Second Quarter 2016 Results 1

Resource Center: 1-800-232-6643 

Contact: Pete Bakel 

202-752-2034

Date: August 4, 2016

Fannie Mae Reports Net Income of $2.9 Billion and 

Comprehensive Income of $2.9 Billion for Second Quarter 2016

• Fannie Mae expects to pay $2.9 billion in dividends to Treasury in September 2016. With the 

expected September dividend payment, the company will have paid a total of $151.4 billion in 

dividends to Treasury. 

• Fannie Mae was the largest provider of liquidity to the mortgage market in the second quarter of 

2016, providing approximately $145 billion in mortgage financing that enabled families to buy, 

refinance, or rent homes.

• Fannie Mae is focused on serving its customers’ needs, implementing innovative tools that deliver 

greater value and certainty to lenders, and helping make predictable long-term fixed-rate 

mortgages, including the 30-year fixed-rate mortgage, a reality for families across the country.

• Fannie Mae continued to lay off risk to private capital in the mortgage market and reduce taxpayer 

risk through its Connecticut Avenue SecuritiesTM (CAS), Credit Insurance Risk TransferTM

(CIRT

TM), and other types of risk-sharing transactions. Through the second quarter of 2016, Fannie 

Mae had transferred a significant portion of the mortgage credit risk on over $660 billion in unpaid 

principal balance of mortgage loans pursuant to these transactions. 

WASHINGTON, DC — Fannie Mae (FNMA/OTC) reported net income of $2.9 billion and 

comprehensive income of $2.9 billion for the second quarter of 2016. The company reported a positive net 

worth of $4.1 billion as of June 30, 2016. As a result, the company expects to pay Treasury a $2.9 billion

dividend in September 2016.

“We had another quarter of solid financial performance,” said Timothy J. Mayopoulos, president and chief 

executive officer. “We are carrying through on actions to strengthen our company, support the housing 

market, and bring innovation to the market for the benefit of consumers, lenders, and taxpayers. We 

remain a steady, continuous source of mortgage financing to ensure broad access to quality rental housing 

and predictable long-term mortgages, including the 30-year fixed-rate mortgage.”

Second Quarter 2016 Results — Fannie Mae’s net income of $2.9 billion and comprehensive income of 

$2.9 billion for the second quarter of 2016 compares to net income of $1.1 billion and comprehensive 

income of $936 million for the first quarter of 2016. The increase in net income was due primarily to: 

• Lower fair value losses in the second quarter of 2016 driven by smaller decreases in longer-term 

interest rates during the quarter. 

• Higher credit-related income in the second quarter of 2016 attributable primarily to an increase in 

home prices and a decrease in actual and projected mortgage interest rates, as well as a decrease in 

foreclosed property expense.

• Higher net revenues driven primarily by an increase in mortgage prepayments.
Second Quarter 2016 Results 2

SUMMARY OF SECOND QUARTER 2016 RESULTS

(Dollars in Millions) 2Q16 1Q16 Variance 2Q16 2Q15 Variance

Net interest income $ 5,286 $ 4,769 $ 517 $ 5,286 $ 5,677 $ (391)

Fee and other income 174 203 (29) 174 556 (382)

Net revenues 5,460 4,972 488 5,460 6,233 (773)

Investment gains, net 398 69 329 398 514 (116)

Fair value gains (losses), net (1,667) (2,813) 1,146 (1,667) 2,606 (4,273)

Administrative expenses (678) (688) 10 (678) (689) 11

Credit-related income (expense)

Benefit (provision) for credit losses 1,601 1,184 417 1,601 (1,033) 2,634

Foreclosed property expense (63) (334) 271 (63) (182) 119

Total credit-related income (expense) 1,538 850 688 1,538 (1,215) 2,753

Temporary Payroll Tax Cut Continuation Act of 2011

(TCCA) fees (453) (440) (13) (453) (397) (56)

Other expenses, net (254) (264) 10 (254) (202) (52)

Income before federal income taxes 4,344 1,686 2,658 4,344 6,850 (2,506)

Provision for federal income taxes (1,398) (550) (848) (1,398) (2,210) 812

Net income attributable to Fannie Mae $ 2,946 $ 1,136 $ 1,810 $ 2,946 $ 4,640 $ (1,694)

Total comprehensive income attributable to Fannie Mae $ 2,869 $ 936 $ 1,933 $ 2,869 $ 4,359 $ (1,490)

Dividends distributed or available for distribution to

senior preferred stockholder $ (2,869) $ (919) $ (1,950) $ (2,869) $ (4,359) $ 1,490

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

second quarter of 2016, compared with $5.0 billion for the first quarter of 2016. 

