Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations
You should read this MD&A together with our consolidated financial statements and the accompanying notes included
in this report. This MD&A does not discuss 2023 performance or a comparison of 2023 versus 2024 performance for
select areas where we have determined the omitted information is not necessary to understand our current-period
financial condition, changes in our financial condition, or our results. The omitted information may be found in our 2024
Form 10-K, filed with the SEC on February 14, 2025 , in MD&A sections titled “Consolidated Results of Operations,”
“Single-Family Business,” “Multifamily Business,” and “Liquidity and Capital Management.”
Key Market Economic Indicators
Below we discuss how varying macroeconomic conditions can influence our financial results across different business
and economic environments. Our forecasts and expectations are based on many assumptions, subject to many
uncertainties and may change, perhaps substantially, from our current forecasts and expectations. See “ Forward-
Looking Statements ” and “ Risk Factors ” for a discussion of factors that could cause actual results to differ materially
from our current forecasts and expectations.
Market Interest Rates
Selected Market Interest Rates
(1) Refers to the U.S. weekly average fixed-rate mortgage rate according to Freddie Mac’s Primary Mortgage Market Survey ® . These rates are
reported using the latest available data for a given period.
(2) According to Bloomberg.
(3) Refers to the daily rate per the Federal Reserve Bank of New York.
How Interest Rates Can Affect Our Financial Results
• Net interest income . Changes in interest rates impact the timing of when we recognize certain components of
net interest income. Our primary source of net interest income is guaranty fees we receive for assuming the
Fannie Mae 2025 Form 10-K
MD&A | Key Market Economic Indicators
credit risk on our guaranty book of business, which consists of upfront and base guaranty fees. Since we
amortize upfront guaranty fees over the contractual life of the loan, when a loan prepays, the remaining upfront
fees on the loan are recognized as income in that period. In a rising interest-rate environment, our mortgage
loans generally prepay more slowly as borrowers are less likely to refinance, which typically results in lower
deferred guaranty fee income as those upfront fees are amortized into interest income over a longer period of
time. Conversely, in a declining interest-rate environment, our mortgage loans generally prepay faster as
borrowers are more likely to refinance, typically resulting in higher deferred guaranty fee income as loan
prepayments accelerate the realization of those upfront fees as interest income. However, since most of the
loans in our single-family guaranty book of business continue to have mortgage interest rates meaningfully
below the current prevailing rate as of December 31, 2025 , we may not experience higher deferred guaranty
fee income in a declining interest-rate environment unless mortgage interest rates drop to a level that is low
enough to incentivize more borrowers to refinance. Interest rates also affect the amount of interest income we
earn on our assets. Our corporate liquidity portfolio and certain mortgage-related assets typically earn more
interest income in a higher interest-rate environment and less interest income in a lower interest-rate
environment. On our corporate debt, we typically pay more interest in a higher interest-rate environment and
less interest in a lower interest-rate environment. See “ Consolidated Results of Operations — Net Interest
Income ” for a discussion of how interest rate changes impacted our financial results and for information on the
interest rates of the loans in our single-family conventional guaranty book of business compared to the
prevailing average 30-year fixed-rate mortgage rate as of year-end 2025 .
• Fair value gains (loss es ) . We have exposure to fair value gains and losses resulting from changes in interest
rates , primarily through our trading securities, mortgage commitment derivatives and risk management
derivatives, which we mark to market through earnings. We apply fair value hedge accounting to address some
of this exposure to interest rates. For more information about our fair value gains (losses), see “ Consolidated
Results of Operations — Fair Value Gains (Losses), Net .”
• (Provision) benefit for credit losses . When mortgage interest rates increase, our expected credit losses on
l oans generally incre ase because (1) we expect fewer borrowers will refinance their loans, thereby extending
the expected life of the loan, which increases our expectation of loss and (2) borrowers with adjustable-rate
loans or multifamily loans with balloon balances due at maturity face increased costs and a reduced ability to
refinance. This increase in our expectation of loss contributes to our provision for credit losses. Conversely,
when mortgage interest rates decrease, our expectation of l oss generally decre ases, which reduces our
provision for credit losses. For more information on our (provision) benefit for credit losses, see “ Consolidated
Results of Operations — (Provision) Benefit for Credit Losses .”
The U.S. weekly average 30-year fixed-rate mortgage rate decreased to 6.15% at the end of the fourth quarter of 2025 ,
compared to 6.30% at the end of the third quarter of 2025 and 6.85% at the end of the fourth quarter of 2024 .
Home Prices
Single-Family Annual Home Price Growth Rate (1)
(1) Calculated internally using property data on loans purchased by Fannie Mae, Freddie Mac, and other third-party home sales data. Fannie
Mae’s home price index is a weighted repeat transactions index, measuring average price changes in repeat sales on the same properties.
Fannie Mae’s home price index excludes prices on properties sold in foreclosure. Fannie Mae’s home price growth rates represent
estimates based on non-seasonally adjusted preliminary data and are subject to change as additional data becomes available.
Fannie Mae 2025 Form 10-K
MD&A | Key Market Economic Indicators
How Home Prices Can Affect Our Financial Results
• Actual and forecasted home prices impact our provision or benefit for credit losses as well as the growth and
size of our guaranty book of business.
• Changes in home prices affect the amount of equity that borrowers have in their homes. Borrowers with less
equity typically have higher delinquency and default rates, particularly in times of economic stress.
• As home prices increase, the severity of losses we incur on defaulted loans that we hold or guarantee
decreases because the amount we can recover from the properties securing the loans increases. Declines in
home prices may increase the losses we incur on defaulted loans.
• As home prices rise, the principal balance of loans associated with newly acquired purchase loans may
increase, causing growth in the size of our guaranty book. Additionally, rising home prices can increase the
amount of equity borrowers have in their home, which may lead to an increase in origination volumes for cash-
out refinance loans with higher principal balances than the existing loan. Replacing existing loans with newly
acquired cash-out refinances can affect the growth and size of our guaranty book.
We currently estimate h ome prices on a national basis increased by 3.0% in 2025 . We expect home price growth of
2.4% on a national basis in 2026 . We also expect regional variation in the timing and rate of home price changes.
Economic Activity
GDP and Unemployment Rate
(1) Real GDP growth (decline) is based on the quarterly series calculated by the Bureau of Economic Analysis and is subject to revision.
(2) According to the U.S. Bureau of Labor Statistics and subject to revision.
How GDP and the Unemployment Rate Can Affect Our Financial Results
• Changes in U.S. gross domestic product (“GDP”) and the unemployment rate can affect several mortgage
market factors, including the demand for both single-family and multifamily housing and the level of loan
delinquencies, which impact credit losses.
• Economic growth is a key factor for the performance of mortgage-related assets. In a growing economy,
employment and income typically rise, thus allowing borrowers to meet payment requirements, existing
homeowners to consider purchasing and moving to another home, and renters to consider becoming
homeowners. Homebuilding typically increases to meet the rise in demand. Mortgage delinquencies typically
fall in an expanding economy, thereby decreasing credit losses.
• In a slowing economy, income growth and housing activity typically slow, followed by softening employment. As
an economic slowdown intensifies, households typically reduce their spending, further accelerating the
slowdown. An economic slowdown can lead to employment losses, impairing the ability of borrowers and
renters to meet mortgage and rental payments, thus causing loan delinquencies to rise.
GDP increased in the first three quarters of 2025 . Bureau of Economic Analysis GDP data for the fourth quarter of 2025
was not available at the time of filing this report. However, we anticipate that the fourth quarter 2025 GDP report will
show growth, and that GDP will continue to grow in 2026 . The unemployment rate was 4.4% in December 2025 , flat
from September 2025 . W e expect the unemployment rate to remain relatively stable in 2026 .
The impact of t rade, fiscal, monetary, regulatory, and immigration policies, and geopolitical events, is uncertain and
could materially impact our outlook for interest rates, home price growth, and economic growth.
See “ Risk Factors — Credit Risk ” and “ Risk Factors — Market and Industry Risk ” for further discussion of risks to our
business and financial results associated with interest rates, home prices, and economic conditions.
Fannie Mae 2025 Form 10-K
MD&A | Consolidated Results of Operations
Consolidated Results of Operations
This section discusses our consolidated results of operations and should be read together with our consolidated
financial statements and the accompanying notes.
In the third quarter of 2025, we made a change in accounting principle, which has been applied retrospectively to the
consolidated balance sheets and consolidated statements of cash flows. In the third and fourth quarters of 2025, we
also revised the presentation of certain items in the consolidated statements of operations and other comprehensive
income, and prior periods have been recast accordingly. Refer to “ Note 1, Summary of Significant Accounting Policies —
Basis of Presentation” for a description of these changes in accounting principle and presentation.
Summary of Consolidated Results of Operations
For the Year Ended December 31,
Variance
(Dollars in millions)
Net interest income (1)
Fee and other income
Net revenues
Fair value gains (losses), net
Investment gains (losses), net (2)
Other gains (losses), net
(Provision) benefit for credit losses
Non-interest expense:
Administrative expenses (3)
Legislative assessments (4)
Credit enhancement expense (5)
Other income (expense), net (2)(6)
Total non-interest expense
Income before federal income taxes
Provision for federal income taxes
Net income
Total comprehensive income
(1) Includes net interest income generated by the 10 basis point guaranty fee increase we implemented pursuant to the Temporary Payroll Tax
Cut Continuation Act of 2011, and as extended by the Infrastructure Investment and Jobs Act, which is paid to Treasury and not retained by
us. We refer to this as TCCA fees, or income related to TCCA.
(2) Beginning in the fourth quarter of 2025, we changed the presentation of debt extinguishment gains and losses from “Other income
(expense), net” to “Investment gains (losses), net.” Prior periods have been recast to conform with the current period presentation.
(3) Consists of salaries and employee benefits and professional services, technology and occupancy expenses.
(4) Consists of TCCA fees, affordable housing allocations and FHFA assessments.
(5) Single-family credit enhancement expense consists of costs associated with our freestanding credit enhancements, which primarily include
our CAS and CIRT programs, enterprise-paid mortgage insurance (“EPMI”) and certain lender risk-sharing programs. Multifamily credit
enhancement expense primarily consists of costs associated with our Multifamily CIRT TM (“MCIRT TM ”) and Multifamily Connecticut Avenue
Securities ® (“MCAS TM ”) programs as well as amortization expense for certain lender risk-sharing programs. Excludes CAS transactions
accounted for as debt instruments and credit risk transfer programs accounted for as derivative instruments.
(6) Primarily consists of foreclosed property income (expense), change in the expected benefits from our freestanding credit enhancements,
and gains (losses) from partnership investments.
Net Interest Income
Overview
Our primary source of net interest income is guaranty fees we receive for assuming the credit risk on mortgage loans
underlying Fannie Mae MBS held by third parties in our guaranty book of business. We recognize almost all of our
guaranty fee revenue in net interest income because, in our consolidated balance sheets, we consolidate the
substantial majority of mortgage loans underlying our Fannie Mae MBS. Guaranty fees from these mortgage loans
account for the difference between the interest income on mortgage loans in consolidated trusts and the interest
expense on the debt of consolidated trusts.
Fannie Mae 2025 Form 10-K
MD&A | Consolidated Results of Operations
We also earn interest income from our retained mortgage portfolio and corporate liquidity portfolio as described below.
In addition, income or expense from hedge accounting is a component of our net interest income.
Net Interest Income from Guaranty Book of Business
For single-family mortgage loans, there are two components of our guaranty fees:
• Base fees. These fees are ongoing fees that factor into a mortgage loan’s interest rate, which are collected
each month over the life of the mortgage loan.
• Upfront fees . These fees are one-time payments made by lenders upon loan delivery to us. Upfront fees
include risk-based fees, referred to as “loan-level price adjustments,” that vary by the attributes of the loan and
the borrower (such as loan size, LTV ratio, borrower credit score, etc.) . Upfront fees also include payments we
make to and receive from lenders to adjust the monthly contractual guaranty fee rate on a Fannie Mae MBS.
These fees are initially recorded as cost basis adjustments to the mortgage loan and are then amortized into
net interest income over the contractual life of the loan.
For multifamily mortgage loans, base fees are the primary component of our guaranty fee.
In our “Components of Net Interest Income” table, we display net interest income from our guaranty book of business in
three categories:
• Base guaranty fee income excluding TCCA, which primarily consists of ongoing monthly fees that are
contractually due to us for assuming credit risk and that we collect and recognize each month over the life of
the mortgage loan, excluding the portion of those fees related to the TCCA described below.
• Base guaranty fee income related to TCCA, which is the portion of the base fees we collect that are not
retained by us but paid to Treasury pursuant to the Temporary Payroll Tax Cut Continuation Act of 2011, as
amended.
• Deferred guaranty fee income, which primarily represents income from the upfront fees described above that
are amortized into net interest income. Deferred guaranty fee income also includes the amortization of cost
basis adjustments on our mortgage loans and debt of consolidated trusts that are not associated with upfront
fees. These basis adjustments consist of premiums and discounts that are established when we initially
recognize mortgage loans and debt of consolidated trusts in our consolidated balance sheets at fair value. We
amortize these basis adjustments over the contractual life of the associated financial instrument.
Other Sources of Net Interest Income
Net Interest Income from Portfolios
We also recognize net interest income on the difference between interest income earned on the assets in our retained
mortgage portfolio and our corporate liquidity portfolio (collectively, our “portfolios”) and the interest expense associated
with our funding debt. See “ Retained Mortgage Portfolio ” and “ Liquidity and Capital Management — Liquidity
Management — Corporate Liquidity Portfolio ” for more information about our portfolios.
Income (Expense) from Hedge Accounting
To reduce the impact of interest-rate volatility on our financial results, we apply fair value hedge accounting. As a result,
during the hedging period, we recognize fair value changes attributable to movements in benchmark interest rates for
mortgage loans, funding debt, and the related interest-rate swaps in the hedging relationships, as a component of net
interest income. We also recognize the amortization of hedge-related basis adjustments and any related interest accrual
on the swaps as a component of net interest income.
As of December 31, 2025 , 2024 and 2023 , we had $2.0 billion , $2.6 billion and $3.6 billion , respectively, in net
cumulative fair value hedge basis adjustments. These adjustments have been or will be amortized as net expenses over
the remaining contractual life of the respective hedged items in the “Income (expense) from hedge accounting” line item
in the “Components of Net Interest Income” table below. The substantial majority of these hedge basis adjustments
relate to our funding debt. See “ Note 1, Summary of Significant Accounting Policies ” and “ Note 9, Derivative
Instruments ” for more information about our hedge accounting program.
Fannie Mae 2025 Form 10-K
MD&A | Consolidated Results of Operations
Components of Net Interest Income
The table below displays the components of our net interest income from our guaranty book of business, from our
portfolios, as well as from hedge accounting.
Components of Net Interest Income
For the Year Ended December 31,
Variance
(Dollars in millions)
Net interest income from guaranty book of business:
Base guaranty fee income excluding TCCA
Base guaranty fee income related to TCCA
Net deferred guaranty fee income
Total net interest income from guaranty book of business
Net interest income from portfolios (1)
Income (expense) from hedge accounting
Total net interest income
(1) Includes interest income from assets held in our retained mortgage portfolio and our corporate liquidity portfolio, as well as other assets
used to support lender liquidity. Also includes interest expense on our fundi ng debt.
Net interest income decreased by $140 million in 2025 compared with 2024 primarily driven by lower net interest
income from portfolios, partially offset by higher base guaranty fee income.
• Lower net interest income from portfolios. Lower net interest income from portfolios in 2025 compared with
2024 was primarily driven by higher costs on long-term funding debt. This was driven by higher average rates
on our long-term funding debt as we issued debt in a higher-interest rate environment relative to maturing long-
term debt as well as a higher average balance outstanding.
• Higher base guaranty fee income. Higher base guaranty fee income was primarily driven by higher average
guaranty fees on recent single-family acquisitions as well as an increase in our multifamily guaranty book of
business.
Net interest income was relatively flat in 2024 compared with 2023 . The $25 million decline was driven by lower
deferred guaranty fee income, primarily offset by higher income from base guaranty fees and lower expense from hedge
accounting.
• Lower deferred guaranty fee income. The decrease in deferred guaranty fee income in 2024 compared to 2023
was primarily driven by less income from the amortization of premiums on debt of consolidated trusts. This
decrease was largely driven by rising interest rates throughout much of 2023 and 2024 , which reduced the
prices of newly issued MBS debt thereby decreasing premiums.
• Higher base guaranty fee income. Higher base guaranty fee income was primarily driven by higher average
guaranty fees on recent single-family acquisitions.
• Lower expense from hedge accounting . We had lower expense from hedge accounting in 2024 compared with
2023 , primarily driven by lower interest expense on derivatives in hedging relationships.
Fannie Mae 2025 Form 10-K
MD&A | Consolidated Results of Operations
Analysis of Unamortized Deferred Guaranty Fees
The following charts present information about the interest rates of the loans in our single-family conventional guaranty
book of business as well as information about our deferred guaranty fees.
As shown in the chart below (on the left), most of our single-family conventional guaranty book of business as of
December 31, 2025 had an interest rate lower than the U.S. weekly average 30-year fixed-rate mortgage rate. Per
Freddie Mac’s Primary Mortgage Market Survey ® , as of December 31, 2025 , the U.S. weekly average interest rate for a
single-family 30-year fixed-rate mortgage was 6.15% . Accordingly, even if interest rates decline to 5% , most of the
borrowers whose mortgage loans are in our single-family conventional guaranty book of business still would not be
incentivized to refinance.
The other chart below (on the right) presents guaranty fees that will be amortized into deferred guaranty fee income in
future periods, which we refer to as “unamortized deferred guaranty fees.” Deferred guaranty fees primarily result from
the upfront fees that we receive on single-family loans we acquire, which are recorded as cost basis adjustments to the
mortgage loan. Deferred guaranty fees also include cost basis adjustments on our mortgage loans and debt of
consolidated trusts that are not associated with upfront fees, such as premiums and discounts. We amortize these cost
basis adjustments as deferred guaranty fee income over the remaining contractual life of the mortgage loans or debt. As
discussed in “Key Market Economic Indicators,” the timing of when we recognize deferred guaranty fee income depends
on the life of the mortgage loan, which, for single-family in particular, is sensitive to changes in mortgage interest rates
as those changes impact the borrowers’ incentive to refinance.
Interest Rates of Single-Family
Conventional Guaranty Book of Business
Compared with the U.S. Weekly Average
30-Year Fixed-Rate Mortgage Rate
Unamortized Deferred Guaranty Fees
As of December 31, 2025
(Dollars in billions)
Represents the U.S. weekly average 30-year fixed-rate
mortgage rate as of December 31, 2025, according to
Freddie Mac’s Primary Mortgage Market Survey ® .
Represents the net unamortized cost basis adjustment
balance that will be amortized and recognized through
deferred guaranty fee income over the remaining
contractual life of the mortgage loans or debt.
Represents the percentage of single-family conventional
guaranty book of business by select interest rate band
based on the current interest rate of the mortgage loans.
Fannie Mae 2025 Form 10-K
MD&A | Consolidated Results of Operations
The amount of deferred guaranty fee income we record can vary and is primarily impacted by: (1) the amount of upfront
fees we charge on single-family mortgage loans, (2) changes in interest rates, which affect the premiums and discounts
we record on newly acquired mortgage loans and newly created debt of consolidated trusts, and (3) the amount by
which premiums and discounts on existing loans and debt of consolidated trust are different compared to newly
acquired loans and debt. The balance of our unamortized deferred guaranty fees decreased as of December 31, 2025 ,
compared with December 31, 2024 , largely as a result of amortization of existing upfront fees on single-family loans and
premiums of existing MBS debt. In addition, interest-rate-driven pricing changes resulted in fewer premiums on newly
issued MBS debt relative to MBS debt that amortized, which further reduced the balance of unamortized deferred
guaranty fees.
Analysis of Net Interest Income
The table below displays an analysis of our net interest income, average balances and related yields earned on assets
and incurred on liabilities. For most components of the average balances, we use a daily weighted average of the UPB
net of unamortized cost basis adjustments. When daily average balance information is not available, such as for
mortgage loans, we use monthly averages.
Analysis of Net Interest Income and Yield (1)
For the Year Ended December 31,
Average
Balance
Interest
Income/
(Expense)
Average
Rates
Earned/
Paid
Average
Balance
Interest
Income/
(Expense)
Average
Rates
Earned/
Paid
Average
Balance
Interest
Income/
(Expense)
Average
Rates
Earned/
Paid
(Dollars in millions)
Interest-earning assets:
Cash
Securities purchased under agreements
to resell
Investments in securities
Mortgage loans:
Mortgage loans of Fannie Mae
Mortgage loans of consolidated trusts
Total mortgage loans (2)
Advances to lenders
Total interest-earning assets
Interest-bearing liabilities:
Short-term funding debt
Long-term funding debt
Total debt of Fannie Mae
Debt securities of consolidated trusts
held by third parties
Total interest-bearing liabilities
Net interest income/net interest yield
(1) Includes the effects of discounts, premiums and other cost basis adjustments, including basis adjustments related to hedge accounting.
(2) Average balance includes mortgage loans on nonaccrual status. Interest income includes loan fees of $3.0 billion , $2.8 billion and
$2.8 billion for the years ended 2025 , 2024 and 2023 , respectively. Loan fees primarily consist of yield maintenance revenue we
recognized on the prepayment of multifamily mortgage loans and the amortization of upfront cash fees exchanged when we acquire the
mortgage loan.
Fannie Mae 2025 Form 10-K
MD&A | Consolidated Results of Operations
The table below displays the change in our net interest income between periods and the extent to which that variance is
attributable to: (1) changes in the volume of our interest-earning assets and interest-bearing liabilities or (2) changes in
the interest rates of these assets and liabilities.
Rate/Volume Analysis of Changes in Net Interest Income
Total
Variance
Variance Due to: (1)
Total
Variance
Variance Due to: (1)
Volume
Rate
Volume
Rate
(Dollars in millions)
Interest income:
Cash
Securities purchased under agreements to resell
Investments in securities
Mortgage loans:
Mortgage loans of Fannie Mae
Mortgage loans of consolidated trusts
Total mortgage loans
Advances to lenders
Total interest income
Interest expense:
Short-term funding debt
Long-term funding debt
Total debt of Fannie Mae
Debt securities of consolidated trusts held by third parties
Total interest expense
Net interest income
(1) Combined rate/volume variances are allocated between rate and volume based on the relative size of each variance.
(Provision) Benefit for Credit Losses
Our (provision) benefit for credit losses can vary substantially from period to period due to factors such as changes in
actual and forecasted home prices, property valuations, and fluctuations in actual and forecasted interest rates. Other
drivers include the volume and credit risk profile of our new acquisitions, borrower payment behavior; events such as
natural disasters or pandemics; the type, volume and effectiveness of our loss mitigation activities, including
forbearances and loan modifications, the volume of completed foreclosures and the volume and pricing of loans
redesignated from held for investment (“HFI”) to held for sale (“HFS”). The benefit or provision for credit losses includes
our benefit or provision for loan losses, advances of pre-foreclosure costs , accrued interest receivable losses, our
guaranty loss reserves and credit losses on our available-for-sale (“AFS”) debt securities.
Our (provision) benefit for credit losses and our related loss reserves can also be impacted by updates to the models,
assumptions and data used in determining our allowance for loan losses. Although we believe the estimates underlying
our allowance as of December 31, 2025 are reasonable, they are subject to uncertainty. Changes in future economic
conditions and loan performance from our current expectations may result in volatility in our allowance for loan losses
and, as a result, our benefit or provision for credit losses. See “ Critical Accounting Estimates ” for additional information
about how our estimate of credit losses is subject to uncertainty. See “ Risk Factors — Credit Risk ” for a discussion of
factors that could result in significant provisions for credit losses on the loans in our book of business.
Fannie Mae 2025 Form 10-K
MD&A | Consolidated Results of Operations
The table below presents our single-family and multifamily benefit or provision for credit losses and the change in
expected credit enhancement recoveries.
(Provision) Benefit for Credit Losses and Change in Expected Credit Enhancement Recoveries
by Segment
For the Year Ended December 31,
(Dollars in millions)
(Provision) benefit for credit losses:
Single-family (provision) benefit for credit losses
Multifamily (provision) benefit for credit losses
Total (provision) benefit for credit losses
Change in expected credit enhancement recoveries: (1)
Single-family
Multifamily
Total change in expected credit enhancement recoveries
(1) Consists of estimated changes in benefits from our freestanding credit enhancements, which are recognized as a component of “Other
income (expense), net” in our consolidated statements of operations and comprehensive income.
Single-Family (Provision) Benefit for Credit Losses
Our single-family provision for credit losses in 2025 was primarily driven by current-year loan acquisitions and by loan
delinquencies.
• Provision for newly acquired loans. The provision for newly acquired loans was largely attributable to our 2025
single-family acquisitions, which primarily consisted of purchase loans. At acquisition, we record expected
lifetime credit losses for newly acquired loans, resulting in provision for credit losses. P urchase loans generally
have higher original LTV ratios than refinance loans, and as a result, generally carry higher expected lifetime
credit losses than refinance loans.
• Provision from loan delinquencies . As loans migrate into delinquency status, expected credit losses increase
due to higher probabilities of default and greater loss severity assumptions. For 2025 , provision related to loan
delinquencies was primarily driven by loans that became newly delinquent during the year, as well as an
increase in the population of loans that were 60 days or more past due, which resulted in higher expected credit
losses.
Our single-family benefit for credit losses in 2024 was primarily driven by improvements to our longer-term single-family
home price forecast, partially offset by provision from the risk profile of newly acquired loans, and provision related to
higher mortgage interest rates.
• Home price forecast benefit . We recognized a benefit from improvements to our longer-term single-family home
price forecast. Higher home prices decrease the likelihood that loans will default and reduce the amount of
losses on loans that default, which impacts our estimate of losses and ultimately reduces our loss reserves and
provision for credit losses.
• Provision for newly acquired loans. The provision for newly acquired loans was primarily driven by the credit
risk profile of our 2024 single-family acquisitions, which primarily consisted of purchase loans.
• Provision for higher interest rates. We also recognized provision from higher mortgage interest rates. As
mortgage rates increase, we expect a decrease in future prepayments on single-family loans. Lower expected
prepayments extend the expected life of the loan, which increases our expectation of credit losses.
See “ Key Market Economic Indicators ” for additional information about how home prices and interest rates affect our
credit loss estimates, including a discussion of home price growth and our home price forecast. Also see “ Critical
Accounting Estimates ” for more information about our home price and interest rate forecasts and how they can impact
our single-family (provision) benefit for credit losses.
Fannie Mae 2025 Form 10-K
MD&A | Consolidated Results of Operations
Multifamily (Provision) Benefit for Credit Losses
Our multifamily provision for credit losses in 2025 was primarily driven by an increase in delinquencies including
provision from seriously delinquent loans that were written down to the net recoverable amount of the loans’ collateral
value during the period. These factors were partially offset by a slightly improved long-term forecast of multifamily
property net operating income (“NOI”) and property values.
See “ Critical Accounting Estimates ” for more information about our NOI and property value growth estimates and how
they can affect our multifamily (provision) benefit for credit losses.
Our multifamily provision for credit losses in 2024 was primarily driven by declining multifamily property values, an
increase in multifamily loan delinquencies, and provision related to our estimate of losses on loans involving fraud or
suspected fraud. These factors were partially offset by an improved long-term forecast of multifamily property NOI.
• Provision relating to declining multifamily property values . During 2024 , multifamily property values declined,
primarily due to elevated interest rates resulting in higher market yield requirements. This decrease in property
values led to higher LTV ratios for loans in our multifamily guaranty book of business, which drove higher
estimated risk of default and loss severity in the allowance and therefore a higher credit loss provision.
• Provision relating to increased delinquencies. Multifamily loan delinquencies increased in 2024 , particularly for
adjustable-rate conventional loans that became seriously delinquent and were written down to their net
recoverable amount, which contributed to the multifamily provision for credit losses.
• Provision relating to fraud or suspected fraud . Expected losses relating to multifamily lending transactions
involving fraud or suspected fraud further heightened the risk of default and added to our multifamily credit loss
provision.
• Benefit relating to improved NOI forecast. Our forecast of NOI on multifamily properties improved compared to
our prior forecast, which also positively impacted our projection of multifamily property values. This
improvement in our NOI forecast was primarily due to a refinement of our forecast assumptions to use the
average NOI historical growth rate for a longer period of the forecast.
Change in Expected Credit Enhancement Recoveries
Change in expected credit enhancement recoveries consists of the change in expected and realized benefits from our
freestanding credit enhancements . The benefit from expected credit enhancement recoveries in 2025 and 2024 was
primarily driven by lender loss-sharing benefits relating to realized and expected losses on multifamily loans. For 2025,
the benefit was partially offset by a downward revision to our forecast of expected single-family credit enhancement
receivables.
Fannie Mae 2025 Form 10-K
MD&A | Consolidated Results of Operations
Fair Value Gains (Losses), Net
The estimated fair value of our derivatives, trading securities and other financial instruments carried at fair value may
fluctuate substantially from period to period because of changes in interest rates, the yield curve, mortgage and credit
spreads and implied volatility, as well as activity related to these financial instruments.
Our hedge accounting program is designed to hedge our exposure to changes in benchmark interest rates, specifically
the Secured Overnight Financing Rate (“SOFR”) , and cannot be applied to changes in interest rate spreads, convexity,
or seasoning (i.e., the effect of financial instruments moving closer to maturity) . As a result, our fair value gains and
losses after the impact of hedge accounting are also impacted by components unrelated to changes in SOFR . See
“ Note 1, Summary of Significant Accounting Policies —Fair Value Hedge Accounting” for additional information.
The table below displays the components of our fair value gains and losses.
Fair Value Gains (Losses), Net
For the Year Ended December 31,
(Dollars in millions)
Risk management derivatives fair value gains (losses) (1)
Impact of hedge accounting (2)
Risk management derivatives fair value gains (losses), net
Mortgage commitment derivatives fair value gains (losses), net
Credit enhancement derivatives fair value gains (losses), net
Other derivatives fair value gains (losses), net
Total derivatives fair value gains (losses), net
Trading securities gains, net
Long-term debt fair value gains (losses), net
Other, net (3)
Fair value gains (losses), net
(1) Includes net change in fair value for the period and net contractual interest income (expense) on interest-rate swaps, which is primarily
impacted by changes in interest rates and changes in the composition of our interest-rate swaps portfolio.
(2) The “Impact of hedge accounting” reflected in this table shows the net gain or loss from swaps in hedging relationships plus any accrued
interest during the applicable periods that are recognized in “Net interest income.” For more information about our hedge accounting
program, see “ Note 1, Summary of Significant Accounting Policies ” and “ Note 9, Derivative Instruments .”
(3) Consists primarily of fair value gains and losses on mortgage loans held at fair value.
Fair value gains, net in 2025 was primarily driven by declining interest rates, which resulted in gains on fixed-rate
trading securities, mortgage loans held at fair value, and risk management derivatives, as well as losses on mortgage
commitment derivatives and long-term debt of consolidated trusts held at fair value that largely offset these gains.
Factors that are not covered by our hedge accounting program, as discussed above, largely offset each other in 2025.
Fair value gains, net in 2024 was driven by gains on risk management derivatives, trading securities, and mortgage
commitment derivatives. Gains on risk management derivatives and mortgage commitment derivatives were primarily
due to rising interest rates, and gains on trading securities were primarily driven by holdings of U.S. Treasury securities
moving closer to maturity (i.e., seasoning) , which resulted in the reversal of previously recorded fair value losses. The
impact of hedge accounting was a loss for the period, partially offsetting gains on risk management derivatives.
For information on our use of derivatives to manage interest-rate risk, see “ Risk Management — Market Risk
Management, including Interest-Rate Risk Management — Interest-Rate Risk Management .”
Fannie Mae 2025 Form 10-K
MD&A | Consolidated Results of Operations
Legislative Assessments
Legislative assessments consists of TCCA fees, FHFA assessments and affordable housing allocations. For additional
information on our TCCA fees, FHFA assessments and affordable housing allocations, see “ Certain Relationships and
Related Transactions, and Director Independence — Transactions with Related Persons” and “ Note 2, Conservatorship,
Senior Preferred Stock Purchase Agreement and Related Matters —Related Parties.”
The table below displays the components of our legislative assessments.
Legislative Assessments
For the Year Ended December 31,
(Dollars in millions)
TCCA fees (1)
FHFA assessments (2)
Affordable housing allocations: (3)
Treasury’s Capital Magnet Fund
HUD’s Housing Trust Fund
Total affordable housing allocations
Total legislative assessments
(1) TCCA fees are expenses recognized as a result of the 10 basis point increase in guaranty fees on all single-family mortgages delivered to
us on or after April 1, 2012 pursuant to the Temporary Payroll Tax Cut Continuation Act of 2011 and as extended by the Infrastructure
Investment and Jobs Act, which we pay to Treasury.
