Profile: Federal National Mortgage Association (FNM)

Federal National Mortgage Association (Fannie Mae) is a government-sponsored enterprise (GSE) chartered by the United States Congress to support liquidity and stability in the secondary mortgage market, where mortgage loans are purchased and sold. The Company participates in the secondary mortgage market by purchasing mortgage loans and mortgage-related securities for its mortgage portfolio. It also makes other investments that increase the supply of affordable housing. The Company is organized in three business segments: Single-Family Credit Guaranty, Housing and Community Development (HCD), and Capital Markets.

Single-Family Credit Guaranty Business

The Company’s Single-Family Credit Guaranty (Single-Family) business works with its lender customers to securitize single-family mortgage loans into Fannie Mae mortgage-backed securities (Fannie Mae MBS), and to facilitate the purchase of single-family mortgage loans for its mortgage portfolio. Single-family mortgage loans relate to properties with four or fewer residential units. Revenues in the segment are derived primarily from guaranty fees received as compensation for assuming the credit risk on the mortgage loans underlying single-family Fannie Mae MBS and on the single-family mortgage loans held in its portfolio.

Housing and Community Development Business

The HCD business works with the Company’s lender customers to securitize multifamily mortgage loans into Fannie Mae MBS and to facilitate the purchase of multifamily mortgage loans for its mortgage portfolio. Multifamily mortgage loans relate to properties with five or more residential units, which may be apartment communities, cooperative properties or manufactured housing communities. The HCD business also makes federal low-income housing tax credit (LIHTC) partnership, debt and equity investments. Revenues in the segment are derived from a variety of sources, including the guaranty fees received as compensation for assuming the credit risk on the mortgage loans underlying multifamily Fannie Mae MBS and on the multifamily mortgage loans held in its portfolio, transaction fees associated with the multifamily business, and bond credit enhancement fees.

Capital Markets Group

The Capital Markets group manages the Company’s investment activity in mortgage loans, mortgage-related securities and other investments, its debt financing activity, and its liquidity and capital positions. The Company funds its investments primarily through proceeds it receives from its issuance of debt securities in the domestic and international capital markets. The Capital Markets group generates most of its revenue from the difference, or spread, between the interest it earns on its mortgage assets and the interest it pays on the debt it issues to fund these assets.