Full Year 2017 Results 1

Resource Center: 1-800-732-6643

Contact: Pete Bakel

202-752-2034

Date: February 14, 2018

Fannie Mae Reports Net Income of $2.5 Billion and

Comprehensive Income of $2.3 Billion for 2017

Fannie Mae Reports Net Loss of $6.5 Billion and 

Comprehensive Loss of $6.7 Billion for Fourth Quarter 2017

Fannie Mae Reports Pre-Tax Income of $18.4 Billion for 2017 and 

Pre-Tax Income of $5.0 Billion for Fourth Quarter 2017

Full Year and Fourth Quarter 2017 Results “Our 2017 results 

demonstrate that the 

fundamentals of our 

business are strong. While 

the fourth quarter was 

affected by a one-time 

accounting charge, we 

expect to benefit from a 

lower tax rate going 

forward.

“As we mark 80 years of 

serving America’s housing 

market, our focus is on 

building a strong, stable 

housing finance system for 

the future. We are doing 

this by delivering 

innovative solutions for our 

customers and 

demonstrating leadership 

on our country’s most 

persistent housing 

challenges. 

“We are in a strong 

position to serve the 

changing needs of 

homeowners and renters, 

and to advance our vision 

to be America’s most 

valued housing partner.”

Timothy J. Mayopoulos, 

President and Chief 

Executive Officer

• Fannie Mae reported 2017 net income of $2.5 billion, compared with net income

of $12.3 billion in 2016. Fannie Mae’s annual pre-tax income for 2017 was

$18.4 billion, compared with $18.3 billion in 2016, reflecting the strength of the

company’s underlying business fundamentals.

• Fannie Mae reported a fourth quarter 2017 net loss of $6.5 billion, compared

with net income of $3.0 billion in the third quarter.

• The primary driver of changes in the company’s net income for full year 2017

and the fourth quarter of 2017 was a $9.9 billion provision for federal income

taxes in the fourth quarter resulting from the remeasurement of the company's

deferred tax assets due to the Tax Cuts and Jobs Act (Tax Act). As a result,

Fannie Mae reported a net worth deficit of $3.7 billion as of December 31, 2017.

To eliminate the company’s net worth deficit, the company expects the Director

of the Federal Housing Finance Agency (FHFA) will submit a request to

Treasury on the company’s behalf for $3.7 billion.

Business Highlights

• In December 2017, FHFA entered into an agreement with Treasury on Fannie

Mae’s behalf that modified the dividend provisions of the senior preferred stock.

The agreement increased the applicable capital reserve amount to $3.0 billion,

effective January 1, 2018, and reduced the dividend amount otherwise payable

for the fourth quarter of 2017 by $2.4 billion.

• Fannie Mae provided approximately $570 billion in liquidity to the mortgage

market in 2017 and was the largest issuer of single-family mortgage-related

securities in the secondary market in the fourth quarter and full year of 2017.

The company’s estimated market share of new single-family mortgage-related

securities issuances was 39 percent for full year 2017 and 37 percent for the

fourth quarter of 2017.

• Fannie Mae provided more than $67 billion in multifamily and other rental

financing and supported 770,000 units of multifamily housing in 2017, the

highest multifamily rental volume in the history of its Delegated Underwriting

and Servicing (DUS®) program.

• Fannie Mae has transferred a portion of the credit risk on single-family

mortgages with an unpaid principal balance of more than $1.2 trillion since

2013, measured at the time of the transactions, including more than $390 billion

in 2017. As of December 31, 2017, $922 billion in single-family mortgages or

approximately 32 percent of the loans in the company’s single-family

conventional guaranty book of business, measured by unpaid principal balance,

were covered by a credit risk transfer transaction.
Full Year 2017 Results 2

WASHINGTON, DC — Fannie Mae (FNMA/OTC) reported annual net income of $2.5 billion (after-tax), annual pretax income of $18.4 billion, and annual comprehensive income of $2.3 billion in 2017. For the fourth quarter of 2017, 

Fannie Mae reported a net loss of $6.5 billion (after-tax), pre-tax income of $5.0 billion, and a comprehensive loss of 

$6.7 billion resulting from the remeasurement of the company’s deferred tax assets due to the enactment of the Tax 

Act. The company reported a net worth deficit of $3.7 billion as of December 31, 2017. To eliminate the company’s 

net worth deficit, the company expects the Director of the Federal Housing Finance Agency (FHFA) will submit a 

request to Treasury on the company’s behalf for $3.7 billion. 

SUMMARY OF FANNIE MAE’S FINANCIAL PERFORMANCE

Fannie Mae’s pre-tax income was $18.4 billion in 2017, compared with $18.3 billion in 2016, reflecting the strength 

of the company’s underlying business fundamentals. 

The company’s net revenues, which consist of net interest income and fee and other income, were higher in 2017 

compared with 2016.

• Net interest income decreased slightly in 2017 compared with 2016. Net interest income was derived 

primarily from guaranty fees from the company’s $3.2 trillion guaranty book of business. Fannie Mae 

receives guaranty fees as compensation for managing the credit risk on loans underlying Fannie Mae MBS 

held by third parties.

• Fee and other income increased in 2017 compared with 2016 primarily as a result of a settlement 

agreement resolving legal claims related to private-label mortgage-related securities the company 

purchased prior to entering conservatorship in 2008.