Net interest income, which includes guaranty fee revenue, was $5.3 billion for the second quarter of 2016

compared with $4.8 billion for the first quarter of 2016. Net interest income for the second quarter of 2016

was driven by guaranty fee revenue and interest income earned on mortgage assets in the company’s 

retained mortgage portfolio. 

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 is a result of both the impact 

of guaranty fee increases implemented in 2012 and the reduction of the company’s retained mortgage 

portfolio. Approximately two-thirds of the company’s net interest income in the second quarter of 2016

was derived from its guaranty business. The company expects that guaranty fees will continue to account 

for an increasing portion of its net interest income.
Second Quarter 2016 Results 3

Net fair value losses were $1.7 billion in the second quarter of 2016, compared with $2.8 billion in the 

first quarter of 2016. Fair value losses for the second quarter of 2016 were due primarily to decreases in 

longer-term interest rates negatively impacting the value of the company’s risk management derivatives. 

The estimated fair value of the company’s financial instruments 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. 

Credit-related income, which consists of a benefit for credit losses and foreclosed property expense, was 

$1.5 billion in the second quarter of 2016, compared with $850 million in the first quarter of 2016. Creditrelated income in the second quarter of 2016 was due primarily to a benefit for credit losses for the quarter 

attributable primarily to an increase in home prices and a decrease in actual and projected mortgage 

interest rates.
Second Quarter 2016 Results 4

VARIABILITY OF FINANCIAL RESULTS 

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

factors, such as changes in interest rates or home prices, could result in significant volatility in our 

financial results from quarter to quarter or year to year. Fannie Mae’s future financial results also will be 

affected by a number of other factors, including: the company’s guaranty fee rates; the volume of singlefamily mortgage originations in the future; the size, composition, and quality of its retained mortgage 

portfolio and guaranty book of business; and economic and housing market conditions. Although Fannie 

Mae expects to remain profitable on an annual basis for the foreseeable future, due to the company’s 

expectation of continued declining capital and the potential for significant volatility in its financial results, 

the company could experience a net worth deficit in a future quarter, particularly as the company’s capital 

reserve amount approaches or reaches zero. The company’s expectations for its future financial results do 

not take into account the impact on its business of potential future legislative or regulatory changes, which 

could have a material impact on the company’s financial results, particularly the enactment of housing 

finance reform legislation. For additional information on factors that affect the company’s financial 

results, please refer to “Executive Summary” in the company’s quarterly report on Form 10-Q for the 

quarter ended June 30, 2016 (Second Quarter 2016 Form 10-Q).

SUMMARY OF SECOND QUARTER 2016 BUSINESS SEGMENT RESULTS

The business groups running Fannie Mae’s three reporting segments consist of its Single-Family business, 

its Multifamily business, and its Capital Markets group. These business groups 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. In support of this vision, Fannie Mae is focused on: advancing a sustainable and reliable business 

model that reduces risk to the housing finance system and taxpayers; providing reliable, large-scale access 

to affordable mortgage credit for qualified borrowers and helping struggling homeowners; and serving 

customer needs and improving the company’s business efficiency.
Second Quarter 2016 Results 5

(Dollars in Millions) 2Q16 1Q16 Variance 2Q16 2Q15 Variance

Single-Family Segment:

Guaranty fee income $ 3,260 $ 3,222 $ 38 $ 3,260 $ 3,092 $ 168

Credit-related income (expense) 1,535 828 707 1,535 (1,238) 2,773

TCCA fees (453) (440) (13) (453) (397) (56)

Other (599) (587) (12) (599) (412) (187)

Income before federal income taxes 3,743 3,023 720 3,743 1,045 2,698

Provision for federal income taxes (1,093) (643) (450) (1,093) (419) (674)

Net income $ 2,650 $ 2,380 $ 270 $ 2,650 $ 626 $ 2,024

Multifamily Segment:

Guaranty fee income $ 400 $ 385 $ 15 $ 400 $ 357 $ 43

Credit-related income 3 22 (19) 3 23 (20)