(2) FHFA assessments are expenses relating to our obligation under the GSE Act to pay FHFA to cover a portion of its costs, expenses and
working capital.
(3) Affordable housing allocations relates to the GSE Act requirement to set aside each year an amount equal to 4.2 basis points of the UPB of
our new business purchases and to pay this amount to specified HUD and Treasury funds in support of affordable housing. In March 2025 ,
we paid $160 million to the funds based on our new business purchases in 2024 . For 2025 , we recognized an expense of $171 million
related to this obligation based on $408.2 billion in new business purchases during the year. We expect to pay this amount to the funds in
Administrative Expenses
Administrative expenses consists of salaries and employee benefits, professional services, and technology and
occupancy costs , and were $3.6 billion in 2025 and 2024 . Cost reductions from fewer employees and contractors were
mostly offset by an increase in severance costs and h igher occupancy expenses , resulting in a net $40 million decrease
in administrative expenses. Severance costs were $95 million higher in 2025 compared with 2024 , with total headcount
declining from approximately 8,200 employees as of December 2024 to approximately 7,000 employees as of
December 2025 . Occupancy expenses increased by $55 million in 2025 compared with 2024 , primarily related to costs
associated with reducing our real estate footprint.
Other Income (Expense), Net
Other expense decreased from $685 million in 2024 to $586 million in 2025 , primarily driven by a decrease in our
foreclosed property expense as a result of a reduction of our single-family REO properties and reduced repair costs.
This was partially offset by a decrease in the benefits on our expected credit enhancement recoveries on multifamily
loans. See “ (Provision) Benefit for Credit Losses ” for a discussion of our changes in expected credit enhancement
recoveries .
Fannie Mae 2025 Form 10-K
MD&A | Consolidated Balance Sheet Analysis
Consolidated Balance Sheet Analysis
This section discusses our consolidated balance sheets and should be read together with our consolidated financial
statements and the accompanying notes.
Summary of Consolidated Balance Sheets
As of December 31,
Variance
(Dollars in millions)
Assets
Cash
Restricted cash
Securities purchased under agreements to resell
Investments in securities, at fair value
Mortgage loans:
Of Fannie Mae
Of consolidated trusts
Allowance for loan losses
Mortgage loans, net of allowance for loan losses
Deferred tax assets, net
Other assets
Total assets
Liabilities and equity
Debt:
Of Fannie Mae
Of consolidated trusts
Other liabilities
Total liabilities
Total stockholders’ equity
Total liabilities and equity
Restricted Cash
The increase in restricted cash from December 31, 2024 to December 31, 2025 was primarily driven by an increase in
prepayments of loans held in consolidated trusts, resulting in higher cash balances held in trusts at period end. For
information on our accounting policy for restricted cash, see “ Note 1, Summary of Significant Accounting Policies .”
Securities Purchased Under Agreements to Resell and Investments in Securities,
at Fair Value
The primary driver of the de crease in securities purchased under agreements to resell and investments in securities, at
fair value , from December 31, 2024 to December 31, 2025 , was t he reinvestmen t of proceeds from sales and maturities
of U.S. Treasury securities and maturities of securities purchased under agreements to resell into agency MBS held in
our retained mortgage portfolio and payments made to redeem debt of Fannie Mae. See “ Liquidity and Capital
Management — Liquidity Management — Corporate Liquidity Portfolio ” and “ Retained Mortgage Portfolio ” for additional
information.
Mortgage Loans, Net of Allowance for Loan Losses
The mortgage loans reported in our consolidated balance sheets are classified as either HFS or HFI and include loans
owned by Fannie Mae and loans held in consolidated trusts.
M ortgage loans, net of allowance for loan losses decreased from December 31, 2024 to December 31, 2025 , driven
primarily by a reduction in single-family loans, as single-family loan paydowns, liquidations and sales outpaced
acquisitions. This decrease in single-family loans was partially offset by an increase in multifamily loans during 2025 .
For additional information on our mortgage loans, see “ Note 4, Mortgage Loans ,” and for additional information on
changes in our allowance for credit losses, see “ Note 5, Allowance for Credit Losses .”
Fannie Mae 2025 Form 10-K
MD&A | Consolidated Balance Sheet Analysis
Debt
Debt of Fannie Mae represents short-term and long-term corporate debt issued to maintain adequate liquidity to fund
our operations. Debt of consolidated trusts represents the amount of Fannie Mae MBS issued from consolidated trusts
and held by third-party certificateholders .
Debt of Fannie Mae decreased from December 31, 2024 to December 31, 2025 as our funding needs were primarily
satisfied by earnings retained from our operations. The decrease in debt of consolidated trusts from December 31, 2024
to December 31, 2025 was primarily driven by liquidations of Fannie Mae single-family MBS outpacing issuances and
an increase in Fannie Mae MBS held in our retained mortgage portfolio. Purchases of Fannie Mae MBS from
consolidated trusts for our retained mortgage portfolio result in the derecognition of related balances in debt of
consolidated trusts. See “ Liquidity and Capital Management — Liquidity Management — Debt Funding ” for a summary of
activity in debt of Fannie Mae and a comparison of the mix between our outstanding short-term and long-term debt. Also
see “ Note 8, Short-Term and Long-Term Debt ” for additional information on our total outstanding debt.
Retained Mortgage Portfolio
Our retained mortgage portfolio consists of mortgage loans and mortgage-related securities that we own, including
Fannie Mae MBS and non-Fannie Mae mortgage-related securities. Assets held by consolidated MBS trusts that back
mortgage-related securities owned by third parties are not included in our retained mortgage portfolio.
We classify our retained mortgage portfolio into three categories:
• Agency MBS investments and lender liquidity includes balances related to agency MBS that we have
purchased for investment purposes as well as balances related to our portfolio securitization activity, which
supports our efforts to provide liquidity to the single-family and multifamily mortgage markets.
• Loss mitigation includes delinquent mortgage loans we purchase from our MBS trusts, which enables us to
initiate certain loss mitigation efforts.
• Other primarily includes legacy assets that we purchased for investment purposes prior to our entry into
conservatorship in 2008.
Fannie Mae 2025 Form 10-K
MD&A | Retained Mortgage Portfolio
The following table displays the components of our retained mortgage portfolio, based on UPB. Based on the nature of
the asset, these balances are included in either “ Investments in securities, at fair value ” or “ Mortgage loans, net of
allowance for loan losses ” in our “Summary of Consolidated Balance Sheets” table above .
The retained mortgage portfolio increased $37.6 billion to $132.5 billion as of December 31, 2025 compared with $94.9
billion as of December 31, 2024 . This was primarily due to an increase in agency securities resulting from providing
liquidity to the secondary mortgage market and increased agency MBS investments following FHFA’s October 2025
increase in the amount of agency MBS that we are permitted to hold for investment purposes to $40 billion. The
increase was further driven by lower sales of nonperforming and reperforming loans from the portfolio and increased
purchases of delinquent loans from MBS trusts.
Retained Mortgage Portfolio
As of December 31,
(Dollars in millions)
Agency MBS investments and lender liquidity:
Agency securities (1)
Mortgage loans
Total agency MBS investments and lender liquidity
Loss mitigation mortgage loans (2)
Other:
Reverse mortgage loans and securities (3)
Other mortgage loans and securities (4)
Total other
Total retained mortgage portfolio
Retained mortgage portfolio by segment:
Single-family mortgage loans and mortgage-related securities
Multifamily mortgage loans and mortgage-related securities
(1) Consists of Fannie Mae, Freddie Mac and Ginnie Mae mortgage-related securities, including Freddie Mac securities guaranteed by Fannie
Mae. Excludes Fannie Mae and Ginnie Mae reverse mortgage securities and Fannie Mae-wrapped private-label securities.
(2) Includes single-family loans on nonaccrual status of $12.7 billion and $10.3 billion as of December 31, 2025 and 2024 , respectively. Also
includes multifamily loans on nonaccrual status of $3.0 billion and $2.9 billion as of December 31, 2025 and 2024 , respectively.
(3) Includes Fannie Mae and Ginnie Mae reverse mortgage securities.
(4) Other mortgage loans primarily includes multifamily loans on accrual status and single-family loans that are not included in the loss
mitigation or agency MBS investments and lender liquidity categories . Other mortgage securities primarily includes private-label securities
and mortgage revenue bonds.
The amount of mortgage assets that we may own is capped at $225 billion under the terms of our senior preferred stock
purchase agreement with Treasury. We are also subject to specified limitations on the composition of our retained
mortgage portfolio pursuant to FHFA guidance. In January 2026, FHFA increased the prior limitation on our agency MBS
investments to allow us to further support the secondary mortgage market, while generating viable economic returns. As
a result of this change, we are permitted to increase our agency MBS investments, provided that our total mortgage
assets do not exceed the $225 billion cap under the terms of our senior preferred stock purchase agreement with
Treasury, with collateralized mortgage obligation securities remaining ca pped at $5 billion of our agency MBS
investments.
As a result of the additional increase in our agency MBS investment limit, we expect to continue to increase our
holdings of agency MBS, while balancing the other uses of our retained mortgage portfolio described above and
remaining in compliance with the $225 billion cap under the terms of our senior preferred stock purchase agreement
with Treasury. We intend to fund our agency MBS purchases primarily through cash from business operations, the sale
of assets in our corporate liquidity portfolio and the issuance of additional debt securities, taking into consideration our
liquidity requirements and market conditions. Our agency MBS investments may fluctuate based on market conditions
and other purchases for our retained mortgage portfolio, such as purchases of loans from our MBS trusts for loss
mitigation purposes and to facilitate portfolio securitization transaction activity. For information on our corporate liquidity
portfolio and outstanding debt, see “ Liquidity and Capital Management .”
We include 10% of the notional value of the interest-only securities we hold in calculating the size of the retained
mortgage portfolio for the purpose of determining compliance with the senior preferred stock purchase agreement
Fannie Mae 2025 Form 10-K
MD&A | Retained Mortgage Portfolio
mortgage assets cap and associated FHFA instructions. As of December 31, 2025 , 10% of the notional value of our
interest-only securities was $1.8 billion , which is not included in the table above.
Under the terms of our MBS trust documents, we have the option or, in some instances, the obligation, to purchase
mortgage loans that meet specific criteria from an MBS trust. FHFA has also provided us with instruction on our single-
family delinquent loan buyout policy. The purchase price for these loans is the UPB of the loans plus accrued interest. In
support of our loss mitigation strategies, we purchased $15.5 billion of loans from our single-family MBS trusts during
2025 , the substantial majority of which were delinquent, compared with $12.7 billion during 2024 .
Guaranty Book of Business
When we securitize mortgage loans originated by lenders into Fannie Mae mortgage-backed securities, we issue
guarantees, assuming the credit risk for those mortgage loans. Our guaranty book of business offers insight into both
the guarantees we’ve issued and the credit risk of the loans we’ve acquired that back our MBS outstanding or that are
held in our retained mortgage portfolio.
Our “guaranty book of business” consists of: (1) Fannie Mae MBS outstanding, excluding the portions of any structured
securities we issue that are backed by Freddie Mac securities, (2) mortgage loans of Fannie Mae held in our retained
mortgage portfolio, and (3) other credit enhancements that we provide on mortgage assets. These components are
categorized as either conventional or government based on whether the underlying mortgage loans or securities are
fully or partially guaranteed or insured by the U.S. government (referred to as “government”) or are not fully or partially
guaranteed or insured by the U.S. government (referred to as “conventional”).
We use the term “Fannie Mae MBS” or “our MBS” to refer to any type of mortgage-backed security that we issue,
including Fannie Mae-issued UMBS , and structured securities such as Supers ® and Real Estate Mortgage Investment
Conduit securities (“REMICs”).
We and Freddie Mac each issue single-family UMBS. In some instances, our MBS are resecuritizations of securities
backed in whole or in part by Freddie Mac-issued UMBS, in which case our guaranty extends to the underlying Freddie
Mac securities, shown as “Freddie Mac securities guaranteed by Fannie Mae” in the table below. The Freddie Mac
securities guaranteed by Fannie Mae are excluded from our “guaranty book of business” because Freddie Mac
continues to guarantee the payment of principal and interest on the underlying Freddie Mac securities, but included in
“Total Fannie Mae guarantees” as presented in the table below.
The table below displays the composition of our guaranty book of business and our total Fannie Mae guarantees based
on UPB.
Composition of Fannie Mae Guaranty Book of Business
As of December 31,
Single-
Family
Multifamily
Total
Single-
Family
Multifamily
Total
(Dollars in millions)
Conventional guaranty book of business
Government guaranty book of business
Guaranty book of business
Freddie Mac securities guaranteed by Fannie Mae (1)
Total Fannie Mae guarantees
(1) Represents the UPB of Freddie Mac-issued UMBS backing Fannie Mae-issued Supers and REMICs. Because we do not have the power
to direct matters (primarily the servicing of mortgage loans) that impact the credit risk to which we are exposed, which constitute control of
these securitization trusts, we do not consolidate these trusts in our consolidated balance sheet, giving rise to off-balance sheet exposure.
See “ Liquidity and Capital Management — Liquidity Management — Off-Balance Sheet Arrangements ” and “ Note 7, Financial Guarantees ”
for more information regarding our maximum exposure to loss on unconsolidated Fannie Mae MBS and Freddie Mac securities.
We present the guaranty book of business in this section and in our Monthly Summary reports, which are available on
our website, based on the UPB of our MBS outstanding. In the “ Single-Family Business ” and “ Multifamily Business ”
sections of this report, we present our single-family conventional guaranty book of business and our multifamily
guaranty book of business, respectively, based on the UPB of mortgage loans underlying our MBS. These amounts
differ primarily as a result of payments we receive on underlying loans that have not yet been paid to the MBS holders
or in instances where we have advanced missed borrower payments on mortgage loans to make required distributions
to MBS holders. The difference in these measurements is less than 1%. Using these two presentations allows us to
Fannie Mae 2025 Form 10-K
MD&A | Guaranty Book of Business
base the disclosure in this section and in our Monthly Summary reports on the MBS measurement, and disclosures
about the composition of loans in our guaranty book of business on the loan measurement.
Business Segment Financial Results
We have two reportable business segments: Single-Family and Multifamily. This section discusses the primary
components of net income for our Single-Family Business and Multifamily Business segments. This information
complements the discussion of our consolidated financial results in “ Consolidated Results of Operations .”
Single-Family Business Financial Results (1)
For the Year Ended December 31,
Variance
(Dollars in millions)
Net interest income (2)
Fee and other income
Net revenues
Fair value gains (losses), net
Investment gains (losses), net (3)
Other gains (losses), net
(Provision) benefit for credit losses
Non-interest expense:
Administrative expenses (4)
Legislative assessments (5)
Credit enhancement expense (6)
Other income (expense), net (3)(7)
Total non-interest expense
Income before federal income taxes
Provision for federal income taxes
Net income
Multifamily Business Financial Results (1)
For the Year Ended December 31,
Variance
(Dollars in millions)
Net interest income
Fee and other income
Net revenues
Fair value gains (losses), net
Investment gains (losses), net (3)
Other gains (losses), net
(Provision) benefit for credit losses
Non-interest expense:
Administrative expenses (4)
Legislative assessments (5)
Credit enhancement expense (6)
Other income (expense), net (3)(7)
Total non-interest expense
Income before federal income taxes
Provision for federal income taxes
Net income
Fannie Mae 2025 Form 10-K
MD&A | Business Segment Financial Results
(1) See “ Note 11, Segment Reporting ” for information about our segment allocation methodology.
(2) For single-family, includes net interest income generated by the 10 basis point guaranty fee increase we implemented pursuant to the
Temporary Payroll Tax Cut Continuation Act of 2011, and as extended by the Infrastructure Investment and Jobs Act, which is paid to
Treasury and not retained by us.
(3) Beginning in the fourth quarter of 2025, we changed the presentation of debt extinguishment gains and losses from “Other income
(expense), net” to “Investment gains (losses), net.” Prior periods have been recast to conform with the current period presentation.
(4) Consists of salaries and employee benefits and professional services, technology and occupancy expenses.
(5) For single-family, consists of the portion of our single-family guaranty fees that is paid to Treasury pursuant to the TCCA, affordable
housing allocations and FHFA assessments. For multifamily, consists of affordable housing allocations and FHFA assessments.
(6) Single-family credit enhancement expense consists of costs associated with our freestanding credit enhancements, which primarily include
our CAS and CIRT programs, EPMI and certain lender risk-sharing programs. Multifamily credit enhancement expense primarily consists
of costs associated with our MCIRT TM and MCAS TM programs as well as amortization expense for certain lender risk-sharing programs.
Excludes CAS transactions accounted for as debt instruments and credit risk transfer programs accounted for as derivative instruments.
(7) Primarily consists of foreclosed property income (expense), change in the expected benefits from our freestanding credit enhancements
and gains (losses) from partnership investments.
Net Interest Income
(Dollars in millions)
Single-Family
The $237 million decrease in net interest income in 2025 compared with 2024 was p rimarily driven by lower net interest
income from portfolios, partially offset by higher base guaranty fee income.
The $99 million decrease in net interest income in 2024 compared with 2023 was driven by lower deferred guaranty fee
income, primarily offset by higher income from base guaranty fees and lower expense from hedge accounting.
Multifamily
The $97 million increase in net interest income in 2025 compared with 2024 was primarily driven by higher guaranty fee
income as a result of an increase in the size of our multifamily guaranty book of business and higher yield maintenance
income, partially offset by lower average charged guaranty fees.
The $74 million increase in net interest income in 2024 compared with 2023 was primarily driven by higher guaranty fee
income as a result of an increase in the size of our multifamily guaranty book of business, partially offset by lower
average charged guaranty fees and lower yield maintenance income from fewer prepayments.
Fannie Mae 2025 Form 10-K
MD&A | Business Segment Financial Results
(Provision) Benefit for Credit Losses
(Dollars in millions)
See “ Consolidated Results of Operations — (Provision) Benefit for Credit Losses ” for a discussion of our single-family
and multifamily (provision) benefit for credit losses .
Fair Value Gains (Losses), Net
(Dollars in millions)
The change in fair value gains (losses), net from 2024 to 2025 was primarily driven by activity within our single-family
segment. See “ Consolidated Results of Operations — Fair Value Gains (Losses), Net ” for a discussion of our
consolidated fair value gains (losses) .
Fannie Mae 2025 Form 10-K
MD&A | Business Segment Financial Results
Other Income (Expense), Net
(Dollars in millions)
Single-Family
Other expense, net, decreased from $771 million in 2024 to $606 million in 2025 primarily due to a decrease in our
foreclosed property expense as a result of a reduction of our single-family REO properties and reduced repair costs.
Multifamily
Other income, net decreased from $86 million in 2024 to $20 million in 2025, primarily due to a decline in our expected
credit enhancement recoveries on multifamily loans. The decrease in estimated credit losses subject to credit
enhancements on our multifamily guaranty book of business decreased the amount we expect to receive from our
multifamily loss sharing arrangements.
Single-Family Business
Single-Family Primary Business Activities
Providing Liquidity for Single-Family Mortgage Loans
Working with lenders, our Single-Family business provides liquidity to the mortgage market primarily by acquiring single-
family loans from lenders and securitizing those loans into Fannie Mae MBS, which are either delivered to the lenders or
sold to investors or dealers. We describe our securitization transactions in “ Business — Mortgage Securitizations .” Our
Single-Family business also supports liquidity in the mortgage market and the businesses of our lenders through other
activities, such as issuing structured Fannie Mae MBS backed by single-family mortgage assets and buying and selling
single-family agency mortgage-backed securities.
Our Single-Family business securitizes and purchases primarily conventional (not government-insured or government-
guaranteed) single-family fixed-rate or adjustable-rate, first-lien mortgage loans, or mortgage-related securities backed
by these types of loans. We also securitize or purchase loans insured by the Federal Housing Administration (“ FHA”) ,
loans guaranteed by the Department of Veterans Affairs (“ VA”) , loans guaranteed by the Rural Development Housing
and Community Facilities Program of the U.S. Department of Agriculture, manufactured housing mortgage loans and
other mortgage-related securities.
Single-Family Mortgage Servicing
Our single-family mortgage loans are serviced by mortgage servicers on our behalf. Some loans are serviced by the
lenders that initially sold the loans to us. In other cases, loans are serviced by third-party servicers that did not originate
or sell the loans to us. For loans we own or guarantee, the lender or servicer must obtain our approval before selling
servicing rights to another servicer.
Our mortgage servicers typically collect and deliver principal and interest payments, administer escrow accounts,
monitor and report on loan performance, perform early delinquency intervention activities, evaluate transfers of
ownership interests, respond to requests for partial releases of security, and handle insurance proceeds from casualty
and condemnation losses. Our mortgage servicers are the primary point of contact for borrowers and perform a key role
in the effective implementation of our servicing policies, negotiation of workouts for delinquent and troubled loans, and
other loss mitigation activities. Mortgage servicers also inspect and preserve properties and process foreclosures and
bankruptcies. For information on the risks of our reliance on servicers, refer to “ Risk Factors — Credit Risk .”
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Primary Business Activities
We compensate servicers primarily by permitting them to retain a specified portion of each interest payment on a
serviced mortgage loan as a servicing fee. Servicers also generally retain assumption fees, late payment charges and
other similar charges, to the extent they are collected from borrowers, as additional servicing compensation. We also
compensate servicers for negotiating workouts on problem loans.
Our servicers are required to develop, follow and maintain written procedures relating to loan servicing and legal
compliance in accordance with our Servicing Guide. We oversee servicer compliance with our Servicing Guide
requirements and execution of our loss mitigation programs by conducting reviews of select servicers. These reviews
are designed to test a servicer’s quality control processes and compliance with our requirements across key servicing
functions. Issues identified through these Servicing Guide compliance reviews are provided to the servicer with
prescribed corrective actions and expected resolution due dates, and we monitor servicers’ remediation of their
compliance issues.
We employ a servicer performance management program, called the Servicer Total Achievement and Rewards TM
(STAR TM ) Program, which provides our largest servicers a transparent framework of key metrics and operational
assessments to recognize strong performance and identify areas of weakness. Performance management staff
measure, monitor and manage overall servicer performance by conducting regular servicer performance reviews in an
effort to promote optimal performance, mitigate risk and explore best practices or areas of opportunity to take action and
improve performance where necessary or appropriate.
Repercussions for poor performance by a servicer may include performance improvement plans, lost incentive income,
compensatory fees, monetary and non-monetary remedies, and reduced opportunity for STAR Program recognition. If
poor performance persists, servicing may ultimately be transferred to a different servicer.
Single-Family Credit Risk and Credit Loss Management
Our Single-Family business:
• Prices and manages the credit risk on loans in our single-family guaranty book of business through our loan
acquisition policies, including our Selling Guide.
• Enters into transactions that transfer a portion of the credit risk on some of the loans in our single-family
guaranty book of business through our credit risk transfer programs.
• Works to reduce costs of defaulted single-family loans, including through forbearance plans, home retention
solutions, foreclosure alternatives, management of foreclosures and our REO inventory, selling nonperforming
loans, and pursuing contractual remedies from lenders, servicers and providers of credit enhancement.
See “ Single-Family Mortgage Credit Risk Management ” below for discussion of our strategies for managing credit risk
and credit losses on single-family loans .
Single-Family Lenders and Investors
We work with lenders that operate within the primary mortgage market where mortgage loans are originated and funds
are loaned to borrowers. Our lenders include mortgage banking companies, savings and loan associations, savings
banks, commercial banks, credit unions, community banks, private mortgage originators, and state and local housing
finance agencies. Lenders originating mortgages in the primary mortgage market often sell them in the secondary
mortgage market in the form of whole loans or in the form of mortgage-related securities.
During 2025 , approximately 1,200 lenders delivered single-family mortgage loans to us. We acquire a significant portion
of our single-family mortgage loans from several large mortgage lenders. During 2025 , our top five lenders, in the
aggregate, accounted for 36% of our single-family business volume, compared with 29% in 2024 . Rocket Companies,
Inc. and United Wholesale Mortgage, LLC were the only lenders that accounted for 10% or more of our single-family
business volume in 2025 , representing approximately 12% and 10% , respectively. The percentage attributable to
Rocket Companies, Inc. includes volume from its affiliates Nationstar Mortgage LLC, doing business as Mr. Cooper,
which Rocket Companies, Inc. acquired in October 2025, and from Rocket Mortgage, LLC, and represents volume from
these lenders for the entire year rather than solely the post acquisition period. For information on our single-family
mortgage servicers, see “ Risk Management — Institutional Counterparty Credit Risk Management — Mortgage Servicers
and Sellers .”
We have a diversified funding base of domestic and international investors. Fannie Mae single-family MBS investors
include money managers, banks, insurance companies, real estate investment trusts, the U.S. Federal Reserve, foreign
central banks, corporations, state and local governments, and other municipal authorities. Our CAS investors primarily
consist of money managers, hedge funds, and insurance companies, while our CIRT transaction counterparties are
insurers and reinsurers.
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Competition
Single-Family Competition
We compete to acquire single-family mortgage assets in the secondary mortgage market and to issue single-family
mortgage-backed securities to investors. Competition to acquire single-family mortgage assets is significantly affected
by: our and our competitors’ pricing, eligibility standards and risk appetite; the number and nature of single-family
mortgage loans originated and available for us to purchase in the secondary mortgage market (and whether sellers
elect to retain loans with better credit characteristics); investor demand for UMBS and for our and our competitors’ other
mortgage-backed securities; and macroeconomic conditions. Our ability to compete may also be affected by many other
factors, including: our and our competitors’ capital requirements; our and Freddie Mac’s return on capital requirements;
applicable requirements to purchase mission-related loans; FHFA’s single-family mortgage purchase, servicing and
securitization requirements aimed at aligning our single-family MBS with Freddie Mac’s MBS; direction from FHFA; new
or existing legislation or regulations applicable to us, our lenders or our investors; and our senior preferred stock
purchase agreement with Treasury.
Our primary competitors for the acquisition of single-family mortgage assets are Freddie Mac, FHA, the VA, the FHLBs,
U.S. banks and thrifts, securities dealers, insurance companies, and investment funds. Our primary competitors for the
issuance and/or guarantee of single-family mortgage-backed securities are Freddie Mac, Ginnie Mae (which primarily
guarantees securities backed by FHA-insured loans and VA-guaranteed loans) and private market competitors.
Competition for investors and counterparties in our credit risk transfer transactions comes primarily from other issuers of
mortgage credit risk transfer transactions, such as Freddie Mac and private mortgage insurers. We also compete for
investor funds against other credit-related securitized products, such as private-label residential mortgage-backed
securities (“RMBS”), commercial RMBS, and collateralized loan obligations. The nature of our primary competitors and
the overall levels of competition we face could change as a result of a variety of factors, many of which are outside our
control. See “ Business — Conservatorship and Treasury Agreements ,” “ Business — Legislation and Regulation ,” and
“ Risk Factors ” for information on matters that could affect our business and competitive environment.
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Market
Single-Family Mortgage Market
In the charts below we present macroeconomic factors that affect the single-family mortgage market in which our
Single-Family business operates. Home sales and the supply of unsold homes are indicators of the underlying demand
for mortgage loans, which impacts our acquisition volumes.
Total Single-Family Home Sales and
Months’ Supply of Unsold Homes (1)
Single-Family Mortgage Originations and
Mortgage Debt Outstanding (2)
(Home sales units in thousands)
(Dollars in trillions)
Months’ supply of new single-family
unsold homes, as of year end
Fannie Mae’s percentage of total single-family mortgage
debt outstanding, as of period end
Months’ supply of existing single-family
unsold homes, as of year end
Single-family U.S. mortgage debt outstanding, as of period
end
Existing home sales
Single-family U.S. mortgage loan originations
New home sales
(1) Total existing home sales data according to National Association of REALTORS ® . New single-family home sales data for 2023 and 2024
according to the U.S. Census Bureau. The 2025 new single-family home sales data is the January 2026 forecast from our Economic and
Strategic Research Group, as U.S. Census Bureau data for 2025 was not available at the time of filing this report. The seasonally adjusted
months’ supply of new single‑family unsold homes for 2025 is based on data reported by U.S. Census Bureau as of October 2025 (the
latest available data). Certain previously reported data has been updated to reflect revised historical data from one or both of these
organizations.
(2) 2025 information is as of September 30, 2025 and is based on the Federal Reserve’s January 2026 mortgage debt outstanding release,
the latest date for which the Federal Reserve has estimated mortgage debt outstanding for single-family residences. Prior-period amounts
have been changed to reflect revised historical data from the Federal Reserve.
Additional Information
• The U.S. weekly average 30-year fixed-rate mortgage rate was 6.15% as of December 31, 2025 compared with
6.85% as of December 26, 2024 , and averaged 6.60% in 2025 , compared with 6.72% in 2024 , according to
Freddie Mac’s Primary Mortgage Market Survey ® .
• We forecast that total originations in the U.S. single-family mortgage mark et in 2026 will increase from 2025
levels by approximately 24% , from an estimated $1.94 tri llion in 2025 to $2.41 trillion in 2026 , and the amount
of refinance originations in the U.S. single-family mortgage market will increase from an estimated $560 billion
in 2025 to $917 billion in 2026 .
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage-Related Securities Issuances Share
Single-Family Mortgage-Related Securities Issuances Share
Our single-family Fannie Mae MBS issuances were $337 billion in 2025 , compared with $329 billion in 2024 and $320
billion in 2023 . This slight increase in issuances compared with 2024 was driven by a modest uptick in refinancing
activity in 2025 , prompted by a decline in interest rates during the second half of 2025 . Based on the latest data
available, the charts below display our estimated share of single-family mortgage-related securities issuances as
compared with that of our primary competitors for the issuance of single-family mortgage-related securities for the
periods indicated.
Single-Family Mortgage-Related
Securities Issuances Share
Ginnie Mae
Private-label securities
Fannie Mae
Freddie Mac
We estimate our share of single-family mortgage-related securities issuances was 30% in 2023 .
Our market share is influenced by various factors, primarily the pricing of single-family loans and the competitive market
environment. These factors have led to a decrease in our share of mortgage-related securities issuances in recent
years . When making pricing and acquisition decisions for single-family loans, we must consider a mix of often
competing factors, such as competitive market dynamics, our capital requirements, our housing mission requirements
and UMBS market liquidity objectives. Balancing these considerations can sometimes create challenges that impact our
ability to compete effectively in the marketplace. For a discussion of factors that affect or could affect our business, our
competitive environment, demand for our MBS, or the liquidity and market value of our MBS, as well as the risks
associated with our conservatorship, our higher capital requirements relative to that of our primary competitor, our
housing mission requirements, the UMBS market and the performance of our MBS, see “ Business — Conservatorship
and Treasury Agreements ,” “ Business — Legislation and Regulation ,” “ Risk Factors ” and “ Single-Family Competition .”
Single-Family Business Metrics
Net interest income for our Single-Family business is driven by the guaranty fees we charge and the size of our single-
family conventional guaranty book of business. The guaranty fees we charge are based in part on the characteristics of
the loans we acquire. We may adjust our guaranty fees in light of market conditions and to achieve return targets. As a
result, the average charged guaranty fee on new acquisitions may fluctuate based on the credit quality and product mix
of loans acquired, as well as market conditions and other factors.
The charts below display our average charged guaranty fees, net of TCCA fees, on our single-family conventional
guaranty book of business and on new single-family conventional loan acquisitions, along with our average single-family
conventional guaranty book of business and our single-family conventional loan acquisitions for the periods presented.
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Business Metrics
Select Single-Family Business Metrics (1)
(Dollars in billions)
Average charged guaranty fee on single-family
conventional guaranty book of business, net of TCCA
fees (2)
Average single-family conventional guaranty book
of business (3)
Average charged guaranty fee on new single-family
conventional acquisitions, net of TCCA fees (2)
Single-family conventional acquisitions
(1) For information reported in this “ Single-Family Business ” section, our single-family conventional guaranty book of business is measured
using the UPB of our mortgage loans underlying Fannie Mae MBS outstanding .
(2) Excludes the impact of a 10 basis point guaranty fee increase implemented pursuant to the TCCA, the incremental revenue from which is
paid to Treasury and not retained by us.
(3) Our single-family conventional guaranty book of business primarily consists of single-family conventional mortgage loans underlying
Fannie Mae MBS outstanding. It also includes single-family conventional mortgage loans of Fannie Mae held in our retained mortgage
portfolio, and other credit enhancements that we provide on single-family conventional mortgage assets . Our single-family conventional
guaranty book of business does not include: (a) mortgage loans guaranteed or insured, in whole or in part, by the U.S. government; (b)
Freddie Mac-acquired mortgage loans underlying Freddie Mac-issued UMBS that we have resecuritized; or (c) non-Fannie Mae single-
family mortgage-related securities held in our retained mortgage portfolio for which we do not provide a guaranty. Our average single-
family conventional guaranty book of business is based on the average of quarter-end balances .