The decrease in Fannie Mae’s net income and comprehensive income in 2017 was driven primarily by a $9.9 billion

provision for federal income taxes resulting from the enactment of the Tax Act. This one-time charge was due to the 

remeasurement of the company’s deferred tax assets using the lower corporate tax rate enacted in the fourth 

quarter of 2017 with an effective date of January 1, 2018. Fannie Mae expects its future net income will benefit from 

the lower federal corporate income tax rate. The company expects its effective tax rate to be approximately 20 

percent in 2018.
Full Year 2017 Results 3

Summary of Financial Results

(Dollars in millions) 4Q17 3Q17 Variance 2017 2016 Variance

Net interest income $ 5,111 $ 5,274 $ (163) $ 20,733 $ 21,295 $ (562)

Fee and other income 431 1,194 (763) 2,227 966 1,261

Net revenues 5,542 6,468 (926) 22,960 22,261 699

Investment gains, net 833 313 520 1,522 1,256 266

Fair value losses, net (191) (289) 98 (1,211) (1,081) (130)

Administrative expenses (703) (664) (39) (2,737) (2,741) 4

Credit-related income (expense)

Benefit (provision) for credit losses 560 (182) 742 2,041 2,155 (114)

Foreclosed property expense (130) (140) 10 (521) (644) 123

Total credit-related income (expense) 430 (322) 752 1,520 1,511 9

Temporary Payroll Tax Cut Continuation Act of

2011 (“TCCA”) fees (544) (531) (13) (2,096) (1,845) (251)

Other expenses, net (411) (427) 16 (1,511) (1,028) (483)

Income before federal income taxes 4,956 4,548 408 18,447 18,333 114

Provision for federal income taxes (11,489) (1,525) (9,964) (15,984) (6,020) (9,964)

Net income (loss) $ (6,533) $ 3,023 $ (9,556) $ 2,463 $ 12,313 $ (9,850)

Total comprehensive income (loss) $ (6,687) $ 3,048 $ (9,735) $ 2,257 $ 11,665 $ (9,408)

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

quarter of 2017, compared with $6.5 billion for the third quarter of 2017. For the year, net revenues were $23.0 

billion, compared with $22.3 billion in 2016. 

Net interest income was $5.1 billion for the fourth quarter of 2017, compared with $5.3 billion for the third quarter of 

2017. For 2017, net interest income was $20.7 billion, compared with $21.3 billion for 2016. The decrease in net 

interest income for the fourth quarter and the year was due primarily to lower net interest income from the 

company’s retained mortgage portfolio.

More than 75 percent of Fannie Mae’s 2017 net interest income was derived from the loans underlying Fannie Mae 

MBS in consolidated trusts, which primarily generate income through guaranty fees. As shown in the chart below, in 

recent years, an increasing portion of Fannie Mae’s net interest income has been derived from guaranty fees, rather 

than from the company’s retained mortgage portfolio assets. This shift has been driven by both the guaranty fee 

increases the company implemented in 2012 and the reduction of its retained mortgage portfolio. 
Full Year 2017 Results 4

__________

(1) Guaranty fee income includes the impact of a 10 basis point guaranty fee increase implemented in 2012 pursuant to the 

Temporary Payroll Tax Cut Continuation Act of 2011, the incremental revenue from which is remitted to Treasury and not 

retained by the company.

Fee and other income was $431 million for the fourth quarter of 2017, compared with $1.2 billion for the third 

quarter of 2017. Fee and other income for the fourth quarter of 2017 was lower due primarily to a settlement 

agreement in the third quarter of 2017 that resolved legal claims relating to private-label mortgage-related securities 

the company purchased prior to entering conservatorship in 2008. For the year, fee and other income was $2.2 

billion, compared with $1.0 billion for 2016. The increase in fee and other income for the year was driven primarily 

by the settlement agreement described above.

Net fair value losses were $191 million in the fourth quarter of 2017, compared with $289 million in the third 

quarter of 2017. Net fair value losses in the fourth quarter of 2017 were due primarily to the impact of increases in 

short-term interest rates on both the value of the company’s risk management derivatives, and its commitments to 

sell mortgage-related securities. For the year, net fair value losses were $1.2 billion, compared with $1.1 billion in 

2016. The company recognized total risk management derivatives fair value losses for 2017 primarily as a result of 

interest expense accruals on interest rate swaps. These losses were partially offset by an increase in the fair value 

of the company’s interest rate swaps in 2017 due to movements in swap rates during the year. The estimated fair 

value of the company’s derivatives, trading securities, and other financial instruments carried at fair value may 

fluctuate substantially from period to period because of changes in interest rates, the yield curve, mortgage and 

credit spreads, implied volatility, and activity related to these financial instruments.
Full Year 2017 Results 5

Credit-related income (expense) consists of a benefit or provision for credit losses and foreclosed property 

expense. Credit-related income was $430 million in the fourth quarter of 2017, compared with credit-related 

expense of $322 million in the third quarter of 2017. Credit-related income in the fourth quarter was due to a benefit 

for credit losses driven primarily by an increase in actual and forecasted home prices and the redesignation of 

mortgage loans from held-for-investment to held-for-sale during the quarter. The shift to credit-related income in the 

fourth quarter reflected the impact of the recent hurricanes, which resulted in credit-related expense in the third 

quarter of 2017. Credit-related income was $1.5 billion in both 2017 and 2016. Credit-related income in 2017 was 

due to a benefit for credit losses driven primarily by an increase in actual and forecasted home prices and the 

redesignations of loans from held-for-investment to held-for-sale during the year, partially offset by the impact of 

estimated incurred losses from Hurricanes Harvey, Irma, and Maria in 2017.
Full Year 2017 Results 6