Other (24) (36) 12 (24) 27 (51)

Income before federal income taxes 379 371 8 379 407 (28)

Provision for federal income taxes (40) (38) (2) (40) (41) 1

Net income $ 339 $ 333 $ 6 $ 339 $ 366 $ (27)

Capital Markets Segment:

Net interest income $ 1,080 $ 1,092 $ (12) $ 1,080 $ 1,513 $ (433)

Investment gains, net 2,088 1,415 673 2,088 1,562 526

Fair value gains (losses), net (1,730) (2,803) 1,073 (1,730) 2,555 (4,285)

Other (287) (299) 12 (287) (230) (57)

Income (loss) before federal income taxes 1,151 (595) 1,746 1,151 5,400 (4,249)

Benefit (provision) for federal income taxes (265) 131 (396) (265) (1,750) 1,485

Net income (loss) $ 886 $ (464) $ 1,350 $ 886 $ 3,650 $ (2,764)

Single-Family Business

• Single-Family net income was $2.7 billion in the second quarter of 2016, compared with $2.4 billion

in the first quarter of 2016. Net income in the second quarter of 2016 was driven primarily by guaranty 

fee income and credit-related income.

• Single-Family guaranty fee income was $3.3 billion for the second quarter of 2016, compared with 

$3.2 billion in the first quarter of 2016. The increase in guaranty fee income in the second quarter of 

2016 was driven primarily by loans with higher guaranty fees becoming a larger part of the company’s 

Single-Family guaranty book of business due primarily to the cumulative impact of guaranty fee price 

increases implemented in 2012.

• Single-Family credit-related income was $1.5 billion in the second quarter of 2016, compared with 

$828 million in the first quarter of 2016. Credit-related income in the second quarter of 2016 was due 

primarily to a benefit for credit losses for the quarter attributable primarily to an increase in home 

prices and a decrease in actual and projected mortgage interest rates.

• The Single-Family guaranty book of business was $2.82 trillion as of both June 30, 2016 and 

March 31, 2016.
Second Quarter 2016 Results 6

Multifamily Business

• Multifamily net income was $339 million in the second quarter of 2016, compared with $333 million

in the first quarter of 2016. Net income in the second quarter of 2016 was driven primarily by guaranty 

fee income.

• Multifamily guaranty fee income was $400 million for the second quarter of 2016, compared with 

$385 million for the first quarter of 2016. The increase in guaranty fee income in the second quarter of 

2016 was driven primarily by loans with higher guaranty fees becoming a larger part of the company’s 

Multifamily guaranty book of business, while loans with lower guaranty fees continue to liquidate. 

• Multifamily new business volume totaled $22.8 billion for the first half of 2016, of which 

approximately 67 percent counted toward the Federal Housing Finance Agency’s (FHFA) 2016 

multifamily production volume cap. 

• The Multifamily guaranty book of business was $225.2 billion as of June 30, 2016, compared with 

$220.7 billion as of March 31, 2016. 

Capital Markets

• Capital Markets had net income of $886 million in the second quarter of 2016, compared with a net 

loss of $464 million in the first quarter of 2016. Capital Markets’ net income in the second quarter of 

2016 was driven primarily by net investment gains and net interest income, partially offset by fair 

value losses.

• Capital Markets net investment gains were $2.1 billion in the second quarter of 2016, compared with 

$1.4 billion in the first quarter of 2016. Net investment gains for the second quarter of 2016 were due 

primarily to gains on sales of available-for-sale securities in the second quarter of 2016.

• Capital Markets net interest income was $1.1 billion in both the second quarter of 2016 and the first 

quarter of 2016. Net interest income was driven primarily by interest income earned on mortgage 

assets in the company’s retained mortgage portfolio.

• Capital Markets net fair value losses were $1.7 billion in the second quarter of 2016, compared with 

$2.8 billion in the first quarter of 2016. Net fair value losses for the second quarter of 2016 were due 

primarily to fair value losses on risk management derivatives driven by decreases in longer-term 

interest rates during the quarter.

• Capital Markets retained mortgage portfolio balance decreased to $316.3 billion as of June 30, 2016, 

compared with $332.6 billion as of March 31, 2016, resulting from purchases of $75.4 billion and 

sales and liquidations of $91.8 billion during the second quarter of 2016. 

