Fannie Mae is a leading source of financing for mortgages in the United States, with $4.0$4.2 trillion in assets as of December 31, 2020.2021. Organized as a government-sponsored entity, Fannie Mae is a shareholder-owned corporation. Our charter is an act of Congress, and we have a mission underwhich establishes that charterour purposes are to provide liquidity and stability to the residential mortgage market and to promote access to mortgage credit. We were initially established in 1938.

Our revenues are primarily driven by guaranty fees we receive for assuming the credit risk on loans underlying the mortgage-backed securities we issue. We do not originate loans or lend money directly to borrowers. Rather, we work primarily work with lenders who originate loans to borrowers. We securitize those loans into Fannie Mae mortgage-backed securities that we guarantee (which we refer to as Fannie Mae MBS or our MBS).

Effectively managing credit risk is key to our business. In exchange for assuming credit risk on the loans we acquire, we receive guaranty fees. These fees take into account the credit risk characteristics of the loans we acquire and consist of two primary components:

As described further in “COVID-19 Impact” and “Risk Factors,” the COVID-19 pandemic has significantly affected our financial performance andFor information about how we expect that it will continue to do so. Given the unprecedented nature of the COVID-19 pandemic, it is difficult to assess or predict the long-term effects of the pandemic on our financial performance.

Through our current forecasts regarding future macroeconomic conditions.

Our mission is to provide liquidityfacilitate equitable and stability to the residential mortgage market and to promotesustainable access to mortgage credit.

The Charter Act specifies that our operations are to be financed by private capital to the maximum extent feasible. We are expected to earn reasonable economic returns on all our activities. However, we may accept lower returns on certain activities relating to mortgages on housing for low- and moderate-income families in order to support those segments of the market. We expect the lower returns to be offset by activities that yield higher returns.

The Charter Act also includes the following provisions:

We support market liquidity by issuing Fannie Mae MBS that are readily traded in the capital markets. We create Fannie Mae MBS by placing mortgage loans in a trust and issuing securities that are backed by those mortgage loans. Monthly payments received on the loans are the primary source of payments passed through to Fannie Mae MBS holders. We guarantee to the MBS trust that we will supplement amounts received by the MBS trust as required to permit timely payment of principal and interest on the trust certificates. In return for this guaranty, we receive guaranty fees.

Below we discuss the three broad categories of our securitization transactions and UMBS.the uniform mortgage-backed securities we issue.

We currently securitize a substantial majority of the single-family and multifamily mortgage loans we acquire. Our securitization transactions primarily fall within three broad categories: lender swap transactions, portfolio securitizations, and structured securitizations.

Our most common type of securitization transaction is our “lender swap transaction.” In a single-family lender“lender swap transaction,” a mortgage lender that operates in the primary mortgage market generally delivers a pool of mortgage loans to us in exchange for Fannie Mae MBS backed by these mortgage loans. Lenders may hold the Fannie Mae MBS they receive from us or sell them to investors. A pool of mortgage loans is a group of mortgage loans with similar characteristics. After receiving the mortgage loans in a lender swap transaction, we place them in a trust for which we serve as trustee. This trust is established for the sole purpose of holding the mortgage

loans separate and apart from our corporate assets. We guarantee to each MBS trust that we will supplement amounts received by the MBS trust as required to permit timely payment of principal and interest on the related Fannie Mae MBS. We are entitled to a portion of the interest payment as a fee for providing our guaranty. The mortgage servicer also retains a portion of the interest payment as a fee for servicing the loan. Then, on behalf of the trust, we make monthly distributions to the Fannie Mae MBS certificateholders from the principal and interest payments and other collections on the underlying mortgage loans.

Our Multifamily business generally creates multifamily Fannie Mae MBS in lender swap transactions in a manner similar to our Single-Family business. Our multifamily lender customersMultifamily lenders typically deliver only one mortgage loan to back each multifamily Fannie Mae MBS. The characteristics of each mortgage loan are used to establish guaranty fees on a risk-adjusted basis. Securitizing a multifamily mortgage loan into a Fannie Mae MBS facilitates its sale into the secondary market.

