Fourth Quarter and Full Year 2019 Results 1

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

202-752-2034 

Date: February 13, 2020

Fannie Mae Reports Net Income of $14.2 Billion for 2019

and $4.4 Billion for Fourth Quarter 2019

Fourth Quarter and Full Year 2019 Results

• Fannie Mae reported 2019 net income of $14.2 billion and fourth 

quarter 2019 net income of $4.4 billion. Fannie Mae’s solid financial 

performance reflects its strong business fundamentals and stable 

single-family and multifamily guaranty books. 

“Our results further demonstrate 

the strength and earnings power of 

Fannie Mae’s business in 2019, 

including our ability to manage risk 

and generate solid returns in both 

our Single-Family and Multifamily 

business lines. We continue to fulfill 

our mission to provide liquidity to 

the mortgage market and meet our 

housing goals, while growing our 

guaranty fee income and managing 

expense growth. We begin 2020 

with a net worth of $14.6 billion, 

thanks to strong retained earnings 

and prudent risk management.”

Hugh R. Frater, 

Chief Executive Officer 

Business Highlights

• Fannie Mae’s net worth increased to $14.6 billion as of December 31,

2019, as the company continues to retain quarterly earnings and

restore its capital base. Based on the current agreement with the U.S.

Department of the Treasury and the Federal Housing Finance Agency

(FHFA), the company may retain quarterly earnings until its net worth

reaches $25 billion.

• Fannie Mae provided more than $650 billion in liquidity to the mortgage

market in 2019, helping families across the country to own or rent a

home through the financing of more than 3 million home purchases,

refinancings, and rental units.

• Fannie Mae was the largest issuer of single-family mortgage-related

securities in the secondary market during 2019 with an estimated

market share of single-family mortgage-related securities issuances of

37%. Fannie Mae has financed approximately 1 in 4 single-family

mortgages in the United States.

• Fannie Mae provided $70 billion in multifamily financing in 2019, which

enabled the financing of 726,000 units of multifamily housing. More

than 90% of the multifamily units the company financed in 2019 were

affordable to families earning at or below 120% of the area median

income, providing support for both affordable and workforce housing.

Fannie Mae finances one fifth of the multifamily mortgage debt

outstanding in the United States.

Fannie Mae continued its ongoing capital management and risk reduction

efforts in 2019:

• Fannie Mae made changes to its Single-Family credit risk transfer 

structures in 2019, increasing the company’s capital relief and reducing 

the company’s risk. Fannie Mae also began obtaining credit protection 

on single-family reference pools containing seasoned loans, increasing 

the percentage of the company’s book covered by credit risk transfer, 

reducing the company’s capital requirements, and further reducing risk. 

• Fannie Mae also enhanced its risk transfer capabilities through the 

company’s first Multifamily Connecticut Avenue Securities (MCASTM) 

transaction in the fourth quarter of 2019, while remaining committed to 

lender risk-sharing through its Delegated Underwriting and Servicing 

(DUS®) program. These and other multifamily credit enhancements 

through 2019 have reduced the company’s conservatorship capital 

requirement for credit risk on multifamily loans acquired in 2018 by 

more than 70%.

• Fannie Mae’s retained mortgage portfolio decreased to $153.6 billion

as of December 31, 2019 from $179.2 billion as of December 31, 2018,

due primarily to a decrease in the company’s loss mitigation portfolio

driven by sales of reperforming loans.
Fourth Quarter and Full Year 2019 Results 2

WASHINGTON, DC — Fannie Mae (FNMA/OTCQB) reported annual net income of $14.2 billion and annual 

comprehensive income of $14.0 billion, compared with net income of $16.0 billion and comprehensive income of 

$15.6 billion for 2018. The decrease in net income for 2019 was driven primarily by a shift to fair value losses in 

2019 from fair value gains in 2018 as a result of decreasing interest rates throughout most of 2019. For the fourth 

quarter of 2019, Fannie Mae reported net income of $4.4 billion and comprehensive income of $4.3 billion, 

compared with net income of $4.0 billion and comprehensive income of $4.0 billion for the third quarter of 2019. The 

increase in net income for the fourth quarter of 2019 was due primarily to an increase in net interest income from 

the amortization of upfront fees as a result of elevated prepayment rates, an increase in investment gains, and a 

shift to fair value gains from fair value losses in the third quarter of 2019, partially offset by a decrease in creditrelated income. 