BUILDING A SUSTAINABLE HOUSING FINANCE SYSTEM

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

invested significant resources toward helping to maintain a safer and sustainable housing finance system 

for today and build a safer and sustainable housing finance system for the future. The company is pursuing 

the strategic goals identified by its conservator, FHFA. These strategic goals are: maintain, in a safe and 

sound manner, credit availability and foreclosure prevention activities for new and refinanced mortgages 

to foster liquid, efficient, competitive, and resilient national housing finance markets; reduce taxpayer risk 

through increasing the role of private capital in the mortgage market; and build a new single-family 

infrastructure for use by Fannie Mae and Freddie Mac and adaptable for use by other participants in the 

secondary market in the future.
Second Quarter 2016 Results 7

ABOUT FANNIE MAE’S CONSERVATORSHIP

Fannie Mae has operated under the conservatorship of 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 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, 2016, Fannie Mae has requested cumulative 

draws totaling $116.1 billion and paid $148.5 billion in dividends to Treasury. Under the senior preferred 

stock purchase agreement, the payment of dividends does not offset prior draws. As a result, Treasury 

maintains a liquidation preference of $117.1 billion on the company’s senior preferred stock. 

Treasury Draws and Dividend Payments

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

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

not offset prior Treasury draws.

(2) Fannie Mae expects to pay a dividend for the third quarter of 2016 calculated based on the company’s net worth of $4.1 billion as of 

June 30, 2016 less a capital reserve amount of $1.2 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 immediately preceding fiscal 

quarter exceeds an applicable capital reserve amount. The capital reserve amount is $1.2 billion for each 

quarter of 2016 and will be reduced by $600 million each year 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. If the company were to draw additional funds from 

Treasury under the agreement in 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.

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, 

2015 (2015 Form 10-K). 
Second Quarter 2016 Results 8

CREDIT RISK TRANSFER TRANSACTIONS

In late 2013, Fannie Mae began entering into credit risk transfer transactions with the goal of transferring, 

to the extent economically sensible, a portion of the mortgage credit risk on some of the recently acquired 

loans in its single-family book of business in order to reduce the economic risk to the company and to 

taxpayers of future borrower defaults. Fannie Mae’s primary method of achieving this goal has been 

through the issuance of its Connecticut Avenue SecuritiesTM (CAS) and its Credit Insurance Risk 

TransferTM (CIRT

TM) transactions. 

These transactions transfer a portion of the mortgage credit risk associated with losses on specified 

reference pools of single-family mortgage loans to investors in CAS or to panels of reinsurers or insurers 

in CIRT transactions. Approximately 19 percent of the loans in the company’s single-family conventional 

guaranty book of business as of June 30, 2016, measured by unpaid principal balance, were included in a 

reference pool for a CAS or CIRT transaction. The company also has executed other types of risk-sharing 

transactions in addition to its CAS and CIRT transactions. In the aggregate, Fannie Mae’s credit risk 

transfer transactions completed through June 30, 2016 transferred a significant portion of the mortgage 

credit risk on single-family mortgages with an unpaid principal balance of over $660 billion. The 

mezzanine risk positions we sell in a CAS transaction and the insurance layer we obtain in a CIRT

transaction typically exceed our estimated stress losses for the associated reference pool of loans.

The loans Fannie Mae has included in its single-family credit risk transfer transactions have been limited 

to specified categories of loans it has acquired in recent years. Loan categories the company has targeted 

for credit risk transfer transactions generally consist of fixed-rate 30-year single-family conventional loans 

that meet certain credit performance characteristics, are non-Refi PlusTM and have loan-to-value (LTV) 

ratios between 60 percent and 97 percent. These targeted loan categories constituted over half of the 

company’s loan acquisitions for the twelve months ended June 2015, and over 95 percent of the loans in 

these categories that the company acquired in the twelve months ended June 2015 were included in a 

subsequent credit risk transfer transaction. Loans are included in reference pools for credit risk transfer 

transactions on a lagged basis; typically, about one year after the company initially acquired the loans. The 

portion of Fannie Mae’s single-family loan acquisitions it includes in credit risk transfer transactions can 

vary from period to period based on market conditions and other factors.