PROVIDING LIQUIDITY AND SUPPORT TO THE MARKET

Liquidity

Fannie Mae provided approximately $570 billion in liquidity to the mortgage market in 2017, including approximately 

$148 billion in liquidity in the fourth quarter of 2017, through its purchases and guarantees of loans, which resulted 

in:

• Approximately 1.2 million home purchases in 2017, including approximately 293,000 in the fourth quarter of 

2017

• Approximately 1 million mortgage refinancings in 2017, including approximately 246,000 in the fourth

quarter of 2017

• Approximately 770,000 units of multifamily housing in 2017, including approximately 217,000 in the fourth

quarter of 2017
Full Year 2017 Results 7

SUMMARY OF FOURTH QUARTER AND FULL YEAR 2017 BUSINESS SEGMENT RESULTS

Fannie Mae’s two reportable business segments—Single-Family and Multifamily—engage in complementary 

business activities in pursuing Fannie Mae’s vision to be America’s most valued housing partner and to provide 

liquidity, access to credit, and affordability in all U.S. housing markets at all times, while effectively managing and 

reducing risk to Fannie Mae’s business, taxpayers, and the housing finance system. Fannie Mae is advancing this 

vision by pursuing four strategic objectives: advancing a sustainable and reliable business model that reduces risk 

to the housing finance system and taxpayers; providing great service to its customers and partners, enabling them 

to serve the needs of American households more effectively; supporting and sustainably increasing access to credit 

and affordable housing; and building a simple, efficient, innovative, and continuously improving company. 

Business Segments

Single-Family Business

(Dollars in millions) 4Q17 3Q17 Variance 2017 2016 Variance

Single-Family Segment:

Net interest income $ 4,463 $ 4,627 $ (164) $ 18,212 $19,010 $ (798)

Fee and other income 186 1,005 (819) 1,378 521 857

Net revenues 4,649 5,632 (983) 19,590 19,531 59

Credit-related income (expense) 437 (294) 731 1,550 1,439 111

Investment gains, net 795 286 509 1,352 944 408

Fair value losses, net (191) (300) 109 (1,188) (1,040) (148)

Administrative expenses (610) (580) (30) (2,391) (2,418) 27

TCCA fees (544) (531) (13) (2,096) (1,845) (251)

Other expenses, net (273) (320) 47 (1,004) (1,012) 8

Income before federal income taxes 4,263 3,893 370 15,813 15,599 214

Provision for federal income taxes (10,287) (1,361) (8,926) (14,301) (5,417) (8,884)

Net income (loss) $ (6,024) $ 2,532 $ (8,556) $ 1,512 $10,182 $ (8,670)

Financial Results

• Single-Family pre-tax income was $4.3 billion in the fourth quarter of 2017, compared with $3.9 billion in the 

third quarter of 2017. The increase in pre-tax income in the fourth quarter was driven primarily by a shift to 

credit-related income, as the impact of the recent hurricanes resulted in credit-related expense in the third 

quarter of 2017, and an increase in net investment gains, resulting from higher gains on loan sales 

consistent with the company’s reduction of its retained mortgage portfolio. The increase in pre-tax income in 

the fourth quarter was partially offset by lower fee and other income from a settlement agreement reached 

in the third quarter of 2017 resolving legal claims relating to private-label mortgage-related securities the 

company purchased prior to entering conservatorship in 2008.

For the year, Single-Family pre-tax income was $15.8 billion, compared with $15.6 billion in 2016. The 

increase in pre-tax income in 2017 was driven primarily by an increase in net investment gains, resulting 

from higher gains on loan sales, consistent with the company’s reduction of its retained mortgage portfolio, 

and an increase in fee and other income from a settlement agreement reached in the third quarter of 2017 

resolving legal claims relating to private-label mortgage-related securities the company purchased prior to 

entering conservatorship in 2008. The increase in pre-tax income in 2017 was partially offset by a reduction 

in net interest income due mainly to a decline in the average balance of the single-family retained mortgage 

portfolio and lower amortization income partially offset by higher base guaranty fee income.
Full Year 2017 Results 8

Business Highlights

• The single-family guaranty book of business grew in size by approximately 40 basis points in the fourth 

quarter. The average charged guaranty fee, net of Temporary Payroll Tax Cut Continuation Act of 2011 

(TCCA) fees, on the single-family guaranty book increased by 0.2 basis points, to 42.6 basis points in the 

fourth quarter, compared with the third quarter of 2017. The average charged guaranty fee on the singlefamily guaranty book of business continued to increase as loans with lower guaranty fees were replaced 

with loans with higher guaranty fees.

• The average charged guaranty fee, net of TCCA, on new single-family acquisitions decreased by 1.7 basis 

points in the fourth quarter to 45.4 basis points, compared with the third quarter of 2017, driven primarily by 

increased competition. The average charged guaranty fee on newly acquired single-family loans increased 

in 2017 compared with 2016 due primarily to an increase in total loan level price adjustments charged on 

the company’s 2017 acquisitions.