Summary of Financial Results

(Dollars in millions) 4Q19 3Q19 Variance 2019 2018 Variance

Net interest income $ 5,850 $ 5,229 $ 621 $ 20,962 $ 20,951 $ 11

Fee and other income 301 402 (101) 1,176 979 197

Net revenues 6,151 5,631 520 22,138 21,930 208

Investment gains, net 923 253 670 1,770 952 818

Fair value gains (losses), net 84 (713) 797 (2,214) 1,121 (3,335)

Administrative expenses (786) (749) (37) (3,023) (3,059) 36

Credit-related income

Benefit for credit losses 279 1,857 (1,578) 4,011 3,309 702

Foreclosed property expense (151) (96) (55) (515) (617) 102

Total credit-related income 128 1,761 (1,633) 3,496 2,692 804

Temporary Payroll Tax Cut Continuation Act of 2011

(“TCCA”) fees (626) (613) (13) (2,432) (2,284) (148)

Other expenses, net (644) (571) (73) (2,158) (1,253) (905)

Income before federal income taxes 5,230 4,999 231 17,577 20,099 (2,522)

Provision for federal income taxes (865) (1,036) 171 (3,417) (4,140) 723

Net income $ 4,365 $ 3,963 $ 402 $ 14,160 $ 15,959 $ (1,799)

Total comprehensive income $ 4,266 $ 3,977 $ 289 $ 13,969 $ 15,611 $ (1,642)

Net revenues, which consist of net interest income and fee and other income, were $6.2 billion for the fourth 

quarter of 2019, compared with $5.6 billion for the third quarter of 2019. For the year, net revenues were $22.1 

billion, compared with $21.9 billion in 2018.

Net interest income was $5.9 billion for the fourth quarter of 2019, compared with $5.2 billion for the third quarter of 

2019. The increase in net interest income for the fourth quarter was due primarily to higher amortization income 

driven by an increase in mortgage prepayment activity as a result of the declining interest rate environment for most 

of 2019. For 2019, net interest income was $21.0 billion, substantially unchanged from 2018. 
Fourth Quarter and Full Year 2019 Results 3

Net Interest Income

(Dollars in Billions)

(1) Includes revenues generated by the 10 basis point guaranty fee increase the company implemented pursuant to the TCCA, the incremental 

revenue from which is remitted to Treasury and not retained by us. 

(2) Includes interest income from assets held in the company’s retained mortgage portfolio and other investments portfolio, as well as other 

assets used to generate lender liquidity. Also includes interest expense on the company’s outstanding corporate debt and Connecticut 

Avenue Securities® debt.

Net fair value gains were $84 million in the fourth quarter of 2019, compared with $713 million in losses in the third 

quarter of 2019. Net fair value gains in the fourth quarter of 2019 were driven primarily by gains on risk 

management derivatives due to increases in interest rates in the fourth quarter of 2019. For the year, net fair value 

losses were $2.2 billion, compared with $1.1 billion in gains in 2018. Net fair value losses for 2019 were due 

primarily to decreases in interest rates throughout the first nine months of 2019, compared to increases in interest 

rates throughout most of 2018. Fannie Mae is developing capabilities to implement fair value hedge accounting to 

reduce the impact of interest-rate volatility on the company’s financial results. Once implemented, derivative fair 

value gains and losses resulting from changes in certain benchmark interest rates may be reduced by offsetting 

gains and losses in the fair value of designated hedged mortgage loans or debt. Therefore, the company expects 

the volatility of its financial results associated with changes in interest rates will be reduced substantially while fair 

value gains and losses driven by other factors, such as credit spreads, will remain.

Net Fair Value Gains (Losses)

(Dollars in Billions)

Credit-related income consists of a benefit or provision for credit losses and foreclosed property expense. Creditrelated income was $128 million in the fourth quarter of 2019, compared with $1.8 billion in the third quarter of 2019. 

The decrease in credit-related income in the fourth quarter was driven primarily by a benefit in the third quarter of 

2019 due to the company’s enhancement of its model to estimate cash flows for individually impaired single-family 

loans within the company’s loan loss allowance for single-family loans. Credit-related income was $3.5 billion in 

2019, compared with $2.7 billion in 2018. The increase in credit-related income for the year was driven primarily by 

the third-quarter enhancement to the company’s model and a benefit from decreases in interest rates for most of 

2019, compared with increases in interest rates for most of 2018.
Fourth Quarter and Full Year 2019 Results 4

Credit-Related Income

(Dollars in Billions)

Investment gains were $923 million in the fourth quarter of 2019, compared with $253 million in the third quarter of 

2019. Investment gains were $1.8 billion in 2019, compared with $952 million in 2018. The increase in investment 

gains for the fourth quarter of 2019 and for the year was driven primarily by an increase in gains from sales of 

single-family held-for-sale loans and available-for-sale securities. 

