quarter ended June 30, 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
Second Quarter 2013 Results 10

APPENDIX

SUMMARY OF SECOND QUARTER 2013 RESULTS

Fannie Mae reported net income of $10.1 billion for the second quarter of 2013, compared with net 

income of $5.1 billion for the second quarter of 2012. Fannie Mae reported comprehensive income of 

$10.3 billion for the second quarter of 2013, compared with comprehensive income of $5.4 billion for the 

second quarter of 2012.

(Dollars in millions) 2Q13 1Q13 Variance 2Q13 2Q12 Variance

Net interest income $ 5,667 $ 6,304 $ (637) $ 5,667 $ 5,428 $ 239

Fee and other income 485 568 (83) 485 395 90

Net revenues 6,152 6,872 (720) 6,152 5,823 329

Investment gains, net 290 118 172 290 131 159

Net other-than-temporary impairments (6) (9) 3 (6) (599) 593

Fair value gains (losses), net 829 834 (5) 829 (2,449) 3,278

Administrative expenses (626) (641) 15 (626) (567) (59)

Credit-related income

Benefit for credit losses 5,383 957 4,426 5,383 3,041 2,342

Foreclosed property income 332 260 72 332 70 262

Total credit-related income 5,715 1,217 4,498 5,715 3,111 2,604

Other non-interest expenses (274) (277) 3 (274) (331) 57

Net gains (losses) and income (expenses) 5,928 1,242 4,686 5,928 (704) 6,632

Income before federal income taxes 12,080 8,114 3,966 12,080 5,119 6,961

(Provision) benefit for federal income taxes (1,985) 50,571 (52,556) (1,985) — (1,985)

Net income 10,095 58,685 (48,590) 10,095 5,119 4,976

Less: Net income attributable to noncontrolling interest (11) — (11) (11) (5) (6)

Net income attributable to Fannie Mae $ 10,084 $ 58,685 $ (48,601) $ 10,084 $ 5,114 $ 4,970

Total comprehensive income attributable to Fannie Mae $ 10,250 $ 59,339 $ (49,089) $ 10,250 $ 5,442 $ 4,808

Preferred stock dividends $ (10,243) $ (4,224) $ (6,019) $ (10,243) $ (2,929) $ (7,314)

Net revenues were $6.2 billion for the second quarter of 2013, compared with $6.9 billion for the first 

quarter of 2013. Net interest income was $5.7 billion, compared with $6.3 billion for the first quarter of 

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

income from portfolio assets due to a decline in the company’s retained portfolio and the recognition of 

$518 million of unamortized cost basis adjustments in the first quarter of 2013 related to loans 

repurchased by Bank of America under a resolution agreement Fannie Mae entered into with them, 

partially offset by higher income from guaranty fees. As Fannie Mae reduces the size of its retained 

mortgage portfolio in compliance with the terms of the senior preferred stock purchase agreement, 

revenues generated by its retained mortgage portfolio assets will also decrease. As a result of both the 

shrinking of the company’s retained mortgage portfolio and the impact of guaranty fee increases, Fannie 

Mae expects that, in a number of years, guaranty fees will become its primary source of revenues.
Second Quarter 2013 Results 11

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

property income, was $5.7 billion in the second quarter of 2013, compared with $1.2 billion in the first 

quarter of 2013. The company recorded credit-related income in the second quarter of 2013 due primarily 

to an increase in home prices. Additionally, in the second quarter of 2013, the company updated the 

assumptions and data used in calculating loss reserves on modified loans to reflect faster prepayment and 

lower default expectations, which resulted in an incremental benefit for credit losses of $2.2 billion.

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

the effect of certain fair-value losses, were $1.6 billion in the second quarter of 2013, compared with $1.5 

billion in the first quarter of 2013. Credit losses in both the first and second quarter of 2013 were 

favorably impacted by increases in home prices and sales prices on dispositions of the company’s REO, as 

well as by recoveries resulting from settlements relating to repurchase requests. 
Second Quarter 2013 Results 12

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 $53.1 billion as of June 30, 2013, compared with $60.2 billion as of March 31, 2013. The total 

loss reserves coverage to total nonperforming loans was 23 percent as of June 30, 2013, compared with 25 

percent as of March 31, 2013.