We also purchase mortgage loans and mortgage-related securities for securitization and sale at a later date through our “portfolio securitization transactions.” Most of our portfolio securitization transactions are driven by our single-family whole loan conduit activities, pursuant to which we purchase single-family whole loans from a large group of typically smallersmall to mid-sized lenders principally for the purpose of securitizing the loans into Fannie Mae MBS, which may then be sold to dealers and investors.

In a “structured securitization transaction,” we create structured Fannie Mae MBS, typically for our lender customerslenders or securities dealer customers,dealers, in exchange for a transaction fee. In these transactions, the customerlender or dealer “swaps” a mortgage-related asset that it owns (typically a mortgage security) in exchange for a structured Fannie Mae MBS we issue. The process for issuing Fannie Mae MBS in a structured securitization is similar to the process involved in our lender swap securitizations described above.

Each of Fannie Mae and Freddie Mac (the “GSEs”) issues and guarantees UMBS and structured securities backed by UMBS and other securities, as described below.

The key features of UMBS are the same as those of legacy single-family Fannie Mae MBS. Accordingly, all single-family Fannie Mae MBS that are directly backed by fixed-rate loans and generally eligible for trading in the TBA market are considered UMBS, whether issued before or after June 3, 2019, when we began issuingthe introduction of UMBS. In this report, we use the term “Fannie Mae-issued UMBS” to refer to single-family Fannie Mae MBS that are directly backed by fixed-rate mortgage loans and generally eligible for trading in the TBA market. We use the term “Fannie Mae MBS” or “our MBS” to refer to any type of mortgage-backed security that we issue, including UMBS, Supers, REMICs and other types of single-family or multifamily mortgage-backed securities. References to our single-family guaranty book of business in this report exclude Freddie Mac-acquired mortgage loans underlying Freddie Mac mortgage-related securities that we have resecuritized.

TheWe rely on the common securitization platform operated by CSS has replaced certain elements of Fannie Mae’s and Freddie Mac’s proprietary systems for securitizing single-family mortgages and performing associated back-office and administrative functions. The design ofto securitize the common securitization platform also allows for the potential integration of additional market participants in the future. We no longer use our individual proprietary securitization function for our single-family MBS issuances. In addition to using the common securitization platformwe issue and for our newly issued UMBS issuances, we are also now using the common securitization platform for certain ongoing administrative functions for our previously issued and outstanding single-family Fannie Mae MBS. We do not use the common securitization platform operated by CSS for securitizing or performing associated administrative functions for our multifamily Fannie Mae MBS.

Effectively pricing and managing credit risk is key to our business. Below we discuss key elements of how we are compensated for and manage the risk of credit losses through the life cycle of our loans and how we measure our credit risk.

Loans we acquire must be underwritten in accordance with our guidelines and standards.

In exchange for managing credit risk on the loans we acquire, we receive guaranty fees that take into account, among other factors, the credit risk characteristics of the loans we acquire. We provide information about our guaranty fees in MD“MD&A—Single-familySingle-Family Business—Single-familySingle-Family Business Metrics” and in “MD&A—Multifamily Business—Multifamily Business Metrics.”

We closely monitor the performance of loans in our guaranty book of business and we work to reduce defaults and mitigate the severity of credit losses through our servicing policies and practices.

In addition to managing credit risk through our selling and servicing practices, we also share and transfer credit risk to third parties through a variety of credit enhancement products and programs.

For more information about our loans with credit enhancement, see “MD&A—Single-Family Business—Single-Family Mortgage Credit Risk Management—Single-Family Credit Enhancement and Transfer of Mortgage Credit Risk” and “MD&A—Multifamily Business—Multifamily Mortgage Credit Risk Management—Transfer of Multifamily Mortgage Credit Risk.”

Our best estimate of future credit losses is reflected in our single-family and multifamily loss reserves, which for periods on or after January 1, 2020 isare calculated using a lifetime credit loss methodology under the CECL standard. We update our estimate of credit losses quarterly based on the credit profile of our loans as well as certain actual and forecasted economic data. Changes in our estimate affect our benefit or provision for credit losses, which, combined with foreclosed property expense, comprises our credit-related income or expense each quarter.expense.