Investment Gains

(Dollars in Billions)
Fourth Quarter and Full Year 2019 Results 5

Providing Liquidity and Support to the Market

Fannie Mae’s mission is to provide a stable source of liquidity to support housing for low-and moderate-income 

Americans. In 2019, more than 90% of the multifamily units the company financed were affordable to families 

earning at or below 120% of the area median income, providing support for both affordable and workforce housing.

Fannie Mae provided more than $650 billion in liquidity to the mortgage market in 2019, including approximately 

$207 billion in liquidity in the fourth quarter of 2019. Through its purchases and guarantees of mortgage loans in 

2019, Fannie Mae acquired approximately 2.3 million single-family mortgage loans. Fannie Mae also financed 

approximately 726,000 units of multifamily housing in 2019, including approximately 178,000 in the fourth quarter of 

2019.
Fourth Quarter and Full Year 2019 Results 6

Business Segments 

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

business activities to provide liquidity, access to credit, and affordability in all U.S. housing markets at all times, 

while effectively managing risk. 

Single-Family Business

(Dollars in millions) 4Q19 3Q19 Variance 2019 2018 Variance

Net interest income $ 5,071 $ 4,484 $ 587 $18,013 $18,162 $ (149)

Fee and other income 103 156 (53) 453 450 3

Net revenues 5,174 4,640 534 18,466 18,612 (146)

Investment gains, net 880 198 682 1,589 850 739

Fair value gains (losses), net 148 (719) 867 (2,216) 1,210 (3,426)

Administrative expenses (666) (634) (32) (2,565) (2,631) 66

Credit-related income 124 1,747 (1,623) 3,515 2,709 806

TCCA fees (626) (613) (13) (2,432) (2,284) (148)

Other expenses, net (482) (424) (58) (1,661) (1,012) (649)

Income before federal income taxes 4,552 4,195 357 14,696 17,454 (2,758)

Provision for federal income taxes (734) (872) 138 (2,859) (3,708) 849

Net income $ 3,818 $ 3,323 $ 495 $11,837 $13,746 $ (1,909)

Serious delinquency rate 0.66 % 0.68 %

Financial Results

• Single-Family net income was $3.8 billion in the fourth quarter of 2019, compared with $3.3 billion in the 

third quarter of 2019. The increase in net income in the fourth quarter was driven primarily by: 

higher net interest income driven primarily by higher amortization income in the fourth quarter, resulting 

from increased mortgage prepayment rates;

an increase in investment gains driven primarily by an increase in gains from sales of single-family 

held-for-sale loans and available-for-sale securities; and

fair value gains in the fourth quarter compared to fair value losses in the third quarter, driven by 

increases in interest rates in the fourth quarter. 

The increase in net income was partially offset by a decrease in credit-related income in the fourth 

quarter driven primarily by a benefit in the third-quarter due to the company’s enhancement of the its 

single-family loan loss allowance model. 

• For the year, single-family net income was $11.8 billion, compared with $13.7 billion in 2018. The decrease 

in single-family net income in 2019 was driven primarily by a shift to fair value losses in 2019 from fair value 

gains in 2018 as a result of decreasing interest rates throughout most of 2019.

Business Highlights

• The average single-family conventional guaranty book of business increased by $21.6 billion during the 

fourth quarter of 2019, while the average charged guaranty fee, net of Temporary Payroll Tax Cut 

Continuation Act of 2011 (TCCA) fees, on the single-family conventional guaranty book remained relatively 

flat at 44 basis points compared with the third quarter of 2019. 

• Changes to Fannie Mae's Desktop Underwriter® eligibility guidelines to further limit risk layering improved 

the credit profile of the company's new acquisitions in 2019, particularly with respect to loans with debt-toincome (DTI) ratios above 45%. The updates to Desktop Underwriter and a higher percentage of refinance 

acquisitions decreased the share of acquisitions with DTI ratios above 45% from 25% in 2018 to 19% in 

2019.
Fourth Quarter and Full Year 2019 Results 7

• The single-family serious delinquency rate was 0.66% as of December 31, 2019, a decrease from 0.76% as 

of December 31, 2018. Single-family seriously delinquent loans are loans that are 90 days or more past due 

or in the foreclosure process.