These transactions increase the role of private capital in the mortgage market and reduce the risk to Fannie 

Mae’s business, taxpayers, and the housing finance system. The company intends to continue to engage in 

credit risk transfer transactions on an ongoing basis, subject to market conditions. Over time, the company 

expects that a larger portion of its single-family conventional guaranty book of business will be covered 

by credit risk transfer transactions. 

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 has seen the effect of the actions it took, beginning in 

2008, to significantly strengthen its underwriting and eligibility standards to promote sustainable 

homeownership and stability in the housing market. Fannie Mae actively monitors the credit risk profile 

and credit performance of the company’s single-family loan acquisitions, in conjunction with housing 

market and economic conditions, to determine if its pricing, eligibility, and underwriting criteria 

accurately reflects the risk associated with loans the company acquires or guarantees. Single-family 

conventional loans acquired by Fannie Mae in the second quarter of 2016 had a weighted average 

borrower FICO credit score at origination of 749 and a weighted average original LTV ratio of 75 percent.
Second Quarter 2016 Results 9

Fannie Mae’s single-family conventional guaranty book of business as of June 30, 2016 consisted of 

single-family loans acquired prior to 2009; non-Refi Plus loans acquired beginning in 2009; loans 

acquired through the Administration’s Home Affordable Refinance Program® (HARP®); and other loans 

acquired pursuant to the company’s Refi Plusinitiative, excluding HARP loans. The company’s Refi Plus 

initiative, which started in April 2009 and includes HARP, provides expanded refinance opportunities for 

eligible Fannie Mae borrowers, and may involve the refinance of existing Fannie Mae loans with high 

LTV ratios, including loans with LTV ratios in excess of 100 percent. 

The single-family serious delinquency rate for Fannie Mae’s book of business has decreased for 25 

consecutive quarters since the first quarter of 2010 and was 1.32 percent as of June 30, 2016, 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, improved loan payment performance, and the 

company’s acquisition of loans with stronger credit profiles since the beginning of 2009. In recent periods, 

nonperforming loan sales have also contributed to the decrease in the company’s serious delinquency rate. 

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

delinquent continue to be negatively impacted by the length of time required to complete a foreclosure in 

some states. Longer foreclosure timelines result in these loans remaining in the company’s book of 

business for a longer time, which has caused the company’s serious delinquency rate to decrease more 

slowly in the last few years than it would have if the pace of foreclosures had been faster. The slow pace 

of foreclosures in certain areas of the country has negatively affected the company’s single-family serious 

delinquency rates, foreclosure timelines, and financial results, and may continue to do so. Other factors 

such as the pace of loan modifications, the timing and volume of future nonperforming loan sales the 

company makes, servicer performance, changes in home prices, unemployment levels, and other 

macroeconomic conditions also influence serious delinquency rates. 
Second Quarter 2016 Results 10

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, decreased to $24.2 billion as of June 30, 2016 from $26.5 billion as of March 31, 2016. The 

decrease in the company’s total loss reserves for the second quarter of 2016 was primarily driven by an 

increase in home prices, mortgage loan liquidations, and a decrease in actual and projected mortgage 

interest rates. The company’s loss reserves have declined substantially from their peak and are expected to 

decline further. 
Second Quarter 2016 Results 11

SERVING CUSTOMER NEEDS AND IMPROVING BUSINESS EFFICIENCY

Fannie Mae is engaged in various initiatives to better serve its customers’ needs and improve its business 

efficiency. The company is committed to providing its lender partners with the products, services, and 

tools they need to serve the market more effectively and efficiently. To further this commitment, Fannie 

Mae is focused on continuing to revise and clarify its representation and warranty framework, 

implementing innovative new and enhanced tools that deliver greater value and certainty to lenders, and 

making its customers’ interactions with Fannie Mae simpler and more efficient. For additional information 

on the company’s efforts to serve its customer needs and improve its business efficiency, please refer to 

“Executive Summary” in the company’s Second Quarter 2016 Form 10-Q and 2015 Form 10-K.

PROVIDING LIQUIDITY AND SUPPORT TO THE MARKET

Liquidity

Fannie Mae provided approximately $145 billion in liquidity to the mortgage market in the second quarter 

of 2016, through its purchases of loans and guarantees of loans and securities, which resulted in 

approximately: 

• 274,000 home purchases 

• 311,000 mortgage refinancings 

• 141,000 units of multifamily housing 

The company was one of the largest issuers of single-family mortgage-related securities in the secondary 

market in the second quarter of 2016, with an estimated market share of new single-family mortgagerelated securities issuances of 38 percent, compared with 37 percent in the first quarter of 2016 and 37 

percent in the second quarter of 2015. 