We provide information on our loss reserves in “Selected Financial Data” and in “MD&A—Single-Family Business—Single-Family Mortgage Credit Risk Management—Single-Family Problem Loan Management—Other Single-Family Credit information” and “MD&A—Multifamily Business—Multifamily Mortgage Credit Risk Management—Multifamily Problem Loan Management and Foreclosure Prevention—Other Multifamily Credit information.” We provide information on our credit related income or expense in “MD&A—Consolidated Results of Operations—Credit-Related Income (Expense).”

On September 6, 2008, the Director of FHFA appointed FHFA as our conservator, pursuant to authority provided by the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended, including by the Federal Housing Finance Regulatory Reformand Economic Recovery Act of 2008 (together, the “GSE Act”). The conservatorship is a statutory process designed to preserve and conserve our assets and property and put the company in a sound and solvent condition.

The conservatorship has no specified termination date. For more information on the risks to our business relating to the conservatorship and uncertainties regarding the future of our company and business, as well as the adverse effects of the conservatorship on the rights of holders of our common and preferred stock, see “Risk Factors—GSE and Conservatorship Risk.”

Our conservatorship could terminate through a receivership. For information on the circumstances under which FHFA is required or permitted to place us into receivership and the potential consequences of receivership, see “Legislation and

Our directors serve on behalf of the conservator and exercise their authority as directed by and with the approval, where required, of the conservator. Our directors have no fiduciary duties to any person or entity except to the conservator. Accordingly, our directors are not obligated to consider the interests of the company, the holders of our equity or debt securities, or the holders of Fannie Mae MBS unless specifically directed to do so by the conservator.

Because we are in conservatorship, our common stockholders currently do not have the ability to elect directors or to vote on other matters. The conservator eliminated common and preferred stock dividends (other than dividends on the senior preferred stock issued to Treasury) during the conservatorship.

FHFA has broad powers when acting as our conservator. As conservator, FHFA can direct us to enter into contracts or enter into contracts on our behalf. Further, FHFA may transfer or sell any of our assets or liabilities (subject to limitations and post-transfer notice provisions for transfers of certain types of financial contracts), without any approval, assignment of rights or consent of any party. However, mortgage loans and mortgage-related assets that have been transferred to a

Fannie Mae MBS trust must be held by the conservator for the beneficial owners of the Fannie Mae MBS and cannot be used to satisfy the general creditors of the company. Neither the conservatorship nor the terms of our agreements with Treasury change our obligation to make required payments on our debt securities or perform under our mortgage guaranty obligations.

The senior preferred stock purchase agreement provides that, on a quarterly basis, we may draw funds up to the amount, if any, by which our total liabilities exceed our total assets, as reflected in our consolidated balance sheet, prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), for the applicable fiscal quarter (referred to as the “deficiency amount”), up to the maximum amount of remaining funding under the agreement. As of the date of this filing, the maximum amount of remaining funding under the agreement is $113.9 billion. If we were to draw additional funds from Treasury under the agreement with respect to a future period, the amount of remaining funding under the agreement would be reduced by the amount of our draw. The senior preferred stock purchase agreement provides that the deficiency amount will be calculated differently if we become subject to receivership or other liquidation process.

The senior preferred stock purchase agreement provides for the payment of an unspecified quarterly commitment fee to Treasury to compensate Treasury for its ongoing support under the senior preferred stock purchase agreement. As amended byThe amount of this fee, as well as a number of the January 2021 letter agreement,agreement’s other terms and the terms of the senior preferred stock, depend on whether we have reached the “capital reserve end date,” which is defined as the last day of the second consecutive fiscal quarter during which we have maintained capital equal to, or in excess of, all of the capital requirements and buffers under the enterprise regulatory capital framework discussed in “Legislation and Regulation—GSE-Focused Matters—Capital.” Under the agreement, provides that (1) through and continuing until the capital reserve end date, the periodic commitment fee will not be set, accrue, or be payable, and (2) not later than the capital reserve end date, we and Treasury, in consultation with the Chair of the Federal Reserve, will agree to set the periodic commitment fee. Treasury’s funding commitment under the senior preferred stock purchase agreement has no expiration date. The agreement provides that Treasury’s funding commitment will terminate under any of the following circumstances: (1) the completion of our liquidation and fulfillment of Treasury’s obligations under its funding commitment at that time; (2) the payment in full of, or reasonable provision for, all of our liabilities (whether or not contingent, including mortgage guaranty obligations); or (3) the funding by Treasury of the maximum amount that may be funded under the agreement. In addition, Treasury may terminate its funding commitment and declare the agreement null and void if a court vacates,