Net fair value gains were $829 million in the second quarter of 2013, compared with $834 million in the 

first quarter of 2013. The company recorded fair value gains in the second quarter of 2013 due to 

derivative gains because interest rates increased in the second quarter of 2013, partially offset by fair value 

losses on its trading securities due to lower prices on commercial mortgage-backed securities (“CMBS”) 

driven by a widening of credit spreads and higher interest rates. 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.
Second Quarter 2013 Results 13

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 acquires 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 $6.5 billion in the second quarter of 2013, compared with 

$34.9 billion in the first quarter of 2013. The decrease in net income in the second quarter of 2013 

compared with the first quarter of 2013 was due primarily to the release of the company’s valuation 

allowance against its deferred tax assets in the first quarter of 2013. Net income in the second quarter of 

2013 was due primarily to credit-related income. The Single-Family guaranty book of business was $2.84 

trillion as of June 30, 2013 and as of March 31 2013. Single-Family guaranty fee income was $2.5 billion

in the second quarter of 2013 and $2.4 billion in the first quarter of 2013. 

Multifamily had net income of $386 million in the second quarter of 2013, compared with $8.5 billion in 

the first quarter of 2013. The decrease in net income in the second quarter of 2013 compared with the first 

quarter of 2013 was due primarily to the release of the company’s valuation allowance against its deferred 

tax assets in the first quarter of 2013. The Multifamily guaranty book of business was $205.5 billion as of 

June 30, 2013, compared with $205.4 billion as of March 31, 2013. Multifamily recorded credit-related 

income of $34 million in the second quarter of 2013, compared with credit-related income of $183 million

in the first quarter of 2013. Multifamily guaranty fee income was $300 million for the second quarter of 

2013 and $291 million for the first quarter of 2013. 
Second Quarter 2013 Results 14

Capital Markets group had net income of $3.3 billion in the second quarter of 2013, compared with 

$15.9 billion in the first quarter of 2013. The decrease in net income in the second quarter of 2013 

compared with the first quarter of 2013 was due primarily to the release of the company’s valuation 

allowance against its deferred tax assets in the first quarter of 2013. Capital Markets’ net interest income 

for both the second and the first quarter of 2013 was $2.7 billion. Fair value gains for the second quarter 

of 2013 were $841 million, compared with $875 million in the first quarter of 2013. The Capital Markets 

retained mortgage portfolio balance decreased to $565.2 billion as of June 30, 2013, compared with 

$597.8 billion as of March 31, 2013, resulting from purchases of $77.4 billion, liquidations of $34.1 

billion, and sales of $75.9 billion during the quarter. 
Second Quarter 2013 Results 15

(Dollars in millions) 2Q13 1Q13 Variance 2Q13 2Q12 Variance

Single-Family Segment:

Guaranty fee income $ 2,544 $ 2,375 $ 169 $ 2,544 $ 1,970 $ 574

Credit-related income 5,681 1,034 4,647 5,681 3,015 2,666

Other (677) (88) (589) (677) (631) (46)

Income before federal income taxes 7,548 3,321 4,227 7,548 4,354 3,194

(Provision) benefit for federal income taxes (1,050) 31,578 (32,628) (1,050) — (1,050)

Net income $ 6,498 $ 34,899 $ (28,401) $ 6,498 $ 4,354 $ 2,144

Multifamily Segment:

Guaranty fee income $ 300 $ 291 $ 9 $ 300 $ 252 $ 48

Credit-related income 34 183 (149) 34 96 (62)

Other 62 37 25 62 10 52

Income before federal income taxes 396 511 (115) 396 358 38

(Provision) benefit for federal income taxes (10) 7,988 (7,998) (10) — (10)

Net income $ 386 $ 8,499 $ (8,113) $ 386 $ 358 $ 28

Capital Markets Segment:

Net interest income $ 2,680 $ 2,742 $ (62) $ 2,680 $ 3,443 $ (763)

Investment gains, net 898 1,349 (451) 898 1,458 (560)

Fair value gains (losses), net 841 875 (34) 841 (2,461) 3,302

Other (179) (86) (93) (179) (967) 788

Income before federal income taxes 4,240 4,880 (640) 4,240 1,473 2,767

(Provision) benefit for federal income taxes (925) 11,005 (11,930) (925) — (925)