• In December 2017 and February 2018, FHFA, in its capacity as conservator, provided guidance relating to 

Fannie Mae’s guaranty fee pricing for new single-family acquisitions. FHFA’s guidance requires that the 

company meet a specified minimum return on equity target based on the conservator capital framework. 

The company must implement this target in the first quarter of 2018. The company may be required to 

increase guaranty fees charged on some loans in order to meet this requirement.

• The single-family serious delinquency rate increased from 1.01 percent as of September 30, 2017 to 1.24 

percent as of December 31, 2017, driven by the impact of the hurricanes.

Multifamily Business

(Dollars in millions) 4Q17 3Q17 Variance 2017 2016 Variance

Multifamily Segment:

Net interest income $ 648 $ 647 $ 1 $ 2,521 $ 2,285 $ 236

Fee and other income 245 189 56 849 445 404

Net revenues 893 836 57 3,370 2,730 640

Credit-related income (expense) (7) (28) 21 (30) 72 (102)

Fair value gains (losses), net — 11 (11) (23) (41) 18

Administrative expenses (93) (84) (9) (346) (323) (23)

Other income (expenses) (100) (80) (20) (337) 296 (633)

Income before federal income taxes 693 655 38 2,634 2,734 (100)

Provision for federal income taxes (1,202) (164) (1,038) (1,683) (603) (1,080)

Net income (loss) $ (509) $ 491 $ (1,000) $ 951 $ 2,131 $ (1,180)

Financial Results

• Multifamily pre-tax income was $693 million in the fourth quarter of 2017, compared with $655 million in the 

third quarter of 2017. The increase in pre-tax income for the fourth quarter of 2017 was driven by higher 

yield maintenance fees due to prepayment activity and lower credit-related expense, as the third quarter of 

2017 included the estimated losses from the hurricanes. 

• Multifamily pre-tax income was $2.6 billion in 2017, compared with $2.7 billion in 2016. Pre-tax income was 

lower in 2017 due primarily to higher gains on the sale of available-for sale securities and gains on the sale 

of partnership investments in 2016. The decrease was partially offset by higher net interest income in 2017 

driven by growth in the multifamily guaranty book of business, and new multifamily loan acquisitions with 

higher guaranty fees replacing liquidating loans with lower guaranty fees.

Business Highlights

• New multifamily business volume was more than $20 billion in the fourth quarter of 2017, an increase from 

approximately $16 billion in the third quarter. Fannie Mae provided more than $67 billion in multifamily and 
Full Year 2017 Results 9

other rental financing and supported approximately 770,000 units of multifamily housing in 2017, the highest 

multifamily rental volume in the history of Fannie Mae’s DUS program. Approximately 46 percent of Fannie 

Mae’s 2017 multifamily new business and other rental volume counted toward FHFA’s 2017 multifamily 

volume cap.

• The multifamily guaranty book of business continued to grow in the fourth quarter of 2017, while the 

average charged guaranty fee on the multifamily book remained relatively flat at 79 basis points as of 

December 31, 2017.

• The multifamily serious delinquency rate increased from 0.03 percent as of September 30, 2017 to 0.11 

percent as of December 31, 2017, driven by the impact of the hurricanes.

CREDIT QUALITY

While continuing to make it possible for families to buy, refinance, or rent homes, Fannie Mae has maintained 

responsible credit standards. Fannie Mae monitors various loan attributes, in conjunction with housing market and 

economic conditions, to determine if its pricing, eligibility, and underwriting criteria accurately reflect the risks 

associated with loans the company acquires or guarantees. Single-family conventional loans acquired by Fannie 

Mae in 2017 had a weighted average borrower FICO credit score at origination of 745 and a weighted average 

original loan-to-value ratio of 75 percent.
Full Year 2017 Results 10

__________

(1) Calculated as of the end of each period based on the number of single-family conventional loans that are 90 days or more 

past due and loans that have been referred to foreclosure but not yet foreclosed upon, divided by the number of loans in 

Fannie Mae’s single-family conventional guaranty book of business. 

(2) Fannie Mae has acquired HARP loans and other Refi Plus loans under its Refi PlusTM initiative since 2009. Fannie Mae’s 

Refi Plus initiative offers refinancing flexibility to eligible borrowers who are current on their loans and whose loans are 

owned or guaranteed by us and meet certain additional criteria. HARP loans, which have loan-to-value (“LTV”) ratios at 

origination greater than 80%, refers to loans Fannie Mae has acquired pursuant to the Home Affordable Refinance 

Program® (“HARP®”). Other Refi Plus loans, which have LTV ratios at origination of 80% or less, refers to loans the 

company has acquired under its Refi Plus initiative other than HARP loans. Loans the company acquires under Refi Plus 

and HARP are refinancings of loans that were originated prior to June 2009.

While Fannie Mae’s single-family delinquency rates continued their downward trend in the first part of 2017, the 

impact of the hurricanes in the third quarter of 2017 resulted in an increase in the company’s single-family 

delinquency rates in the latter part of the year. In response to the hurricanes, the company permitted its servicers to 

grant an initial temporary 90-day period of disaster forbearance to any homeowner in the hurricane-affected regions 

they believe has been impacted by the disaster. Servicers are permitted to extend the forbearance period beyond 

90 days after making contact with the homeowner or with Fannie Mae’s approval. As a result, a large number of 

borrowers in the hurricane-affected regions became delinquent while in this forbearance period, particularly in 

Texas, Florida, and Puerto Rico, which were most significantly impacted by the hurricanes.