Fannie Mae also remained a continuous source of liquidity in the multifamily market in the second quarter 

of 2016. As of March 31, 2016 (the latest date for which information is available), the company owned or 

guaranteed approximately 19 percent of the outstanding debt on multifamily properties.
Second Quarter 2016 Results 12

Refinancing Initiatives

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

borrowers and includes HARP, the company acquired approximately 37,000 loans in the second quarter of 

2016. Refinancings delivered to Fannie Mae through Refi Plus in the second quarter of 2016 reduced 

borrowers’ monthly mortgage payments by an average of $204. The company expects the volume of 

refinancings under HARP to continue to decline between now and the program’s expiration on December 

31, 2016, due to a decrease in the population of borrowers with loans that have high LTV ratios who are 

willing to refinance and would benefit from refinancing.

Home Retention Solutions and Foreclosure Alternatives

To reduce the credit losses Fannie Mae ultimately incurs on its 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. 

For the Six Months Ended June 30,

2016 2015

Unpaid

Principal

Balance

Number of

Loans

Unpaid

Principal

Balance

Number of

Loans

(Dollars in Millions)

Home retention solutions:

Modifications $ 7,003 42,177 $ 8,800 52,914

Repayment plans and forbearances completed 395 2,825 476 3,423

Total home retention solutions 7,398 45,002 9,276 56,337

Foreclosure alternatives:

Short sales 1,214 5,887 1,610 7,781

Deeds-in-lieu of foreclosure 502 3,317 629 4,004

Total foreclosure alternatives 1,716 9,204 2,239 11,785

Total loan workouts $ 9,114 54,206 $ 11,515 68,122

Loan workouts as a percentage of single-family guaranty book of business 0.65% 0.63% 0.81% 0.79%

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

offers alternatives to foreclosure. In dealing with homeowners in distress, the company first seeks home 
Second Quarter 2016 Results 13

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

alternatives.

• Fannie Mae provided approximately 27,000 loan workouts during the second quarter of 2016

enabling borrowers to avoid foreclosure.

• Fannie Mae completed approximately 21,000 loan modifications during the second quarter of 

2016.

FORECLOSURES AND REO

When there is no viable home retention solution or foreclosure alternative that can be applied, the 

company seeks to move to foreclosure expeditiously in an effort to minimize prolonged delinquencies that 

can hurt local home values and destabilize communities.

For the Six Months Ended June 30,

2016 2015

Single-family foreclosed properties (number of properties):

Beginning of period inventory of single-family foreclosed properties (REO) 57,253 87,063

Total properties acquired through foreclosure 30,371 44,161

Dispositions of REO (41,643) (62,507)

End of period inventory of single-family foreclosed properties (REO) 45,981 68,717

Carrying value of single-family foreclosed properties (dollars in millions) $ 5,301 $ 7,997

Single-family foreclosure rate 0.35% 0.51%

• Fannie Mae acquired 14,004 single-family REO properties, primarily through foreclosure, in the 

second quarter of 2016, compared with 16,367 in the first quarter of 2016. 

• As of June 30, 2016, the company’s inventory of single-family REO properties was 45,981, 

compared with 52,289 as of March 31, 2016. The carrying value of the company’s single-family 

REO was $5.3 billion as of June 30, 2016.

• The company’s single-family foreclosure rate was 0.35 percent for the six months ended June 30, 

2016. This reflects the annualized total 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.

Fannie Mae’s financial statements for the second quarter of 2016 are available in the accompanying 

Annex; however, investors and interested parties should read the company’s Second Quarter 2016 Form 