Net income $ 3,315 $ 15,885 $ (12,570) $ 3,315 $ 1,473 $ 1,842
Second Quarter 2013 Results 16

ANNEX I

FANNIE MAE

(In conservatorship)

Condensed Consolidated Balance Sheets — (Unaudited)

(Dollars in millions, except share amounts)

As of

June 30, 2013

December 31,

2012

ASSETS

Cash and cash equivalents $ 24,718 $ 21,117

Restricted cash (includes $48,774 and $61,976, respectively, related to consolidated trusts) 53,930 67,919

Federal funds sold and securities purchased under agreements to resell or similar arrangements 37,800 32,500

Investments in securities:

Trading, at fair value 40,189 40,695

Available-for-sale, at fair value (includes $665 and $935, respectively, related to consolidated trusts) 55,536 63,181

Total investments in securities 95,725 103,876

Mortgage loans:

Loans held for sale, at lower of cost or fair value (includes $101 and $72, respectively, related to consolidated

trusts) 545 464

Loans held for investment, at amortized cost:

Of Fannie Mae 328,573 355,544

Of consolidated trusts (includes $13,770 and $10,800, respectively, at fair value and loans pledged as collateral that

may be sold or repledged of $524 and $943, respectively) 2,696,579 2,652,193

Total loans held for investment 3,025,152 3,007,737

Allowance for loan losses (49,643) (58,795)

Total loans held for investment, net of allowance 2,975,509 2,948,942

Total mortgage loans 2,976,054 2,949,406

Accrued interest receivable, net (includes $7,725 and $7,567, respectively, related to consolidated trusts) 8,997 9,176

Acquired property, net 10,266 10,489

Deferred tax asset, net 48,679 —

Other assets (includes cash pledged as collateral of $981 and $1,222, respectively) 24,496 27,939

Total assets $ 3,280,665 $ 3,222,422

LIABILITIES AND EQUITY

Liabilities:

Accrued interest payable (includes $8,275 and $8,645, respectively, related to consolidated trusts) $ 10,613 $ 11,303

Debt:

Of Fannie Mae (includes $720 and $793, respectively, at fair value) 603,240 615,864

Of consolidated trusts (includes $14,601 and $11,647, respectively, at fair value) 2,637,295 2,573,653

Other liabilities (includes $366 and $1,059, respectively, related to consolidated trusts) 16,274 14,378

Total liabilities $ 3,267,422 $ 3,215,198

Commitments and contingencies (Note 17) — —

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, respectively 19,130 19,130

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

shares outstanding, respectively 687 687

Accumulated deficit (117,561) (122,766)

Accumulated other comprehensive income 1,204 384

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

Total Fannie Mae stockholders’ equity 13,208 7,183

Noncontrolling interest 35 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) 13,243 7,224

Total liabilities and equity $ 3,280,665 $ 3,222,422

See Notes to Condensed Consolidated Financial Statements
Second Quarter 2013 Results 17

FANNIE MAE

(In conservatorship)

Condensed Consolidated Statements of Operations and Comprehensive Income — (Unaudited)

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

For the Three For the Six

 Months Ended Months Ended

June 30, June 30,

2013 2012 2013 2012

Interest income:

Trading securities $ 222 $ 73 $ 448 $ 522

Available-for-sale securities 651 1,035 1,324 1,762

Mortgage loans (includes $24,847 and $28,424, respectively, for the three months ended and

$50,241 and $57,425, respectively, for the six months ended related to consolidated trusts) 28,056 32,023 57,280 64,593

Other 49 40 106 78

Total interest income 28,978 33,171 59,158 66,955

Interest expense:

Short-term debt 37 32 80 74

Long-term debt (includes $20,722 and $24,714, respectively, for the three months ended and

$41,880 and $50,074, respectively, for the six months ended related to consolidated trusts) 23,274 27,711 47,107 56,256

Total interest expense 23,311 27,743 47,187 56,330

Net interest income 5,667 5,428 11,971 10,625

Benefit for credit losses 5,383 3,041 6,340 1,041

Net interest income after benefit for credit losses 11,050 8,469 18,311 11,666

Investment gains, net 290 131 408 247

Net other-than-temporary impairments (6) (599) (15) (663)