Fannie Mae expects its single-family serious delinquency rate to remain higher during the short-term while 

borrowers are in forbearance periods. The company expects many of these delinquent borrowers to resolve their 

delinquencies in the next several months, either through resuming their mortgage payments or by obtaining a loan 

modification. Over the long term, the company expects the impact of the hurricanes on its serious delinquency rate 

to subside and for this rate to resume its previous downward trend; however, because the company’s single-family 

serious delinquency rate has already declined significantly over the past several years, it expects more modest 

declines and may experience period to period fluctuations in this rate.

The company’s single-family serious delinquency rate and the period of time that loans remain seriously delinquent 

continue to be negatively affected by the length of time required to complete a foreclosure in some states. Other 

factors that affect its single-family serious delinquency rate include: the pace of loan modifications; the timing and 

volume of nonperforming loan sales made by the company; natural disasters; servicer performance; and changes in 

home prices, unemployment levels and other macroeconomic conditions.
Full Year 2017 Results 11

FINANCIAL PERFORMANCE OUTLOOK

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

could result in significant volatility in the company’s financial results from quarter to quarter or year to year. Fannie 

Mae expects volatility from quarter to quarter in its financial results due to a number of factors, particularly changes 

in market conditions that result in fluctuations in the estimated fair value of the financial instruments that it marks to 

market through its earnings. Other factors that may result in volatility in the company’s quarterly financial results 

include developments that affect its loss reserves, such as changes in interest rates, home prices or accounting 

standards, or events such as natural disasters. 

The potential for significant volatility in the company’s financial results could result in a net loss in a future quarter. 

Because the company had a net worth deficit as of December 31, 2017, it has no remaining capital reserves as of 

that date. Pursuant to the December 2017 letter agreement described below, Fannie Mae is now permitted to retain 

up to $3.0 billion in future earnings as capital reserves. Once the company is able to rebuild its capital reserves to 

$3.0 billion, the capital reserves will provide a buffer in the event of a net loss in a future quarter. However, any net 

loss the company experiences in the future could be greater than the amount of its capital reserves. If this were to 

occur, it would result in a net worth deficit for that quarter. If the company has another net worth deficit in a future 

quarter, it will be required to draw additional funds from Treasury under the senior preferred stock purchase 

agreement to avoid being placed into receivership. 

ABOUT FANNIE MAE’S CONSERVATORSHIP AND AGREEMENTS WITH TREASURY

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

commitment under a senior preferred stock purchase agreement to provide funding to Fannie Mae under certain 

circumstances if the company has a net worth deficit. Pursuant to this agreement and the senior preferred stock the 

company issued to Treasury in 2008, the Director of FHFA has directed Fannie Mae to pay dividends to Treasury on 

a quarterly basis since entering into conservatorship in 2008 for every dividend period for which dividends were 

payable.

In December 2017, FHFA entered into a letter agreement with Treasury on Fannie Mae’s behalf that amended the 

dividend provisions of the senior preferred stock to: 

• increase the applicable capital reserve amount to $3.0 billion, effective January 1, 2018; and

• reduce the dividend amount otherwise payable for the fourth quarter of 2017 by $2.4 billion.

The amended dividend provisions of the senior preferred stock also provide that, if Fannie Mae does not declare 

and pay a dividend in the full amount provided for in the senior preferred stock for any future dividend period, the 

capital reserve amount will thereafter be zero. In his December 21, 2017 statement announcing this reinstatement 

of the $3.0 billion capital reserve, the Director of FHFA noted that FHFA contemplates that going forward Fannie 

Mae and Freddie Mac dividends will be declared and paid beyond the $3.0 billion capital reserve in the absence of 

exigent circumstances.

The chart below shows the funds Fannie Mae has drawn from Treasury pursuant to the senior preferred stock 

purchase agreement, as well as the dividend payments the company has made to Treasury on the senior preferred 

stock, since entering into conservatorship.
Full Year 2017 Results 12

__________

(1) Under the terms of the senior preferred stock purchase agreement, dividend payments the company makes to Treasury do 

not offset prior draws of funds from Treasury, and the company is not permitted to pay down draws it has made under the 

agreement except in limited circumstances. Amounts may not sum due to rounding.

(2) Treasury draws are shown in the period for which requested, not when the funds were received by the company. 

Accordingly, the 2017 draw amount and 2008-2017 total draw amount reflect the $3.7 billion the company will draw to 

eliminate its net worth deficit as of December 31, 2017. Draw requests have been funded in the quarter following a net worth 

deficit.

Under the terms of the senior preferred stock, if Fannie Mae does not have a positive net worth or if our net worth 

does not exceed the applicable capital reserve amount as of the end of a fiscal quarter, then no dividend amount 

will accrue or be payable for the applicable dividend period. Because the company had a net worth deficit of $3.7 

billion as of December 31, 2017, no dividend will be payable to Treasury for the first quarter of 2018, and the 

company expects the Director of FHFA will submit a request to Treasury on the company’s behalf for $3.7 billion to 

eliminate its net worth deficit. After Fannie Mae receives these funds, the maximum amount of remaining funding 

under the agreement will be $113.9 billion. If the company were to draw additional funds from Treasury under the 

agreement in respect of a future period, the amount of remaining funding under the agreement would be reduced by 

the amount of the company’s draw. Dividend payments Fannie Mae makes to Treasury do not restore or increase 

the amount of funding available to the company under the agreement.