Multifamily Business

(Dollars in millions) 4Q19 3Q19 Variance 2019 2018 Variance

Net interest income $ 779 $ 745 $ 34 $ 2,949 $ 2,789 $ 160

Fee and other income 198 246 (48) 723 529 194

Net revenues 977 991 (14) 3,672 3,318 354

Fair value losses, net (64) 6 (70) 2 (89) 91

Administrative expenses (120) (115) (5) (458) (428) (30)

Credit-related income (expense) 4 14 (10) (19) (17) (2)

Other income (expense) (119) (92) (27) (316) (139) (177)

Income before federal income taxes 678 804 (126) 2,881 2,645 236

Provision for federal income taxes (131) (164) 33 (558) (432) (126)

Net income $ 547 $ 640 $ (93) $ 2,323 $ 2,213 $ 110

Serious delinquency rate 0.04 % 0.06 %

Financial Results

• Multifamily net income was $547 million in the fourth quarter of 2019, compared with $640 million in the 

third quarter of 2019. The decrease in net income in the fourth quarter of 2019 was due primarily to: 

a decrease in fee and other income resulting from a decrease in prepayment volume; and

fair value losses in the fourth quarter compared with fair value gains in the third quarter, driven primarily 

by losses on commitments as a result of rising interest rates during commitment periods in the fourth 

quarter;

partially offset by an increase in guaranty fee revenue as the multifamily book grew during the quarter.

• Multifamily net income was $2.3 billion in 2019, compared with $2.2 billion in 2018. The increase in 

multifamily net income in 2019 was attributable primarily to an increase in yield maintenance revenue driven 

by higher prepayment volumes and an increase in guaranty fee income as a result of growth on the 

company’s multifamily guaranty book of business, partially offset by a decrease in charged guaranty fees on 

the multifamily guaranty book.

Business Highlights

• The average multifamily guaranty book of business increased by approximately $8 billion during the fourth 

quarter of 2019 to $334 billion, while the average charged guaranty fee on the multifamily book remained 

relatively flat at 72 basis points compared with the third quarter of 2019.

• New multifamily business volume was $18 billion in the fourth quarter of 2019. On September 13, 2019, the 

Federal Housing Finance Agency’s (FHFA) revised the multifamily business volume cap structure setting a 

$100 billion cap for the five-quarter period ending December 31, 2020. Approximately $82 billion of new 

business capacity remains under the revised cap structure.

• The multifamily serious delinquency rate was 0.04% as of December 31, 2019, a decrease from 0.06% as 

of December 31, 2018. Multifamily seriously delinquent loans are loans that are 60 days or more past due.
Fourth Quarter and Full Year 2019 Results 8

Credit Risk Transfer Transactions

Fannie Mae continues to support the growth of the credit risk transfer market and expand the types of loans 

covered by its credit risk transfer structures. Fannie Mae enters into credit-risk transfer transactions when it is 

economically advantageous to do so. Because they reduce credit risk, the company’s credit-risk transfer 

transactions and other credit enhancements also help the company manage capital. For single-family loans, the 

company offers Fannie Mae’s benchmark Connecticut Avenue Securities® (CAS) REMICTM transactions and its 

Credit Insurance Risk TransferTM (CIRTTM) transactions. In the fourth quarter of 2019, Fannie Mae began obtaining 

credit protection on single-family reference pools containing seasoned loans, including loans made under the 

company’s Refi PlusTM program and the Home Affordable Refinance Program. For multifamily mortgages, nearly 

100% of the company’s new multifamily business volume in 2019 had lender risk-sharing, primarily through the 

company’s Delegated Underwriting and Servicing (DUS®) program, as in prior years. To complement the company’s 

front-end lender loss sharing program through DUS, Fannie Mae also engages in back-end credit risk transfer 

transactions through its multifamily CIRT transactions and through Multifamily Connecticut Avenue Securities 

(MCASTM) transactions. Fannie Mae completed its first MCAS transaction in the fourth quarter of 2019. 

Fannie Mae continually evaluates loans in its single-family guaranty book of business without credit enhancement to 

determine whether it makes economic sense to include them in a future CAS or CIRT transaction. The company 

targets over 90% of acquisitions in the following loan categories for credit risk transfer transactions: fixed-rate 

single-family conventional loans with terms greater than 20 years that meet certain additional, minimum criteria; 

loans that are non-Refi Plus; and loans with LTV ratios between 60% and 97%. This criteria covers over 60% of the 

company’s recent single-family acquisitions. Loans are generally included in reference pools for CAS and CIRT

transactions on a lagged basis. In recent years, Fannie Mae has shortened this lag for a majority of target loans to 

typically less than six months after the company initially acquires the loans. The portion of the company’s singlefamily loan acquisitions it includes in credit risk transfer transactions can vary from period to period based on market 

conditions and other factors. Fannie Mae also is evaluating its seasoned loan portfolio, which includes loans that 

were initially acquired prior to the start of our CAS and CIRT programs, for inclusion in these transactions. 

Single-Family Credit Risk Transfer

(Dollars in Billions)
Fourth Quarter and Full Year 2019 Results 9

Multifamily Credit Risk Transfer

(Dollars in Billions)

Treasury Housing Reform Plan

On September 5, 2019, Treasury released a plan recommending administrative and legislative reforms to the 

housing finance system. The Treasury Housing Reform Plan recommends ending Fannie Mae’s conservatorship, 

considering additional restrictions and requirements on Fannie Mae’s business, and many other matters.