Our single-family conventional loan acquisition volumes remained at low levels in 2025 . Housing affordability
constraints, limited supply, and market competition continued to put downward pressure on the volume of purchase
loans we acquired. In addition, while interest rates decreased during the second half of 2025 , the U.S. weekly average
30-year fixed-rate mortgage rate during the year still remained higher than the interest rates of most outstanding single-
family loans, resulting in higher, but still relatively low, refinance v olu mes . Our average single-family conventional
guaranty book of business continued to decrease in 2025, decreasing to $3.59 trillion in 2025 from $3.63 trillion in 2024,
as liquidations from the book outpaced acquisitions.
Average charged guaranty fee on newly acquired conventional single-family loans is a metric management uses to
measure the amount we earn as compensation for the credit risk we manage and to assess our return. Average
charged guaranty fee represents, on an annualized basis, the average of the base guaranty fees charged during the
period for our single-family conventional guaranty arrangements, which we receive monthly over the life of the loan, plus
the recognition of any upfront cash payments, including loan-level price adjustments, based on an estimated average
life at the time of acquisition. The calculation of single-family conventional charged guaranty fees at acquisition is
sensitive to changes in inputs used in the calculation, including assumptions about the weighted average life of the loan,
therefore changes in charged guaranty fees are not necessarily indicative of a change in pricing.
Our average charged guaranty fee on newly acquired conventional single-family loans, net of TCCA fees, increased in
2025 compared with 2024 and 2023 , primarily as a result of a shift in the mix and profile of loans we acquired , as well
as higher base guaranty fees charged on new single-family loan acquisitions.
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
Single-Family Mortgage Credit Risk Management
Our strategy for managing single-family mortgage credit risk consists of four primary components, which we discuss in
greater detail in the sections below:
• our acquisition and servicing policies along with our underwriting and servicing standards;
• guaranty book diversification and monitoring;
• the transfer of credit risk through risk transfer transactions and the use of credit enhancements; and
• management of problem loans.
We typically obtain our single-family credit information from the lenders or servicers of the mortgage loans in our
guaranty book of business and receive representations and warranties from them as to the accuracy of the information.
While we perform various quality assurance checks by sampling loans to assess compliance with our underwriting and
eligibility criteria, we do not independently verify all reported information and we rely on lender representations and
warranties regarding the accuracy of the characteristics of loans in our guaranty book of business. See “ Risk Factors ”
for a discussion of risks relating to mortgage fraud as a result of this reliance on lender representations and warranties.
Single-Family Acquisition and Servicing Policies and Underwriting and Servicing
Standards
Overview
Our Single-Family business is responsible for setting underwriting and servicing standards and pricing, and managing
credit risk relating to our single-family guaranty book of business.
Underwriting and Servicing Standards
The Fannie Mae Single-Family Selling Guide (“Selling Guide”) sets forth our underwriting and eligibility guidelines, as
well as our policies and procedures related to selling single-family mortgages to us. Our Servicing Guide sets forth our
policies for servicing the loans in our single-family guaranty book.
Desktop Underwriter
Our proprietary automated underwriting system, Desktop Underwriter ® (DU ® ), is used by mortgage lenders to evaluate
the substantial majority of our single-family loan acquisitions. DU measures credit risk by assessing the primary and
contributory risk factors of a mortgage and provides a comprehensive risk assessment of a borrower’s loan application
and eligibility of the loan for sale to us. Risk factors evaluated by DU include the key loan attributes described under
“ Single-Family Guaranty Book Diversification and Monitoring ” below . DU applies our own assessment of the borrower’s
credit data, including using trended credit data when available. DU analyzes the results of this risk and eligibility
evaluation to arrive at the underwriting recommendation for the loan casefile. As part of our comprehensive risk
management approach, we periodically update DU to reflect changes to our underwriting and eligibility guidelines. As
part of normal business operations, we regularly review DU to determine whether its risk analysis and eligibility
assessment are appropriate based on the current market environment and loan performance information. We also
regularly review DU’s underlying risk assessment models and recalibrate these models to improve DU’s ability to
effectively analyze risk and avoid excessive risk layering. Factors we take into account in these evaluations include the
profile of loans delivered to us, loan performance and current market conditions.
Other Underwriting Standards
DU was used to evaluate the substantial majority of the single-family loans we acquired in 2025 . We also purchase and
securitize mortgage loans that have been underwritten using other automated underwriting systems, as well as
manually underwritten mortgage loans that meet our stated underwriting requirements or mortgage loans that meet
ag reed-upon standards that differ from our standard underwriting and eligibility criteria. The majority of loans we
acquired in 2025 that were not underwritten with DU were underwritten through a third-party automated underwriting
system, such as Freddie Mac’s Loan Product Advisor ® .
Servicing Policies
Our servicing policies establish the requirements our servicers must follow in:
• processing and remitting loan payments;
• working with delinquent borrowers on loss mitigation activities;
• managing and protecting Fannie Mae’s interest in the pledged property; and
• processing bankruptcies and foreclosures.
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
Our goal is to ensure that our policies support credit risk management over the life of the mortgage loan by enabling
early delinquency outreach by servicers, promoting loss mitigation in the event of default and providing for the
preservation and protection of the collateral supporting the mortgage loan. See “ Single-Family Primary Business
Activities — Single-Family Mortgage Servicing ” above for more information on the servicing of our single-family mortgage
loans.
New Credit Score Models
Fannie Mae uses credit scores to provide a foundation for risk-based pricing, and support disclosures to investors. We
currently use the “classic FICO ® Score” from Fair Isaac Corporation as our credit score model, which FHFA has
approved.
In October 2022, FHFA announced the validation and approval of two new credit score models for use by Fannie Mae
and Freddie Mac: the FICO ® Score 10T credit score model and the VantageScore ® 4.0 credit score model. In July 2025,
FHFA announced that Fannie Mae and Freddie Mac are moving forward with an interim phase in the transition to the
new credit score models, in which we will permit lenders to deliver mortgage loans using a credit score generated by
either the classic FICO Score model or the VantageScore 4.0 model as we continue to work towards full implementation
of modernized credit scoring and credit reporting. FHFA also announced that implementation efforts are underway with
respect to the FICO Score 10T credit score model, and that Fannie Mae and Freddie Mac expect to be able to publish
historical FICO Score 10T data and adopt scores from the model at a later date.
We will update our Selling Guide and make additional changes to support the adoption of VantageScore 4.0 in the near
future. During the interim phase, we will accept either classic FICO Score or VantageScore 4.0 credit scores on a given
loan, but not both. FHFA has advised that the inclusion of VantageScore 4.0 credit scores during the interim phase will
not change our current tri-merge credit reporting requirement.
Quality Control Process
Our quality control process includes using automated tools to help us determine whether a loan meets our eligibility
requirements by conducting in-depth reviews and selecting random samples of performing loans for quality control
review shortly after acquisition.
Repurchase Requests and Representation and Warranty Framework
If we determine that a mortgage loan did not meet our Selling Guide requirements, then our mortgage sellers and/or
servicers are obligated to repurchase the loan, reimburse us for our losses or provide other remedies, unless the loan is
eligible for relief under our representation and warranty framework. We refer to our demands that mortgage sellers and
servicers meet these obligations as repurchase requests.
Under our representation and warranty framework, lenders can obtain relief from repurchase liability for violations of
certain underwriting representations and warranties. Loans with 36 months of consecutive monthly payments and
minimal delinquencies over a specified time period or with satisfactory conclusion of a full-file quality control review are
eligible for relief. However, no relief may be granted for violations of “life of loan” representations and warranties, such
as those relating to whether a loan was originated in compliance with applicable laws or conforms to our charter
requirements. As of December 31, 2025 , 81% of the outstanding loans in our single-family conventional guaranty book
of business that were acquired and are subject to this framework have obtained relief based solely on payment history
or the satisfactory conclusion of a full-file quality control review, and an additional 16% remain eligible for relief in the
future.
In addition, lenders may obtain relief from liability for violations of a more narrow set of representations and warranties
through the use of specified underwriting tools. This primarily includes relief for:
• borrower income, asset and employment data that has been validated through DU; and
• appraised property value for appraisals that have received a qualifying risk score in Collateral Underwriter ® , our
appraisal review tool.
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
The table below shows information about issued and outstanding repurchase requests on single-family loans.
Issued and Outstanding Repurchase Requests
(Dollars in billions)
Total loans delivered for the applicable twelve-month period (1)
Repurchase requests issued as of year end on loans delivered during the applicable
twelve-month period (2)
As of December 31,
(Dollars in millions)
Outstanding Repurchase Requests:
UPB of outstanding repurchase requests (3)
As a percentage of our single-family conventional guaranty book of business
Percentage of outstanding repurchase requests over 180 days outstanding
(1) The applicable twelve-month period for 2025 is May 1, 2024 through April 30, 2025 and for 2024 is May 1, 2023 through April 30, 2024. For
2025 , this represents the most recent twelve-month period as of December 31, 2025 for which we have issued substantially all repurchase
demands. The 2024 period is presented on the same basis for comparability with the 2025 period.
(2) Represents repurchase requests issued as of December 31, 2025 and 2024 , on loans delivered to us during the applicable twelve-month
periods referenced in the prior footnote.
(3) The dollar amounts of our outstanding repurchase requests are based on the UPB of the loans underlying the repurchase request, which
often differs from the amount collected or reimbursed from mortgage sellers and/or servicers depending on the type of remedy agreed
upon.
Single-Family Guaranty Book Diversification and Monitoring
Overview
The composition of our single-family conventional guaranty book of business is diversified by product type, loan
characteristics and geography, all of which influence credit quality and performance and may reduce our credit risk. We
monitor various loan attributes, in conjunction with housing market and economic conditions, to determine if our pricing,
eligibility and underwriting criteria are appropriately calibrated to ensure the risk associated with loans we acquire fits
within our corporate risk appetite and meets our other mission and return objectives. In some cases, we may decide to
significantly reduce our participation in riskier loan product categories. We also review the payment performance of
loans in order to help identify potential problem loans early in the delinquency cycle and to guide the development of our
loss mitigation strategies.
The profile of our single-family conventional guaranty book of business includes the following key risk characteristics:
• LTV ratio. LTV ratio is a strong predictor of credit performance. Lower LTV ratios are generally associated with
a reduced likelihood of default and lower loss severity in the event of default. This relationship also applies to
estimated mark-to-market LTV ratios. An LTV ratio above 100% indicates that the borrower's mortgage balance
is greater than the property's current market value, which increases the risk of default and potential loss
severity.
• Product type. Certain loan product types have features that may result in increased risk. Generally,
intermediate-term, fixed-rate mortgages exhibit the lowest default rates, followed by long-term, fixed-rate
mortgages. Historically, adjustable-rate mortgages (“ARMs”), including negative-amortizing and interest-only
loans, and balloon/reset mortgages have exhibited higher default rates than fixed-rate mortgages, partly
because the borrower’s payments rose, within limits, as interest rates changed.
• Number of units. Mortgages on one-unit properties tend to have lower credit risk than mortgages on two-, three-
or four-unit properties.
• Property type. Certain property types have a higher risk of default. For example, condominiums tend to have
higher credit risk than single-family detached properties.
• Occupancy type. Mortgages on properties occupied by the borrower as a primary or secondary residence tend
to have lower credit risk than mortgages on investment properties.
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
• Credit score. Credit score is a measure often used by the financial services industry, including us, to assess
borrower credit quality and the likelihood that a borrower will repay future obligations as expected. A higher
credit score typically indicates lower credit risk.
• DTI ratio. DTI ratio refers to the ratio of a borrower’s outstanding debt obligations (including both mortgage debt
and certain other long-term and significant short-term debts) to that borrower’s reported or calculated monthly
income, to the extent the income is used to qualify for the mortgage. As a borrower’s DTI ratio increases, the
associated risk of default on the loan generally increases, especially if other higher-risk factors are present.
From time to time, we revise our guidelines for determining a borrower’s DTI ratio. The amount of income
reported by a borrower and used to qualify for a mortgage may not represent the borrower’s total income;
therefore, the DTI ratios we report may be higher than borrowers’ actual DTI ratios.
• Loan purpose. Loan purpose refers to how the borrower intends to use the funds from a mortgage loan—either
for a home purchase or refinancing of an existing mortgage. Cash-out refinancings have a higher risk of default
than either mortgage loans used for the purchase of a property or other refinancings that restrict the amount of
cash returned to the borrower.
• Geographic concentration. Local economic conditions affect borrowers’ ability to repay loans and the value of
collateral underlying loans. Geographic diversification reduces mortgage credit risk.
• Loan age. We monitor year of origination and loan age, which is defined as the number of years since
origination. T he risk of default on mortgage loans typically does not peak until the third through fifth year
following origination; however, this range can vary based on many factors, including changes in
macroeconomic conditions and foreclosure timelines.
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
The following table displays our single-family conventional business volumes and our single-family conventional
guaranty book of business, based on certain key risk characteristics that we use to evaluate the risk profile and credit
quality of our single-family loans.
We provide additional information on the credit characteristics of our single-family loans in our quarterly earnings
presentations and financial supplements, which we furnish to the SEC with current reports on Form 8-K and make
available on our website. Information in our quarterly earnings presentations and financial supplements is not
incorporated by reference into this report.
Key Risk Characteristics of Single-Family Conventional Business Volume and Guaranty Book
of Business (1)
Percent of Single-Family Conventional
Business Volume at Acquisition (2)
For the Year Ended December 31,
Percent of Single-Family Conventional
Guaranty Book of Business (3)
As of December 31,
Original LTV ratio: (4)
Greater than 100%
Total
Weighted average
Average loan amount
Loan count (in thousands)
Estimated mark-to-market LTV
ratio: (5)
Greater than 100%
Total
Weighted average
FICO credit score at origination: (6)
Total
Weighted average
DTI ratio at origination: (7)
Greater than 45%
Total
Weighted average
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
Percent of Single-Family Conventional
Business Volume at Acquisition (2)
For the Year Ended December 31,
Percent of Single-Family Conventional
Guaranty Book of Business (3)
As of December 31,
Product type:
Fixed-rate: (8)
Long-term
Intermediate-term
Total fixed-rate
Adjustable-rate
Total
Number of property units:
1 unit
2-4 units
Total
Property type:
Single-family homes
Condo/Co-op
Total
Occupancy type:
Primary residence
Second/vacation home
Investor
Total
Loan purpose:
Purchase
Cash-out refinance
Other refinance
Total
Geographic concentration: (9)
Midwest
Northeast
Southeast
Southwest
West
Total
Origination year:
2019 and prior
Total
* Represents less than 0.5% of single-family conventional business volume or guaranty book of business.
(1) Second-lien mortgage loans held by third parties are not reflected in the original LTV or the estimated mark-to-market LTV ratios in this
table.
(2) Calculated based on the UPB of single-family loans for each category at time of acquisition.
(3) Calculated based on the aggregate UPB of single-family loans for each category divided by the aggregate UPB of loans in our single-
family conventional guaranty book of business as of the end of each period.
(4) The original LTV ratio generally is based on the original UPB of the loan divided by the appraised property value reported to us at the time
of acquisition of the loan. Excludes loans for which this information is not readily available.
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
(5) The aggregate estimated mark-to-market LTV ratio is based on the UPB of the loan as of the end of each reported period divided by the
estimated current value of the property, which we calculate using an internal valuation model that estimates periodic changes in home
value. Excludes loans for which this information is not readily available.
(6) Loans with unavailable FICO credit scores represent less than 0.5% of single-family conventional business volume or guaranty book of
business, and therefore are not presented separately in this table.
(7) Excludes loans for which this information is not readily available.
(8) Long-term fixed-rate consists of mortgage loans with maturities greater than 15 years, while intermediate-term fixed-rate loans have
maturities equal to or less than 15 years.
(9) Midwest consists of IL, IN, IA, MI, MN, NE, ND, OH, SD and WI. Northeast consists of CT, DE, ME, MA, NH, NJ, NY, PA, PR, RI, VT and
VI. Southeast consists of AL, DC, FL, GA, KY, MD, MS, NC, SC, TN, VA and WV. Southwest consists of AZ, AR, CO, KS, LA, MO, NM, OK,
TX and UT. West consists of AK, CA, GU, HI, ID, MT, NV, OR, WA and WY.
Characteristics of our New Single-Family Loan Acquisitions
Refinancing activity was higher in 2025 compared to 2024 as interest rates declined in the second half of 2025 , resulting
in a modest increase in the number of borrowers who could benefit from refinancing. Accordingly, the share of our
single-family loan acquisitions consisting of refinance loans (versus home purchase loans) increased to 26% in 2025
compared with 17% in 2024 . Typically, refinance loans have lower LTV ratios than home purchase loans. This trend
contributed to a minor decrease in the percentage of our single-family loan acquisitions with LTV ratios over 80%, from
39% in 2024 to 38% in 2025 . In addition, our acquisitions of loans from first-time home buyers decreased to 37% of our
single-family loan acquisitions in 2025 from 41% in 2024 .
The credit profile of our future acquisitions will depend on many factors, including:
• our future guaranty fee pricing and our competitors’ pricing, and any impact of that pricing on the volume and
mix of loans we acquire;
• our internal risk limits;
• our future eligibility standards and those of mortgage insurers, FHA and VA;
• the percentage of loan originations representing refinancings;
• changes in interest rates;
• our future objectives and activities in support of those objectives, including actions we may take to reach
additional underserved creditworthy borrowers;
• government and regulatory policy;
• market and competitive conditions; and
• our capital requirements.
We expect the ultimate performance of our loans will be affected by borrower behavior, public policy and
macroeconomic trends, including unemployment, the economy and home prices.
High-Balance Loans
The standard conforming loan limit for a one-unit property was $766,550 f or 2024 , $806,500 for 2025 and increased to
$832,750 for 2026 . As we discuss in “ Business — Legislation and Regulation — Our Charter ,” we are permitted to acquire
loans with higher balances in certain areas, which we refer to as high-balance loans.
The following table displays the amount of high-balance loans in our single-family conventional guaranty book of
business.
Single-Family High-Balance Loans
As of December 31,
UPB (in billions)
Percentage of single-family conventional guaranty book of business
Adjustable-Rate Mortgages
ARMs are mortgage loans with an interest rate that adjusts periodically over the life of the mortgage based on changes
in a specified index. The table below displays the UPB for ARMs in our single-family conventional guaranty book of
business by the year of their next scheduled contractual reset date. The contractual reset is either an adjustment to the
loan’s interest rate or a scheduled change to the loan’s monthly payment to begin to reflect the payment of principal.
The timing of the actual reset dates may differ from those presented due to a number of factors, including refinancing or
exercising of other provisions within the terms of the mortgage.
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
Single-Family Adjustable-Rate Mortgages (1)
Reset Year
Thereafter
Total
(Dollars in millions)
ARMs (2)
(1) Excludes loans for which there is not an additional reset for the remaining life of the loan.
(2) Includes $1.8 billion of interest-only and negative-amortizing loans. We have not acquired interest-only loans since 2014, and we have not
acquired negative-amortizing loans since 2007.
Single-Family Credit Enhancement and Transfer of Mortgage Credit Risk
Overview
One of the key components of our credit risk management strategy is the transfer of mortgage credit risk to third parties.
The table below displays information about the loans in our single-family conventional guaranty book of business
covered by one or more forms of credit enhancement, including mortgage insurance or a credit risk transfer transaction.
Single-Family Loans with Credit Enhancement
As of December 31,
UPB
Percentage of
Single-Family
Conventional
Guaranty Book
of Business
UPB
Percentage of
Single-Family
Conventional
Guaranty Book
of Business
(Dollars in billions)
Primary mortgage insurance
Connecticut Avenue Securities
Credit Insurance Risk Transfer
Other
Less: Loans covered by multiple credit enhancements
Total single-family loans with credit enhancement
The table above presents the UPB and percentage of our single-family conventional guaranty book of business that is
covered by the referenced credit enhancements, but does not present the risk in force of such credit enhancements.
“Risk in force” refers to the maximum potential loss recovery under the applicable credit enhancement transaction. The
risk in force of our back-end single-family credit risk transfer transactions, which refers to the maximum amount of
losses that could be absorbed by credit risk transfer investors, was approximately $39 billion as of December 31, 2025 ,
compared with approximately $43 billion as of December 31, 2024 . Our back-end credit risk transfer transactions
consist of our Connecticut Avenue Securities, Credit Insurance Risk Transfer, and other transactions. For information on
our risk-in-force primary mortgage insurance coverage, see “ Risk Management — Institutional Counterparty Credit Risk
Management — Mortgage Insurers .”
Mortgage Insurance
Our charter generally requires credit enhancement on any single-family conventional mortgage loan that we purchase or
securitize if it has an LTV ratio over 80% at the time of acquisition. We generally achieve this through primary mortgage
insurance. Primary mortgage insurance transfers varying portions of the credit risk associated with a mortgage loan to a
third-party insurer. For us to receive a payment in settlement of a claim under a primary mortgage insurance policy, the
insured loan must be in default and the borrower’s interest in the property securing the loan must have been
extinguished, generally in a foreclosure action, short sale or a deed-in-lieu of foreclosure. Claims are generally paid
three to six months after title to the property has been transferred.
Our approved monoline mortgage insurers’ financial ability and willingness to pay claims is an important determinant of
our overall credit risk exposure. For a discussion of our exposure to and management of the counterparty credit risk
associated with mortgage insurers, see “ Risk Management — Institutional Counterparty Credit Risk Management —
Mortgage Insurers ” and “ Note 14, Concentrations of Credit Risk .”
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
Credit Risk Transfer Transactions
Our Single-Family business has developed other risk-sharing capabilities to transfer portions of our single-family
mortgage credit risk to the private market. These credit risk transfer transactions are described in the table below. Our
credit risk transfer transactions are designed to transfer a portion of the losses we expect would be incurred in an
economic downturn or a stressed credit environment. While these transactions are expected to mitigate some of our
potential future credit losses (generally net of any proceeds received from front-end credit enhancements, such as
primary mortgage insurance), they are not designed to shield us from all losses. We retain a portion of the future credit
losses on all loans covered by CAS and CIRT transactions, including all or a portion of the first loss positions in most
transactions. Because our credit risk transfer transactions reduce our credit risk, they also affect our capital
requirements and our returns on capital.
We have designed our credit risk transfer transactions so that the principal payment and loss performance of the
transactions correspond to the performance of the loans in the underlying reference pools. Generally, loss
reimbursement payments are received after the underlying property has been liquidated and all applicable proceeds,
including primary mortgage insurance benefits, have been applied to reduce the loss.
In 2025 , we transferred a portion of the mortgage credit risk on single-family mortgage loans with a UPB of $179.8
billion at the time of the transactions. When engaging in these transactions, we consider their cost, the resulting capital
relief provided by the transactions, and the overall credit risk transfer capacity of the market. The cost of our credit risk
transfer transactions is impacted by macroeconomic and housing market sentiment, as well as the demand and
capacity of the investors and reinsurers that support these transactions. When structuring our credit risk transfer
transactions, we may choose to adjust the amount of first loss retained by Fannie Mae in these transactions as a way to
manage costs or market capacity, or as a way to adjust the amount of capital relief we are targeting for the transaction.
Changes in our capital requirements, including the capital relief assigned for credit risk transfer transactions, could
cause us to modify our credit risk transfer activities.
We provide a portion of the guaranty fee to investors in our credit risk transfer transactions as compensation for their
taking on a share of the credit risk of the related loans. We record the substantial majority of expenses related to our
credit risk transfer transactions in “Credit enhancement expense” within our consolidated statements of operations and
comprehensive income.
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
Principal Categories of Our Single-Famil y Credit Risk Transfer Transactions
Transaction Description
Other Key Characteristics
CAS
REMIC ®
• We transfer to investors a portion of the mortgage
credit risk associated with losses on a reference
pool of mortgage loans.
• We create a reference pool consisting of recently
acquired single-family mortgage loans included in
our guaranty book of business and create a
hypothetical securitization structure with notional
credit risk positions, or tranches (that is, first loss,
mezzanine and senior).
• We recognize the cost of credit protection in
“Credit enhancement expense” in our
consolidated statements of operations and
comprehensive income.
• We recognize the expected benefits from the
credit protection in “Other income (expense), net”
in our consolidated statements of operations and
comprehensive income.
• CAS REMIC transactions align the timing of our
recognition of credit losses with the related
recovery from the CAS REMIC. We record the
expected benefit and the loss in the same period.
• The principal balance of the CAS REMIC decreases
as a result of credit losses on loans in the related
reference pool. These write downs of the principal
balance reduce the total amount of payments that the
CAS trust is obligated to make to investors.
• Credit losses on the loans in the reference pool for a
CAS transaction are first applied to the first loss
tranche. If credit losses on these loans exceed the
outstanding principal balance of the first loss tranche,
losses are then applied to reduce the outstanding
principal balance of the mezzanine loss tranche.
• Transactions beginning with our October 2021
issuances were issued with a 20-year final maturity
date and an optional early redemption of 5 years, or
the date at which the outstanding balance of the
underlying reference loans is less than or equal to
10% of the original balance.
• After maturity or early redemption, if exercised, the
CAS REMIC provides no further credit protection with
respect to the reference loans that were previously
underlying that CAS REMIC transaction.
• Presents minimal counterparty credit risk as the CAS
trust receives the proceeds that will reimburse us for
certain credit events on the related loans upon the
issuance of the CAS REMIC.
CIRT
• Insurance transactions whereby we obtain actual
loss coverage on pools of loans either directly
from an insurance provider that retains the risk, or
from an insurance provider that simultaneously
cedes all of its risk to one or more reinsurers.
• In CIRT deals, we generally retain an initial
portion of losses on the loans in the pool (for
example, the first 0.75% of the initial pool UPB).
Reinsurers cover losses above this retention
amount up to a detachment point (for example,
the next 4.0% of the initial pool UPB). We retain
all losses above this detachment point. The initial
portion of losses we retain and the detachment
points vary in CIRT transactions—the
percentages provided above are only examples.
• We make premium payments on CIRT deals that
we recognize in “Credit enhancement expense” in
our consolidated statements of operations and
comprehensive income.
• We recognize the expected benefits from the
credit protection in “Other income (expense), net”
in our consolidated statements of operations and
comprehensive income.
• The insurance layer typically provides coverage for
losses on the pool that are likely to occur only in a
stressed economic environment.
• Insurance benefits are received after the underlying
property has been liquidated and all applicable
proceeds, including private mortgage insurance
benefits, have been applied to the loss.
• To date, CIRT transactions generally have been
structured with 10, 12-1/2, or 18-year terms, and
covered loans that are delinquent as of the final
scheduled month continue to be covered until and
unless they eventually cure. The transaction term may
vary based upon market execution and the capital
benefit.
• Presents counterparty credit risk. A portion of the
insurers’ or reinsurers’ obligations is collateralized with
highly-rated liquid assets held in a trust account
initially determined according to the ratings of such
insurer or reinsurer. Contractual provisions require
additional collateral to be posted in the event of
adverse developments with the counterparty, such as
a ratings downgrade. For additional discussion of our
exposure to and management of counterparty credit
risk associated with CIRT transactions, see “Risk
Management—Institutional Counterparty Credit Risk
Management—Reinsurers.”
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
The following table displays the primary characteristics of the loans in our single-family conventional guaranty book of
business without credit enhancement.
Single-Family Loans Currently without Credit Enhancement
As of December 31,
UPB
Percentage of
Single-Family
Conventional
Guaranty Book
of Business
UPB
Percentage of
Single-Family
Conventional
Guaranty Book
of Business
(Dollars in billions)
Low LTV ratio or short-term (1)
Pre-credit risk transfer program inception (2)
Recently acquired (3)
Other (4)
Less: Loans in multiple categories
Total single-family loans currently without credit enhancement
(1) Represents loans with an LTV ratio less than or equal to 60% or loans with an original maturity of 20 years or less.
(2) Represents loans that were acquired before the inception of our credit risk transfer programs. Also includes Refi Plus TM loans.
(3) Represents loans that were recently acquired and have not been included in a reference pool.
(4) Includes adjustable-rate mortgage loans, loans with a combined LTV ratio greater than 97%, non-Refi Plus loans acquired after the
inception of our credit risk transfer programs that became 30 or more days delinquent prior to inclusion in a credit risk transfer transaction,
and loans that were delinquent as of December 31, 2025 or December 31, 2024 . Also includes loans that were previously included in a
credit risk transfer transaction but subsequently had the coverage canceled or the covered term of the transaction ended.
Single-Family Problem Loan Management
Overview
Our problem loan management strategies focus primarily on reducing defaults to avoid losses that would otherwise
occur and pursuing foreclosure alternatives to mitigate the severity of the losses we incur. If a borrower does not make
required payments, or is in jeopardy of not making payments, we work with the loan servicer to offer workout solutions
to minimize the likelihood of foreclosure as well as the severity of loss. When appropriate, we seek to move to
foreclosure expeditiously.
Below we describe the following:
• delinquency statistics on our problem loans;
• efforts undertaken to manage our problem loans, including the role of servicers in loss mitigation, forbearance
plans, loan workouts, and sales of nonperforming and reperforming loans;
• REO management; and
• other single-family credit-related information, including our credit loss and loan sale performance and credit loss
concentration metrics.
We also provide ongoing credit performance information on loans underlying single-family Fannie Mae MBS and loans
covered by single-family credit risk transfer transactions. For loans backing Fannie Mae MBS, see the “Forbearance
and Delinquency Dashboard” available in the MBS section of our Data Dynamics ® tool, which is available at
www.fanniemae.com/datadynamics. For loans covered by credit risk transfer transactions, see the “Deal Performance
Data” report available in the CAS and CIRT sections of the tool. Information on our website is not incorporated into this
report. Information in Data Dynamics may differ from similar measures presented in our financial statements and other
public disclosures for a variety of reasons, including as a result of variations in the loan population covered, timing
differences in reporting and other factors.
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
Delinquency
The tables below display the delinquency status of loans and changes in the volume of seriously delinquent loans in our
single-family conventional guaranty book of business based on the number of loans. Single-family seriously delinquent
loans are loans that are 90 days or more past due or in the foreclosure process. Our single-family serious delinquency
rate is expressed as a percentage of our single-family conventional guaranty book of business based on loan count.
Management monitors the single-family serious delinquency rate as an indicator of potential future credit losses and
loss mitigation activities. Serious delinquency rates are reflective of our performance in assessing and managing credit
risk associated with single-family loans in our guaranty book of business. A higher serious delinquency rate may result
in a higher allowance for loan losses. For information on our single-family serious delinquency rate based on UPB, see
" Note 14, Concentrations of Credit Risk — Risk Characteristics of our Guaranty Book of Business — Single-Family Credit
Risk Characteristics ."
Delinquency Status and Activity of Single-Family Conventional Loans
As of December 31,
Delinquency status:
30 to 59 days delinquent
60 to 89 days delinquent
Seriously delinquent (“SDQ”):
Percentage of SDQ loans that have been delinquent for more than 180 days
Percentage of SDQ loans that have been delinquent for more than two years
For the Year Ended December 31,
Single-family SDQ loans (number of loans):
Beginning balance
Additions
Removals:
Modifications and other loan workouts
Liquidations and sales
Cured or less than 90 days delinquent
Total removals
Ending balance
Our single-family serious delinquency rate increased by 2 basis points as of December 31, 2025 compared with
December 31, 2024 , remaining near historically low levels . Given our expectation of slower home price growth in 2026
and 2027, the credit performance of the loans in our single-family guaranty book of business may decline compared
with recent performance, which could lead to higher delinquencies or an increase in our single-family serious
delinquency rate.
Factors that affect our single-family serious delinquency rate include:
• the percentage of our loans that receive forbearance and the length of time they remain in forbearance;
• the pace and effectiveness of payment deferrals, loan modifications and other workouts;
• the timing and volume of nonperforming loan sales we execute;
• pandemics and natural disasters;
• servicer performance; and
• changes in home prices, unemployment levels and other macroeconomic conditions.
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
The table below displays the serious delinquency rates for, and the percentage of our seriously delinquent single-family
conventional loans represented by, the specified loan categories. Percentage of book amounts represent the UPB of
loans for each category divided by the UPB of our total single-family conventional guaranty book of business. The
reported categories are not mutually exclusive.
Single-Family Conventional Seriously Delinquent Loan Concentration Analysis
As of December 31,
Percentage of
Book
Outstanding (1)
Percentage
of Seriously
Delinquent
Loans (2)
Serious
Delinquency
Rate
Percentage of
Book
Outstanding (1)
Percentage
of Seriously
Delinquent
Loans (2)
Serious
Delinquency
Rate
Percentage of
Book
Outstanding (1)
Percentage
of Seriously
Delinquent
Loans (2)
Serious
Delinquency
Rate
States:
California
Florida
Illinois
New York
Texas
All other states
Estimated mark-to-
market LTV ratio:
Greater than 100%
Credit enhanced: (3)
Primary MI & other (4)
Credit risk transfer (5)
Non-credit enhanced
* Represents less than 0.5% of single-family conventional guaranty book of business.
(1) Percentage of book amounts represent the UPB of loans for each category divided by the UPB of our total single-family conventional
guaranty book of business.