10-Q, 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 Second Quarter 2016 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 “2016 Second Quarter 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: its future dividend payments to Treasury; the impact of and future plans with respect to the company’s credit risk 

transfer transactions; the sources of its future net interest income; the company’s future profitability; the factors that will affect the company’s 

future financial results; the factors that will affect the company’s future single-family serious delinquency rates; the future volume of its HARP
Second Quarter 2016 Results 14

refinancings; the future fair value of the company’s financial instruments; the company’s future loss reserves; and the impact of the company’s 

actions to reduce credit losses. These estimates, forecasts, expectations, and statements are forward-looking statements based on the 

company’s current assumptions regarding numerous factors, including future interest rates and home prices, the future performance of its 

loans and the future guaranty fee rates applicable to the loans the company acquires. 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, 

including negative interest rates; changes in 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, including increases in the number of 

underwater borrowers who strategically default on their mortgage loans; 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 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; 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 a single security; 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 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 any change in the Federal Reserve’s policy toward the reinvestment of principal payments of mortgage-backed securities 

or any future sales of such securities; 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; information security breaches; 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, 2015 and the company’s quarterly report on Form 10-Q for the quarter ended June 30, 2016, 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.
Second Quarter 2016 Results 15

ANNEX

FANNIE MAE

(In conservatorship)

Condensed Consolidated Balance Sheets — (Unaudited)

(Dollars in Millions, except share amounts)

As of

June 30, December 31,

2016 2015

ASSETS

Cash and cash equivalents $ 23,619 $ 14,674

Restricted cash (includes $33,121 and $25,865, respectively, related to consolidated trusts) 37,697 30,879

Federal funds sold and securities purchased under agreements to resell or similar arrangements 22,325 27,350

Investments in securities:

Trading, at fair value (includes $1,111 and $135, respectively, pledged as collateral) 39,167 39,908

Available-for-sale, at fair value (includes $179 and $285, respectively, related to consolidated trusts) 13,180 20,230

Total investments in securities 52,347 60,138

Mortgage loans:

Loans held for sale, at lower of cost or fair value 4,277 5,361

Loans held for investment, at amortized cost:

Of Fannie Mae 224,036 233,054

Of consolidated trusts 2,825,355 2,809,180

Total loans held for investment (includes $13,413 and $14,075, respectively, at fair value) 3,049,391 3,042,234

Allowance for loan losses (23,799) (27,951)

Total loans held for investment, net of allowance 3,025,592 3,014,283

Total mortgage loans 3,029,869 3,019,644

Deferred tax assets, net 35,953 37,187

Accrued interest receivable (includes $7,281 and $6,974, respectively, related to consolidated trusts) 8,018 7,726

Acquired property, net 5,500 6,766

Other assets 19,565 17,553

Total assets $ 3,234,893 $ 3,221,917

LIABILITIES AND EQUITY

Liabilities:

Accrued interest payable (includes $8,200 and $8,194, respectively, related to consolidated trusts) $ 9,548 $ 9,794

Debt:

Of Fannie Mae (includes $10,650 and $11,133, respectively, at fair value) 362,418 386,135

Of consolidated trusts (includes $32,798 and $23,609, respectively, at fair value) 2,849,486 2,811,536

Other liabilities (includes $368 and $448, respectively, related to consolidated trusts) 9,372 10,393

Total liabilities 3,230,824 3,217,858

Commitments and contingencies — —

Fannie Mae stockholders’ equity:

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

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

Common stock, no par value, no maximum authorization—1,308,762,703 shares issued and 1,158,082,750 shares

outstanding 687 687

Accumulated deficit (126,638) (126,942)

Accumulated other comprehensive income 1,130 1,407

Treasury stock, at cost, 150,679,953 shares (7,401) (7,401)

Total Fannie Mae stockholders’ equity 4,057 4,030

Noncontrolling interest 12 29

Total equity 4,069 4,059

Total liabilities and equity $ 3,234,893 $ 3,221,917

See Notes to Condensed Consolidated Financial Statements in the Second Quarter 2016 Form 10-Q
Second Quarter 2016 Results 16

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 Months For the Six Months

Ended June 30, Ended June 30,

2016 2015 2016 2015

Interest income:

Trading securities $ 128 $ 116 $ 248 $ 231

Available-for-sale securities 170 294 373 670

Mortgage loans (includes $23,866 and $24,267, respectively, for the three months ended and

$48,492 and $48,889, respectively, for the six months ended related to consolidated trusts) 26,256 26,682 53,217 53,726

Other 46 34 94 67

Total interest income 26,600 27,126 53,932 54,694

Interest expense:

Short-term debt 57 33 108 62

Long-term debt (includes $19,521 and $19,528, respectively, for the three months ended and