For more information on Treasury’s Housing Reform Plan and risks associated with the plan, as well as the letter 

agreement with Treasury, see “Business—Conservatorship, Treasury Agreements and Housing Finance Reform” 

and “Risk Factors” in the company’s 2019 Form 10-K.

Net Worth, Treasury Funding, and Senior Preferred Stock Dividends

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 Fannie Mae issued to Treasury in 2008, the company paid dividends to Treasury on the senior 

preferred stock on a quarterly basis for every dividend period for which dividends were payable since the company 

entered conservatorship in 2008.

On September 27, 2019, Fannie Mae and Treasury entered into a letter agreement modifying the terms of the 

senior preferred stock held by Treasury to permit Fannie Mae to retain up to $25 billion in capital, effective with the 

third quarter 2019 dividend period. The letter agreement also provides that the liquidation preference of the senior 

preferred stock increases at the end of each quarter by the increase, if any, in Fannie Mae’s net worth during the 

immediately prior fiscal quarter, until the liquidation preference has increased by $22 billion pursuant to this 

provision.

Under the terms of the senior preferred stock, Fannie Mae will not owe dividends to Treasury until it has 

accumulated over $25 billion in net worth as of the end of a quarter. Accordingly, no dividends were payable to 

Treasury for the fourth quarter of 2019, and none are payable for the first quarter of 2020. As of December 31, 

2019, Fannie Mae’s net worth was $14.6 billion. 

Changes in the company’s net worth can be significantly impacted by market conditions that affect its net interest 

income, fluctuations in the estimated fair value of the company’s derivatives and other financial instruments that the 

company marks to market through its earnings, developments that affect the company’s loss reserves such as 

changes in interest rates, home prices or accounting standards, or events such as natural disasters, and other 

factors, as the company discusses in “Risk Factors” and “ MD&A—Consolidated Results of Operations” in the 

company’s 2019 Form 10-K.
Fourth Quarter and Full Year 2019 Results 10

The charts below show information about Fannie Mae’s net worth, the remaining amount of Treasury’s funding 

commitment to Fannie Mae, senior preferred stock dividends the company has paid Treasury, and funds the 

company has drawn from Treasury pursuant to its funding commitment.

(1) Aggregate amount of dividends the company has paid to Treasury on the senior preferred stock from 2008 through December 31, 2019. 

Under the terms of the senior preferred stock purchase agreement, dividend payments the company makes to Treasury do not offset its 

draws of funds from Treasury.

(2) Aggregate amount of funds the company has drawn from Treasury pursuant to the senior preferred stock purchase agreement from 2008 

through December 31, 2019.

The aggregate liquidation preference of the senior preferred stock increased from $127.2 billion as of September 

30, 2019 to $131.2 billion as of December 31, 2019 due to the increase in our net worth during the third quarter of 

2019. The aggregate liquidation preference of the senior preferred stock will further increase to $135.4 billion as of 

March 31, 2020 due to the increase in our net worth during the fourth quarter of 2019.

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

“Business—Conservatorship, Treasury Agreements and Housing Finance Reform” in the company’s 2019 Form 10-

K.

Fannie Mae’s financial statements for the full year of 2019 are available in the accompanying Annex; however, 

investors and interested parties should read the company’s 2019 Form 10-K for a discussion of its financial results 

and condition, credit performance, and other matters. The Form 10-K was filed today with the Securities and 

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

about the company’s credit performance, the characteristics of its guaranty book of business, its foreclosureprevention efforts, and other measures is contained in the “Q4 and Full Year 2019 Financial 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: the stability of the company’s guaranty books and strength of its business fundamentals; the liquidity the company will 

provide; the company’s housing goals performance; the company’s future guaranty fees, expenses, retained earnings and capital; other 

measures of the company’s future profitability, financial condition, and results of operations and the factors that will affect them; the company’s 

work to implement hedge accounting and the impact of that work; the company’s future dividend payments to Treasury; the future liquidation 

preference of the senior preferred stock; and the company’s plans relating to and the effects of the company’s credit risk transfer transactions. 
Fourth Quarter and Full Year 2019 Results 11

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 forward-looking 

statements as a result of: the uncertainty of the company’s future; 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 (including all or any portion of the Treasury 