For a description of the terms of the senior preferred stock purchase agreement and the senior preferred stock, 

including additional information on the December 2017 letter agreement amending the terms of the senior preferred 

stock, see “Conservatorship and Treasury Agreements—Treasury Agreements” in the company’s 2017 Form 10-K.

Although Treasury owns Fannie Mae’s senior preferred stock and a warrant to purchase 79.9 percent of the 

company’s common stock, and has made a commitment under a senior preferred stock purchase agreement to 

provide the company with funds to maintain a positive net worth under specified conditions, the U.S. government 

does not guarantee the company’s securities or other obligations.
Full Year 2017 Results 13

Fannie Mae’s financial statements for the full year of 2017 are available in the accompanying Annex; however, 

investors and interested parties should read the company’s 2017 Form 10-K, which was filed today with the 

Securities and Exchange Commission and is available on Fannie Mae’s website, www.fanniemae.com. The 

company provides further discussion of its financial results and condition, credit performance, and other matters in 

its 2017 Form 10-K. Additional information about the company’s credit performance, the characteristics of its 

guaranty book of business, its foreclosure-prevention efforts, and other measures is contained in the “2017 Credit 

Supplement” at www.fanniemae.com.

# # #

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

statements regarding: actions by the Director of FHFA relating to requests for funding from Treasury to eliminate the company’s net worth deficit 

and future dividend payments on the senior preferred stock; actions by Treasury to provide funding to eliminate the company’s net worth deficit; 

the company’s profitability and financial results and the factors that will affect the company’s profitability and financial results; the company’s 

effective tax rate; and the company’s future serious delinquency rates and the factors that will affect the company’s single-family serious 

delinquency rates. These estimates, forecasts, expectations, and statements are forward-looking statements based on the company’s current 

assumptions regarding numerous factors. Actual results, and future projections, could be materially different from what is set forth in the forwardlooking statements as a result of: home price changes; interest rate changes; unemployment rates; other macroeconomic and housing market 

variables; the company’s future serious delinquency rates; the company’s future guaranty fee pricing and the impact of that pricing on the 

company’s guaranty fee revenues and competitive environment; government policy; credit availability; changes in borrower behavior; the volume 

of loans it modifies; the effectiveness of its loss mitigation strategies; significant changes in modification and foreclosure activity; the volume and 

pace of future nonperforming and reperforming loan sales and their impact on the company’s results and serious delinquency rates; the 

effectiveness of its management of its real estate owned inventory and pursuit of contractual remedies; changes in the fair value of its assets and 

liabilities; future legislative or regulatory requirements or changes that have a significant impact on the company’s business, such as the 

enactment of housing finance reform legislation; actions by FHFA, Treasury, the Department of Housing and Urban Development or other 

regulators that affect the company’s business; the size, composition and quality of the company’s guaranty book of business and retained 

mortgage portfolio; the company’s market share; the life of the loans in the company’s guaranty book of business; future updates to the 

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

principles; changes to the company’s accounting policies; whether the company’s counterparties meet their obligations in full; effects from 

activities the company takes to support the mortgage market and help borrowers; the company’s future objectives and activities in support of 

those objectives, including actions the company may take to reach additional underserved creditworthy borrowers; actions the company may be 

required to take by FHFA, in its role as the company’s conservator or as its regulator, such as changes in the type of business the company does 

or the implementation of the Single Security Initiative; limitations on the company’s business imposed by FHFA, in its role as the company’s 

conservator or as its regulator; the conservatorship and its effect on the company’s business; the investment by Treasury and its effect on the 

company’s business; the uncertainty of the company’s future; challenges the company faces in retaining and hiring qualified executives and other 

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 fiscal and monetary policies of the Federal Reserve, including implementation of 

the Federal Reserve’s balance sheet normalization program; changes in the structure and regulation of the financial services industry; the 

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

company’s reliance on and the performance of the company’s servicers; conditions in the foreclosure environment; global political risks; natural 

disasters, environmental disasters, terrorist attacks, pandemics, or other major disruptive events; cyber attacks or other information security 

breaches or threats; and many other factors, including those discussed in the “Risk Factors” and “Forward-Looking Statements” sections of and 

elsewhere in the company’s annual report on Form 10-K for the year ended December 31, 2017, and elsewhere in this release.

Fannie Mae provides website addresses in its news releases solely for readers’ information. Other content or information appearing on these 

websites is not part of this release. 

Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of Americans. We partner with 

lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home 

buying process easier, while reducing costs and risk. To learn more, visit fanniemae.com and follow us on twitter.com/fanniemae.
Full Year 2017 Results 14

ANNEX

FANNIE MAE

(In conservatorship)

Consolidated Balance Sheets

(Dollars in millions, except share amounts)

As of December 31,

2017 2016

ASSETS

Cash and cash equivalents $ 32,110 $ 25,224

Restricted cash (includes $22,132 and $31,536, respectively, related to consolidated trusts) 28,150 36,953

Federal funds sold and securities purchased under agreements to resell or similar arrangements 19,470 30,415

Investments in securities:

Trading, at fair value (includes $747 and $1,277, respectively, pledged as collateral) 34,679 40,562

Available-for-sale, at fair value (includes $87 and $107, respectively, related to consolidated trusts) 4,843 8,363

Total investments in securities 39,522 48,925

Mortgage loans:

Loans held for sale, at lower of cost or fair value 4,988 2,899

Loans held for investment, at amortized cost:

Of Fannie Mae 162,809 204,318

Of consolidated trusts 3,029,812 2,896,001

Total loans held for investment (includes $10,596 and $12,057, respectively, at fair value) 3,192,621 3,100,319

Allowance for loan losses (19,084) (23,465)

Total loans held for investment, net of allowance 3,173,537 3,076,854

Total mortgage loans 3,178,525 3,079,753

Deferred tax assets, net 17,350 33,530

Accrued interest receivable, net (includes $7,560 and $7,064, respectively, related to consolidated trusts) 8,133 7,737

Acquired property, net 3,220 4,489

Other assets 19,049 20,942

Total assets $ 3,345,529 $ 3,287,968

LIABILITIES AND EQUITY (DEFICIT)

Liabilities:

Accrued interest payable (includes $8,598 and $8,285, respectively, related to consolidated trusts) $ 9,682 $ 9,431

Debt:

Of Fannie Mae (includes $8,186 and $9,582, respectively, at fair value) 276,752 327,097

Of consolidated trusts (includes $30,493 and $36,524, respectively, at fair value) 3,053,302 2,935,219

Other liabilities (includes $492 and $390, respectively, related to consolidated trusts) 9,479 10,150

Total liabilities 3,349,215 3,281,897

Commitments and contingencies — —

Fannie Mae stockholders’ equity (deficit):

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 and

1,158,087,567 and 1,158,082,750 shares outstanding, respectively 687 687

Accumulated deficit (133,805) (124,253)

Accumulated other comprehensive income 553 759

Treasury stock, at cost, 150,675,136 and 150,679,953 shares, respectively (7,400) (7,401)

Total stockholders’ equity (deficit) (3,686) 6,071

Total liabilities and equity (deficit) $ 3,345,529 $ 3,287,968

See Notes to Consolidated Financial Statements in 2017 Form 10-K
Full Year 2017 Results 15

FANNIE MAE

(In conservatorship)

Consolidated Statements of Operations and Comprehensive Income

(Dollars in millions, except share amounts)

For the Year Ended December 31,

2017 2016 2015

Interest income:

Trading securities $ 706 $ 516 $ 444

Available-for-sale securities 335 620 1,156

Mortgage loans (includes $100,593, $95,266 and $97,971, respectively, related to consolidated

trusts) 108,319 104,642 107,699

Other 496 243 143

Total interest income 109,856 106,021 109,442

Interest expense:

Short-term debt (250) (206) (146)

Long-term debt (includes $82,580, $77,575 and $80,326, respectively, related to consolidated

trusts) (88,873) (84,520) (87,887)

Total interest expense (89,123) (84,726) (88,033)

Net interest income 20,733 21,295 21,409

Benefit for credit losses 2,041 2,155 795

Net interest income after benefit for credit losses 22,774 23,450 22,204

Investment gains, net 1,522 1,256 1,336

Fair value losses, net (1,211) (1,081) (1,767)

Fee and other income 2,227 966 1,348

Non-interest income 2,538 1,141 917

Administrative expenses:

Salaries and employee benefits (1,328) (1,336) (1,319)

Professional services (933) (955) (984)

Other administrative expenses (476) (450) (747)

Total administrative expenses (2,737) (2,741) (3,050)

Foreclosed property expense (521) (644) (1,629)

Temporary Payroll Cut Continuation Act of 2011 (“TCCA”) fees (2,096) (1,845) (1,621)

Other expenses, net (1,511) (1,028) (613)

Total expenses (6,865) (6,258) (6,913)

Income before federal income taxes 18,447 18,333 16,208

Provision for federal income taxes (15,984) (6,020) (5,253)

Net income 2,463 12,313 10,955

Other comprehensive loss:

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

taxes (206) (642) (763)

Other — (6) 437

Total other comprehensive loss (206) (648) (326)

Total comprehensive income 2,257 11,665 10,629

Less: Comprehensive income attributable to noncontrolling interest — — (1)

Total comprehensive income attributable to Fannie Mae $ 2,257 $ 11,665 $ 10,628

Net income $ 2,463 $ 12,313 $ 10,955

Less: Net income attributable to noncontrolling interest — — (1)

Net income attributable to Fannie Mae $ 2,463 $ 12,313 $ 10,954

Dividends distributed or available for distribution to senior preferred stockholder (8,944) (12,236) (11,216)

Net income (loss) attributable to common stockholders $ (6,481) $ 77 $ (262)

Earnings (loss) per share:

Basic $ (1.12) $ 0.01 $ (0.05)

Diluted (1.12) 0.01 (0.05)

Weighted-average common shares outstanding:

Basic 5,762 5,762 5,762

Diluted 5,762 5,893 5,762

See Notes to Consolidated Financial Statements in 2017 Form 10-K
Full Year 2017 Results 16

FANNIE MAE

(In conservatorship)

 Consolidated Statements of Cash Flows

(Dollars in millions)

For the Year Ended December

31, 2017 2016 2015

Cash flows provided by (used in) operating activities:

Net income $ 2,463 $ 12,313 $ 10,955

Reconciliation of net income to net cash used in operating activities:

Amortization of cost basis adjustments (6,641) (6,821) (6,298)

Benefit for credit losses (2,041) (2,155) (795)

Valuation gains (1,573) (472) (510)