$40,179 and $40,043, respectively, for the six months ended related to consolidated trusts) 21,257 21,416 43,769 43,888

Total interest expense 21,314 21,449 43,877 43,950

Net interest income 5,286 5,677 10,055 10,744

Benefit (provision) for credit losses 1,601 (1,033) 2,785 (500)

Net interest income after benefit (provision) for credit losses 6,887 4,644 12,840 10,244

Investment gains, net 398 514 467 856

Fair value gains (losses), net (1,667) 2,606 (4,480) 687

Fee and other income 174 556 377 864

Non-interest income (loss) (1,095) 3,676 (3,636) 2,407

Administrative expenses:

Salaries and employee benefits 331 331 695 682

Professional services 232 251 447 522

Occupancy expenses 46 43 91 86

Other administrative expenses 69 64 133 122

Total administrative expenses 678 689 1,366 1,412

Foreclosed property expense 63 182 397 655

Temporary Payroll Tax Cut Continuation Act of 2011 (“TCCA”) fees 453 397 893 779

Other expenses, net 254 202 518 197

Total expenses 1,448 1,470 3,174 3,043

Income before federal income taxes 4,344 6,850 6,030 9,608

Provision for federal income taxes (1,398) (2,210) (1,948) (3,080)

Net income 2,946 4,640 4,082 6,528

Other comprehensive loss:

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

and taxes (75) (280) (273) (371)

Other (2) (1) (4) (2)

Total other comprehensive loss (77) (281) (277) (373)

Total comprehensive income attributable to Fannie Mae $ 2,869 $ 4,359 $ 3,805 $ 6,155

Net income attributable to Fannie Mae 2,946 4,640 4,082 6,528

Dividends distributed or available for distribution to senior preferred stockholder (2,869) (4,359) (3,788) (6,155)

Net income attributable to common stockholders $ 77 $ 281 $ 294 $ 373

Earnings per share:

Basic $ 0.01 $ 0.05 0.05 0.06

Diluted 0.01 0.05 0.05 0.06

Weighted-average common shares outstanding:

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

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

See Notes to Condensed Consolidated Financial Statements in the Second Quarter 2016 Form 10-Q
Second Quarter 2016 Results 17

FANNIE MAE

(In conservatorship)

Condensed Consolidated Statements of Cash Flows— (Unaudited)

(Dollars in Millions)

For the Six Months

Ended June 30,

2016 2015

Net cash used in operating activities $ (3,982) $ (1,506)

Cash flows provided by investing activities:

Proceeds from maturities and paydowns of trading securities held for investment 1,109 484

Proceeds from sales of trading securities held for investment 1,313 992

Proceeds from maturities and paydowns of available-for-sale securities 1,778 2,279

Proceeds from sales of available-for-sale securities 7,584 5,311

Purchases of loans held for investment (97,024) (98,042)

Proceeds from repayments of loans acquired as held for investment of Fannie Mae 11,804 12,487

Proceeds from sales of loans acquired as held for investment of Fannie Mae 1,964 366

Proceeds from repayments and sales of loans acquired as held for investment of consolidated trusts 238,188 259,429

Net change in restricted cash (6,818) (4,846)

Advances to lenders (57,956) (62,110)

Proceeds from disposition of acquired property and preforeclosure sales 8,557 11,384

Net change in federal funds sold and securities purchased under agreements to resell or similar arrangements 5,025 8,940

Other, net (661) (65)

Net cash provided by investing activities 114,863 136,609

Cash flows used in financing activities:

Proceeds from issuance of debt of Fannie Mae 432,025 213,648

Payments to redeem debt of Fannie Mae (456,586) (249,610)

Proceeds from issuance of debt of consolidated trusts 171,004 167,880

Payments to redeem debt of consolidated trusts (244,631) (265,969)

Payments of cash dividends on senior preferred stock to Treasury (3,778) (3,716)

Other, net 30 (46)

Net cash used in financing activities (101,936) (137,813)

Net increase (decrease) in cash and cash equivalents 8,945 (2,710)

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

Cash and cash equivalents at end of period $ 23,619 $ 19,313

Cash paid during the period for:

Interest $ 52,354 $ 52,679

Income taxes 610 370

See Notes to Condensed Consolidated Financial Statements in the Second Quarter 2016 Form 10-Q