Housing Reform Plan), including changes that limit the company’s business activities or footprint; home price changes; interest rate and credit 

spread changes; macroeconomic factors such as U.S. gross domestic product, unemployment rates, personal income, and the volume of 

mortgage originations; the size and the company’s share of the U.S. mortgage market and the factors that affect them, including population 

growth and household formation; the company’s future serious delinquency rates; the company’s and its competitors’ future guaranty fee pricing 

and the impact of that pricing on the company’s guaranty fee revenues and competitive environment; credit availability; changes in borrower 

behavior; 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; the 

company’s reliance on Common Securitization Solutions, LLC (CSS) and the common securitization platform for the operation of a majority of its 

single-family securitization activities; the stability and adequacy of the systems and infrastructure that impact the company’s operations, including 

the company’s and those of CSS, its other counterparties and other third parties on which the business relies; actions by FHFA, Treasury, the 

Department of Housing and Urban Development, the Consumer Financial Protection Bureau or other regulators, or Congress, that affect the 

company’s business, including new capital requirements that become applicable to the company or changes in the ability-to-repay rule to replace 

the qualified mortgage patch for GSE-eligible loans; the size, composition and quality of the company’s guaranty book of business and retained 

mortgage portfolio; the competitive landscape in which the company operates, including the impact of legislative or other developments on levels 

of competition in its industry and other factors affecting its market share; the life of the loans in the company’s guaranty book of business; the 

company’s reliance on and future updates it makes to its models, including the assumptions used by these models; changes in generally 

accepted accounting principles; changes to the company’s accounting policies; 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; limitations on the company’s business imposed by 

FHFA, in its role as the company’s conservator or as its regulator; the conservatorship, including any changes to or termination (by receivership 

or otherwise) of the conservatorship and its effect on the company’s business; the investment by Treasury, including potential changes to the 

terms of the senior preferred stock purchase agreement or senior preferred stock, and its effect on the company’s business, including restrictions 

imposed on the company by the terms of the senior preferred stock purchase agreement, the senior preferred stock and Treasury’s warrant, as 

well as the possibility that these or other restrictions on the company’s business and activities may be applied to the company through other 

mechanisms even if the company ceases to be subject to these agreements and instruments; the possibility that future changes in leadership at 

FHFA or the Administration may result in changes in FHFA’s or Treasury’s willingness to pursue the administrative reform recommendations in 

the Treasury plan; 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; the impact of increasing 

interdependence between the single-family mortgage securitization programs of Fannie Mae and Freddie Mac in connection with uniform 

mortgage-backed securities; operational control weaknesses; changes in the fiscal and monetary policies of the Federal Reserve; changes in the 

structure and regulation of the financial services industry; the company’s ability to access the debt markets; changes in the demand for Fannie 

Mae MBS; disruptions or instability in the housing and credit markets; uncertainties relating to the potential phasing out of LIBOR, or other 

market changes that could impact the loans the company owns or guarantees or its MBS; the company’s need to rely on third parties to fully 

achieve some of its corporate objectives; the company’s reliance on mortgage servicers; domestic and global political risks and uncertainties; 

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, 2019, 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.
Fourth Quarter and Full Year 2019 Results 12

ANNEX

FANNIE MAE

(In conservatorship)

Consolidated Balance Sheets

(Dollars in millions)

As of December 31,

2019 2018

ASSETS

Cash and cash equivalents $ 21,184 $ 25,557

Restricted cash (includes $33,294 and $17,849, respectively, related to consolidated trusts) 40,223 23,866

Federal funds sold and securities purchased under agreements to resell or similar arrangements 13,578 32,938

Investments in securities:

Trading, at fair value (includes $3,037 and $3,061, respectively, pledged as collateral) 48,123 41,867

Available-for-sale, at fair value 2,404 3,429

Total investments in securities 50,527 45,296

Mortgage loans:

Loans held for sale, at lower of cost or fair value 6,773 7,701

Loans held for investment, at amortized cost:

Of Fannie Mae 94,911 113,039

Of consolidated trusts 3,241,494 3,142,858

Total loans held for investment (includes $7,825 and $8,922, respectively, at fair value) 3,336,405 3,255,897

Allowance for loan losses (9,016) (14,203)

Total loans held for investment, net of allowance 3,327,389 3,241,694

Total mortgage loans 3,334,162 3,249,395

Deferred tax assets, net 11,910 13,188

Accrued interest receivable, net (includes $8,172 and $7,928, respectively, related to consolidated trusts) 8,604 8,490

Acquired property, net 2,366 2,584

Other assets 20,765 17,004

Total assets $ 3,503,319 $ 3,418,318

LIABILITIES AND EQUITY

Liabilities:

Accrued interest payable (includes $9,361 and $9,133, respectively, related to consolidated trusts) $ 10,228 $ 10,211

Debt:

Of Fannie Mae (includes $5,687 and $6,826, respectively, at fair value) 182,247 232,074

Of consolidated trusts (includes $21,880 and $23,753, respectively, at fair value) 3,285,139 3,159,846