(2) Calculated based on the number of single-family loans that were seriously delinquent for each category divided by the total number of
single-family conventional loans that were seriously delinquent.
(3) The credit-enhanced categories are not mutually exclusive. A loan with primary mortgage insurance that is also covered by a credit risk
transfer transaction will be included in both the “Primary MI & other” category and the “Credit risk transfer” category. As a result, the “Credit
enhanced” and “Non-credit enhanced” categories do not sum to 100%. The total percentage of our single-family conventional guaranty
book of business with some form of credit enhancement as of December 31, 2025 was 47% .
(4) Refers to loans included in an agreement used to reduce credit risk by requiring primary mortgage insurance, collateral, letters of credit,
corporate guarantees, or other agreements to provide an entity with some assurance that it will be compensated to some degree in the
event of a financial loss. Excludes loans covered by credit risk transfer transactions unless such loans are also covered by primary
mortgage insurance.
(5) Refers to loans included in reference pools for credit risk transfer transactions, including loans in these transactions that are also covered
by primary mortgage insurance. For CAS and some lender risk-sharing transactions, this represents the outstanding UPB of the underlying
loans on the single-family mortgage credit book, not the outstanding reference pool, as of the specified date.
Forbearance Plans and Loan Workouts
As a part of our credit risk management efforts, we offer several types of loss mitigation options to help homeowners
stay in their home or to otherwise avoid foreclosure. Loss mitigation options can consist of a forbearance plan or a loan
workout. Our loan workouts reflect additional types of home retention solutions that help reinstate loans to current
status, including repayment plans, payment deferrals, and loan modifications. Our loan workouts also include
foreclosure alternatives, such as short sales and deeds in-lieu of foreclosure.
As of December 31, 2025 , the UPB of single-family loans in forbearance was $7.5 billion , or 0.2% of our single-family
conventional guaranty book of business, compared with $8.0 billion , or 0.2% of our single-family conventional guaranty
book of business, as of December 31, 2024 .
We work with our servicers to implement our home retention solution and foreclosure alternative initiatives, and we
emphasize the importance of early contact with borrowers and early entry into a home retention solution. We require
that servicers first evaluate borrowers for eligibility under a workout option before considering foreclosure. The existence
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
of a second lien may limit our ability to provide borrowers with loan workout options, particularly those that are part of
our foreclosure prevention efforts; however, we are not required to contact a second lien holder to obtain their approval
prior to providing a borrower with a loan modification.
Home Retention Solutions
When a borrower cannot bring the loan current by reinstating the loan or through a repayment plan, we use our
payment deferral and loan modification workout options to help resolve the loan’s delinquency. A payment deferral is a
loss mitigation option which defers the repayment of the delinquent principal and interest payments and other eligible
default-related amounts that were advanced on behalf of the borrower by converting them into a non-interest-bearing
balance due at the earlier of the payoff date, the maturity date, or sale or transfer of the property. The remaining
mortgage terms, interest rate, payment schedule, and maturity date remain unchanged, and no trial period is required.
The number of months of payments deferred varies based on the types of hardships the borrower is facing.
We also offer single-family borrowers loan modifications, which contractually change the terms of the loan. Our loan
modification programs generally require completion of a trial period of three to four months where the borrower makes
reduced monthly payments prior to receiving the modification.
O ur loan modifications are designed to reach a 20% targeted principal and interest payment reduction for the borrower.
As outlined by our Servicing Guide, loan modifications include the following concessions as necessary to achieve a 20%
targeted payment reduction:
• capitalization of past due amounts, a form of payment delay, which capitalizes interest and other eligible
default-related amounts that were advanced on behalf of the borrower that are past due into the UPB of the
loan; and
• a term extension, which may extend the contractual maturity date of the loan up to 40 years from the effective
date of the modification.
In addition to these concessions, loan modifications may also include an interest rate reduction, which reduces the
contractual interest rate of the loan, or a principal forbearance, which is another form of payment delay that includes
forbearing repayment of a portion of the principal balance as a non-interest bearing amount that is due at the earlier of
the payoff date, the maturity date, or sale or transfer of the property.
Our primary loan modification program is currently the Flex Modification program, which offers payment relief for eligible
borrowers.
Foreclosure Alternatives
We offer foreclosure alternatives for borrowers who are unable to retain their homes. Foreclosure alternatives may be
more appropriate if the borrower has experienced a significant adverse change in financial condition due to events such
as long-term unemployment or reduced income, divorce, or unexpected issues like medical bills, and is therefore no
longer able to make the required mortgage payments. To avoid foreclosure and satisfy the first-lien mortgage obligation,
our servicers work with a borrower to:
• accept a deed-in-lieu of foreclosure, whereby the borrower voluntarily signs over the title to their property to the
servicer; or
• sell the home prior to foreclosure in a short sale, whereby the borrower sells the home for less than the full
amount owed to Fannie Mae under the mortgage loan.
These alternatives are designed to reduce our credit losses while helping borrowers avoid having to go through a
foreclosure.
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
Loan Workout Metrics
The chart below displays the UPB of our completed single-family loan workouts by type, as well as the number of loan
workouts. This table does not include loans in an active forbearance arrangement, trial modifications, and repayment
plans that have been initiated but not completed.
(1) Excludes approximately 20,500 loans, 19,300 loans and 16,300 loans in a trial modification period that was not yet complete as of
December 31, 2025 , 2024 and 2023 , respectively.
(2) Other was $938 million , $773 million and $516 million for the years ended December 31, 2025 , 2024 and 2023 , respectively. Other
includes repayment plans and foreclosure alternatives. Repayment plans reflect only those plans associated with loans that were 60 days
or more delinquent at the execution of the plan.
The increase in loan workout activity in 2025 compared with 2024 was primarily driven by an increase in loan
modifications, which includes borrowers affected by disaster activity.
The table below displays the percentage of our single-family loan modifications completed during 2024 and 2023 that
were current or paid off one year after modification and, for modifications completed during 2023 , two years after
modification.
Percentage of Single-Family Completed Loan Modifications That Were Current or Paid Off at
One and Two Years Post-Modification
2024 Modifications
2023 Modifications
One Year Post-Modification
Two Years Post-Modification
Nonperforming and Reperforming Loan Sales
We also undertake efforts to mitigate credit losses and manage our problem loans by selling our nonperforming and
reperforming loans, thereby removing them from our guaranty book of business. This problem loan management
strategy is intended to reduce: the number of seriously-delinquent loans, the severity of losses incurred on these loans,
and the capital we would be required to hold for such loans.
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
Nonperforming and Reperforming Loan Sale Activity
For the Year Ended December 31,
(Dollars in millions)
Reperforming Loan Sales:
Number of loans sold
Aggregate UPB of loan sales
Nonperforming Loan Sales:
Number of loans sold
Aggregate UPB of loan sales
REO Management
If a loan defaults, we may acquire the property through foreclosure or a deed-in-lieu of foreclosure. The table below
displays our REO activity by region. Regional REO acquisition trends generally follow a pattern that is similar to, but
lags, that of regional delinquency trends.
Single-Family REO Properties
For the Year Ended December 31,
Single-family REO properties (number of properties):
Beginning of period inventory of single-family REO properties (1)
Acquisitions by geographic area: (2)
Midwest
Northeast
Southeast
Southwest
West
Total REO acquisitions (1)
Dispositions of REO
End of period inventory of single-family REO properties (1)
Carrying value of single-family REO properties (dollars in millions)
Single-family foreclosure rate (3)
REO net sales price to UPB (4)
REO net sales price to UPB and costs to repair (5)
Short sales net sales price to UPB (6)
(1) Consists of held-for-sale and held-for-use properties, which are reported in our consolidated balance sheets as a component of “Other
assets.”
(2) See footnote 9 to the “ Key Risk Characteristics of Single-Family Conventional Business Volume and Guaranty Book of Business ” table for
states included in each geographic region.
(3) Reflects the total number of properties acquired through foreclosure or deeds-in-lieu of foreclosure as a percentage of the total number of
loans in our single-family conventional guaranty book of business as of the end of each period.
(4) Calculated as the amount of sale proceeds received on disposition of REO properties during the respective periods, excluding those
subject to repurchase requests made to our sellers or servicers, divided by the aggregate UPB of the related loans at the time of
foreclosure. Net sales price represents the contract sales price less selling costs for the property and other charges paid by the seller at
closing, and excludes the cost associated with any property repairs.
(5) Calculated as the amount of sale proceeds received on disposition of REO properties during the respective periods, excluding those
subject to repurchase requests made to our sellers or servicers, divided by the aggregate UPB of the related loans at the time of
foreclosure and costs to repair the property. Net sales price represents the contract sales price less selling costs for the property and other
charges paid by the seller at closing.
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
(6) Calculated as the amount of sale proceeds received on properties sold in short sale transactions during the respective periods divided by
the aggregate UPB of the related loans. Net sales price includes borrower relocation incentive payments and subordinate lien(s)
negotiated payoffs.
Our REO net sales price to UPB, excluding costs to repair, declined to 136% in 2025 from 143% in 2024, primarily
driven by REO properties with higher LTV ratios at foreclosure, resulting in a higher average UPB relative to the sales
price. The ratio of REO net sales price to UPB and costs to repair declined to 82% in 2025 from 89% in 2024, primarily
driven by higher average UPB and rising capitalizable repair costs per property due to inflation and labor shortages. Our
prior REO repair strategy was to conduct repairs on the majority of the properties we acquired. In March 2025, FHFA
directed us to revise our REO repair strategy, and we expect our revised strategy will result in lower repair costs on our
REO properties over time.
We market and sell the majority of our foreclosed properties through local real estate professionals. In some cases, we
use alternative methods of disposition, including selling homes to municipalities, other public entities or non-profit
organizations, and selling properties through public auctions. We also engage in third-party sales at foreclosure, which
allow us to avoid maintenance and other REO expenses we would have incurred had we acquired the property.
As shown in the chart below, the majority of our REO properties are unable to be marketed at any given time because
the properties are under repair, occupied or are subject to state or local redemption or confirmation periods, which
delays the marketing and disposition of these properties.
REO Property Status
As of December 31, 2025
Single-Family Credit Loss Performance Metrics and Loan Sale Performance
The single-family credit loss performance metrics and loan sale performance measures below present information about
losses or gains we realized on our single-family loans during the periods presented. For the purposes of our single-
family credit loss performance metrics, credit losses or gains represent write-offs net of recoveries and foreclosed
property income or expense. The amount of these losses or gains in a given period is driven by foreclosures, pre-
foreclosure sales, post-foreclosure REO activity, mortgage loan redesignations, and other events that trigger write-offs
and recoveries. The single-family credit loss metrics we present are not defined terms and may not be calculated in the
same manner as similarly titled measures reported by other companies. Management uses these measures to evaluate
the effectiveness of our single-family credit risk management strategies in conjunction with leading indicators such as
serious delinquency and forbearance rates, which are potential indicators of future realized single-family credit losses.
We believe these measures provide useful information about our single-family credit performance and the factors that
impact it.
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
The table below displays the components of our single-family credit loss performance metrics. Because sales of
nonperforming and reperforming loans are a part of our credit loss mitigation strategy, we also provide information in the
table below on our loan sale performance through the “Gains (losses) on sales and other valuation adjustments” line
item.
Single-Family Credit Loss Performance Metrics and Loan Sale Performance
For the Year Ended December 31,
(Dollars in millions)
Write-offs
Recoveries
Foreclosed property income (expense)
Credit gains (losses)
Write-offs on the redesignation of mortgage loans from HFI to HFS (1)
Net credit gains (losses) and write-offs on redesignations
Gains (losses) on sales and other valuation adjustments (2)
Net credit gains (losses), write-offs on redesignations and gains (losses) on sales
and other valuation adjustments
Credit gain (loss) ratio (in bps) (3)
Net credit gains (losses), write-offs on redesignations and gains (losses) on sales
and other valuation adjustments ratio (in bps) (4)
* Represents less than 0.05 bps.
(1) Consists of the lower of cost or fair value adjustment at time of redesignation.
(2) Consists of gains or losses realized on the sales of nonperforming and reperforming mortgage loans during the period and temporary
lower of cost or market adjustments on HFS loans, which are recognized in “ Investment gains (losses), net ” in our consolidated statements
of operations and comprehensive income.
(3) Calculated based on the amount of “Credit gains (losses)” divided by the average single-family conventional guaranty book of business
during the period.
(4) Calculated based on the amount of “Net credit gains (losses), write-offs on redesignations and gains (losses) on sales and other valuation
adjustments” divided by the average single-family conventional guaranty book of business during the per iod.
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
The table below displays concentrations of our net single-family credit gains (losses) and write-offs on redesignations
based on geography.
Concentration Analysis of Net Credit Gains (Losses) and Write-offs on Redesignations
Percentage of Single-Family
Conventional Guaranty Book of
Business Outstanding (1)
Amount of Single-Family Credit
Gains (Losses) and
Redesignation Write-offs (2)
As of December 31,
For the Year Ended
December 31,
(Dollars in millions)
Geographical distribution:
California
Florida
Illinois
New York
Texas
All other states
Total
(1) Calculated based on the aggregate UPB of single-family loans for each category divided by the aggregate UPB of loans in our single-
family conventional guaranty book of business as of the end of each period.
(2) Credit gains (losses) and write-offs on redesignations do not include gains (losses) on sales and other valuation adjustments. Excludes the
impact of recoveries resulting from resolution agreements related to representation and warranty matters and compensatory fee income
related to servicing matters that have not been allocated to specific loans.
Fannie Mae 2025 Form 10-K
MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management
Single-Family Maturity Information
The below table shows the contractual maturities and interest rate sensitivities of our single-family mortgage loan
portfolio a s recorded on our consolidated balance sheets. Although the loans in our consolidated portfolio have varying
contractual terms (for example, 15-year, 30-year, etc.), the actual life of the loans is likely to be significantly less than
their contractual term as a result of prepayment. Therefore, the contractual term is not a reliable indicator of the loans’
expected lives. Single-family mortgages can be prepaid in whole or in part at any time without penalty.
Single-Family Loans: Maturities and Terms of the Consolidated Mortgage Loan Portfolio (1)
As of December 31, 2025
Due within 1
year (2)
Greater than 1
year but
within 5 years
Greater than 5
years but
within 15
years
Greater than
15 years
Total
(Dollars in millions)
Single-family mortgage loans:
Loans held for sale
Loans held for investment:
Of Fannie Mae
Of consolidated trusts
Total UPB of single-family mortgage
loans
Cost basis adjustments, net
Total single-family mortgage loans (3)
Single-family mortgage loans by interest rate sensitivity:
Fixed-rate
Adjustable-rate
Total UPB of single-family mortgage loans
(1) We report the scheduled repayments in the maturity category in which the payment is due, such that a loan’s balance may be presented
across multiple maturity categories.
(2) Due within 1 year includes reverse mortgages for which there is no defined maturity date of $2.5 billion as of December 31, 2025 .
(3) Excludes accrued interest receivable. The UPB of single family loans is based on the amount of contractual UPB due and excludes any
write-offs for amounts deemed uncollectible. Those write-offs are presented as a component of cost basis adjustments, net.
Multifamily Business
Multifamily Primary Business Activities
Providing Liquidity for Multifamily Mortgage Loans
Our Multifamily business provides mortgage market liquidity primarily for properties with five or more residential units,
which may be apartment communities, cooperative properties, seniors housing, dedicated student housing or
manufactured housing communities. Our Multifamily business works with our multifamily lenders to provide funds to the
mortgage market primarily by securitizing multifamily mortgage loans acquired from these lenders into Fannie Mae
MBS, which are sold to investors or dealers. We also purchase multifamily mortgage loans and provide credit
enhancement for bonds issued by state and local housing finance authorities to finance multifamily housing. Our
Multifamily business supports liquidity in the mortgage market through other activities, such as buying and selling
Fannie Mae multifamily MBS and issuing structured securities backed by Fannie Mae collateral. We also continue to
invest in multifamily Low Income Housing Tax Credit (“LIHTC”) projects to help support and preserve the supply of
affordable rental housing.
Fannie Mae 2025 Form 10-K
MD&A | Multifamily Business | Multifamily Primary Business Activities
Key Characteristics of the Multifamily Business
The Multifamily business has a number of key characteristics that distinguish it from our Single-Family business.
• Collateral: Multifamily loans are collateralized by properties that generate cash flows predominantly driven by
rental income received from tenants and effectively operate as businesses.
• Borrowers and sponsors: Multifamily borrowing entities are typically owned, directly or indirectly, by for-profit
corporations, limited liability companies, partnerships, real estate investment trusts and individuals who invest
in real estate for cash flow and expected returns in excess of their original contribution of equity. Borrowing
entities are typically single-asset entities, with the property as their only asset. The ultimate owner of a
multifamily borrowing entity is referred to as the “sponsor.” We evaluate both the borrowing entity and its
sponsor when considering a new transaction and managing our business. We refer to both the borrowing
entities and their sponsors as “borrowers.” When considering a multifamily borrower, creditworthiness is
evaluated through a combination of quantitative and qualitative data, including liquid assets, net worth, number
of units owned, experience in a market and/or property type, multifamily portfolio performance, access to
additional liquidity, debt maturities, asset/property management platform, senior management experience,
reputation, and exposures to lenders and Fannie Mae.
• Non-recourse: Multifamily loans are generally non-recourse to the borrowers, meaning that we may only seek
repayment of the loan through the value of the underlying collateral.
• Lenders: During 2025 , we executed multifamily transactions with 28 lenders. Of these, 24 lenders delivered
loans to us under our DUS program described below. In determining whether to enter into a selling and
servicing arrangement with a multifamily lender, we consider the lender’s: financial strength; multifamily
underwriting and servicing experience and processes, including relevant policies and procedures in place;
portfolio performance; and willingness and ability to share in the risk of loss associated with the multifamily
loans they originate.
• Loan size: The average size of a multifamily loan (based on UPB) in our guaranty book of business is much
larger than the average size of a single-family loan. See “ Single-Family Guaranty Book Diversification and
Monitoring ” and “ Multifamily Guaranty Book Diversification and Monitoring ” for additional information about the
average size of single-family and multifamily loans in our guaranty book.
• Underwriting process: Multifamily loans require detailed underwriting of the property’s operating cash flow. Our
underwriting standards include an evaluation of the property’s operating income compared to loan payments,
property market value, property quality and condition, market and submarket factors, and ability to refinance at
maturity.
• Term and lifecycle: In contrast to the standard 30-year single-family residential loan, multifamily loans typically
have original loan terms of 5 , 7 , or 10 years, with balloon payments due at maturity.
• Prepayment terms: To reduce the likelihood of prepayments during the term of a loan, most Fannie Mae
multifamily loans impose prepayment premiums, primarily yield maintenance. This is in contrast to single-family
loans, which do not have prepayment premiums.
Delegated Underwriting and Servicing Program
Fannie Mae’s DUS program is a unique business model that is intended to align the interests of the lender and Fannie
Mae. Our DUS lender network of 24 current members is composed of mortgage banking companies, large diversified
financial institutions, and banks. We pre-approve DUS lenders and delegate to these lenders the authority to underwrite
and service multifamily loans on our behalf in accordance with our standards and requirements. Delegation permits
lenders to respond to customers more rapidly, as the lender generally has the authority to approve a loan within our
prescribed parameters. In certain cases when a loan’s credit characteristics do not meet established delegation criteria,
Fannie Mae’s internal credit team may assess whether a loan’s risk profile is within our risk tolerance.
DUS lenders typically share a portion of the credit risk on our multifamily loans for the life of the loans. The servicing
fees we pay to DUS lenders include compensation for the portion of credit risk they retain. See “ Multifamily Mortgage
Credit Risk Management ” for additional information about our lender risk sharing.
Multifamily Mortgage Servicing
Substantially all of the multifamily loans in our guaranty book of business as of December 31, 2025 and 2024 were
serviced by DUS lenders or their affiliates on our behalf. Multifamily servicers are responsible for the evaluation of the
financial condition of properties and property owners, administering various types of loan- and property-level
agreements (including agreements covering replacement reserves, completion or repair, and operations and
maintenance), as well as conducting routine property inspections. When elevated risks in a transaction are identified,
Fannie Mae 2025 Form 10-K
MD&A | Multifamily Business | Multifamily Primary Business Activities
we may require additional evaluation and mitigation of these risks, such as conducting additional property inspections
and requiring borrowers to complete repairs within specific timelines. We monitor multifamily servicing relationships and
retain the right to approve servicing transfers, which are infrequent.
Multifamily Credit Risk and Credit Loss Management
Our Multifamily business:
• Sets the underwriting and servicing standards and credit requirements for lenders to underwrite multifamily
loans on our behalf.
• Prices and manages the credit risk on loans in our multifamily guaranty book of business. Lenders retain a
portion of the credit risk in substantially all multifamily transactions.
• Enters into additional transactions that transfer a portion of Fannie Mae’s credit risk on some of the loans in our
multifamily guaranty book of business through back-end credit risk transfer transactions.
• Works to reduce costs of defaulted multifamily loans, including through loss mitigation strategies such as
forbearance and modification, management of foreclosures and our REO inventory, and pursuing contractual
remedies from lenders, servicers, borrowers, sponsors, and providers of credit enhancement.
See “ Multifamily Mortgage Credit Risk Management ” for a discussion of our strategies for managing credit risk and
credit losses on multifamily loans.
Multifamily Activities Supporting Affordable Rental Housing
Overview
A core component of Fannie Mae’s mission is to support the U.S. multifamily housing market by helping serve the
nation’s rental housing needs. We focus on supporting affordable housing, which is housing that is affordable to
households earning at or below the median income in their area, as well as on workforce housing, which is housing that
is affordable to those earning at or below 120% of area median income. Approximately 93% of the multifamily units we
financed in 2025 that were potentially eligible for housing goals credit were affordable to those earning at or below
120% of the median income in their area. The chart below shows a breakout of our multifamily acquisitions by area
median income.
Multifamily Rental Units by Affordability Relative to Area Median Income (AMI) (1)
(1) Based on rents reported at loan origination. Rents may change following loan origination. Reflects multifamily acquisitions potentially
eligible for housing goals credit, which consists of newly acquired units financed by first liens; excludes second liens on units for which we
had financed the first lien, manufactured housing communities, and manufactured housing rentals.
Fannie Mae 2025 Form 10-K
MD&A | Multifamily Business | Multifamily Primary Business Activities
Targeted Affordable Housing
To serve low- and very-low-income households, we have a team that focuses exclusively on relationships with lenders
financing privately-owned multifamily properties that receive public subsidies in exchange for maintaining long-term
affordable rents. We work with borrowers that may utilize housing programs and subsidies provided by local, state and
federal agencies; examples include tax incentives (such as those provided through LIHTC or tax abatement) and rent
subsidies (such as project-based Section 8 rental assistance or tenant vouchers). The public subsidy programs are
largely targeted to provide housing to those earning less than 60% of area median income (as defined by HUD) and are
structured to ensure that the low- and very low-income households who benefit from the programs pay no more than
30% of their gross monthly income for rent and utilities. As of December 31, 2025 , these affordable loans represented
approximately 12% of our multifamily guaranty book of business, based on UPB, including $7.0 billion in bond credit
enhancements.
Our acquisition of loans financing properties affordable to low- and very-low income households help us meet our
multifamily housing goals and FHFA’s requirement that a portion of our multifamily volume be focused on affordable and
underserved markets. We discuss our multifamily housing goals in “ Business — Legislation and Regulation — Housing
Goals — Multifamily Housing Goals ” and we discuss our requirement to focus on affordable and underserved markets in
“ Multifamily Business Metrics —Multifamily New Business Volume.”
Equity Investments in Low Income Housing Tax Credit Projects
We make equity investments in LIHTC partnerships. These LIHTC partnerships have generally been established to
identify, develop and operate multifamily housing that is leased to qualifying residential tenants. LIHTC encourages
private equity investment in creating and preserving affordable units throughout the country by awarding federal tax
credits to affordable housing developers, who then exchange those tax credits with corporate investors, such as Fannie
Mae, in return for capital contributions. In August 2025, FHFA doubled our annual LIHTC investment limit from $1 billion
to $2 billion. The increase in the LIHTC investment limit enables us to expand support for Duty to Serve-designated
rural areas by directing additional equity capital to underserved and rural communities, enhancing affordable housing
development in areas with limited access to traditional financing.
Multifamily Lenders and Investors
Our Multifamily business works primarily with our DUS lender network. During 2025 , our top five m ultifamily lenders, in
the aggregate, accounted for 50% of our multifamily business volume, compared with 49% in 2024 . Three of our
lenders, Walker & Dunlop, Wells Fargo, and CBRE Multifamily Capital accounted for 12% , 11% , and 10% , respectively,
of our 2025 multifamily business volume. No other lenders accounted for 10% or more of our multifamily business
volume in 2025 .
We have a diversified funding base of domestic and international investors. Fannie Mae multifamily MBS investors
include money managers, banks, insurance companies, real estate investment trusts, corporations, state and local
governments, and other municipal authorities. Our Multifamily Connecticut Avenue Securities ® (“MCAS TM ”) investors
primarily consist of money managers and hedge funds, while our Multifamily CIRT TM (“MCIRT TM ”) transaction
counterparties are insurers and reinsurers.
Multifamily Competition
We compete to acquire multifamily mortgage assets in the secondary mortgage market and to issue multifamily
mortgage-backed securities to investors. Our primary competitors for the acquisition of multifamily mortgage assets are
Freddie Mac, life insurers, U.S. banks and thrifts, and other institutional investors. Our primary competitors for the
issuance of multifamily mortgage-backed securities are Freddie Mac, U.S. banks, Ginnie Mae, and private-label issuers
of commercial mortgage-backed securities. Competition in these activities is significantly affected by: our and our
competitors’ pricing, eligibility standards, loan structures and risk appetite; lender preferences; the number and types of
multifamily mortgage loans offered for sale in the secondary mortgage market; investor demand for our and our
competitors’ mortgage-backed securities; and macroeconomic conditions. Our ability to compete may also be affected
by many other factors, including: actions we take to support affordable multifamily housing; direction from FHFA; our
senior preferred stock purchase agreement with Treasury; our or our competitors’ capital requirements; our and Freddie
Mac’s return on capital requirements; and new or existing legislation or regulations applicable to us, our lenders or our
investors. The nature of our primary competitors and the overall levels of competition we face could change as a result
of a variety of factors, many of which are outside our control. See “ Business — Conservatorship and Treasury
Agreements ,” “ Business — Legislation and Regulation ,” and “ Risk Factors ” for information on matters that could affect
our business and competitive environment.
Fannie Mae 2025 Form 10-K
MD&A | Multifamily Business | Multifamily Mortgage Market
Multifamily Mortgage Market
The multifamily market saw rental demand slow moderately along with continued elevated levels of new supply entering
the market in 2025 . Modestly decreasing interest rates were associated with an increase in multifamily property sales
transactions, but multifamily property valuations declined year over year.
• Vacancy rates . Based on data from Moody’s Analytics, the national multifamily vacancy rate for institutional
investment-type apartment properties increased to 6.7% as of December 31, 2025 , compared with 6.6% as of
September 30, 2025 , and 6.4% as of December 31, 2024 . The estimated average national multifamily vacancy
rate over the last 15 years was approximately 5.1%.
• Rents . Based on Moody’s Analytics data, effective rents decreased 0.8% during the fourth quarter of 2025 ,
compared to a decrease of 0.1% during the third quarter of 2025 and an increase of 0.3% during the fourth
quarter of 2024 . Effective rents as of the fourth quarter of 2025 remain unchanged from the fourth quarter of
• Net a bsorption . Net absorption, the net change in the total number of occupied multifamily rental units , declined
in the fourth quarter of 2025, consistent with the increase in vacancy rates. Based on Moody’s Analytics data,
net absorption for the fourth quarter of 2025 declined 42% compared with the third quarter of 2025 and 48%
compared with the fourth quarter of 2024.
• Property sales volumes. Based on preliminary MSCI RCA data, multifamily property sales for 2025 were $165
billion, higher than the $151 billion volume during 2024 , and much closer to the 2015 to 2019 annual average
level of $169 billion.
• Property values. According to data from the MSCI RCA Commercial Property Price Index (“RCA CPPI TM ”),
multifamily property values declined 19% from their peak in the second quarter of 2022 to the fourth quarter of
2025 and decreased approximately 1% from the fourth quarter of 2024 to the fourth quarter of 2025.
We estimate that more than 500,000 multifamily rental units were delivered to the U.S. housing market in 2025, which is
well above the past 10-year average of 424,000 units delivered annually. Additionally, there were approximately 793,000
multifamily rental units underway as of November 2025, and based on recent historical trends we expect between
450,000 and 500,000 units will be completed in 2026.
Vacancy rates and rents are important to loan performance because multifamily loans are generally repaid from the
cash flows generated by the underlying property. We expect vacancy rates will decline slightly by the end of 2026, and
we expect cumulative rent growth below 2.0% for the year. We also expect slowing household formation, but elevated
single-family housing prices in many places continue to push many new households into the rental market and keep a
number of tenants renting longer. If job growth slows substantially, lower demand could push up vacancies and limit rent
growth potential.
Property value is important to credit quality because when a multifamily loan matures, a borrower may be required to
make up any value shortfalls if the value estimate has declined below the UPB of the loan and the borrower needs new
financing for the property. A borrower may default on its loan if the UPB of the loan is significantly higher than the
current property value.
Multifamily property capitalization rates, the indicated rate of return on investment for commercial properties sold during
the quarter, were estimated at 5.5% in the fourth quarter of 2025, down slightly from 5.6% in the third quarter of 2025,
but the same level as in the fourth quarter of 2024. Multifamily capitalization rates increased substantially between the
first quarter of 2022 and the fourth quarter of 2023 but have averaged around 5.6% since then, with the spread between
multifamily capitalization rates and 10-year Treasury rates, which is an important consideration for commercial real
estate investors, remaining significantly narrower than the spread that was observed prior to 2022.
Fannie Mae 2025 Form 10-K
MD&A | Multifamily Business | Multifamily Mortgage Acquisition Share
Multifamily Mortgage Acquisition Share
In 2025, both GSEs collectively acquired approximately $150 billion in multifamily mortgage volume; Fannie Mae’s
share of these acquisitions was 49% and Freddie Mac’s share was 51%.
The chart below displays our estimated share of multifamily mortgage acquisitions during the twelve months ended as
of September 30, 2025 , the latest date available, and the twelve months ended September 30, 2024 , as compared with
that of our primary competitors for the acquisition of multifamily mortgage assets.
Multifamily Mortgage Acquisition Share (1)
Fannie Mae
Ginnie Mae
Depository Institutions
Non-Traditional MF Lenders and Others (2)
Freddie Mac
Life Insurers
Conduits
(1) According to the American Council of Life Insurers (“ACLI”), Trepp, Mortgage Bankers Association and Fannie Mae Multifamily Economic
and Strategic Research Group.
(2) Other includes state and local credit agencies, FHLBs and other financial institutions.
Multifamily Mortgage Debt Outstanding
As shown in the chart below, we have remained a continuous source of liquidity in the U.S. multifamily market .
Multifamily Mortgage Debt Outstanding (1)
(Dollars in trillions)
(1) Multifamily mortgage debt outstanding as of September 30, 2025 is based on the Federal Reserve’s January 2026 mortgage debt
outstanding release, the latest date for which the Federal Reserve has estimated mortgage debt outstanding for multifamily residences.
Prior-period amounts have been updated to reflect revised historical data from the Federal Reserve.
Fannie Mae 2025 Form 10-K
MD&A | Multifamily Business | Multifamily Business Metrics
Multifamily Business Metrics
Multifamily New Business Volume
The chart below displays our new multifamily loan acquisitions by UPB and number of units financed.
Multifamily New Business Volume
(Dollars in billions)
(1) Reflects UPB of new multifamily loans securitized or purchased as well as credit enhancements provided during the period. These figures
will not agree to Fannie Mae MBS issued during the period, as Fannie Mae MBS issued also include portfolio securitizations and certain
conversions that result in a new Fannie Mae MBS issuance without a newly created loan and exclude bond or mortgage loan credit
enhancements.
(2) Reflects newly acquired units financed by first liens and excludes manufactured housing rentals.
Multifamily business volumes increased by 34% in 2025 compared with 2024 , reflecting increased market activity in
2025 . We are subject to an annual multifamily loan purchase cap set by FHFA, which was $73 billion in 2025 and
increased to $88 billion for 2026 . FHFA requires that at least 50% of our multifamily loan purchases be mission-driven,
focused on specified affordable and underserved market segments, and certain loan categories are exempt from the
loan purchase cap. The significant majority of our multifamily new business volume of $73.7 billion in 2025 counted
towards FHFA’s 2025 multifamily loan purchase ca p.
Fannie Mae 2025 Form 10-K
MD&A | Multifamily Business | Multifamily Business Metrics
Multifamily Securities Issuances
We securitize the vast majority of multifamily mortgage loans we acquire through lender swap transactions. We also
support liquidity in the market by issuing structured MBS backed by multifamily Fannie Mae MBS, including through our
Fannie Mae GeMS TM program.