Current and deferred federal income taxes 14,369 4,309 4,083

Net change in trading securities 4,511 (3,005) (10,153)

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

enhancements (2,426) (3,124) (3,055)

Other, net (406) (1,778) (900)

Net cash provided by (used in) operating activities 8,256 (733) (6,673)

Cash flows provided by investing activities:

Proceeds from maturities and paydowns of trading securities held for investment 1,206 1,840 768

Proceeds from sales of trading securities held for investment 241 1,618 1,104

Proceeds from maturities and paydowns of available-for-sale securities 2,009 2,927 4,394

Proceeds from sales of available-for-sale securities 1,990 11,378 8,249

Purchases of loans held for investment (189,593) (233,935) (187,194)

Proceeds from repayments of loans acquired as held for investment of Fannie Mae 22,557 25,294 25,776

Proceeds from sales of loans acquired as held for investment of Fannie Mae 10,241 5,222 3,196

Proceeds from repayments and sales of loans acquired as held for investment of consolidated

trusts 435,637 543,690 484,230

Net change in restricted cash 8,803 (6,074) 1,663

Advances to lenders (123,687) (140,147) (118,746)

Proceeds from disposition of acquired property and preforeclosure sales 12,221 16,115 20,757

Net change in federal funds sold and securities purchased under agreements to resell or similar

arrangements 10,945 (3,065) 3,600

Other, net 641 116 527

Net cash provided by investing activities 193,211 224,979 248,324

Cash flows used in financing activities:

Proceeds from issuance of debt of Fannie Mae 1,034,742 982,272 443,371

Payments to redeem debt of Fannie Mae (1,086,470) (1,043,108) (518,575)

Proceeds from issuance of debt of consolidated trusts 383,793 437,392 347,614

Payments to redeem debt of consolidated trusts (514,637) (580,642) (511,158)

Payments of cash dividends on senior preferred stock to Treasury (12,015) (9,624) (10,278)

Other, net 6 14 26

Net cash used in financing activities (194,581) (213,696) (249,000)

Net increase (decrease) in cash and cash equivalents 6,886 10,550 (7,349)

Cash and cash equivalents at beginning of period 25,224 14,674 22,023

Cash and cash equivalents at end of period $ 32,110 $ 25,224 $ 14,674

Cash paid during the period for:

Interest $ 109,480 $ 104,318 $ 104,928

Income taxes 3,090 1,711 1,170

Non-cash activities:

Net mortgage loans acquired by assuming debt $ 258,312 $ 275,710 $ 220,168

Net transfers from mortgage loans of Fannie Mae to mortgage loans of consolidated trusts 193,809 223,705 175,104

Transfers from advances to lenders to loans held for investment of consolidated trusts 118,282 130,886 114,851

Net transfers from mortgage loans to acquired property 10,262 13,768 17,534

Transfers of mortgage loans from held for investment to held for sale 12,886 3,878 8,601

See Notes to Consolidated Financial Statements in 2017 Form 10-K
Full Year 2017 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

Accumulated

Deficit

Accumulated 

Other

Comprehensive

Income

Treasury

Stock

Non

Controlling

Interest

Total

Equity 

(Deficit)

Senior

Preferred Preferred Common

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

Change in investment in

noncontrolling interest — — — — — — — — — (12) (12)

Comprehensive income:

Net income — — — — — — 10,954 — — 1 10,955

Other comprehensive income, net of

tax effect:

Changes in net unrealized gains 

on available-for-sale securities 

(net of tax of $151) — — — — — — — (280) — — (280)

Reclassification adjustment for 

gains included in net income 

(net of tax of $253) — — — — — — — (483) — — (483)

Prior service cost and actuarial 

gains, net of amortization for 

defined benefit plans, net of 

tax — — — — — — — 437 — — 437

Total comprehensive income 10,629

Senior preferred stock dividends — — — — — — (10,278) — — — (10,278)

Balance as of December 31, 2015 1 556 1,158 117,149 19,130 687 (126,942) 1,407 (7,401) 29 4,059

Change in investment in

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

Comprehensive income:

Net income — — — — — — 12,313 — — — 12,313

Other comprehensive income, net of

tax effect:

Changes in net unrealized gains 

on available-for-sale securities 

(net of tax of $30) — — — — — — — (55) — — (55)

Reclassification adjustment for 

gains included in net income 

(net of tax of $316) — — — — — — — (587) — — (587)

Other, net of tax — — — — — — — (6) — — (6)

Total comprehensive income 11,665

Senior preferred stock dividends — — — — — — (9,624) — — — (9,624)

Balance as of December 31, 2016 1 556 1,158 117,149 19,130 687 (124,253) 759 (7,401) — 6,071

Comprehensive income:

Net income — — — — — — 2,463 — — — 2,463

Other comprehensive income, net of

tax effect:

Changes in net unrealized gains 

on available-for-sale securities 

(net of tax of $28) — — — — — — — 53 — — 53

Reclassification adjustment for 

gains included in net income 

(net of tax of $139) — — — — — — — (259) — — (259)

Total comprehensive income 2,257

Senior preferred stock dividends — — — — — — (12,015) — — — (12,015)

Other — — — — — — — — 1 — 1

Balance as of December 31, 2017 1 556 1,158 $117,149 $ 19,130 $ 687 $ (133,805) $ 553 $ (7,400) $ — $ (3,686)

See Notes to Consolidated Financial Statements in 2017 Form 10-K