Other liabilities (includes $376 and $356, respectively, related to consolidated trusts) 11,097 9,947

Total liabilities 3,488,711 3,412,078

Commitments and contingencies (Note 16) — —

Fannie Mae stockholders’ equity:

Senior preferred stock (liquidation preference of $131,178 and $123,836, respectively) 120,836 120,836

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 shares outstanding 687 687

Accumulated deficit (118,776) (127,335)

Accumulated other comprehensive income 131 322

Treasury stock, at cost, 150,675,136 shares (7,400) (7,400)

Total stockholders’ equity (See Note 1: Senior Preferred Stock Purchase Agreement, Senior Preferred 

Stock and Warrant for information on the related dividend obligation and liquidation preference) 14,608 6,240

Total liabilities and equity $ 3,503,319 $ 3,418,318

See Notes to Consolidated Financial Statements in 2019 Form 10-K
Fourth Quarter and Full Year 2019 Results 13

FANNIE MAE

(In conservatorship)

Consolidated Statements of Operations and Comprehensive Income

(Dollars in millions, except per share amounts)

For the Year Ended December 31,

2019 2018 2017

Interest income:

Trading securities $ 1,627 $ 1,336 $ 706

Available-for-sale securities 175 230 335

Mortgage loans 116,764 114,605 108,319

Federal funds sold and securities purchased under agreements to resell or similar arrangements 843 742 373

Other 163 136 123

Total interest income 119,572 117,049 109,856

Interest expense:

Short-term debt (501) (468) (250)

Long-term debt (98,109) (95,630) (88,873)

Total interest expense (98,610) (96,098) (89,123)

Net interest income 20,962 20,951 20,733

Benefit for credit losses 4,011 3,309 2,041

Net interest income after benefit for credit losses 24,973 24,260 22,774

Investment gains, net 1,770 952 1,522

Fair value gains (losses), net (2,214) 1,121 (1,211)

Fee and other income 1,176 979 2,227

Non-interest income 732 3,052 2,538

Administrative expenses:

Salaries and employee benefits (1,486) (1,451) (1,328)

Professional services (967) (1,032) (933)

Other administrative expenses (570) (576) (476)

Total administrative expenses (3,023) (3,059) (2,737)

Foreclosed property expense (515) (617) (521)

Temporary Payroll Tax Cut Continuation Act of 2011 (“TCCA”) fees (2,432) (2,284) (2,096)

Other expenses, net (2,158) (1,253) (1,511)

Total expenses (8,128) (7,213) (6,865)

Income before federal income taxes 17,577 20,099 18,447

Provision for federal income taxes (3,417) (4,140) (15,984)

Net income 14,160 15,959 2,463

Other comprehensive loss:

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

and taxes (179) (344) (206)

Other, net of taxes (12) (4) —

Total other comprehensive loss (191) (348) (206)

Total comprehensive income $ 13,969 $ 15,611 $ 2,257

Net income $ 14,160 $ 15,959 $ 2,463

Dividends distributed or amounts attributable to senior preferred stock (13,969) (12,613) (8,944)

Net income (loss) attributable to common stockholders $ 191 $ 3,346 $ (6,481)

Earnings (loss) per share:

Basic $ 0.03 $ 0.58 $ (1.12)

Diluted 0.03 0.57 (1.12)

Weighted-average common shares outstanding:

Basic 5,762 5,762 5,762

Diluted 5,893 5,893 5,762

See Notes to Consolidated Financial Statements in 2019 Form 10-K
Fourth Quarter and Full Year 2019 Results 14

FANNIE MAE

(In conservatorship)

 Consolidated Statements of Cash Flows

(Dollars in millions)

For the Year Ended December 31,

2019 2018 2017

Cash flows provided by (used in) operating activities:

Net income $ 14,160 $ 15,959 $ 2,463

Reconciliation of net income to net cash provided by operating activities:

Amortization of cost basis adjustments (6,002) (5,949) (6,641)

Benefit for credit losses (4,011) (3,309) (2,041)

Valuation gains (1,809) (911) (1,573)

Current and deferred federal income taxes 1,517 3,680 14,369

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

enhancements (917) (1,785) (2,426)

Other, net (98) 440 (406)

Net change in trading securities (1,630) (5,454) 4,511

Interest payment on discounted debt (5,964) (423) (4,043)

Net cash provided by (used in) operating activities (4,754) 2,248 4,213

Cash flows provided by investing activities:

Proceeds from maturities and paydowns of trading securities held for investment 58 182 1,206

Proceeds from sales of trading securities held for investment 49 96 241

Proceeds from maturities and paydowns of available-for-sale securities 469 695 2,009