Multifamily Fannie Mae MBS Issuances
(Dollars in billions)
(1) A portion of structured securities issuances may be backed by Fannie Mae MBS issued during the same period and held by Fannie Mae.
Structured securities backed by Fannie Mae MBS that are issued by a third party are not included in the multifamily Fannie Mae MBS
structured security issuance amounts.
Multifamily Guaranty Book of Business and Average Charged Guaranty Fee
The chart below displays the UPB and average charged guaranty fee related to our multifamily guaranty book of
business.
M ultifamily Guaranty Book of Business and Charged Fee
(Dollars in billions)
(1) Our multifamily guaranty book of business primarily consists of multifamily mortgage loans underlying Fannie Mae MBS outstanding,
multifamily mortgage loans of Fannie Mae held in our retained mortgage portfolio, and other credit enhancements that we provide on
multifamily mortgage assets. It does not include non-Fannie Mae multifamily mortgage-related securities held in our retained mortgage
portfolio for which we do not provide a guaranty.
Fannie Mae 2025 Form 10-K
MD&A | Multifamily Business | Multifamily Business Metrics
Our multifamily guaranty book of business grew to $534.7 billion as of December 31, 2025 , a 7% increase from
December 31, 2024 , driven by our acquisitions combined with low prepayment volumes due to the high interest rate
environment.
Our average charged guaranty fee represents the return we earn as compensation for the credit risk we assume on our
multifamily guaranty book of business. The average charged guaranty fee on our multifamily guaranty book of business
decreased 2.8 basis points in 2025 compared with 2024 , due to lower average charged fees on our 2025 acquisitions
as compared with the loans in our multifamily guaranty book of business as of December 31, 2024 . Our guaranty fee i s
impacted by the rate at which loans in our book of business turn over as well as the guaranty fees we charge on new
business volumes, which are set at the time we acquire the loans. Multifamily pricing is primarily based on individual
loan characteristics, but is also influenced by external forces, such as interest rates, MBS spreads, the availability and
cost of other sources of liquidity, and our mission-related goals.
Multifamily Mortgage Credit Risk Management
Our strategy for managing multifamily mortgage credit risk consists of the following primary components:
• our underwriting and servicing standards;
• guaranty book diversification and monitoring;
• the transfer of mortgage credit risk to third parties, including our lenders ; and
• management of problem loans.
The credit risk profile of a loan in our multifamily guaranty book of business is primarily influenced by:
• the current and anticipated cash flows from the property;
• the type and location of the property;
• the condition and value of the property;
• the financial strength of the borrower;
• market trends; and
• the structure of the financing.
These and other factors affect both the amount of expected credit loss on a given loan and the sensitivity of that loss to
changes in the economic environment. These factors and our strategy for managing multifamily mortgage credit risk are
described in more detail below.
We typically obtain our multifamily credit information from the lenders or servicers of the mortgage loans in our guaranty
book of business and receive representations and warranties from them as to the accuracy of the information. While we
perform various quality assurance checks by sampling loans to assess compliance with our underwriting and eligibility
criteria, we do not independently verify all reported information and we rely on lender representations and warranties
regarding the accuracy of the characteristics of loans in our guaranty book of business. See “ Risk Factors ” for a
discussion of risks relating to mortgage fraud as a result of this reliance on lender representations and warranties.
Multifamily Underwriting Standards
Our Multifamily business is responsible for pricing and managing the credit risk on our multifamily guaranty book of
business. Multifamily loans that we purchase or that back Fannie Mae MBS are underwritten by a Fannie Mae-approved
lender and may be subject to our underwriting review prior to closing, depending on the product type, loan size, market
and/or other factors. Our underwriting standards generally include, among other things, property cash flow analysis and
third-party appraisals. We periodically refine our underwriting standards based on changes in our risk appetite.
Our standards for multifamily loans specify maximum original LTV ratio and minimum original debt service coverage
ratio (“DSCR”) values that vary based on loan characteristics. Our experience has been that original LTV ratio and
DSCR values have been reliable indicators of future credit performance. We limit acquisitions of multifamily loans with
original LTV ratios greater than 80% or with original DSCRs of 1.25 or less, as they pose more credit risk than we
typically seek. The percentage of our new multifamily business volume acquired in 2025 with original LTV ratios greater
than 80% was less than 1% , compared with approximately 1% in 2024 . The percentage of new multifamily business
volume acquired in 2025 with original DSCRs (based on actual debt service payments) of 1.25 or less was
approximately 3% , compared with approximately 4% in 2024 .
In 2024 and 2025, we implemented a number of improvements relating to gaps we had previously identified in our
management of multifamily loan origination fraud risk and our oversight of multifamily seller/servicer counterparties, and
we are currently testing these improvements to confirm that we have remediated the identified gaps. We are also
Fannie Mae 2025 Form 10-K
MD&A | Multifamily Business | Multifamily Mortgage Credit Risk Management
developing new artificial intelligence- powered tools to assist us in detecting multifamily mortgage fraud. While we have
improved our processes for managing multifamily mortgage fraud risk, we continue to face risks associated with
multifamily mortgage fraud. See “ Risk Factors — Credit Risk ” for a discussion of this risk .
Multifamily Guaranty Book Diversification and Monitoring
Diversification within our multifamily guaranty book of business by geographic concentration, loan term , interest rate
structure, borrower concentration, loan size, property type, and credit enhancement coverage are important factors that
influence credit performance and may help reduce our credit risk.
As part of our ongoing credit risk management process, we and our lenders monitor the performance and risk
characteristics of our multifamily loans and the underlying properties on an ongoing basis throughout the loan term at
the asset and portfolio level. We generally require lenders to provide quarterly and/or annual financial updates for
multifamily loans. We closely monitor loans that are higher risk, including loans with an estimated current DSCR below
1.0, as that is an indicator of heightened default risk.
The physical condition of the properties that serve as collateral for our multifamily loans is an important credit risk
characteristic. As such, we require that our lenders assess property condition at origination, and our lenders also
conduct and deliver to us their property assessments throughout the life of the loan. We maintain a robust quality control
process with respect to property condition, including requiring third-party inspections for certain properties with a higher
risk profile. Some borrowers may not invest in needed property repairs and maintenance, or in capital replacements,
particularly in times of economic stress when they may not have sufficient resources. When concerns about property
condition of underlying collateral arise, we have a dedicated team that actively engages with our lenders and borrowers
to seek remediation of the identified issues. Failure to perform repairs may result in a default under the loan documents.
We manage our exposure to interest-rate risk and monitor changes in interest rates, which can impact multiple aspects
of our multifamily loans. High interest rates may reduce the ability of multifamily borrowers to refinance their loans,
which often have balloon balances at maturity. We have a team that proactively manages upcoming loan maturities to
minimize losses on maturing loans and assists lenders and borrowers with timely and appropriate refinancing or payoff
of maturing loans. We provide information on the maturity schedule of our multifamily loans in “Multifamily Problem Loan
Management and Multifamily Maturity Information” below and in our quarterly financial supplements, which we furnish to
the SEC with current reports on Form 8-K and make available on our website. Information in our quarterly financial
supplements is not incorporated by reference into this report.
Additionally, in a high interest-rate environment, multifamily borrowers with adjustable-rate mortgages will have higher
monthly payments, which may lower their DSCRs. T he percentage of our multifamily guaranty book of business with a
current DSCR below 1.0 was approximately 4% as of December 31, 2025 , compared to 6% as of December 31, 2024 ,
as displayed in the table below. This decrease was primarily attributable to properties financed with adjustable-rate
mortgages reporting higher DSCRs in their latest operating statements as a result of the current interest rate
environment . We generally require multifamily borrowers with adjustable-rate mortgages to purchase and maintain
interest rate caps for the life of the loan to protect against large movements in rates as well as maintain escrows at our
servicers to reserve for the cost of replacing these caps. We actively monitor interest-rate related risks as part of our risk
management process. For more information on our criticized loan population, see “ Multifamily Problem Loan
Management —Credit Performance Statistics on Multifamily Problem Loans.”
In addition to the factors discussed above, we track the following credit risk characteristics to determine loan credit
quality indicators, which are the internal risk categories we use and which are further discussed in “ Note 4, Mortgage
Loans ”:
• delinquency status;
• the relevant local market and economic conditions that may signal changing risk or return profiles; and
• other risk factors.
For example, we closely monitor rental payment trends and vacancy levels in local markets, as well as capitalization
rates, to identify loans that merit closer attention or loss mitigation actions. The primary asset management
responsibilities for our multifamily loans are performed by our DUS and other multifamily lenders. We periodically
evaluate these lenders’ performance for compliance with our asset management criteria .
Fannie Mae 2025 Form 10-K
MD&A | Multifamily Business | Multifamily Mortgage Credit Risk Management
The following table displays our multifamily business volumes and our multifamily guaranty book of business, based on
certain key risk characteristics that we use to evaluate the risk profile and credit quality of our multifamily loans.
We provide additional information on the credit characteristics of our multifamily loans in our quarterly earnings
presentations and financial supplements, which we furnish to the SEC with current reports on Form 8-K and make
available on our website. Information in our quarterly earnings presentations and financial supplements is not
incorporated by reference into this report.
Key Risk Characteristics of Multifamily Business Volume and Guaranty Book of Business
Multifamily Business Volume at
Acquisition (1)
For the Year Ended December 31,
Multifamily Guaranty Book of Business (2)
As of December 31,
LTV ratio:
Weighted-average original LTV ratio
DSCR:
Weighted-average DSCR (3)
Current DSCR below 1.0 (3)
Loan amount and count:
Average loan amount (in millions)
Loan count
Interest rate type:
Fixed-rate
Adjustable-rate
Total
Amortization type:
Full interest-only
Partial interest-only (4)
Fully amortizing
Total
Asset class type:
Conventional/co-op
Seniors housing
Student housing
Manufactured housing
Total
Affordable (5)
Small balance loans (based on loan
count) (6)
Geographic concentration: (7)
Midwest
Northeast
Southeast
Southwest
West
Total
* Represents less than 0.5% of multifamily business volume or guaranty book of business.
(1) Calculated based on the UPB of multifamily loans for each category divided by the aggregate UPB at time of acquisition, excluding small
balance loans which is calculated based on loan count rather than UPB.
Fannie Mae 2025 Form 10-K
MD&A | Multifamily Business | Multifamily Mortgage Credit Risk Management
(2) Calculated based on the aggregate UPB of multifamily loans for each category divided by the aggregate UPB of loans in our multifamily
guaranty book of business as of the end of each period, excluding small balance loans which is calculated based on loan count rather than
UPB.
(3) For our business volumes, the DSCR is calculated using the actual debt service payments for the loan. For our book of business, our
estimates of current DSCRs are based on the latest available income information, including the related debt service covering a 12-month
period, from quarterly and annual statements for these properties. When an annual statement is the latest statement available, it is used.
When operating statement information is not available, the underwritten DSCR is used. Co-op loans are excluded from this metric.
(4) Consists of mortgage loans that were underwritten with a partial interest-only term, regardless of whether the loan is currently in its
interest-only period.
(5) Represents Multifamily Affordable Housing (“MAH”) loans, which are defined as financing for properties that are under an agreement that
provides long-term affordability, such as properties with rent subsidies or income restrictions. MAH loans are included within the asset
class categories referenced above.
(6) Small balance loans refer to multifamily loans with an original UPB of up to $9 million. Small balance loans are included within the asset
class categories referenced above. We present this metric in the table based on loan count rather than UPB. Small balance loans
comprised 10% , 10% and 11% of our multifamily guaranty book of business as of December 31, 2025 , 2024 and 2023 , respectively, based
on UPB of the loan.
(7) Midwest consists of IL, IN, IA, MI, MN, NE, ND, OH, SD and WI. Northeast consists of CT, DE, ME, MA, NH, NJ, NY, PA, PR, RI, VT and
VI. Southeast consists of AL, DC, FL, GA, KY, MD, MS, NC, SC, TN, VA and WV. Southwest consists of AZ, AR, CO, KS, LA, MO, NM, OK,
TX and UT. West consists of AK, CA, GU, HI, ID, MT, NV, OR, WA and WY.
Multifamily Transfer of Mortgage Credit Risk
Overview
Lender risk-sharing is a cornerstone of our Multifamily business. We primarily transfer risk through our DUS program,
which is described under “ Multifamily Primary Business Activities — Delegated Underwriting and Servicing Program .” To
complement our DUS front-end lender-risk sharing program, we also engage in back-end credit risk transfer
transactions through our MCIRT and MCAS programs.
Front-End Credit Risk Sharing
Our DUS model is designed to transfer approximately one-third of the credit risk on our multifamily loans to lenders,
either on a pro-rated or tiered basis, but the amount of credit loss shared in any given transaction may vary. Lenders
who share on a tiered basis typically absorb losses on the f irst 5% of the UPB of a loan at the time of loss settlement,
and above 5% share a percentage of the loss with us, with the maximum loss capped at 20% of the original UPB of the
loan. Among our DUS network, bank lenders tend to use pro-rated loss sharing, as it results in more favorable
regulatory capital requirements for them, while non-depository lenders vary based on preference.
Fannie Mae 2025 Form 10-K
MD&A | Multifamily Business | Multifamily Mortgage Credit Risk Management
The chart below displays the percentage of credit risk retained by Fannie Mae or transferred to third parties under our
typical DUS lender risk-sharing arrangements. As of December 31, 2025 , 44% of our multifamily guaranty book of
business was covered by tiered loss sharing and 56% was covered by pro-rated loss sharing. As of December 31, 2024 ,
43% of our multifamily guaranty book of business was covered by tiered loss sharing and 56% was covered by pro-
rated loss sharing.
Principal Types of Multifamily DUS Loss Sharing
Tiered
100% of UPB
Pro-rated
UPB
UPB
Fannie Mae
DUS Lender
In certain situations, lenders may assume a smaller portion of the credit risk. We establish lender-specific loss-sharing
limits for individual transactions based on loan size, lender financial performance, and lender creditworthiness, among
other factors. When loss sharing is reduced on a loan, the servicing fee paid to the lender is reduced and our guaranty
fee is increased to reflect the lower credit risk retained by the lender.
Non-DUS lenders, which represent a small portion of our multifamily guaranty book of business, typically share or
absorb losses based on a negotiated percentage of the loan or the pool balance. As a result of our lender risk-sharing
agreements, our maximum potential loss recovery from both DUS and non-DUS loans represented approximately 24%
of the UPB of our multifamily guaranty book of business as of December 31, 2025 and December 31, 2024 .
Back-End Credit Risk Sharing
Our back-end MCAS and MCIRT credit risk transfer programs transfer a portion of the credit risk associated with a
reference pool of multifamily mortgage loans to insurers, reinsurers, or investors. These credit-risk sharing transactions
were primarily designed to further reduce the capital requirements associated with loans in the reference pool, which
reflects the benefit of additional credit risk protection in the event of a stress environment. While we transfer multifamily
credit risk through front-end lender risk-sharing at the time of acquisition, our multifamily back-end credit risk transfer
activity occurs later, sometimes a year or more after acquisition.
In 2025 , we entered into two new multifamily credit risk transfer transactions through our MCIRT and MCAS programs.
When engaging in multifamily credit risk transfer transactions, we consider their cost, the resulting capital relief, and the
overall credit risk appetite of the market. The cost of our credit risk transfer transactions is impacted by macroeconomic
conditions and housing market sentiment, as well as the demand and capacity of the investors and reinsurers that
support these transactions.
Fannie Mae 2025 Form 10-K
MD&A | Multifamily Business | Multifamily Mortgage Credit Risk Management
The table below displays the total UPB of multifamily loans and the percentage of our multifamily guaranty book of
business, based on UPB, that is covered by a back-end credit risk transfer transaction. The table does not reflect front-
end lender risk-sharing arrangements, as only a small portion of our multifamily guaranty book of business is not
covered by these arrangements.
Multifamily Loans in Back-End Credit Risk Transfer Transactions
As of December 31,
UPB
Percentage of
Multifamily
Guaranty Book
of Business
UPB
Percentage of
Multifamily
Guaranty Book
of Business
(Dollars in millions)
MCIRT
MCAS
Total
Multifamily Problem Loan Management
We employ proactive management and monitoring of our multifamily guaranty book, which are designed to mitigate
losses and delinquencies on our multifamily guaranty book of business.
Credit Performance Statistics on Multifamily Problem Loans
The percentage of loans in our multifamily guaranty book of business that were criticized was 6% as of December 31,
2025 and 7% as of December 31, 2024 . The criticized loans category substantially consists of loans classified as
“Substandard” and also includes loans classified as “Special Mention” or “Doubtful.” Substandard loans are loans that
have a well-defined weakness that could impact their timely full repayment. While the majority of the substandard loans
in our multifamily guaranty book of business are currently making timely payments, we continue to monitor the
performance of our substandard loan population. For more information on our credit quality indicators, including our
population of substandard loans, see “ Note 4, Mortgage Loans .”
Our multifamily serious delinquency rate increased to 0.74% as of December 31, 2025 , compared with 0.57% as of
December 31, 2024 , primarily driven by new entrants into the seriously delinquent loan population resulting from
sustained market challenges in recent periods. The impact of new delinquencies was partially offset by the foreclosure
of the remaining loans in a specific seniors housing portfolio that was written off in 2023. Our multifamily serious
delinquency rate consists of multifamily loans that were 60 days or more past due based on UPB, expressed as a
percentage of our multifamily guaranty book of business.
Management monitors the multifamily serious delinquency rate as an indicator of potential future credit losses and loss
mitigation activities. Serious delinquency rates are reflective of our performance in assessing and managing credit risk
associated with multifamily loans in our guaranty book of business. A higher serious delinquency rate may result in a
higher allowance for loan losses. The percentage of loans in our multifamily guaranty book of business that were 180
days or more delinquent was 0.56% as of December 31, 2025 , compared with 0.44% as of December 31, 2024 .
In addition to the credit performance information on our multifamily loans provided in this report, we provide additional
information about the performance of our multifamily loans that back MBS and whole loan REMICs in the “Data
Collections” section of our DUS Disclose ® tool, available at www.fanniemae.com/dusdisclose. Information on our
website is not incorporated into this report. Information in Data Collections may differ from similar measures presented
in our financial statements and other public disclosures for a variety of reasons, including as a result of variations in the
loan population covered, timing differences in reporting and other factors.
Multifamily REO Management
As of December 31, 2025 , we held 181 multifamily REO properties with a carrying value of $1.0 billion , compared with
139 properties with a carrying value of $638 million as of December 31, 2024 . The increase in foreclosure activity was
primarily driven by the remaining properties from a specific seniors housing portfolio that was written off in 2023.
Multifamily Credit Loss Performance Metrics
The amount of multifamily credit losses or gains we realize in a given period is driven by foreclosures, pre-foreclosure
sales, post-foreclosure REO activity and other events that trigger write-offs and recoveries. Our multifamily credit loss
performance metrics are not defined terms and may not be calculated in the same manner as similarly titled measures
reported by other companies. For the purposes of our multifamily credit loss performance metrics, credit losses or gains
Fannie Mae 2025 Form 10-K
MD&A | Multifamily Business | Multifamily Mortgage Credit Risk Management
represent write-offs net of recoveries and foreclosed property income or expense. We believe our multifamily credit
losses, and our multifamily credit losses net of freestanding loss-sharing arrangements, provide useful information about
our multifamily credit performance because they display our multifamily credit losses in the context of our multifamily
guaranty book of business, including changes to the benefit we expect to receive from loss-sharing arrangements.
Management views multifamily credit losses, net of freestanding loss-sharing arrangements, as a key metric related to
our multifamily business model and our strategy to share multifamily credit risk.
The table below displays the components of our multifamily credit loss performance metrics, as well as our multifamily
initial write-off severity rate and write-off loan count.
Multifamily Credit Loss Performance Metrics
For the Year Ended December 31,
(Dollars in millions)
Write-offs (1)
Recoveries
Foreclosed property income (expense)
Credit gains (losses)
Change in expected benefits from freestanding loss-sharing
arrangements (2)
Credit gains (losses), net of freestanding loss-sharing
arrangements
Credit gain (loss) ratio (in bps) (3)
Credit gain (loss) ratio, net of freestanding loss-sharing
arrangements (in bps) (2)(3)
Multifamily initial write-off severity rate on liquidated loans (4)
Multifamily write-off loan count on liquidated loans (5)
(1) Represents write-offs at a liquidation event, which includes a foreclosure, a deed-in-lieu of foreclosure or a short sale, as well as write-offs
prior to a liquidation event. Write-offs associated with non-REO sales are net of loss sharing.
(2) Represents changes to the benefit we expect to receive only from write-offs as a result of certain freestanding loss-sharing arrangements,
primarily multifamily DUS lender risk-sharing transactions. Changes to the expected benefits we will receive are recorded in “Other income
(expense), net” in our consolidated statements of operations and comprehensive income.
(3) Calculated based on the amount of “Credit gains (losses)” and “Credit gains (losses), net of freestanding loss-sharing arrangements,”
divided by the average multifamily guaranty book of business during the period.
(4) Rate is calculated as the initial write-off amount divided by the UPB of the loans written off and is based on write-offs associated with a
liquidation event. The rate excludes any costs, gains or losses associated with REO after initial acquisition through final disposition. The
rate also excludes write-offs when a loan is determined to be uncollectible prior to a liquidation event. Write-offs are net of lender loss-
sharing agreements.
(5) Represents the number of loans that experienced write-offs associated with a liquidation event during the period.
Fannie Mae 2025 Form 10-K
MD&A | Multifamily Business | Multifamily Mortgage Credit Risk Management
Multifamily Maturity Information
The below table shows the contractual maturities and interest rate sensitivities of our multifamily mortgage loan portfolio
as recorded on our consolidated balance sheets. Although loans in our consolidated portfolio have varying contractual
terms, the actual life of the loans may be less than their contractual term as a result of prepayment.
Multifamily Loans: Maturities and Terms of the Consolidated Mortgage Loan Portfolio (1)
As of December 31, 2025
Due within 1
year
Greater than 1
year but
within 5 years
Greater than 5
years but
within 15
years
Greater than
15 years
Total
(Dollars in millions)
Multifamily mortgage loan portfolio: (2)
Loans held for investment:
Of Fannie Mae
Of consolidated trusts
Total UPB of multifamily mortgage loans
Cost basis adjustments, net
Total multifamily mortgage loans (2)
Multifamily mortgage loan portfolio by interest rate sensitivity:
Fixed-rate
Adjustable-rate
Total UPB of multifamily mortgage loans
(1) We report the scheduled repayments in the maturity category in which the payment is due, such that a loan’s balance may be presented
across multiple maturity categories.
(2) Excludes accrued interest receivable. The UPB of multifamily loans is based on the amount of contractual UPB due and excludes any
write-offs for amounts deemed uncollectible. Those write-offs are presented as a component of cost basis adjustments, net.
Fannie Mae 2025 Form 10-K
MD&A | Consolidated Credit Ratios and Select Credit Information
Consolidated Credit Ratios and Select Credit Information
The table below displays select credit ratios on our single-family conventional guaranty book of business and our
multifamily guaranty book of business, as well as the inputs used in calculating these ratios. For purposes of calculating
our consolidated credit ratios and the credit loss reserves and write-offs, net of recoveries, the ratios are inclusive of our
allowance for loan losses, allowance for accrued interest receivable, and reserve for guaranty losses. These amounts
exclude reserves for advances of pre-foreclosure costs and the allowance for available-for-sale securities .
Consolidated Credit Ratios and Select Credit Information
December 31, 2025
December 31, 2024
Single-family
Multifamily
Consolidated
Total
Single-family
Multifamily
Consolidated
Total
(Dollars in millions)
Credit loss reserves as a
percentage of:
Guaranty book of business
Nonaccrual loans at amortized
cost
Nonaccrual loans as a
percentage of:
Guaranty book of business
Select financial information used
in calculating credit ratios:
Credit loss reserves
Guaranty book of business (1)
Nonaccrual loans at amortized
cost
(1) Guaranty book of business is as of period end. For single-family, represents the conventional guaranty book of business.
Our credit loss reserves increased as of December 31, 2025 compared with December 31, 2024 primarily as a result of
a provision for credit losses, which increased our allowance for loan losses, as we describe in “ Consolidated Results of
Operations — (Provision) Benefit for Credit Losses .”
Fannie Mae 2025 Form 10-K
MD&A | Consolidated Credit Ratios and Select Credit Information
Consolidated Write-off Ratio and Select Credit Information
For the Year Ended December 31,
Single-
family
Multifamily
Total
Single-
family
Multifamily
Total
Single-
family
Multifamily
Total
(Dollars in millions)
Select credit ratio:
Write-offs, net of
recoveries, as a
percentage of the
average guaranty
book of business
(in bps)
Select financial
information used
in calculating
credit ratio:
Write-offs (1)
Recoveries
Write-offs, net of
recoveries
Average guaranty
book of
business (2)
(1) Represents write-offs when a loan is determined to be uncollectible. For single-family, also includes any write-offs upon the redesignation
of mortgage loans from HFI to HFS.
(2) Average guaranty book of business is based on the average of quarter-end balances. For single-family, represents the conventional
guaranty book of business.
Liquidity and Capital Management
Liquidity Management
Our business activities require that we maintain adequate liquidity to fund our operations. Our liquidity risk management
requirements are designed to address our liquidity risk, which is the risk that we will not be able to meet our obligations
when they come due, including the risk associated with the inability to access funding sources or manage fluctuations in
funding levels. Liquidity risk management involves forecasting funding requirements, maintaining sufficient funding
capacity to meet our needs based on our ongoing assessment of financial market liquidity and adhering to our
regulatory requirements.
Primary Sources and Uses of Funds
Our liquidity depends largely on our ability to issue debt in the capital markets, including both corporate debt and sales
of our MBS securities. We believe that our status as a government-sponsored enterprise and continued federal
government support are essential to maintaining our access to the debt markets. Substantially all of our sources and
uses of funds identified below are both short-term and long-term in nature.
Our primary sources of funds include:
• issuance of long-term and short-term corporate debt;
• proceeds from the sale of mortgage-related securities, mortgage loans, corporate liquidity portfolio assets, and
REO assets;
• principal and interest payments received on mortgage loans, mortgage-related securities and non-mortgage
investments we own;
• guaranty fees received on Fannie Mae MBS, including the TCCA fees collected by us on behalf of Treasury;
• payments received from mortgage insurance counterparties and other providers of credit enhancement; and
• borrowings we may make under a secured intraday funding line of credit or against mortgage-related securities
and other investment securities we hold pursuant to repurchase agreements and loan agreements.
Fannie Mae 2025 Form 10-K
MD&A | Liquidity and Capital Management
Our primary uses of funds include:
• the repayment of matured, redeemed and repurchased debt;
• the purchase of mortgage loans (including delinquent loans from MBS trusts), mortgage-related securities and
other investments;
• interest payments on outstanding debt;
• administrative expenses;
• losses, including advances for past due principal and interest, incurred in connection with our Fannie Mae MBS
guaranty obligations;
• payments of federal income taxes;
• payments of TCCA fees to Treasury; and
• payments associated with our credit risk transfer program expenses.
Liquidity Risk Management Practices and Contingency Planning
Many factors, both internal and external to our business, could influence our debt activity, affect the amount, mix and
cost of our debt funding, reduce demand for our debt securities, increase our liquidity or roll over risk, or otherwise have
a material adverse impact on our liquidity position, including:
• changes or perceived changes in federal government support of our business or our debt securities;
• changes in or the elimination of our status as a government-sponsored enterprise;
• changes by investors in how they view our debt or regulatory changes causing our debt to no longer be
considered a high-quality liquid asset;
• actions taken by the President, FHFA, the Federal Reserve, Treasury, or other government agencies;
• legislation relating to us or our business;
• a change or perceived change in the creditworthiness of the U.S. government, due to our reliance on the U.S.
government’s support;
• a U.S. government payment default on its debt obligations;
• a downgrade in the credit ratings of our senior unsecured debt or the U.S. government’s debt from the major
ratings organizations;
• future changes or disruptions in the financial markets;
• a systemic event leading to the withdrawal of liquidity from the market;
• an extreme market-wide widening of credit spreads;
• public statements by key policy makers;
• a significant decline in our net worth;
• potential investor concerns about the adequacy of funding available to us under or about changes to the senior
preferred stock purchase agreement;
• loss of demand for our debt, or certain types of our debt, from a significant number of investors;
• a significant credit or operational (including cybersecurity) event involving us or one of our major institutional
counterparties; or
• a sudden catastrophic operational failure in the financial sector.
See “Risk Factors” for a discussion of the risks we face relating to:
• the uncertain future of our company;
• our reliance on the issuance of debt securities to obtain funds for our operations and the relative cost to obtain
these funds;
• our liquidity contingency plans;
• our credit ratings; and
• other factors that could adversely affect our ability to obtain adequate debt funding or otherwise negatively
impact our liquidity, including the factors listed above.
Fannie Mae 2025 Form 10-K
MD&A | Liquidity and Capital Management
Also see “ Business — Conservatorship and Treasury Agreements — Treasury Agreements .”
We maintain a liquidity management framework and conduct liquidity contingency planning to prepare for an event in
which our access to the unsecured debt markets becomes limited.
Our liquidity requirements established by FHFA have four components we must meet:
• a short-term cash flow metric that requires us to meet our expected cash outflows and continue to provide
liquidity to the market over a 30-day period of stress, plus an additional $10 billion buffer;
• an intermediate cash flow metric that requires us to meet our expected cash outflows and continue to provide
liquidity to the market over a 365-day period of stress;
• a s pecified minimum stable funding (as defined by FHFA) to less-liquid asset rati o. Less-liquid assets are those
that are not eligible to be pledged as collateral to Fixed Income Clearing Corporation; and
• a requirement that we fund our assets with stable fundin g that has a specified minimum term relative to the
term of the assets.
As of December 31, 2025 , we wer e in compliance with these requirements.
We execute operational testing of our ability to rely upon our U.S. Treasury collateral to obtain financing. We enter into
relatively small repurchase agreements to confirm that we have the operational and systems capability to do so . In
addition, we have positioned collateral in advance to clearing banks in the event we seek to enter into repurchase
agreements in the future. We do not, however, have committed repurchase agreements with specific counterparties, as
historically we have not relied on this form of funding. As a result, our use of such facilities and our ability to enter into
them in significant dollar amounts may be challenging in a stressed market environment. See “ Corporate Liquidity
Portfolio ” for further discussions of our alternative sources of liquidity if our access to the debt markets were to become
limited.
While our liquidity contingency planning attempts to address stressed market conditions and our status in
conservatorship, we believe accessing all liquidity sources in those plans could be difficult or impossible to execute
under stressed conditions for a company of our size in our circumstances. See “ Risk Factors — Liquidity Risk ” for a
description of the risks associated with our ability to fund operations and our liquidity contingency planning.
Debt Funding
We separately present the debt from consolidations (“Debt of consolidated trusts”) and the debt issued by us (“Debt of
Fannie Mae”) in our consolidated balance sheets. This discussion regarding debt funding focuses on the debt of Fannie
Mae. We primarily fund our business through MBS issuances, retained earnings, and the issuance of a variety of short-
term and long-term debt securities in the domestic and international capital markets. Accordingly, we are subject to “roll
over,” or refinancing, risk on our outstanding debt.
Our debt securities are actively traded in the over-the-counter market. We have a diversified funding base of domestic
and international investors. Purchasers of our debt securities are geographically diversified and include fund managers,
commercial banks, pension funds, insurance companies, foreign central banks, corporations, state and local
governments, and other municipal authorities. We compete for low-cost debt funding with institutions that hold mortgage
portfolios, including Freddie Mac and the FHLBs.
Our debt funding needs and debt funding activity may vary from period to period depending on factors such as market
conditions, refinance volumes, our capi tal and liquidity management, our net worth, and the size of o ur retained
mortgage portfolio. See “ Retained Mortgage Portfolio ” for information about our retained mortgage portfolio and limits on
its size.
The UPB of our aggregate indebtedness was $130.0 billion as of December 31, 2025 . Pursuant to the terms of the
senior preferred stock purchase agreement, we are prohibited from issuing debt without the prior consent of Treasury if
it would result in our aggregate indebtedness exceeding our outstanding debt limit, which is set to $270 billion . The
calculation of our indebtedness for purposes of complying with our debt limit reflects the UPB and excludes debt basis
adjustments and debt of consolidated trusts.
Outstanding Debt
Total outstanding debt of Fannie Mae includes short-term and long-term debt and excludes debt of consolidated trusts.
Short-term debt of Fannie Mae consists of borrowings with an original contractual maturity of one year or less and,
therefore, does not include the current portion of long-term debt. Long-term debt of Fannie Mae consists of borrowings
with an original contractual maturity of greater than one year.
Fannie Mae 2025 Form 10-K
MD&A | Liquidity and Capital Management
The following chart and table display information on our outstanding short-term and long-term debt based on original
contractual maturity. Our outstanding debt decreased in 2025 as our funding needs were primarily satisfied by earnings
retained from our operations. Additionally, we increased the proportion of short-term debt to replace maturing long-term
obligations.