modifies, amends, conditions, enjoins, stays or otherwise affects the appointment of the conservator or otherwise curtails the conservator’s powers.

In the event of our default on payments with respect to our debt securities or guaranteed Fannie Mae MBS, if Treasury fails to perform its obligations under its funding commitment and if we and/or the conservator are not diligently pursuing remedies with respect to that failure, the agreement provides that any holder of such defaulted debt securities or Fannie Mae MBS may file a claim in the United States Court of Federal Claims for relief requiring Treasury to fund us up to (1) the amount necessary to cure the payment defaults on our debt and Fannie Mae MBS, (2) the deficiency amount, or (3) the amount of remaining funding under the senior preferred stock purchase agreement, whichever is the least. Any payment that Treasury makes under those circumstances will be treated for all purposes as a draw under the agreement that will increase the liquidation preference of the senior preferred stock.

Most provisions of the senior preferred stock purchase agreement may be waived or amended by mutual agreement of the parties; however, no waiver or amendment of the agreement is permitted that would decrease Treasury’s aggregate funding commitment or add conditions to Treasury’s funding commitment if the waiver or amendment would adversely affect in any material respect the holders of our debt securities or guaranteed Fannie Mae MBS.

Treasury, as the holder of the senior preferred stock, is entitled to receive, when, as and if declared, out of legally available funds, cumulative quarterly cash dividends. The dividends we have paid to Treasury on the senior preferred stock during conservatorship have been declared by, and paid at the direction of, our conservator, acting as successor to the rights, titles, powers and privileges of the Board of Directors. Dividend payments we make to Treasury do not restore or increase the amount of funding available to us under the senior preferred stock purchase agreement.

The terms of the senior preferred stock provide for dividends each quarter in the amount, if any, by which our net worth as of the end of the immediately preceding fiscal quarter exceeds an applicable capital reserve amount. The January 2021 letter agreement increased the applicable capital reserve amount, starting with the quarterly dividend period ending on December 31, 2020, from $25 billion to the amount of adjusted total capital necessary for us to meet the capital requirements and buffers set forth in enterprise regulatory capital framework. If our net worth does not exceed this amount as of the end of the immediately preceding fiscal quarter, then dividends will neither accumulate nor be payable for such period. Our net worth is defined as the amount, if any, by which our total assets (excluding Treasury’s funding commitment and any unfunded amounts related to the commitment) exceed our total liabilities (excluding any obligation with respect to capital stock), in each case as reflected on our balance sheet prepared in accordance with GAAP.

Beginning on the first dividend period following the capital reserve end date, the applicable quarterly dividend amount on the senior preferred stock will be the lesser of:

However, the applicable quarterly dividend amount will immediately increase to a 12% annual rate on the then-current liquidation preference of the senior preferred stock if we fail to timely pay dividends in cash to Treasury. This increased dividend amount will continue until the dividend period following the date we have paid, in cash, full cumulative dividends to Treasury (including any unpaid dividends), at which point the applicable quarterly dividend amount will revert to the prior calculation method.