Proceeds from sales of available-for-sale securities 537 760 1,990

Purchases of loans held for investment (261,808) (172,155) (189,593)

Proceeds from repayments of loans acquired as held for investment of Fannie Mae 12,508 15,082 22,557

Proceeds from sales of loans acquired as held for investment of Fannie Mae 17,794 17,511 10,241

Proceeds from repayments and sales of loans acquired as held for investment of consolidated trusts 552,135 401,045 435,637

Advances to lenders (141,395) (108,294) (123,687)

Proceeds from disposition of acquired property and preforeclosure sales 7,425 9,321 12,221

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

arrangements 19,360 (13,468) 10,945

Other, net (80) 78 641

Net cash provided by investing activities 207,052 150,853 184,408

Cash flows used in financing activities:

Proceeds from issuance of debt of Fannie Mae 789,572 789,355 1,034,742

Payments to redeem debt of Fannie Mae (834,294) (834,366) (1,082,427)

Proceeds from issuance of debt of consolidated trusts 435,235 357,846 383,793

Payments to redeem debt of consolidated trusts (575,706) (471,151) (514,637)

Payments of cash dividends on senior preferred stock to Treasury (5,601) (9,372) (12,015)

Proceeds from senior preferred stock purchase agreement with Treasury — 3,687 —

Other, net 480 63 6

Net cash used in financing activities (190,314) (163,938) (190,538)

Net increase (decrease) in cash, cash equivalents and restricted cash 11,984 (10,837) (1,917)

Cash, cash equivalents and restricted cash at beginning of period 49,423 60,260 62,177

Cash, cash equivalents and restricted cash at end of period $ 61,407 $ 49,423 $ 60,260

Cash paid during the period for:

Interest $ 121,542 $ 110,415 $ 109,480

Income taxes 1,900 460 3,090

Non-cash activities:

Net mortgage loans acquired by assuming debt $ 273,174 $ 231,478 $ 258,312

Net transfers from mortgage loans of Fannie Mae to mortgage loans of consolidated trusts 248,463 185,310 193,809

Transfers from advances to lenders to loans held for investment of consolidated trusts 128,272 102,865 118,282

Net transfers from mortgage loans to acquired property 6,681 8,131 10,262

See Notes to Consolidated Financial Statements in 2019 Form 10-K
Fourth Quarter and Full Year 2019 Results 15

FANNIE MAE

(In conservatorship)

Consolidated Statements of Changes in Equity (Deficit)

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

Fannie Mae Stockholders’ Equity (Deficit)

Shares Outstanding

Senior

Preferred 

Stock

Preferred

Stock

Common

Stock

Accumulated

Deficit

Accumulated 

Other

Comprehensive

Income

Treasury

Stock

Total

Equity 

(Deficit)

Senior

Preferred Preferred Common

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

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

Comprehensive income:

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

Other comprehensive income, net of tax effect:

Changes in net unrealized gains on availablefor-sale securities (net of taxes of $28) — — — — — — — 53 — 53

Reclassification adjustment for gains included 

in net income (net of taxes of $139) — — — — — — — (259) — (259)

Total comprehensive income 2,257

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)

Senior preferred stock dividends paid — — — — — — (9,372) — — (9,372)

Increase to senior preferred stock — — — 3,687 — — — — — 3,687

Comprehensive income:

Net income — — — — — — 15,959 — — 15,959

Other comprehensive income, net of tax effect:

Changes in net unrealized gains on availablefor-sale securities (net of taxes of $21) — — — — — — — (79) — (79)

Reclassification adjustment for gains included 

in net income (net of taxes of $70) — — — — — — — (265) — (265)

Other (net of taxes of $0) — — — — — — — (4) — (4)

Total comprehensive income 15,611

Reclassification related to Tax Cuts and Jobs Act — — — — — — (117) 117 — —

Balance as of December 31, 2018 1 556 1,158 $ 120,836 $ 19,130 $ 687 $ (127,335) $ 322 $ (7,400) $ 6,240

Senior preferred stock dividends paid — — — — — — (5,601) — — (5,601)

Comprehensive income:

Net income — — — — — — 14,160 — — 14,160

Other comprehensive income, net of tax effect:

Changes in net unrealized gains on availablefor-sale securities (net of taxes of $0) — — — — — — — 1 — 1

Reclassification adjustment for gains included 

in net income (net of taxes of $48) — — — — — — — (180) — (180)

Other (net of taxes of $3) — — — — — — — (12) — (12)

Total comprehensive income 13,969

Balance as of December 31, 2019 1 556 1,158 $ 120,836 $ 19,130 $ 687 $ (118,776) $ 131 $ (7,400) $ 14,608

See Notes to Consolidated Financial Statements in 2019 Form 10-K