Debt of Fannie Mae 1
(Dollars in billions)
Short-term debt
Long-term debt maturing within one year
Long-term debt, excluding portion maturing within one year
(1) Outstanding debt balance consists of the UPB, premiums and discounts, fair value adjustments, hedge-related basis adjustments and
other cost basis adjustments. Reported amounts include net discount unamortized cost basis adjustments and fair value adjustments of
$2.6 billion and $3.7 billion as of December 31, 2025 and 2024 , respectively.
Selected Debt Information
As of December 31,
(Dollars in billions)
Selected Weighted-Average Interest Rates (1)
Interest rate on short-term debt
Interest rate on long-term debt, including portion maturing within one year
Interest rate on callable debt
Selected Maturity Data
Weighted-average maturity of debt maturing within one year (in days)
Weighted-average maturity of debt maturing in more than one year (in months)
Other Data
Outstanding callable debt (2)
(1) Excludes the effects of fair value adjustments and hedge-related basis adjustments.
(2) Includes short-term callable debt of $40 million and $95 million as of December 31, 2025 and 2024 , respectively.
We intend to repay our short-term and long-term debt obligations as they become due primarily through cash from
business operations, the sale of assets in our corporate liquidity portfolio and the issuance of additional debt securities.
For information on the maturity profile of our outstanding long-term debt for each of the years 2026 through 2030 and
thereafter, see “ Note 8, Short-Term and Long-Term Debt .”
Fannie Mae 2025 Form 10-K
MD&A | Liquidity and Capital Management
Debt Funding Activity
The table below displays activity in debt of Fannie Mae. This activity excludes the debt of consolidated trusts and
intraday borrowing. The reported amounts of debt issued and paid off during each period represent the face amount of
the debt at issuance and redemption.
Activity in Debt of Fannie Mae
For the Year Ended December 31,
(Dollars in millions)
Issued during the period:
Short-term:
Amount
Weighted-average interest rate
Long-term:
Amount
Weighted-average interest rate
Total issued:
Amount
Weighted-average interest rate
Paid off during the period: (1)
Short-term:
Amount
Weighted-average interest rate (2)
Long-term:
Amount
Weighted-average interest rate
Total paid off:
Amount
Weighted-average interest rate
(1) Consists of all payments on debt, including regularly scheduled principal payments, payments at maturity, payments resulting from calls
and payments for any other repurchases. Repurchases of debt and early retirements of zero-coupon debt are reported at original face
value, which does not equal the amount of actual cash payment.
(2) Includes interest generated from negative interest rates on certain repurchase agreements, which offset our short-term funding costs.
Fannie Mae 2025 Form 10-K
MD&A | Liquidity and Capital Management
Corporate Liquidity Portfolio
The chart below displays information on the composition of our corporate liquidity portfolio. The balance and
composition of our corporate liquidity portfolio fluctuates as a result of factors such as changes in our cash flows,
liquidity in the fixed-income markets, our investment strategy, and our liquidity risk management framework and
practices. Our corporate liquidity portfolio decreased in 2025 , primarily due to liquidating assets to pay off maturing debt
of Fannie Mae that was not replaced , and the sale of U.S. Treasury securities and maturities of securities purchased
under agreement to resell, with proceeds reinvested into agency MBS investments held in our retained mortga ge
portfolio . For information on our expectation to continue to increase our holdings of agency MBS and how we intend to
fund those purchases, see “ Retained Mortgage Portfolio .”
Corporate Liquidity Portfolio
(Dollars in billions)
U.S. Treasury securities
Securities purchased under agreements to resell
Cash
Off-Balance Sheet Arrangements
We enter into certain business arrangements to facilitate our statutory purpose of providing liquidity to the secondary
mortgage market and to reduce our exposure to interest rate fluctuations. Some of these arrangements are not
recorded in our consolidated balance sheets or may be recorded in amounts different from the full contract or notional
amount of the transaction, depending on the nature or structure of, and the accounting required to be applied to, the
arrangement. These arrangements are commonly referred to as “off-balance sheet arrangements” and expose us to
potential losses in excess of the amounts recorded in our consolidated balance sheets.
Our off-balance sheet arrangements result primarily from the following:
• our guaranty of mortgage loan securitization and resecuritization transactions over which we have no control,
which are reflected in our unconsolidated Fannie Mae MBS net of any beneficial ownership interest we retain,
and other financial guarantees that we do not control;
• liquidity support transactions; and
• partnership interests.
The total amount of our off-balance sheet exposure related to unconsolidated Fannie Mae MBS net of any beneficial
interest that we retain, and other financial guarantees was $195.7 billion as of December 31, 2025 and $211.5 billion as
of December 31, 2024 . The majority of the other financial guarantees consists of Freddie Mac securities backing Fannie
Mae structured securities. See “ Guaranty Book of Business ” and “ Note 7, Financial Guarantees ” for more information
regarding our maximum exposure to loss on unconsolidated Fannie Mae MBS and Freddie Mac securities.
Fannie Mae 2025 Form 10-K
MD&A | Liquidity and Capital Management
Our total outstanding liquidity commitments to advance funds for securities backed by multifamily housing revenue
bonds totaled $3.6 billion as of December 31, 2025 and $4.3 billion as of December 31, 2024 . These commitments
require us to advance funds to third parties that enable them to repurchase tendered bonds or securities that are unable
to be remarketed.
We have investments in various limited partnerships and similar legal entities, which consist of LIHTC investments,
community investments and investments in other entities. When we do not have a controlling financial interest in those
entities, our consolidated balance sheets reflect only our investment rather than the full amount of the partnership’s
assets and liabilities. See “ Note 3, Consolidations and Transfers of Financial Assets — Unconsolidated VIEs ” for
information regarding our investments in limited partnerships and similar legal entities.
Equity Funding
Under the current terms of the senior preferred stock purchase agreement, we are prohibited from issuing equity
securities without Treasury’s consent, except in limited circumstances . As a result, our current access to equity funding
is limited to draws under the senior preferred stock purchase agreement. Even if Treasury approves our issuance of
additional equity securities, there may not be a sufficient market for new issuances of our equity securities due to factors
such as our conservatorship status, the covenants under the senior preferred stock purchase agreement, Treasury’s
ownership of the warrant to purchase up to 79.9% of the total shares of our common stock outstanding, and the
uncertainty regarding our future, as described in “ Risk Factors — GSE and Conservatorship Risk .” For a description of
the funding available and the covenants under the senior preferred stock purchase agreement, see “ Business —
Conservatorship and Treasury Agreements — Treasury Agreements .”
Contractual Obligations
We have contractual obligations that affect our liquidity and capital resource requirements. These contractual obligations
primarily consist of debt obligations (and associated interest payment obligations) and mortgage purchase commitments
recognized on our consolidated balance sheet.
• For information about the amounts, maturities and contractual interest rates of our obligations related to debt,
see “ Note 8, Short-Term and Long-Term Debt .”
• For information about our mortgage purchase commitments, see “ Note 17, Commitments and Contingencies .”
Our contractual obligations also include $3.8 billion in cash received as collateral, unrecognized tax benefits, lease
obligations, and future cash payments due under our unconditional and legally binding obligations to fund LIHTC
partnership investments and other partnerships.
In addition, our short- and long-term liquidity and capital resource needs may be affected by our contractual obligations
to make the payments listed below. The amounts of these payments are uncertain and will depend on future events:
• payments on our obligations to stand ready to perform under our guarantees relating to Fannie Mae MBS and
other financial guarantees, including Fannie Mae commingled structured securities. The amount and timing of
payments under these arrangements are generally contingent upon the occurrence of future events. For a
description of the amount of our on- and off-balance sheet Fannie Mae MBS and other financial guarantees as
of December 31, 2025 , see “ Guaranty Book of Business ” and “ Off-Balance Sheet Arrangements ;”
• payments associated with our back-end credit risk transfer transactions , the amount and timing of which are
contingent upon the occurrence of future credit and prepayment events for the related reference pool of
mortgage loans. For more information on these transactions, see “ Single-Family Business — Single-Family
Mortgage Credit Risk Management — Single-Family Credit Enhancement and Transfer of Mortgage Credit Risk
— Credit Risk Transfer Transactions ” and “ Multifamily Business — Multifamily Mortgage Credit Risk Management
— Multifamily Transfer of Mortgage Credit Risk ;” and
• payments related to our interest-rate risk management derivatives that may require cash settlement in future
periods, the amount and timing of which depend on changes in interest rates. For more information on these
transactions, see “ Note 9, Derivative Instruments .”
Credit Ratings
Our credit ratings from the major credit ratings organizations, as well as the credit ratings of the U.S. government, are
primary factors that could affect our ability to access the capital markets and our cost of funds. In addition, our credit
ratings are important when we seek to engage in certain long-term transactions, such as derivative transactions . See
“ Risk Factors — Liquidity Risk ” for a discussion of the risks to our business relating to a decrease in our credit ratings.
Fannie Mae 2025 Form 10-K
MD&A | Liquidity and Capital Management
The table below displays our credit ratings issued by the three major credit rating agencies.
Fannie Mae Credit Ratings
As of December 31, 2025
Moody’s
Fitch
Long-term senior debt
Short-term senior debt
Preferred stock
Ca(hyb)
Outlook
Stable
Stable
Stable
On May 19, 2025, Moody’s downgraded our long-term senior unsecured debt rating to Aa1 from Aaa and changed the
outlook to stable from negative . This action followed Moody’s downgrade of the U.S. Government’s long-term issuer and
senior unsecured ratings to Aa1 from Aaa and change in outlook to stable from negative on May 16, 2025.
We have no covenants in our existing debt agreements that would be violated by a downgrade in our credit ratings.
However, in connection with certain derivatives counterparties, we could be required to provide additional collateral to or
terminate transactions with certain counterpartie s in the event that our senior unsecured debt ratings are downgraded.
See “ Note 9, Derivative Instruments —Derivative Counterparty Credit Exposure” for a description of additional collateral
we would be required to post to derivatives counterparties in the event of certain credit ratings downgrades.
Cash Flows
Year Ended December 31, 2025 . Cash and restricted cash increased from $38.5 billion as of December 31, 2024 to
$42.6 billion as of December 31, 2025 . The increase was primarily driven by cash inflows from (1) proceeds from
repayments of loans, (2) the sale of Fannie Mae MBS to third parties, (3) proceeds from issuances of debt of Fannie
Mae, (4) sales of trading securities, and (5) maturity of investments in securities purchased under agreements to resell.
Largely offsetting these cash inflows were cash outflows primarily from (1) payments on outstanding debt of Fannie Mae
and consolidated trusts, (2) purchases of loans acquired as held for investment, and (3) advances to lenders.
Year Ended December 31, 2024 . Cash and restricted cash increased from $34.0 billion as of December 31, 2023 to
$38.5 billion as of December 31, 2024 . The increase was primarily driven by cash inflows from (1) proceeds from
repayments of loans, (2) the sale of Fannie Mae MBS to third parties, (3) issuances of funding debt, which outpaced
redemptions, and (4) maturity of investments in securities purchased under agreements to resell.
Partially offsetting these cash inflows were cash outflows primarily from (1) payments on outstanding debt of
consolidated trusts, (2) purchases of loans acquired as held for investment, and (3) advances to lenders.
Fannie Mae 2025 Form 10-K
MD&A | Liquidity and Capital Management
Capital Management
Capital Requirements
For a description of our capital requirements under the enterprise regulatory capital framework, see “ Business —
Legislation and Regulation — Capital Requirements .” Although the enterprise regulatory capital framework went into
effect in February 2021, we are not required to hold capital according to the framework’s requirements until the date of
termination of our conservatorship, or such later date as may be ordered by FHFA.
The table below sets forth information about our capital requirements under the standardized approach of the enterprise
regulatory capital framework. A s of December 31, 2025 , we had a deficit in available capital for purposes of the
enterprise regulatory capital framework even though we had positive net worth under G AAP of $109.0 billion primarily
because the $120.8 billion stated value of the senior preferred stock does not qualify as regulatory capital. Our deficit in
available capital for purposes of our risk-based adjusted total capital requirement declined $15 billion in 2025, from $37
billion as of December 31, 2024 to $22 billion as of December 31, 2025 .
As of December 31, 2025 , we had a $215 billion shortfall to our risk-based adjusted total capital requirement including
buffers of $193 billion , and a $135 billion shortfall to our minimum risk-based adjusted total capital requirement
excluding buffers of $113 billion . From December 31, 2024 to December 31, 2025 , our capital shortfall including buffers
declined by $12 billion and our shortfall excluding buffers declined by $11 billion . These declines were primarily driven
by increased retained earnings, which more than offset the rise in minimum capital requirements associated with higher
risk-weighted assets during 2025 . The increase in risk-weighted assets during 2025 was largely driven by loans we
acquired during the period that carried higher credit risk-weights compared to seasoned loans that liquidated , as well as
market risk associated with the increase in retained mortgage portfolio asset s . Under the enterprise regulatory capital
framework, we are required to hold capital associated with the market risk of the mortgage assets held in our retained
mortgage portfolio. As a result, increases in purchases of agency MBS for our retained mortgage portfolio generally
result in an increase in the amount of capital we are required to hold.
Capital Metrics under the Enterprise Regulatory Capital Framework as of December 31, 2025 (1)
(Dollars in billions)
Stress capital buffer
Stability capital buffer
Adjusted total assets
Countercyclical capital buffer
Risk-weighted assets
Prescribed capital conservation buffer amount
Minimum
Capital Ratio
Requirement
Minimum
Capital
Requirement
Available
Capital
(Deficit)
Capital
Shortfall
(without
Buffers) (2)
Applicable
Buffers (3)
Total Capital
Requirement
(including
Buffers)
Capital
Shortfall
(including
Buffers) (2)
Risk-based capital:
Total capital (statutory) (4)
Common equity tier 1 capital
Tier 1 capital
Adjusted total capital
Leverage capital:
Core capital (statutory) (5)
Tier 1 capital
Fannie Mae 2025 Form 10-K
MD&A | Liquidity and Capital Management
Capital Metrics under the Enterprise Regulatory Capital Framework as of December 31, 2024 (1)
(Dollars in billions)
Stress capital buffer
Stability capital buffer
Adjusted total assets
Countercyclical capital buffer
Risk-weighted assets
Prescribed capital conservation buffer amount
Minimum
Capital Ratio
Requirement
Minimum
Capital
Requirement
Available
Capital
(Deficit)
Capital
Shortfall
(without
Buffers) (2)
Applicable
Buffers (3)
Total Capital
Requirement
(including
Buffers)
Capital
Shortfall
(including
Buffers) (2)
Risk-based capital:
Total capital (statutory) (4)
Common equity tier 1 capital
Tier 1 capital
Adjusted total capital
Leverage capital:
Core capital (statutory) (5)
Tier 1 capital
(1) Ratios are calculated as a percentage of risk-weighted assets for risk-based capital metrics and as a percentage of adjusted total assets
for leverage capital metrics.
(2) The capital shortfall in these columns represents the difference between the applicable capital requirement (without or with buffers, as
applicable) and the available capital deficit.
(3) Prescribed capital conservation buffer amount, or PCCBA, for risk-based capital and prescribed leverage buffer amount, or PLBA, for
leverage capital.
(4) The sum of (a) core capital (see definition in footnote 5 below); and (b) a general allowance for foreclosure losses.
(5) The sum of (a) the stated value of our outstanding common stock (common stock less treasury stock); (b) the stated value of our
outstanding perpetual, noncumulative preferred stock; (c) our paid-in capital; and (d) our retained earnings (accumulated deficit).
While it is not applicable until the date of termination of our conservatorship, our maximum payout ratio represents the
percentage of eligible retained income that we are permitted to pay out in the form of distributions or discretionary bonus
payments under the enterprise regulatory capital framework. As of December 31, 2025 , our maximum payout ratio
under the enterprise regulatory capital framework was 0% . See “ Note 13, Regulatory Capital Requirements ” for
information on our capital ratios as o f December 31, 2025 and December 31, 2024 under the enterprise regulatory
capital framework.
Fannie Mae 2025 Form 10-K
MD&A | Liquidity and Capital Management
The table below presents certain components of our regulatory capital.
Regulatory Capital Components
As of December 31,
(Dollars in millions)
Total equity
Less:
Senior preferred stock
Preferred stock
Common equity
Less: deferred tax assets arising from temporary differences that exceed 10% of
common equity tier 1 capital and other regulatory adjustments
Common equity tier 1 capital (deficit)
Add: perpetual, noncumulative preferred stock
Tier 1 capital (deficit)
Tier 2 capital adjustments
Adjusted total capital (deficit)
The table below presents certain components of our core capital.
Statutory Capital Components
As of December 31,
(Dollars in millions)
Total equity
Less:
Senior preferred stock
Accumulated other comprehensive income (loss), net of taxes
Core capital (deficit)
Less: general allowance for foreclosure losses
Total capital (deficit)
Capital Activity
Under the terms governing the senior preferred stock, no dividends were payable to Treasury for the fourth quarter of
2025 and none are payable for the first quarter of 2026 .
Under the terms governing the senior preferred stock, through and including the capital reserve end date, any increase
in our net worth during a fiscal quarter results in an increase in the same amount of the aggregate liquidation preference
of the senior preferred stock in the following quarter. The capital reserve end date is defined as the last day of the
second consecutive fiscal quarter during which we have had and maintained capital equal to, or in excess of, all of the
capital requirements and buffers under the enterprise regulatory capital framework.
As a result of these terms governing the senior preferred stock, the aggregate liquidation preference of the senior
preferred stock increased to $227.0 billion as of December 31, 2025 , from $223.1 billion as of September 30, 2025 , due
to the $3.9 billion increase in our net worth in the third quarter of 2025 . The aggregate liquidation preference of the
senior preferred stock will further increase to $230.5 billion as of March 31, 2026 , due to the $3.5 billion increase in our
net worth in the fourth quarter of 2025 . See “ Business — Conservatorship and Treasury Agreements — Treasury
Agreements ” for more information on the terms of our senior preferred stock, including how the aggregate liquidation
preference is determined.
Fannie Mae 2025 Form 10-K
MD&A | Liquidity and Capital Management
Treasury Funding Commitment
Treasury made a commitment under the senior preferred stock purchase agreement to provide funding to us under
certain circumstances if we have a net worth deficit. As of December 31, 2025 , the remaining amount of Treasury’s
funding commitment to us was $113.9 billion . We have not received any funding from Treasury under this commitment
since the first quarter of 2018. See “ Note 2, Conservatorship, Senior Preferred Stock Purchase Agreement and Related
Matters ” for more information on Treasury’s funding commitment under the senior preferred stock purchase agreement.
Risk Management
Overview
We manage the risks that arise from our business activities through our enterprise risk management program. Our risk
management activities are aligned with the requirements of FHFA’s Enterprise Risk Management Program Advisory
Bulletin, which are consistent with the general principles set forth by the Committee of Sponsoring Organizations of the
Treadway Commission’s (“COSO”) Enterprise Risk Management—Integrating with Strategy and Performance
framework.
Risk Categories
We are exposed to the following principal risk categories:
• Credit Risk . Credit risk is the risk of loss arising from another party’s failure to meet its contractual obligations.
For financial securities or instruments, credit risk is the risk of not receiving principal, interest or other financial
obligation on a timely basis. Our credit risk exposure exists primarily in connection with our guaranty book of
business ( including natural disaster-related exposure) and our institutional counterparties.
• Market Risk . Market risk is the risk of loss resulting from changes in the economic environment. This risk
arises from fluctuations in interest and exchange rates. This risk also includes the risk to earnings or capital
arising from movements in market rates or prices such as foreign exchange rates, equity prices, credit spreads,
and/or commodity prices. Market risk includes interest-rate risk and spread risk, which are discussed in “ Risk
Management — Market Risk Management, including Interest-Rate Risk Management .”
• Liquidity Risk . Liquidity risk is the risk to our current or projected financial condition and resilience arising from
an inability to meet obligations when they come due, including the risk associated with the inability to access
funding sources or manage fluctuations in funding levels.
• Operational Risk . Operational risk is the risk of loss resulting from inadequate or failed internal processes,
people, systems, and third parties, or disruptions from external events. Operational risk includes cyber and
other information security risk.
• Model Risk . Model risk is the risk of potential adverse consequences (such as financial loss or reputational
damage) due to: inappropriate model design; errors in model coding, implementation, inputs or assumptions;
inadequate model performance; or incorrect use or application of model outputs or reports.
• Strategic Risk . Strategic risk is the risk of loss resulting from poor implementation of business decisions or the
failure to respond appropriately to changes in the industry or external environment.
• Compliance Risk . Compliance risk is the risk of legal or regulatory sanctions, damage to current or projected
financial condition, damage to business resilience or damage to reputation resulting from nonconformance with
compliance obligations.
• Reputational Risk . Reputational risk is the risk that substantial negative publicity may cause a decline in public
perception of us, a decline in our customer base, costly litigation, revenue reductions or losses.
See “ Risk Factors ” for a more detailed discussion of risks that could materially adversely affect our business, results of
operations, financial condition, liquidity and net worth. The following discussion, as well as the “ Single-Family Business
— Single-Family Mortgage Credit Risk Management ,” “ Multifamily Business — Multifamily Mortgage Credit Risk
Management ” and “Liquidity and Capital Management” sections of this report, address how we manage the categories
of risk we have determined present the most significant exposure.
Fannie Mae 2025 Form 10-K
MD&A | Risk Management | Overview
Components of Risk Management
Our risk management program is composed of four inter-related components.
• Governance & Organizational Structure. Our risk governance structure establishes authority, responsibility
and accountability for risk management, which we conduct through a variety of controls designed to act in
concert, including delegations of authority, risk committees, risk policies, risk appetite and risk limits.
• Risk Appetite Framework. We manage and govern our risk-taking activities through a risk appetite and limits
framework that is aligned to our corporate strategy and defines boundaries across businesses and risk types.
• Risk Identification, Assessment, Control & Monitoring. We identify, assess, respond to, control, and
monitor risks generated in the pursuit of our strategy and objectives. Performing these activities across the
company allows us to address risks arising from different sources and tailor appropriate responses.
• Reporting & Communication Processes. We identify, capture and communicate relevant information so that
stakeholders can carry out their responsibilities and make sound and informed risk management decisions.
Risk Management Governance
We manage risk by using the “three lines model.” Our Board of Directors and management-level risk committees are
also integral to our risk management program.
Governance
Board of Directors of Fannie Mae
Risk Policy & Capital Committee
Audit Committee
Management-Level Risk Committees
Business Units & Corporate
Functions
First Line : Identify, own and
manage risks
Corporate Risk & Compliance
Division
Second Line : Independent risk
oversight and effective challenge
Internal Audit
xxxxxxxxxxx
Third Line : Independent
assurance
Three Lines
Model
Board of Directors
• Oversees our enterprise risk management program and its alignment with our strategy and business objectives
• Approves Board-level risk policies, risk appetite and risk limits
• Delegates authorities to the CEO and Enterprise Risk Committee
• Certain activities require conservator decision or notification. See “Directors, Executive Officers and Corporate
Governance—Corporate Governance” for more information
Risk Policy & Capital Committee
• Assists the Board in overseeing enterprise risk management and recommends for Board approval Board-level
risk policies, risk appetite and limits
• Approves Risk Policy & Capital Committee-level risk policies
Audit Committee
• Oversees our accounting, reporting, and financial practices, including the integrity of our financial statements
and internal control over financial reporting, as well as our compliance with legal and regulatory requirements
Management-Level Risk Committees
• Consist of an Enterprise Risk Committee chaired by our Chief Risk Officer and additional committees
overseeing risk across the company, including first-line risk committees
• Include members of management from the first and second line functions and senior members from the third
line function
• Approve management-level policies, establish risk parameters, and recommend risk policies
Fannie Mae 2025 Form 10-K
MD&A | Risk Management | Overview
• Provide a cross-functional forum for discussing and documenting risks and responses
• Review decisions on matters that may expose our enterprise to significant, new or unusual risk
Business Units & Corporate Functions (First Line)
• Accountable for identifying, assessing, controlling, monitoring and reporting on all risks in executing their
functions and operating in a sound control environment
• Conform to the risk appetite, policies, standards, and limits or thresholds approved by FHFA, the Board and the
relevant management-level risk committees
• Includes control functions that provide control and oversight
Corporate Risk & Compliance Division (Second Line)
• Oversees all first-line activities to create an aggregate view of the company’s financial and non-financial risks
relative to risk appetite
• Second line functions are independent and report directly to the Board of Directors and CEO
Internal Audit (Third Line)
• An independent, objective assurance and advisory function
• Provides an independent evaluation of the effectiveness of internal controls, risk management, and governance
Credit Risk Management Overview
Below we discuss how we manage mortgage credit risk, institutional counterparty credit risk, and natural disaster risk.
Mortgage Credit Risk Management
Mortgage credit risk arises from the risk of loss resulting from the failure of a borrower to make required mortgage
payments. We are exposed to credit risk on our book of business because we either hold mortgage assets, have issued
a guaranty in connection with the creation of Fannie Mae MBS backed by mortgage assets or have provided other credit
enhancements on mortgage assets. For information on how we manage mortgage credit risk, see “ Single-Family
Business — Single-Family Mortgage Credit Risk Management ” and “ Multifamily Business — Multifamily Mortgage Credit
Risk Management .”
Institutional Counterparty Credit Risk Management
Overview
Institutional counterparty credit risk is the risk of loss resulting from the failure of an institutional counterparty to fulfill its
contractual obligations to us. Our primary exposure to institutional counterparty credit risk exists with our:
• credit guarantors, including mortgage insurers, reinsurers and multifamily lenders with risk sharing
arrangements;
• mortgage lenders that sell loans to us and mortgage lenders and other counterparties that service our loans ;
and
• institutions that issue the investments held in our corporate liquidity portfolio.
We also have direct counterparty exposure to: derivatives counterparties, central counterparty clearing institutions,
custodial depository institutions, mortgage originators, investors and dealers, debt security dealers, and document
custodians. We also have counterparty credit risk exposure to Freddie Mac arising from our resecuritization of Freddie
Mac-issued securities, and to the MERS ® System.
We routinely enter into a high volume of transactions with counterparties in the financial services industry resulting in a
significant credit concentration with respect to this industry. We also may have multiple exposures to particular
counterparties, as many of our institutional counterparties perform several types of services for us. Accordingly, if one of
these counterparties were to become insolvent or otherwise default on its obligations to us, it could harm our business
and financial results in a variety of ways. Our overall objective in managing institutional counterparty credit risk is to
maintain individual and portfolio-level counterparty exposures within acceptable ranges based on our risk-based rating
system. We seek to achieve this objective through the following:
• establishment and observance of counterparty eligibility standards appropriate to each exposure type and level;
• establishment of risk limits;
• requiring collateralization of exposures where appropriate; and
• exposure monitoring and management.
Fannie Mae 2025 Form 10-K
MD&A | Risk Management | Institutional Counterparty Credit Risk Management
See “ Risk Factors — Credit Risk ” for additional discussion of the risks to our business if one or more of our institutional
counterparties fails to fulfill their contractual obligations to us.
Counterparty Risk Management Framework
Establishment and Observance of Counterparty Eligibility Standards
The institutions with which we do business vary in size, complexity and geographic footprint. Because of this,
counterparty eligibility criteria vary depending upon the type and magnitude of the risk exposure incurred. We use a risk-
based approach to assess the credit risk of our counterparties, which may include regular examination of their financial
statements, confidential communication with the management of those counterparties and regular monitoring of publicly
available credit rating information. This and other information is used to develop proprietary credit rating metrics that we
use to assess credit quality. Factors including corporate or third-party support or guarantees, our knowledge of the
counterparty and its management, reputation, quality of operations and experience are also important in determining the
initial and continuing eligibility of a counterparty.
Establishment of Risk Limits
Institutions are assigned a risk limit to ensure that our risk exposure is maintained at a level we believe is appropriate for
the institution’s credit assessment and the time horizon for the exposure, as well as to diversify exposure so that we
adequately manage our concentration risk. A corporate risk limit is first established at the counterparty level for the
aggregate of all activity and then is divided among our individual business units. Our business units may further
subdivide limits among products or activities.
Collateralization of Exposures
We may require collateral, letters of credit or investment agreements as a condition to approving exposure to a
counterparty. Collateral requirements are determined after a comprehensive review of the credit quality and the level of
risk exposure of each counterparty. We may require that a counterparty post collateral in the event of an adverse event
such as a ratings downgrade. Collateral requirements are monitored and adjusted as appropriate.
Exposure Monitoring and Management
The risk management functions of the individual business units are responsible for managing the counterparty
exposures associated with their activities within risk limits. An oversight team that reports to our Chief Risk Officer is
responsible for establishing and enforcing corporate policies and procedures regarding counterparties, establishing
corporate limits and aggregating and reporting institutional counterparty exposure. We regularly update exposure limits
for individual institutions and communicate changes to the relevant business units. We regularly report exposures
against the risk limits to the Risk Policy and Capital Committee of the Board of Directors.
Mortgage Insurers
We are generally required, pursuant to our charter, to obtain credit enhancements on single-family conventional
mortgage loans that we purchase or securitize with LTV ratios over 80% at the time of purchase. We use several types
of credit enhancements to manage our single-family mortgage credit risk, including primary and pool mortgage
insurance coverage. Our primary exposure associated with mortgage insurers is that they will fail to fulfill their
obligations to reimburse us for claims under our insurance policies.
Actions we take to manage this risk include:
• maintaining financial and operational eligibility requirements that an insurer must meet to become and remain a
qualified mortgage insurer;
• regularly monitoring our exposure to individual mortgage insurers and mortgage insurer credit ratings, including
in-depth financial reviews and analyses of the insurers’ portfolios and capital adequacy under hypothetical
stress scenarios;
• requiring certification and supporting documentation annually from each mortgage insurer; and
• performing periodic reviews of mortgage insurers to confirm compliance with eligibility requirements and to
evaluate their management, control and underwriting practices.
The master policies issued by our primary mortgage insurers govern their claim-paying obligations to us, including
circumstances in which significant underwriting or servicing defects might permit the mortgage insurer to rescind
coverage or deny a claim. Where a claim has not been properly paid as a result of lender non-compliance with their
obligation to maintain coverage, the lender is required to make us whole for losses not covered by the insurer. The risk
of coverage rescission is mitigated by the rescission relief principles we require in mortgage insurer master policies, and
may also be mitigated by the quality control standards required by our private mortgage insurer eligibility requirements
Fannie Mae 2025 Form 10-K
MD&A | Risk Management | Institutional Counterparty Credit Risk Management
(“PMIERs”). Generally, the rescission relief principles align with our representation and warranty framework and require
our primary mortgage insurers to waive their rescission rights after a mortgage has performed for at least 36 months or
if they have completed a full review of the loan and found no significant defects. See below for a discussion of the
PMIERs.
In describing our mortgage insurance coverage, “insurance in force” refers to the UPB of single-family loans in our
conventional guaranty book of business covered under the applicable mortgage insurance policies. Our total mortgage
insurance in force was $745.9 billion , or 21% of our single-family conventional guaranty book of business, as of
December 31, 2025 , compared with $753.5 billion , or 21% of our single-family conventional guaranty book of business,
as of December 31, 2024 .
“Risk in force” refers to the maximum potential loss recovery under the applicable mortgage insurance policies in force
and is generally based on the loan-level insurance coverage percentage and, if applicable, any aggregate pool loss
limit, as specified in the policy. As of December 31, 2025 , our total mortgage insurance risk in force was $201.4 billion ,
or 6% of our single-family conventional guaranty book of business, compared with $202.3 billion , or 6% of our single-
family conventional guaranty book of business, as of December 31, 2024 .
Our total mortgage insurance in force and risk in force excludes insurance coverage provided by federal government
entities and credit insurance obtained through CIRT deals.
The charts below display our mortgage insurer counterparties that provided 10% or more of the risk-in-force mortgage
insurance coverage on the loans in our single-family conventional guaranty book of business.
Mortgage Insurer Concentration (1)
Mortgage Guaranty Insurance Corp.
Radian Guaranty, Inc.
Arch Capital Group Ltd.
Enact Mortgage Insurance Corp.
Essent Guaranty, Inc.
National Mortgage Insurance Corp.
(1) Insurance coverage amounts provided for each counterparty may include coverage provided by affiliates and subsidiaries of the
counterparty.
Mortgage insurers must meet and maintain compliance with PMIERs to be eligible to write mortgage insurance on loans
acquired by Fannie Mae. The PMIERs are designed to ensure that mortgage insurers have sufficient liquid assets to
pay all claims under a hypothetical future stress scenario. In August 2024, FHFA announced that Fannie Mae and
Freddie Mac are issuing updates to the PMIERs, which are the financial and operational standards that private
mortgage insurance companies must meet to provide insurance on the mortgage loans that we and Freddie Mac
acquire. The updated standards primarily are designed to address the risk associated with the quality of a mortgage
insurer’s investment portfolio and the potential for that portfolio to lose value. FHFA stated that the updated standards
will improve Fannie Mae and Freddie Mac’s counterparty risk management and better prepare them to withstand a
future stress situation while fulfilling their mission to serve as a reliable source of liquidity for equitable and sustainable
housing finance throughout the economic cycle. The updated standards are expected to be implemented through a 24-
month phased-in approach, with a fully effective date of September 30, 2026.