Fair value gains (losses), net 829 (2,449) 1,663 (2,166)

Debt extinguishment gains (losses), net 27 (93) 4 (127)

Fee and other income 485 395 1,053 770

Non-interest income (loss) 1,625 (2,615) 3,113 (1,939)

Administrative expenses:

Salaries and employee benefits 304 292 621 598

Professional services 219 179 442 347

Occupancy expenses 47 48 93 91

Other administrative expenses 56 48 111 95

Total administrative expenses 626 567 1,267 1,131

Foreclosed property (income) expense (332) (70) (592) 269

Other expenses 301 238 555 490

Total expenses 595 735 1,230 1,890

Income before federal income taxes 12,080 5,119 20,194 7,837

(Provision) benefit for federal income taxes (1,985) — 48,586 —

Net income 10,095 5,119 68,780 7,837

Other comprehensive income:

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

adjustments and taxes 17 320 665 675

Other 149 8 155 15

Total other comprehensive income 166 328 820 690

Total comprehensive income 10,261 5,447 69,600 8,527

Less: Comprehensive income attributable to noncontrolling interest (11) (5) (11) (4)

Total comprehensive income attributable to Fannie Mae $ 10,250 $ 5,442 $ 69,589 $ 8,523

Net income 10,095 5,119 68,780 7,837

Less: Net income attributable to noncontrolling interest (11) (5) (11) (4)

Net income attributable to Fannie Mae 10,084 5,114 68,769 7,833

Dividends distributed or available for distribution to senior preferred stockholder (10,243) (2,929) (69,611) (5,746)

Net (loss) income attributable to common stockholders (Note 11) $ (159) $ 2,185 $ (842) $ 2,087

(Loss) earnings per share:

Basic $ (0.03) $ 0.38 $ (0.15) $ 0.36

Diluted (0.03) 0.37 (0.15) 0.35

Weighted-average common shares outstanding:

Basic 5,762 5,762 5,762 5,762

Diluted 5,762 5,893 5,762 5,893

See Notes to Condensed Consolidated Financial Statements
Second Quarter 2013 Results 18

FANNIE MAE

(In conservatorship)

Condensed Consolidated Statements of Cash Flows— (Unaudited)

(Dollars in millions)

For the Six Months

Ended June 30,

2013 2012

Net cash provided by operating activities $ 4,802 $ 24,135

Cash flows provided by investing activities:

Purchases of trading securities held for investment (3,985) (1,095)

Proceeds from maturities and paydowns of trading securities held for investment 1,293 1,763

Proceeds from sales of trading securities held for investment 4,469 693

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

Proceeds from maturities and paydowns of available-for-sale securities 5,861 5,972

Proceeds from sales of available-for-sale securities 2,021 696

Purchases of loans held for investment (119,122) (81,192)

Proceeds from repayments of loans held for investment of Fannie Mae 28,762 14,236

Proceeds from repayments of loans held for investment of consolidated trusts 394,972 355,110

Net change in restricted cash 13,989 (5,188)

Advances to lenders (76,435) (56,489)

Proceeds from disposition of acquired property and preforeclosure sales 22,466 20,570

Net change in federal funds sold and securities purchased under agreements to resell or similar arrangements (5,300) 22,000

Other, net 170 (92)

Net cash provided by investing activities 269,161 276,959

Cash flows used in financing activities:

Proceeds from issuance of debt of Fannie Mae 248,901 337,683

Payments to redeem debt of Fannie Mae (261,959) (408,557)

Proceeds from issuance of debt of consolidated trusts 235,835 160,523

Payments to redeem debt of consolidated trusts (429,545) (382,520)

Payments of cash dividends on senior preferred stock to Treasury (63,592) (5,750)

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

Other, net (2) 145

Net cash used in financing activities (270,362) (293,905)

Net increase in cash and cash equivalents 3,601 7,189

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

Cash and cash equivalents at end of period $ 24,718 $ 24,728

Cash paid during the period for:

Interest $ 55,455 $ 60,926

Income Taxes $ 1,016 $ —

See Notes to Condensed Consolidated Financial Statements