Fannie Mae 2025 Form 10-K
MD&A | Risk Management | Institutional Counterparty Credit Risk Management
Mortgage insurance only covers losses that are realized after the borrower defaults and title to the property is
subsequently transferred, such as after a foreclosure, short-sale, or a deed-in-lieu of foreclosure. Also, mortgage
insurance does not protect us from all losses on covered loans. For example, mortgage insurance is not intended to
cover property damage from hazards, including natural disasters; and the mortgage insurance policy permits the
exclusion of any material loss directly related to property damage.
We require single-family and multifamily borrowers to obtain and maintain property insurance to cover the risk of
damage to their homes or properties resulting from hazards such as fire, hail, wind and, for properties in areas identified
by FEMA as Special Flood Hazard Areas, flooding. Since we generally permit borrowers to select and obtain required
hazard insurance policies, our requirements for hazard insurance coverage are verified by the lender or servicer, as
applicable. For single-family loans, we require a minimum financial strength rating for non-governmental hazard insurers
that must be provided by S&P Global, Demotech, AM Best or KBRA. For multifamily loans, we require a minimum
financial strength rating for non-governmental hazard insurers that must be provided by AM Bes t. We do not
independently verify the financial condition of these hazard insurers and rely on these rating agencies for their
assessment of the financial condition of these insurers.
See “ Risk Factors — Credit Risk ” for a discussion of the risks to our business of claims under our mortgage insurance
policies not being paid in full or at all, as well as a discussion of risks if borrowers suffer property damage as a result of
hazards for which the borrowers have no or insufficient insurance.
Reinsurers
We use CIRT deals to transfer credit risk on a pool of loans to an insurance provider that retains the risk, or to an
insurance provider that simultaneously cedes all of its risk to one or more reinsurers. In CIRT transactions, we select the
insurance providers and approve the allocation of coverage that may be simultaneously transferred to reinsurers by a
direct provider of our CIRT insurance coverage. We take certain steps to increase the likelihood that we will recover on
the claims we file with the insurers, including the following:
• In our approval and selection of CIRT insurers and reinsurers, we take into account the financial strength of
those companies and the concentration risk that we have with those counterparties.
• We monitor the financial strength of CIRT insurers and reinsurers to confirm compliance with our requirements
and to minimize potential exposure. Changes in the financial strength of an insurer or reinsurer may impact our
future allocation of new CIRT insurance coverage to those providers. In addition, a material deterioration of the
financial strength of a CIRT insurer or reinsurer may permit us to terminate existing CIRT coverage pursuant to
terms of the CIRT insurance policy.
• We require a portion of the insurers’ or reinsurers’ obligations in a CIRT transaction to be collateralized with
highly-rated liquid assets held in a trust account. The required amount of collateral is initially determined
according to the ratings of the insurer or reinsurer. Contractual provisions require additional collateral to be
posted in the event of adverse developments with the counterparty, such as a ratings downgrade to specified
levels.
Fannie Mae 2025 Form 10-K
MD&A | Risk Management | Institutional Counterparty Credit Risk Management
The charts below display the concentration of our credit risk exposure to our top five CIRT counterparties, measured by
maximum liability to us, excluding the benefit of collateral we hold to secure the counterparties’ obligations. For
purposes of determining our top five CIRT counterparties, we separately consider affiliated entities and do not combine
their concentrations.
CIRT Counterparty Concentration
Top 5
Others
• Our CIRT counterparties had a maximum liability to us of $17.9 billion as of December 31, 2025 , and $17.5
billion as of December 31, 2024 .
• There were $4.9 billion as of December 31, 2025 , and $4.8 billion as of December 31, 2024 , in liquid assets
securing CIRT counterparties’ obligations held in trust accounts.
• Our top five CIRT counterparties had a maximum liability to us of $8.5 billion as of December 31, 2025 and
December 31, 2024 .
For information on our credit risk transfer transactions, see “ Single-Family Business — Single-Family Mortgage Credit
Risk Management — Single-Family Credit Enhancement and Transfer of Mortgage Credit Risk — Credit Risk Transfer
Transactions ” and “ Multifamily Business — Multifamily Mortgage Credit Risk Management — Multifamily Transfer of
Mortgage Credit Risk .”
Multifamily Lenders with Risk Sharing
We enter into risk sharing agreements with multifamily lenders, primarily through the DUS program, pursuant to which
the lenders agree to bear a portion of the credit losses on the covered loans. Our maximum potential loss recovery from
lenders under risk sharing agreements on multifamily loans was $ 129.6 billion as of December 31, 2025 , compared with
$119.8 billion as of December 31, 2024 . As of December 31, 2025 , 53% of our maximum potential loss recovery on
multifamily loans was from five DUS lenders compared with 52% as of December 31, 2024 .
As noted above in “ Multifamily Business ,” our primary multifamily delivery channel is our DUS program, which is
composed of lenders that range from large depositories to independent non-bank financial institutions. As of December
31, 2025 , approximately 28% of the UPB of loans in our multifamily guaranty book of business serviced by our DUS
lenders was from institutions with an external investment grade credit rating or a guaranty from an affiliate with an
external investment grade credit rating, compared with approximately 30% as of December 31, 2024 . Given the
recourse nature of the DUS program, DUS lenders are bound by eligibility standards that dictate, among other items,
minimum capital and liquidity levels, and the posting of collateral at a highly rated custodian to secure a portion of the
lenders’ future obligations. We actively monitor the financial condition of these lenders to help ensure the level of risk
remains within our standards and to ensure required capital levels are maintained and are in alignment with actual and
modeled loss projections.
Fannie Mae 2025 Form 10-K
MD&A | Risk Management | Institutional Counterparty Credit Risk Management
Mortgage Servicers and Sellers
The primary risk associated with mortgage servicers that service the loans in our guaranty book of business is that they
will fail to fulfill their servicing obligations. See “ Single-Family Business — Single-Family Primary Business Activities —
Single-Family Mortgage Servicing ” and “ Multifamily Business — Multifamily Primary Business Activities — Multifamily
Mortgage Servicing ” for more discussion on the services performed by our mortgage servicers.
A servicing contract breach could result in credit losses for us or could cause us to incur the cost of finding a
replacement servicer. Replacing a mortgage servicer can result in potentially significant increases in our costs, as well
as increased operational risks. If a mortgage servicer fails, it could result in a temporary disruption in servicing and loss
mitigation activities relating to the loans serviced by that mortgage servicer, particularly if there is a loss of experienced
servicing personnel. See “ Risk Factors — Credit Risk ” for a discussion of additional risks to our business and financial
results associated with mortgage servicers.
We mitigate these risks in several ways, including by:
• establishing minimum standards and financial requirements for our servicers;
• monitoring financial and portfolio performance as compared with peers and internal benchmarks;
• for our largest mortgage servicers, conducting periodic financial reviews to confirm compliance with servicing
guidelines and servicing performance expectations; and
• identifying a group of servicers as potential contingency sub-servicers to which we could transfer the servicing
of some of the loans in our guaranty book in the event one or more of our mortgage servicers is not able or
permitted to continue servicing our loans on our behalf.
We may take one or more of the following actions to mitigate our credit exposure to mortgage servicers that present a
higher risk:
• require a guaranty of obligations by higher-rated entities;
• transfer exposure to third parties;
• require collateral;
• establish more stringent financial requirements;
• work with underperforming major servicers to improve operational processes; and
• suspend or terminate the selling and servicing relationship if deemed appropriate.
As of December 31, 2025 , over half of our single-family guaranty book and over half of our multifamily guaranty book
were serviced by non-depository servicers. Compared with depository financial institutions, these institutions pose
additional risks to us because they generally have lower financial strength and liquidity as compared with our mortgage
servicer counterparties that are depository institutions. Unlike for depository servicers, much of the capital of non-
depository servicers is represented by the value of mortgage servicing rights, which is subject to variability based on
market conditions and therefore is an important factor in determining capital adequacy. Non-depository servicers also
are generally not subject to the same level of regulatory oversight as our mortgage servicer counterparties that are
depository institutions. We require non-depository servicers to meet minimum liquidity requirements to maintain
eligibility with Fannie Mae. We actively monitor the financial condition and capital adequacy of non-depository servicers,
including their compliance with our requirements.
Fannie Mae 2025 Form 10-K
MD&A | Risk Management | Institutional Counterparty Credit Risk Management
The charts below display the percentage of our single-family conventional guaranty book of business serviced by our
top five depository single-family mortgage servicers and top five non-depository single-family mortgage servicers. I n the
fourth quarter of 2025, we updated our disclosure of servicer concentrations to be based on the counterparty performing
the servicing, including loans serviced by that counterparty on behalf of other servicers. Previously servicer
concentrations were disclosed based on loans for which the servicer was directly contractually responsible to us and
excluded loans serviced on behalf of another servicer. Prior period information in this report has been recast t o reflect
this updated approach.
Single-Family Mortgage Servicer Concentration
Top 5 depository servicers
Top 5 non-depository servicers
Others
Following Rocket Companies, Inc.’s acquisition of Mr. Cooper Group in October 2025, Nationstar Mortgage LLC, doing
business as Mr. Cooper (“Mr. Cooper”) and Rocket Mortgage, LLC are affiliates. These companies serviced
approximately 23% of our single-family guaranty book of business based on UPB as of December 31, 2025 . As of
December 31, 2024 , these companies on a combined basis serviced approximately 23% of our single-family guaranty
book of business, based on UPB. No other single-family mortgage servicer serviced 10% or more of our single-family
conventional guaranty book of business as of December 31, 2025 or 2024 . Rocket Mortgage, LLC and Mr. Cooper are
non-depository servicers.
Fannie Mae 2025 Form 10-K
MD&A | Risk Management | Institutional Counterparty Credit Risk Management
The charts below display the percentage of our multifamily guaranty book of business serviced by our top five
depository multifamily mortgage servicers and top five non-depository multifamily mortgage servicers.
Multifamily Mortgage Servicer Concentration
Top 5 depository servicers
Top 5 non-depository servicers
Others
As of December 31, 2025 , Walker & Dunlop, Inc . serviced 13% of our multifamily guaranty book of business based on
UPB, compared with 14% as of December 31, 2024. No other multifamily mortgage servicer serviced 10% or more of
our multifamily guaranty book of business as of December 31, 2025 or 2024 . Walker & Dunlop, Inc. is a non-depository
servicer.
Counterparty Credit Exposure Relating to our Corporate Liquidity Portfolio
The primary credit exposure associated with assets held in our corporate liquidity portfolio is that issuers will not repay
principal and interest in accordance with the contractual terms. If one of these counterparties fails to meet its obligations
to us under the terms of the investments, it could result in financial losses to us and have a material adverse effect on
our earnings, liquidity, financial condition and net worth. We believe the risk of default is low because our corporate
liquidity portfolio primarily consists of cash, reverse repurchase agreements with a central counterparty clearing
institution or The Federal Reserve Bank of New York, and U.S. Treasury securities.
As of December 31, 2025 , our corporate liquidity portfolio totaled $93.8 billion and included $55.2 billion of U.S.
Treasury securities. As of December 31, 2024 , our corporate liquidity portfolio totaled $132.4 billion and included $77.6
billion of U.S. Treasury securities. We mitigate our risk by monitoring the credit risk position of our corporate liquidity
portfolio. As of December 31, 2025 , we held $11.1 billion in overnight unsecured deposits with six financial institutions,
compared with $11.7 billion held with six financial institutions as of December 31, 2024 . The short-term credit ratings for
each of these financial institutions by S&P, Moody’s and Fitch were at least A-1 or the Moody’s or Fitch equivalent of
See “ Liquidity and Capital Management — Liquidity Management — Corporate Liquidity Portfolio ” for more information on
our corporate liquidity portfolio.
Other Counterparties
Derivative Counterparty Credit Exposure
The primary credit exposure that we have on a derivative transaction is that a counterparty will default on payments
due, which could result in us having to acquire a replacement derivative from a different counterparty at a higher cost or
we may be unable to find a suitable replacement. Our derivative counterparty credit exposure relates principally to
interest-rate derivative contracts.
Derivative instruments may be privately negotiated contracts, which are often referred to as over-the-counter (“OTC”)
derivatives, or they may be listed and traded on an exchange where they are accepted for clearing by a derivatives
clearing organization as our cleared derivative transactions.
Fannie Mae 2025 Form 10-K
MD&A | Risk Management | Institutional Counterparty Credit Risk Management
Actions we take to manage our derivative counterparty credit exposure relating to our OTC derivative transactions
include:
• entering into enforceable master netting arrangements with these counterparties, which allow us to net
derivative assets and liabilities with the same counterparty; and
• requiring counterparties to post collateral, which includes cash, U.S. Treasury securities, agency debt and
agency mortgage-related securities.
We manage our credit exposure relating to our cleared derivative transactions through enforceable master netting
arrangements. These arrangements allow us to net our exposure to cleared derivatives by clearing organization and by
clearing member.
Our cleared derivative transactions are submitted to a derivatives clearing organization on our behalf through a clearing
member of the organization. A contract accepted by a derivatives clearing organization is governed by the terms of the
clearing organization’s rules and arrangements between us and the clearing member of the clearing organization. As a
result, we are exposed to the institutional credit risk of both the derivatives clearing organization and the member who is
acting on our behalf. As of December 31, 2025 , approximately 88% of our derivatives transactions were cleared through
a clearing organization, compared with 82% as of December 31, 2024 .
See “ Note 9, Derivative Instruments ” and “ Note 15, Netting Arrangements ” for additional information on our derivative
contracts as of December 31, 2025 and 2024 .
Counterparty Credit Risk Exposure Arising from the Resecuritization of Freddie Mac-Issued Securities
We have been resecuritizing Freddie Mac-issued securities since June 2019 when we began issuing UMBS, which has
increased our credit risk exposure and operational risk exposure to Freddie Mac. Although we have an indemnification
agreement with Freddie Mac, in the event Freddie Mac were to fail (for credit or operational reasons) to make a
payment on Freddie Mac securities that we had resecuritized in a Fannie Mae-issued structured security, we would be
responsible for making the entire payment on the Freddie Mac securities included in that structured security in order to
make payments on any of our outstanding single-family Fannie Mae MBS to be paid on that payment date. Accordingly,
if Freddie Mac were to fail to meet its obligations under the terms of these securities, it could have a material adverse
effect on our earnings and financial condition. We believe the risk of default by Freddie Mac is negligible because of the
funding commitment available to Freddie Mac through its senior preferred stock purchase agreement with Treasury.
As of December 31, 2025 , $184.3 billion in Freddie Mac securities were backing Fannie Mae-issued structured
securities, compared with $200.1 billion as of December 31, 2024 . See “ Risk Factors — GSE and Conservatorship Risk ”
for more information on risks associated with our issuance of UMBS.
Central Counterparty Clearing Institutions
Fannie Mae is a clearing member of two divisions of Fixed Income Clearing Corporation (“FICC”), a central counterparty
(“CCP”). One FICC division clears our trades involving securities purchased under agreements to resell, securities sold
under agreements to repurchase, and other non-mortgage related securities. The other division clears our forward
purchase and sale commitments of mortgage-related securities, including dollar roll transactions. As a result of these
trades, we are required to post initial and variation margin payments as well as settle certain positions each business
day in cash. As a clearing member of FICC, we are exposed to the risk that the FICC or one or more of the CCP’s
clearing members fails to perform its obligations as described below.
• A default by or the financial or operational failure of FICC would require us to replace transactions cleared
through FICC, thereby increasing operational costs and potentially resulting in losses.
• We may also be exposed to losses if a clearing member of FICC defaults on its obligations as each clearing
member is required to absorb a portion of those fellow-clearing member losses. As a result, we could lose the
margin that we have posted to FICC. Moreover, our exposure could exceed the amount of margin that we
previously posted to FICC, since FICC’s rules require non-defaulting clearing members to cover, on a pro rata
basis, losses caused by a clearing member’s default.
We are unable to develop an estimate of the maximum potential amount of future payments that we could be required to
make to FICC under these arrangements as our exposure is dependent on the volume of trades FICC clearing
members execute now and in the future, which varies daily. Although we are unable to develop an estimate of our
maximum exposure, we expect that losses caused by any clearing member would be partially offset by the fair value of
margin posted by the defaulting clearing member and any other available assets of the CCP for those purposes. We
believe that the risk of a material loss is remote due to the FICC's margin and settlement requirements, guarantee funds
and other resources that are available in the event of a default.
Fannie Mae 2025 Form 10-K
MD&A | Risk Management | Institutional Counterparty Credit Risk Management
We actively monitor the risks associated with the FICC in order to effectively manage this counterparty risk and our
associated liquidity exposure.
Custodial Depository Institutions
Our mortgage servicer counterparties are required by our Servicing Guide to use custodial depository institutions to hold
remittances of borrower payments of principal and interest on our behalf. If a custodial depository institution were to fail
while holding such remittances, we would be exposed to risk for balances in excess of the deposit insurance protection
and might not be able to recover all of the principal and interest payments being held by the depository on our behalf, or
there might be a substantial delay in receiving these amounts. If this were to occur, we would be required to replace
these amounts with our own funds to make payments that are due to Fannie Mae MBS certificateholders. Accordingly,
the insolvency of one of our principal custodial depository institutions could result in significant financial losses to us. To
mitigate these risks, our Servicing Guide requires our mortgage servicer counterparties to use custodial depository
institutions that are insured, that are rated as “well capitalized” by their regulator and that meet certain minimum
financial ratings from third-party agencies.
Mortgage Originators, Investors and Dealers
We are routinely exposed to pre-settlement risk through the purchase or sale of mortgage loans and mortgage-related
securities with mortgage originators, mortgage investors and mortgage dealers. The risk is the possibility that the
counterparty will be unable or unwilling to either deliver mortgage assets or compensate us for the cost to cancel or
replace the transaction. We manage this risk by determining position limits with these counterparties, based upon our
assessment of their creditworthiness, and by monitoring and managing these exposures.
Debt Security Dealers
The credit risk associated with dealers that commit to place our debt securities is that they will fail to honor their
contracts to take delivery of the debt, which could result in delayed issuance of the debt through another dealer. We
manage these risks by establishing approval standards, monitoring our exposure positions and monitoring changes in
the credit quality of dealers.
Document Custodians
We use third-party document custodians to provide loan document certification and custody services for some of the
loans that we purchase and securitize. In many cases, our lenders or their affiliates also serve as document custodians
for us. Our ownership rights to the mortgage loans that we own or that back our Fannie Mae MBS could be challenged if
a lender intentionally or negligently pledges or sells the loans that we purchased or fails to obtain a release of prior liens
on the loans that we purchased, which could result in financial losses to us. When a lender or one of its affiliates acts as
a document custodian for us, the risk that our ownership interest in the loans may be adversely affected is increased,
particularly in the event the lender were to become insolvent. We mitigate these risks through legal and contractual
arrangements with these custodians that identify our ownership interest, as well as by establishing qualifying standards
for document custodians and requiring removal of the documents to our possession or to an independent third-party
document custodian if we have concerns about the solvency or competency of the document custodian.
The MERS System
The MERS ® System is an electronic registry owned by Intercontinental Exchange that is widely used by participants in
the mortgage finance industry to track servicing rights and ownership of loans in the United States. A majority of the
loans we own or guarantee are registered and tracked in the MERS System. Though we believe it is unlikely, if we are
unable to use the MERS System, or if our use of the MERS System adversely affects our ability to enforce our rights
with respect to our loans registered and tracked in the MERS System, it could create operational and legal risks for us
and increase the costs and time it takes to record loans or foreclose on loans.
Natural Disaster Risk Management
Natural Disaster-Related Risk Exposure and Mitigation
Major weather events or other natural disasters expose us to credit risk in a variety of ways, including by damaging
properties that secure mortgage loans in our book of business and by negatively impacting the ability of borrowers to
make payments on their mortgage loans. The amount of losses we incur as a result of a major weather event or natural
disaster depends significantly on the extent to which the resulting property damage is covered by hazard or flood
insurance and whether borrowers can continue making payments on their mortgages. The amount of losses we incur
can also be affected by the extent that a disaster impacts the region, especially if it depresses the local economy, and
by the availability of federal, state, or local assistance to borrowers affected by a disaster. To date, our losses from
natural disasters have been limited by geographic diversity in our book of business, the availability of insurance
Fannie Mae 2025 Form 10-K
MD&A | Risk Management | Natural Disaster Risk Management
coverage for damages sustained, the availability of federal, state, or local disaster assistance, and borrowers with equity
in their homes continuing to pay their mortgages. Fannie Mae is obligated by our charter to support residential mortgage
liquidity nationwide. We generally do not disqualify any single-family or multifamily property on the basis of its
geographic location in the U.S., nor do we charge higher guaranty fees in geographic areas that may pose potentially
higher natural disaster-related risk.
We require borrowers to obtain and maintain property insurance to cover the risk of damage to their property resulting
from hazards such as fire, hail, wind and, for properties in areas identified by FEMA as Special Flood Hazard Areas,
flooding. At the time of origination, a borrower is required to provide proof of such insurance, and our servicers have the
right and the obligation to obtain such insurance, at the borrower’s cost, if the borrower allows the required coverage to
lapse. Our servicers monitor flood maps, and will require a flood insurance policy if a mortgaged property is remapped
into a Special Flood Hazard Area during the life of the loan. W e do not require property insurance to cover earthquake
damage to single-family properties. We only require property insurance to cover earthquake damage to multifamily
properties if required by a seismic-risk assessment. We estimate that, as of December 31, 2025 , 3.2% of loans in our
single-family guaranty book of business and 7.3% of loans in our multifamily guaranty book of business were located in
a Special Flood Hazard Area.
We also mitigate natural disaster-related risk exposure, in part, through credit risk transfer and risk-sharing transactions.
To the extent weather and disaster-related losses on loans covered by these transactions exceed the amount of losses
we retain, a portion of those losses would be covered by these credit risk transfer transactions. In addition, we enter into
risk-sharing agreements with multifamily lenders, primarily through the DUS program. For more information on our
single-family credit risk transfer transactions, see “ Single-Family Business — Single-Family Mortgage Credit Risk
Management — Single-Family Credit Enhancement and Transfer of Mortgage Credit Risk — Credit Risk Transfer
Transactions ” and for more information on our multifamily credit risk transfer transactions and our DUS program, see
“ Multifamily Business — Multifamily Mortgage Credit Risk Management — Multifamily Transfer of Mortgage Credit Risk .”
In the event of a natural or other disaster, our servicers work with affected borrowers to develop a plan that addresses
the borrower’s specific situation. Depending on the circumstances, the plan may include one or more of the following: a
payment forbearance plan; a repayment or reinstatement plan; a payment deferral; loan modification; coordination with
insurance companies and administration of insurance proceeds; and, if appropriate, foreclosure alternatives such as
short sales and deeds-in-lieu of foreclosure, or foreclosure. See “ Risk Factors — Credit Risk ” for additional information
on the risks we face from the occurrence of major natural or other disasters, including additional ways that such events
could negatively impact our business, financial results and financial condition.
Market Risk Management, including Interest-Rate Risk Management
We are subject to market risk, which includes interest-rate risk and spread risk. Interest-rate risk is the risk that
movements in interest rates will adversely affect the value of our assets or liabilities or our future earnings or capital.
Spread risk is the risk from changes in an instrument’s value that relate to factors other than changes in interest rates.
Interest-Rate Risk Management
Our exposure to interest-rate risk primarily arises from two sources: our net portfolio and our consolidated MBS trusts.
We collectively define our net portfolio as: our retained mortgage portfolio assets; our corporate liquidity portfolio;
outstanding debt of Fannie Mae; mortgage commitments; and risk management derivatives.
We actively manage the market value sensitivity to interest rate movements of our net portfolio, targeting a low level of
interest rate exposure. We also manage our earnings sensitivity to interest rate movements. We employ an integrated
interest-rate risk management strategy that allows for informed risk taking within pre-defined corporate risk limits.
Decisions regarding our strategy in managing interest-rate risk are based upon our corporate market risk policy and
limits that are approved by our Board of Directors and FHFA.
We monitor current market conditions, including the interest-rate environment, to assess the impact of these conditions
on individual positions and our interest-rate risk profile. In addition to qualitative factors, we use various quantitative risk
metrics to remain within pre-defined risk tolerance levels that we consider acceptable. We regularly disclose two
interest-rate risk metrics that estimate the market value sensitivity of our net portfolio: (1) market value sensitivity to
changes in interest-rate levels and the slope of the yield curve and (2) duration gap.
Sources of Interest-Rate Risk Exposure
We have multiple sources of interest-rate risk exposure. We discuss the primary sources of our interest rate risk
exposure below.
• Duration of Net Portfolio. Interest rates affect the value of our net portfolio, which includes fixed- and floating-
rate securities, debt, derivatives, and loans and other non-mortgage assets. As interest rates decline, the value
Fannie Mae 2025 Form 10-K
MD&A | Risk Management | Market Risk Management, including Interest-Rate Risk Management
of our fixed-rate securities tends to increase, and as interest rates increase, the value of our fixed-rate
securities tends to decrease. For example, in a declining interest-rate environment, existing mortgage assets
held in our net portfolio tend to increase in value or price because these mortgages are likely to have higher
interest rates than new mortgages, which are being originated at the then-current lower interest rates.
• Convexity of Net Portfolio. Our mortgage assets consist mainly of single-family and multifamily mortgage loans.
For single-family loans, borrowers have the option to prepay at any time before the scheduled maturity date.
This prepayment uncertainty results in a potential mismatch between the timing of receipt of cash flows related
to our assets and the timing of payment of cash flows related to our liabilities. Changes in interest rates, as well
as other factors, influence mortgage prepayment rates and duration. When interest rates decrease, prepayment
rates on fixed-rate mortgages generally accelerate because some borrowers can pay off their existing
mortgages and refinance at lower rates. Accelerated prepayment rates have the effect of shortening the
duration and average life of the fixed-rate mortgage assets we hold in our net portfolio. Conversely, when
interest rates increase, prepayment rates generally slow, which extends the duration and average life of our
mortgage assets.
• Duration and Convexity of Consolidated MBS Trusts . We are also exposed to interest-rate risk in connection
with cost basis adjustments related to mortgage assets, mainly single-family and multifamily mortgage loans,
held by our consolidated MBS trusts. These cost basis adjustments often result from upfront cash fees
exchanged at the time of loan acquisition, which include buy-ups, buy-downs, and risk-based loan-level price
adjustments. The timing of when we recognize amortization income related to cost basis adjustments may be
affected by prepayments, thereby impacting our earnings. See “Consolidated Results of Operations—Net
Interest Income—Analysis of Unamortized Deferred Guaranty Fee Income” for more information on our
outstanding net cost basis adjustments related to consolidated MBS trusts.
We are also exposed to interest-rate risk in connection with the float income earned by MBS trusts on the short-
term reinvestment of loan payments received from borrowers in highly liquid investments with short maturities,
such as reverse repurchase agreements. This float income is paid to us as trust management income and
recorded within “Net interest income” in our consolidated financial statements. Changes in interest rates impact
the amount of float income generated by MBS trusts and our float reinvestment yields. Typically, interest-rate
driven changes in the timing of income recognition related to cost basis amortization are partially offset by
interest-rate driven changes in the amount of float income earned.
• Earnings Sensitivity. Changes in interest rates also affect the earnings on our investments in our corporate
liquidity portfolio, our retained mortgage portfolio, and our other assets. When interest rates decline, we
typically earn less on these investments, which can result in volatility in our earnings. In addition, our earnings
can experience volatility due to interest-rate changes and differing accounting treatments that apply to certain
financial instruments on our balance sheet, such as fair-value changes on derivatives and certain securities, as
well as earnings impacts related to assets carried at amortized cost.
For additional discussion of how interest rates can affect our financial results, see “ Key Market Economic Indicators —
How Interest Rates Can Affect Our Financial Results .”
Interest-Rate Risk Management Strategy
Historically, our interest-rate risk management strategy focused primarily on maintaining an asset duration closely
matched to our liability duration, net of derivatives, to minimize exposure to interest-rate movements. Beginning in the
fourth quarter of 2025, we adjusted our interest-rate risk management strategy to balance this objective with the goal of
managing the volatility of our earnings associated with short-term interest rate changes. As a result, pursuant to this
new strategy, we are accepting additional interest rate risk associated with duration by increasing our exposure to
longer-term rate positions, which reduces the sensitivity of our earnings to short-term interest rate movements and helps
manage interest-rate related volatility associated with our retained mortgage portfolio and corporate liquidity portfolio
investments.
Market Value Sensitivity
Our goal for managing the interest-rate risk of our net portfolio is to manage to a low level of exposure to movements in
interest rates and volatility. This involves asset selection and structuring of our liabilities to match and offset the interest-
rate characteristics of our retained mortgage portfolio and our investments in non-mortgage securities. We actively
manage the interest-rate risk of our net portfolio through a strategy incorporating the following principal elements:
• Debt Instruments. We issue a broad range of short- and long-term, callable and non-callable debt instruments
to manage the duration and prepayment risk of expected cash flows of the mortgage assets we own.
• Derivative Instruments. We supplement our issuance of debt with derivative instruments to further reduce
duration and prepayment risks.
Fannie Mae 2025 Form 10-K
MD&A | Risk Management | Market Risk Management, including Interest-Rate Risk Management
• Monitoring and Active Portfolio Rebalancing. We continually monitor our risk positions and actively rebalance
our portfolio of interest rate-sensitive financial instruments to remain within Board approved risk limits.
See “ Liquidity and Capital Management — Liquidity Management — Debt Funding ” for additional information on our debt
activity. Also see “ Note 9, Derivative Instruments ” for a description of the derivatives we use for interest-rate risk
management purposes and the factors we consider in deciding whether to use derivatives.
Earnings Sensitivity
We also manage the earnings sensitivity of our consolidated balance sheet arising from interest rate movements. The
risk management approach utilizes financial instruments, such as U.S. Treasuries, agency mortgage-backed securities
and interest rate derivatives, to mitigate earnings volatility driven by interest rate movements. While this strategy
reduces downside risk to our earnings when interest rates drop, it may limit potential upside benefits of our earnings
when interest rates rise.
We utilize fair value hedge accounting to align the timing of when we recognize the interest-rate driven fair value
changes in hedged mortgage loans and funding debt with derivative hedging instruments to mitigate GAAP earnings
exposure to interest-rate changes, including any short-term earnings volatility that might result from economic hedging.
Our hedge accounting program is specifically designed to address the volatility of our financial results associated with
changes in fair value related to changes in benchmark interest rates. As such, earnings variability driven by other
factors, such as spreads or changes in cost basis amortization recognized in net interest income, remains. In addition,
our ability to effectively reduce earnings volatility is dependent upon the volume and type of interest-rate swaps
available for hedging, which is driven by our interest-rate risk management strategy discussed above. As our range of
available interest-rate swaps varies over time, our ability to reduce earnings volatility through hedge accounting may
vary as well. When the shape of the yield curve shifts significantly from period to period, hedge accounting may be less
effective. In our current program, we typically establish new hedging relationships each business day to provide
flexibility in our overall risk management strategy.
Other Market Risk
Spread risk is the risk from changes in an instrument’s value that relate to factors other than changes in interest rates.
Our spread risk includes the impact of changes in the spread between our mortgage assets and financial liabilities after
we purchase mortgage assets. For mortgage assets in our portfolio that we intend to hold to maturity to realize the
contractual cash flows, we accept period-to-period volatility in our financial results attributable to changes in mortgage-
to-debt spreads that occur after our purchase of mortgage assets. Changes in mortgage spreads could cause significant
fair value losses, and could adversely affect our near-term financial results and net worth. If our agency MBS holdings
increase as we expect, it will increase our exposure to spread risk. Spread risk is intrinsic to our business model. While
we monitor our spread risk exposure and manage the risk where feasible and appropriate, we do not seek to fully
mitigate this risk and accept some level of spread risk.
See “ Risk Factors — Market and Industry Risk ” for a discussion of the risks to our business posed by changes in interest
rates and changes in spreads.
Fannie Mae 2025 Form 10-K
MD&A | Risk Management | Market Risk Management, including Interest-Rate Risk Management
Measurement of Market Value Sensitivity of our Net Portfolio
Below we present two quantitative metrics that provide estimates of the market value sensitivity of our net portfolio: (1)
market value sensitivity of our net portfolio to changes in interest-rate levels and slope of yield curve; and (2) duration
gap. The metrics used to measure the market value sensitivity of our net portfolio are generated using internal models.
Our internal models, consistent with standard practice for models used in our industry, require numerous assumptions,
including assumptions regarding interest rates and future prepayments of principal over the remaining life of our
securities. These assumptions are derived based on the characteristics of the underlying structure of the securities and
historical prepayment rates experienced at specified interest-rate levels, taking into account current market conditions,
the current mortgage rates of our existing outstanding loans, loan age and other factors. On a regular basis,
management makes judgments about the appropriateness of the risk assessments and will make adjustments as
necessary to properly assess our interest-rate exposure and manage our interest-rate risk. The methodologies used to
calculate risk estimates are periodically changed on a prospective basis to reflect improvements in the underlying
estimation process. There are inherent limitations in any methodology used to estimate the exposure to changes in
market interest rates. The reliability of our prepayment estimates and interest-rate risk metrics depends on the
availability and quality of historical data . When market conditions change rapidly and dramatically, the assumptions of
our models may no longer accurately capture or reflect the changing conditions. See “ Risk Factors — Operational and
Model Risk ” for a discussion of the risks associated with our reliance on models to manage risk.
Market Value Sensitivity to Changes in Interest-Rate Level and Slope of Yield Curve
Pursuant to a disclosure commitment with FHFA, we disclose on a monthly basis in our Monthly Summary report the
estimated adverse impact on the fair value of our net portfolio that would result from the following hypothetical
situations:
• a 50 basis point shift in interest rates; and
• a 25 basis point change in the slope of the yield curve.
In measuring the estimated impact of changes in the level of interest rates, we assume a parallel shift in all maturities of
the SOFR interest-rate swap curve.
In measuring the estimated impact of changes in the slope of the yield curve, we assume a constant 7-year rate and a
shift of 16.7 basis points for the 1-year rate and shorter tenors and an opposite shift of 8.3 basis points for the 30-year
rate. Rate shocks for remaining maturity points are interpolated. Our practice is to allow interest rates to go below zero
in the downward shock models unless otherwise prevented through contractual floors. We believe the aforementioned
interest-rate shocks for our monthly disclosures represent moderate movements in interest rates over a one-month
period.
Duration Gap
Duration gap measures the price sensitivity of our assets and liabilities in our net portfolio to changes in interest rates by
quantifying the difference between the estimated durations of our assets and liabilities. Our duration gap analysis
reflects the extent to which the estimated maturity and cash flows for our assets are matched, on average, over time
and across interest-rate scenarios to those of our liabilities. A positive duration gap indicates that the duration of our
assets exceeds the duration of our liabilities. We disclose duration gap on a monthly basis under the caption “Interest
Rate Risk Disclosures” in our Monthly Summary report, which is available on our website.
While our goal is to reduce the price sensitivity of our net portfolio to movements in interest rates, various factors can
contribute to a duration gap that is either positive or negative. The primary factor for the recent changes in our duration
gap is the change in our strategy described above in “ Interest-Rate Risk Management —Interest-Rate Risk Management
Strategy.” Other factors that can result in changes to our duration gap include the market environment and composition
of the assets, debt, and derivatives in our net portfolio.
Results of Market Value Sensitivity Measures
The interest-rate risk measures discussed below exclude the impact of changes in the fair value of our guaranty assets
and liabilities resulting from changes in interest rates. We exclude our guaranty business from these sensitivity
measures based on our current assumption that the guaranty fee income generated from future business activity will
largely replace guaranty fee income lost due to mortgage prepayments.
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MD&A | Risk Management | Market Risk Management, including Interest-Rate Risk Management
The table below displays the pre-tax market value sensitivity of our net portfolio to changes in the level of interest rates
and the slope of the applicable yield curve as measured on the last day of each period presented. The table below also
provides the daily average, minimum, maximum and standard deviation values for duration gap and for the most
adverse market value impact on the net portfolio to changes in the level of interest rates and the slope of the applicable
yield curve for the three months ended December 31, 2025 and 2024 .
The sensitivity measures displayed in the table below, which we disclose on a quarterly basis pursuant to a disclosure
commitment with FHFA, are an extension of our monthly sensitivity measures discussed above. There are three primary
differences between our monthly sensitivity disclosure and the quarterly sensitivity disclosure presented below:
• the quarterly disclosure is expanded to include the sensitivity results for larger rate level shocks of positive or
negative 100 basis points;
• the monthly disclosure reflects the estimated pre-tax impact on the market value of our net portfolio calculated
based on a daily average, while the quarterly disclosure reflects the estimated pre-tax impact calculated based
on the estimated financial position of our net portfolio and the market environment as of the last business day of
the quarter; and
• the monthly disclosure shows the most adverse pre-tax impact on the market value of our net portfolio from the
hypothetical interest-rate shocks, while the quarterly disclosure includes the estimated pre-tax impact of both
up and down interest-rate shocks.
Interest-Rate Sensitivity of Net Portfolio to Changes in Interest-Rate Level and Slope of Yield
Curve
As of December 31, (1)(2)
(Dollars in millions)
Rate level shock:
-100 basis points
-50 basis points
+50 basis points
+100 basis points
Rate slope shock:
-25 basis points (flattening)
+25 basis points (steepening)
For the Three Months Ended December 31, (1)(3)
Duration
Gap
Rate Slope
Shock 25 bps
Rate Level
Shock 50 bps
Duration
Gap
Rate Slope
Shock 25 bps
Rate Level
Shock 50 bps
Market Value Sensitivity
Market Value Sensitivity
(In years)
(Dollars in millions)
(In years)
(Dollars in millions)
Average
Minimum
Maximum
Standard deviation
(1) Computed based on changes in SOFR interest-rates swap curve.
(2) Measured on the last business day of each period presented.
(3) Computed based on daily values during the period presented.
The market value sensitivity of our net portfolio varies across a range of interest-rate shocks depending upon the
duration and convexity profile of our net portfolio. The market value sensitivity of the net portfolio is measured by
quantifying the change in the present value of the cash flows of our financial assets and liabilities that would result from
an instantaneous shock to interest rates, assuming spreads are held constant.
We use derivatives to help manage the residual interest-rate risk exposure between the assets and liabilities in our net
portfolio. Derivatives have enabled us to keep our economic interest-rate risk exposure well managed in a wide range of
interest-rate environments. The table below displays an example of how derivatives impacted the net market value
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MD&A | Risk Management | Market Risk Management, including Interest-Rate Risk Management
exposure for a 50 basis point parallel interest-rate shock. For additional information on our derivative positions, see
“ Note 9, Derivative Instruments .”
Derivative Impact on Interest-Rate Risk (50 Basis Points)
As of December 31, (1)
(Dollars in millions)
Before derivatives
After derivatives
Effect of derivatives
(1) Measured on the last business day of each period prese nted.
Liquidity Risk Management
See “ Liquidity and Capital Management ” for a discussion of how we manage liquidity risk.
Operational Risk Management
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people, systems, and third
parties, or disruptions from external events. Our corporate operational risk framework aligns with our Enterprise Risk
policy and has evolved based on the changing needs of our business and FHFA regulatory guidance. The Non-Financial
Risk Management group is responsible for overseeing and monitoring compliance with our operational risk program’s
requirements. The Non-Financial Risk Management group reports to the Chief Risk Officer and works in conjunction
with other second line teams to oversee and aggregate the full range of operational risks, including fraud, resiliency,
business interruptions, processing errors, damage to physical assets, workplace safety and employment practices. To
quantify our operational risk exposure, we rely on the Basel Standardized Approach, which is based on a percentage of
gross income. In addition, where we deem it appropriate, we purchase insurance policies to mitigate the impact of
operational losses.
We have made investments in existing and emerging technology designed to support our new initiatives and business
transformation efforts, including efforts to improve the quality and accuracy of the mortgage origination process for
lenders, improve our risk management, and drive efficiency improvements. We currently use artificial intelligence (“AI”),
including generative AI, to support a number of business needs. Generative AI is an evolution of artificial intelligence
that is rapidly developing and is expected to transform the way many businesses operate and make decisions, creating
both opportunities for and risks to our business. Our initial uses of generative AI have been focused on areas that we
believe pose lower risk, such as applications focused on improving operational efficiency and employee productivity. We
have also begun to use AI systems capable of orchestrating multi-step workflows and are expanding our use of these
systems. We are expanding our use of AI, in particular generative AI, to assist with our business transformation efforts.
We believe the use of AI tools has significant potential to enhance employee productivity, improve our business
processes, and change the way we engage with our stakeholders. We also believe that if we do not effectively use and
appropriately adopt AI in our business processes, it will result in a competitive disadvantage to us.
We continue to enhance our governance and controls to support the development and implementation of AI in our
business processes, including implementing guiding ethical principles on the appropriate use of AI and enhancing our
risk management framework. To help mitigate AI risks such as hallucination, cybersecurity, data privacy and third-party
risks, we employ a federated approach that assigns first and second line risk reviewers.
See “ Risk Factors — Operational and Model Risk ” for more information regarding our operational risk, including risks
associated with AI, and “ Risk Management — Overview — Risk Management Governance ” for more information regarding
our governance of operational risk management. See “Cybersecurity” for a discussion of cybersecurity risk
management.
Model Risk Management
Model risk is the risk of potential adverse consequences (such as financial loss or reputational damage) due to:
inappropriate model design; errors in model coding, implementation, inputs or assumptions; inadequate model
performance; or incorrect use or application of model outputs or reports. The use of models requires numerous
assumptions and there are inherent limitations in any methodology used to estimate macroeconomic factors such as
home prices, multifamily property values, unemployment and interest rates, and their impact on borrower behavior.
When market conditions change rapidly and dramatically, the assumptions used by models may no longer accurately
capture or reflect the changing conditions. Given the challenges of predicting future behavior, management judgment is
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MD&A | Risk Management | Model Risk Management
used throughout the modeling process, from model design decisions regarding core underlying assumptions, to
interpreting and applying final model output.
We manage model risk through a model risk management framework that establishes the roles and responsibilities for
managing model risk through the model management lifecycle, as well as related governance requirements. Under our
model risk management framework, model owners and users have responsibility for monitoring whether models are
performing accurately and complying with the framework’s control requirements. We have an independent model risk
management team within our Corporate Risk & Compliance division that is responsible for establishing and maintaining
the model risk management framework, as well as providing independent review and approval of models prior to use.
We also have a management-level Model Risk Committee that oversees risk management activities related to model
risk. In addition to internally-developed models, we also use third-party models.
While we employ strategies to manage and govern the risks associated with our use of models, they have not always
been fully effective. Errors were previously discovered in some of the models we use, and we continue to have
deficiencies in our current processes for managing model risk. We have completed remediation of our model
governance and standards, and are in the process of implementing the updated governance and standards across our
modeling inventory.
See “ Risk Factors — Operational and Model Risk ” for a discussion of the risks associated with the use of models,
including our use of third-party models and third-party data providers.
Critical Accounting Estimates
The preparation of financial statements in accordance with GAAP requires management to make a number of
judgments, estimates and assumptions that affect the reported amount of assets, liabilities, income and expenses in our
consolidated financial statements. Understanding our accounting policies and the extent to which we use management
judgment and estimates in applying these policies is integral to understanding our financial statements. We describe our
most significant accounting policies in “ Note 1, Summary of Significant Accounting Policies .”
We evaluate our critical accounting estimates and judgments required by our policies on an ongoing basis and update
them as necessary based on changing conditions. Management has discussed any significant changes in judgments
and assumptions in applying our critical accounting estimates with the Audit Committee of our Board of Directors. See
“ Risk Factors — General Risk ” for a discussion of the risks associated with the need for management to make judgments
and estimates in applying our accounting policies and methods. We have identified one of our accounting estimates,
allowance for loan losses, as critical because it involves significant judgments and assumptions about highly complex
and inherently uncertain matters, and the use of reasonably different judgments and assumptions could have a material
impact on our reported results of operations or financial condition.
Allowance for Loan Losses
The allowance for loan losses is an estimate of single-family and multifamily HFI loan receivables that we expect will not
be collected related to loans held by Fannie Mae or by consolidated Fannie Mae MBS trusts. The expected credit losses
are deducted from the amortized cost basis of HFI loans to present the net amount expected to be received.
The allowance for loan losses involves substantial judgment on a number of matters including the development and
weighting of macroeconomic forecasts, the reversion period applied, the assessment of similar risk characteristics,
which determines the historic loss experience used to derive probability of loan default, the valuation of collateral, which
includes judgments about the property condition at the time of foreclosure, and the determination of a loan’s remaining
expected life. Our most significant judgments involved in estimating our allowance for loan losses relate to the modeled
macroeconomic data used to develop reasonable and supportable forecasts for key economic drivers, which are subject
to significant inherent uncertainty. Most notably, for single-family, the model uses forecasted single-family home prices
as well as a range of possible future interest rate environments. For multifamily, the model uses forecasted net
operating income and property valuations. In developing a reasonable and supportable forecast, the model simulates
multiple paths of interest rates, net o pera ting income and property values based on current market conditions.
Quantitative Component
We use a discounted cash flow method to measure expected credit losses on our single-family mortgage loans and an
undiscounted loss method to measure expected credit losses on our multifamily mortgage loans.
Our modeled loan performance is based on our historical experience of loans with similar risk characteristics adjusted to
reflect current conditions and reasonable and supportable forecasts. Our historical loss experience and our loan loss
estimates capture the possibility of a multitude of events, including remote events that could result in credit losses on
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MD&A | Critical Accounting Estimates
loans that are considered low risk. Our credit loss models, including the macroeconomic forecast data used as key
inputs, are subject to our model oversight and review processes as well as other established governance and controls.
Qualitative Component
Our process for measuring expected credit losses is complex and involves significant management judgment, including
a reliance on historical loss information and current economic forecasts that may not be representative of credit losses
we ultimately realize. Management adjustments may be necessary to take into consideration external factors and
current macroeconomic events that have occurred but are not yet reflected in the data used to derive the model outputs.
Qualitative factors and events not previously observed by the models through historical loss experience may also be
considered, as well as the uncertainty of their impact on credit loss estimates.
Macroeconomic Variables and Sensitivities
Our (provision) benefit for credit losses can vary substantially from period to period based on forecasted
macroeconomic inputs. For single-family, we have determined that our most significant macroeconomic inputs used in
determining our allowance for loan losses consist of forecasted home price growth rates and interest rates. For
multifamily, we have determined that our most significant macroeconomic inputs used in determining our allowance for
loan losses consist of net operating income and property value growth rates.
In evaluating the sensitivities of our allowance to these macroeconomic inputs, it is difficult to estimate how potential
changes in any one factor or input might affect the overall credit loss estimates, because management considers a wide
variety of factors and inputs in estimating the allowance for loan losses. Changes in the factors and inputs considered
may not occur at the same rate and may not be consistent across all geographies or loan types, and changes in factors
and inputs may be directionally inconsistent, such that improvement in one factor or input may offset deterioration in
others. Changes in our assumptions and forecasts of economic conditions could significantly affect our estimate of
expected credit losses and lead to significant changes in the estimate from one reporting period to the next.
We provide more detailed information on our accounting for the allowance for loan losses in “ Note 1, Summary of
Significant Accounting Policies .” See “ Note 5, Allowance for Credit Losses ” for additional information about our current
period (provision) benefit for loan losses.
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MD&A | Critical Accounting Estimates
Single-Family Sensitivities and Inputs
The table below provides information about our most significant macroeconomic inputs used in determining our single-
family allowance for loan losses: forecasted home price growth rates and interest rates. Although the model consumes a
wide range of possible regional home price forecasts and interest rate scenarios that take into account inherent
uncertainty, the forecasts below represent the mean path of those simulations used in determining the single-family
allowance for each quarter during the years ended December 31, 2025 and 2024 , and how those forecasts have
changed between periods of estimate. Below we present our home price growth and interest rate estimates used in our
estimate of expected credit losses. Our forecasts include estimates for periods beyond those presented below.
Select Single-Family Macroeconomic Model Inputs (1)
Forecasted home price growth (decline) rate by period of estimate: (2)
For the Full Year ending December 31,
Fourth Quarter 2025
Third Quarter 2025
Second Quarter 2025
First Quarter 2025
For the Full Year ending December 31,
Fourth Quarter 2024
Third Quarter 2024
Second Quarter 2024
First Quarter 2024
Forecasted 30-year mortgage interest rates by period of estimate: (3)
Through the end
of December 31,
For the Full Year ending
December 31,
Fourth Quarter 2025
Third Quarter 2025
Second Quarter 2025
First Quarter 2025
Through the end
of December 31,
For the Full Year ending
December 31,
Fourth Quarter 2024
Third Quarter 2024
Second Quarter 2024
First Quarter 2024
* Represents less than 0.05% of home price growth (decline).
(1) These forecasts are provided solely for the purpose of providing insight into our credit loss model. Forecasts for future periods are subject
to significant uncertainty, which increases for periods that are further in the future. We provide our most recent forecasts for certain
macroeconomic and housing market conditions in “ Key Market Economic Indicators .” In addition, each month our Economic and Strategic
Research Group provides its economic and housing forecasts, which are available in the “Data and Insights” section of our website,
www.fanniemae.com. Information on our website is not incorporated into this report.
(2) These estimates are based on our national home price index, which is calculated differently from the S&P Cotality Case-Shiller U.S.
National Home Price Index and therefore results in different percentages for comparable growth. We periodically update our home price
growth estimates and forecasts as new data become available. The forecast data in this table may also differ from the forecasted home
price growth rate presented in “ Key Market Economic Indicators ,” because that section reflects our most recent forecast as of the filing
date of this report, while this table reflects the quantitative forecast data we used in our model to estimate credit losses for the periods
shown . Management continues to monitor macroeconomic updates to our inputs in our credit loss model from the time they are approved
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as part of our established governance process, to assess the reasonableness of the inputs used to calculate estimated credit losses. The
forecast data excludes the impact of any qualitative adjustments.
(3) Forecasted 30-year interest rates represent the mean of possible future interest rate environments that are simulated by our interest rate
model and used in the estimation of credit losses. Forecasts through the end of December 31, 2025 and 2024 , represent the average
forecasted rate from the quarter-end through the calendar year end of December 31st. The fourth quarter of 2025 and 2024 interest rates
represent the 30-year interest rate as of December 31, 2025 and December 31, 2024 , respectively. This table reflects the forecasted
interest rate data we used in estimating credit losses for the periods shown and does not reflect changes in interest rates that occurred
after the forecast date.
As noted above, our single-family allowance for loan losses is sensitive to changes in home prices and interest rate
changes. We present in the table below the impact of hypothetical changes in home prices and 30-year interest rates,
with all other factors held constant.
Single-Family Sensitivities - Hypothetical Changes to Model Inputs
Forecasted change to the first 12 months of the forecast:
Allowance Impact
Approximate Change in Allowance
as of December 31, 2025 (1)
(In percentage points)
Change in home prices growth rate: (2)
Change in 30-year interest rates:
(1) Calculated as a percentage of our single-family allowance for loan losses.
(2) Change in home price shown on a normalized basis.
The above sensitivity analyses are hypothetical and are provided solely for the purpose of providing insight into our
credit loss model inputs. In addition, sensitivities for home price and interest rate changes are non-linear. As a result,
changes in these estimates are not always incrementally proportional. The purpose of this analysis is to provide an
indication of the impact of changes in home prices and 30-year interest rates on the estimate of the single-family
allowance for credit losses. This analysis is not intended to imply management’s expectation of future changes in our
forecasts or any other variables that may change as a result.
See “ Key Market Economic Indicators ” for additional information about how home prices and interest rates can affect
our credit loss estimates, including a discussion of home price growth rates and our home price forecast. Also see
“ Consolidated Results of Operations — (Provision) Benefit for Credit Losses ” for information on how our home price and
interest rate forecasts impacted our single-family (provision) benefit for credit losses.
Multifamily Sensitivities and Inputs
The table below provides information about our most significant macroeconomic inputs used in determining our
multifamily allowance for loan losses: multifamily property net operating income and property value growth rates.
Although the model consumes a wide range of possible future economic scenarios, the forecasts below represent the
mean path of those simulations used in determining the multifamily allowance for the years ended December 31, 2025
and 2024 , and how those forecasts have changed between periods of estimate. Our forecasts include estimates for
periods beyond those presented below.
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MD&A | Critical Accounting Estimates
Select Multifamily Macroeconomic Model Inputs (1)
Forecasted net operating income growth (decline) rate by period of estimate:
For the Full Year ending December 31,
Fourth Quarter 2025
Fourth Quarter 2024
Forecasted property value growth (decline) rate by period of estimate:
For the Full Year ending December 31,
Fourth Quarter 2025
Fourth Quarter 2024
N/A Not applicable. For purposes of this disclosure, we provide the forecasted net operating income growth rate and property value growth rate
for the period of estimate and the two years following the period of estimate.
(1) These forecasts are provided solely for the purpose of providing insight into our credit loss model. Forecasts for future periods are
subject to significant uncertainty, which increases for periods that are further in the future, and may not align to other market forecasts.
As noted above, our multifamily allowance for loan losses is sensitive to changes in net operating income and property
value growth changes. We present in the table below the impact of hypothetical changes in net operating income and
property value growth, with all other factors held constant.
Multifamily Sensitivities - Hypothetical Changes to Model Inputs
Forecasted change to the first 12 months of the forecast:
Allowance Impact
Approximate Change in Allowance
as of December 31, 2025 (1)
(In percentage points)
Change in net operating income growth rate:
Change in property value growth rate:
(1) Calculated as a percentage of our multifamily allowance for loan losses.
The above sensitivity analyses are hypothetical and are provided solely for the purpose of providing insight into our
credit loss model inputs. In addition, sensitivities for net operating income and property value growth changes are non-
linear. As a result, changes in these estimates are not always incrementally proportional. The purpose of this analysis is
to provide an indication of the impact of net operating income and property value growth changes on the estimate of the
multifamily allowance for credit losses. This analysis is not intended to imply management’s expectation of future
changes in our forecasts or any other variables that may change as a result.
See “ Consolidated Results of Operations — (Provision) Benefit for Credit Losses ” for information on h ow our net
operating income and property valuations impacted our multifamily (provision) benefit for credit losses.
Impact of Future Adoption of New Accounting Guidance
We evaluate the impact on our consolidated financial statements of recently issued accounting guidance in “ Note 1,
Summary of Significant Accounting Policies .”
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MD&A | Glossary of Terms Used in This Report
Glossary of Terms Used in This Report
Terms used in this report have the following meanings, unless the context indicates otherwise.
“Agency mortgage-related securities” refers to mortgage-related securities issued by Fannie Mae, Freddie Mac and
Ginnie Mae.
“Back-end credit risk transfer transactions” refers to credit enhancements that we obtain after acquiring a loan.
“Business volume” refers to the sum in any given period of the UPB of: (1) the mortgage loans and non-Fannie Mae
mortgage-related securities we purchase for our retained mortgage portfolio; (2) the mortgage loans we securitize into
Fannie Mae MBS that are acquired by third parties; and (3) credit enhancements that we provide on our mortgage
assets. It excludes mortgage loans we securitize from our retained mortgage portfolio and the purchase of Fannie Mae
MBS for our retained mortgage portfolio.
“Capital reserve end date” refers to the date that is the last day of the second consecutive fiscal quarter during which we
have had and maintained capital equal to, or in excess of, all of the capital requirements and buffers under the
enterprise regulatory capital framework.
“CEO” refers to Chief Executive Officer.
“CFO” refers to Chief Financial Officer.
“Connecticut Avenue Securities” or “CAS” refers to a type of security that allows Fannie Mae to transfer a portion of the
credit risk from loan reference pools, consisting of certain mortgage loans in our guaranty book of business, to third-
party investors.
“Connecticut Avenue Securities REMICs” or “CAS REMICs” refers to Connecticut Avenue Securities that are structured
as notes issued by trusts that qualify as REMICs.
“Conventional mortgage” refers to a mortgage loan that is not guaranteed or insured by the U.S. government or its
agencies, such as the VA, the FHA or the Rural Development Housing and Community Facilities Program of the
Department of Agriculture.
“COO” refers to Chief Operating Officer.
“Credit enhancement” refers to an agreement used to reduce credit risk by requiring collateral, letters of credit,
mortgage insurance, corporate guarantees, inclusion in a credit risk transfer transaction reference pool, or other
agreements to provide an entity with some assurance that it will be compensated to some degree in the event of a
financial loss.
“ Credit Insurance Risk Transfer ” or “ CIRT ” refers to insurance transactions whereby we obtain actual loss coverage on
pools of loans either directly from an insurance provider that retains the risk, or from an insurance provider that
simultaneously cedes all of its risk to one or more reinsurers.
“Debt service coverage ratio” or “ DSCR” refers to a ratio of annualized net cash flow to the annualized debt service,
which may include both principal and interest payments, of a multifamily property.
“Deferred guaranty fee income” refers to income primarily from the upfront fees that we receive at the time of loan
acquisition related to single-family loan-level price adjustments or other fees we receive from lenders, which are
amortized over the contractual life of the loan. Deferred guaranty fee income also includes the amortization of cost basis
adjustments on our mortgage loans and debt of consolidated trusts that are not associated with upfront fees.
“Desktop Underwriter” or “ DU” refers to our proprietary automated underwriting system used by mortgage lenders to
evaluate the substantial majority of our single-family loan acquisitions.
“Delegated Underwriting and Servicing program” or “DUS program” refers to our multifamily business program whereby
DUS lenders, who must be pre-approved by us, are delegated the authority to underwrite and service loans for delivery
to us in accordance with our standards and requirements.
“Enterprise regulatory capital framework” refers to the regulatory capital framework established by FHFA applicable to
us that was initially published in December 2020 and subsequently amended in 2022 and 2023, as described in
“Business—Legislation and Regulation—Capital Requirements.”
“FHFA” refers to the Federal Housing Finance Agency. FHFA is an independent agency of the federal government with
general supervisory and regulatory authority over Fannie Mae, Freddie Mac and the Federal Home Loan Banks. FHFA
is our safety and soundness regulator and our mission regulator. FHFA also has been acting as our conservator since
September 2008. For more information on FHFA’s authority as our conservator and as our regulator, see “ Business —
Conservatorship and Treasury Agreements ” and “ Business — Legislation and Regulation .”
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MD&A | Glossary of Terms Used in This Report
“Front-end credit enhancements” refers to credit enhancements that we obtain at the time we acquire a loan.
“GSE” refers to the government-sponsored enterprises Fannie Mae or Freddie Mac.
“GSE Act” refers to the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended.
“Guaranty book of business” refers to the sum of the UPB of: (1) Fannie Mae MBS outstanding (excluding the portions
of any structured securities Fannie Mae issues that are backed by Freddie Mac securities); (2) mortgage loans of
Fannie Mae held in our retained mortgage portfolio; and (3) other credit enhancements that we provide on mortgage
assets. It also excludes non-Fannie Mae mortgage-related securities held in our retained mortgage portfolio for which
we do not provide a guaranty.
“Guaranty fee income” or “guaranty fees” refers to compensation we receive for assuming the credit risk on our single-
family and multifamily guaranty books of business that we recognize in net interest income. There are two components
of our single-family guaranty fee: (1) base fees, which are ongoing fees that factor into a mortgage loan’s interest rate
and are collected each month over the life of the mortgage loan; and (2) upfront fees, which are one-time payments
made by lenders upon loan delivery and are amortized into net interest income over the life of the loan. For multifamily
loans, base fees are the primary component of our guaranty fee. Multifamily guaranty fee income does not include
upfront fees.
“HFI loans” or “held-for-investment loans” refer to mortgage loans we acquire for which we have the ability and intent to
hold for the foreseeable future or until maturity.
“HFS loans” or “held-for-sale loans” refer to mortgage loans we acquire that we intend to sell or securitize via trusts that
will not be consolidated.
“ Low Income Housing Tax Credit ” or “ LIHTC ” refers to a federal program that encourages private equity investment in
creating and preserving affordable units throughout the country by awarding federal tax credits to affordable housing
developers, who then exchange those tax credits with corporate investors in return for capital contributions.
“Loans,” “mortgage loans” and “mortgages” refer to both whole loans and loan participations, secured by residential real
estate, cooperative shares or by manufactured housing units.
“Loss reserves” consists of our allowance for loan losses and our reserve for guaranty losses.
“Mortgage assets,” when referring to our assets, refers to both mortgage loans and mortgage-related securities we hold
in our retained mortgage portfolio. For purposes of the senior preferred stock purchase agreement, the definition of
mortgage assets is based on the UPB of such assets and does not reflect market valuation adjustments, allowance for
loan losses, impairments, unamortized premiums and discounts and the impact of our consolidation of variable interest
entities. Our mortgage asset calculation also includes 10% of the notional value of interest-only securities we hold. We
disclose the amount of our mortgage assets for purposes of the senior preferred stock purchase agreement on a
monthly basis in the “Endnotes” to our Monthly Summary reports, which are available on our website.
“Mortgage-backed securities” or “MBS” refers generally to securities that represent beneficial interests in pools of
mortgage loans or other mortgage-related securities. These securities may be issued by Fannie Mae or by others.
“Multifamily Connecticut Avenue Securities” or “MCAS” refers to Connecticut Avenue Securities that are structured as
notes issued by trusts to transfer credit risk on our multifamily guaranty book of business to third-party investors.
“Multifamily mortgage loan” refers to a mortgage loan secured by a property containing five or more residential dwelling
units.
“New business purchases” refers to single-family and multifamily whole mortgage loans purchased during the period
and single-family and multifamily mortgage loans underlying Fannie Mae MBS issued during the period pursuant to
lender swaps.
“Notional amount” refers to the hypothetical dollar amount in an interest rate swap transaction on which exchanged
payments are based. The notional amount in an interest rate swap transaction generally is not paid or received by either
party to the transaction, or generally perceived as being at risk. The notional amount is typically significantly greater
than the potential market or credit loss that could result from such transaction.
“Outstanding Fannie Mae MBS” refers to the total UPB of any type of mortgage-backed security that we issue, including
UMBS, Supers, REMICs and other types of single-family or multifamily mortgage-backed securities that are held by
third-party investors or in our retained mortgage portfolio. For securities held by third-party investors, it excludes the
portions of any structured securities Fannie Mae issues that are backed by Freddie Mac-issued securities.
“Private-label securities” refers to mortgage-related securities issued by entities other than agency issuers Fannie Mae,
Freddie Mac or Ginnie Mae.
Fannie Mae 2025 Form 10-K
MD&A | Glossary of Terms Used in This Report
“Refi Plus loans” refers to loans we acquired under our Refi Plus initiative, which offered refinancing flexibility to eligible
Fannie Mae borrowers who were current on their loans and who applied prior to the initiative’s December 31, 2018
sunset date. Refi Plus had no limits on maximum LTV ratio and provided mortgage insurance flexibilities for loans with
LTV ratios greater than 80%.
“REMIC” or “Real Estate Mortgage Investment Conduit” refers to a type of mortgage-related security in which interest
and principal payments from mortgages or mortgage-related securities are structured into separately traded securities.
“REO” refers to real-estate owned by Fannie Mae because we have foreclosed on the property or obtained the property
through a deed-in-lieu of foreclosure.
“Representations and warranties” refers to a lender’s assurance that a mortgage loan sold to us complies with the
standards outlined in our Mortgage Selling and Servicing Contract, which incorporates the Selling and Servicing Guides,
including underwriting and documentation. Violation of any representation or warranty is a breach of the lender contract,
including the warranty that the loan complies with all applicable requirements of the contract, which provides us with
certain rights and remedies.
“Retained mortgage portfolio” refers to the mortgage-related assets we own (excluding the portion of assets that back
mortgage-related securities owned by third parties).
“Single-family mortgage loan” refers to a mortgage loan secured by a property containing four or fewer residential
dwelling units.
“Structured Fannie Mae MBS” refers to Fannie Mae securitizations that are resecuritizations of UMBS, MBS, or
previously-issued structured securities. Our structured securities can be commingled—that is, they can include Freddie
Mac securities as part or all of the underlying collateral for the security.
“TCCA fees” refers to the expense recognized as a result of the 10 basis point increase in guaranty fees on all single-
family mortgages delivered to us on or after April 1, 2012 pursuant to the Temporary Payroll Tax Cut Continuation Act of
2011 and as extended by the Infrastructure Investment and Jobs Act, which we pay to Treasury on a quarterly basis.
“ Uniform Mortgage-Backed Securities ” or “ UMBS ” refers to uniform single-family mortgage-backed securities issued by
Fannie Mae or Freddie Mac that are directly backed by fixed-rate mortgage loans and generally eligible for trading in the
to-be-announced (“TBA”) market.
“ UPB ” or “ unpaid principal balance ” refers to the remaining principal balance due on a loan or mortgage-backed
security.
“Write-off” refers to loan amounts written off as uncollectible bad debts. These loan amounts are removed from our
consolidated balance sheet and charged against our loss reserves when the balance is deemed uncollectible, which is
generally at foreclosure or other liquidation events (such as a deed-in-lieu of foreclosure or a short-sale). Also includes
write-offs related to the redesignation of loans from held for investment to held for sale.
“Yield maintenance fee s” refers to multifamily prepayment premiums, which are fees that a multifamily borrower typically
pays when they prepay their loan.