Under the terms governingthat currently govern the senior preferred stock, the aggregate liquidation preference iswill be increased by the following:

The senior preferred stock ranks ahead of our common stock and all other outstanding series of our preferred stock, as well as any capital stock we issue in the future, as to both dividends and rights upon liquidation. As a result, if we are liquidated, the holder of the senior preferred stock is entitled to its then current liquidation preference before any distribution is made to the holders of our common stock or other preferred stock. The aggregate liquidation preference

We are not permitted to redeem the senior preferred stock prior to the termination of Treasury’s funding commitment under the senior preferred stock purchase agreement. Moreover, we are not permitted to pay down the liquidation preference of the outstanding shares of senior preferred stock except to the extent of (1) accumulated and unpaid dividends previously added to the liquidation preference and not previously paid down; and (2) quarterly commitment fees previously added to the liquidation preference and not previously paid down. In addition to these exceptions, if we issue any shares of capital stock for cash while the senior preferred stock is outstanding, the net proceeds of the issuance, with the exception of up to $70 billion in aggregate gross cash proceeds from the issuance of common stock, must be used to pay down the liquidation preference of the senior preferred stock. The liquidation preference of each share of senior preferred stock may not be paid down below $1,000 per share prior to the termination of Treasury’s funding commitment. Following the termination of Treasury’s funding commitment, we may pay down the liquidation preference of all outstanding shares of senior preferred stock at any time, in whole or in part.

The charts below show information about our net worth, the remaining amount of Treasury’s funding commitment to us, senior preferred stock dividends we have paid Treasury and funds we have drawn from Treasury pursuant to its funding commitment.

Pursuant to the senior preferred stock purchase agreement, on September 7, 2008, we, through FHFA in its capacity as conservator, issued to Treasury a warrant to purchase shares of our common stock equal to 79.9% of the total number of shares of our common stock outstanding on a fully diluted basis on the date the warrant is exercised, for an exercise

The senior preferred stock purchase agreement contains covenants that prohibit us from taking a number of actions without the prior written consent of Treasury, including:

Covenants in the senior preferred stock purchase agreement also subject us to limits on the amount of mortgage assets that we may own and the total amount of our indebtedness.

In addition to the changes described above to covenants already in the senior preferred stock purchase agreement, the January 2021 letter agreement added additional covenants:

The business impacts of these new covenants and our compliance with them, including how these new limitations will impact, and may require changesrestrictions described below were added to our underwriting standards and requirements for acquisitions of single-family and multifamily loans. These changes may impact the overall volume and types of loans we acquire in 2021. As of the date of this filing, based on interpretive guidance we have received from FHFA to date and an initial assessment of our acquisition activities, we are not currently in compliance with the new covenants that restrict our acquisitions of purchase money single-family loans with higher-risk characteristics and our acquisitions of single-family loans backed by investment properties and second homes, measured during the preceding 52-week period. We are working with FHFA on resolving any remaining interpretive issues and discussing a timetable to be fully compliant with these covenants.

In connection with our Equitable Housing Finance Plan and in support of other efforts we may undertake to support equitable housing, we anticipate establishing and supporting special purpose credit programs. Under the Equal Credit Opportunity Act, creditors can create special purpose credit programs for groups that have been historically disadvantaged in obtaining credit; such programs benefit applicants who would otherwise be denied credit or receive it on less favorable terms. In response to uncertainty in the industry, in December 2021, the U.S. Department of Housing and Urban Development (“HUD”) issued guidance clarifying that these programs, if they conform with the covenants inEqual Credit Opportunity Act, generally do not violate the agreement, FHFA, asFair Housing Act.

For more information on our conservatorinitial Equitable Housing Finance Plan, see “Directors, Executive Officers and regulator, has the authority to direct compliance and to impose consequences for noncompliance.Corporate Governance—ESG Matters—Social—Racial Equity.”

PolicymakersAfter Fannie Mae was placed in conservatorship, policymakers and others have focused significant attention in recent years on how to reform the nation’s housing finance system, including what role, if any, Fannie Mae and Freddie Mac should play in that system. Despite this attention, efforts in Congress to enact meaningful reform have been limited, particularly in recent years. The Administration and Congress may consider proposed housing finance reformreforms or legislation that could result in significant changes in our structure and role in the future, including proposals that would result in Fannie Mae’s liquidation or dissolution. The January 2021 letter agreement includes a commitment for us and Treasury to work toward developing a proposal to restructure Treasury’s interests in us in a manner that meets three goals: (1) facilitating an orderly exit from conservatorship, (2) ensuring that Treasury is appropriately compensated, and (3) permitting us to raise third-party capital and make distributions as appropriate. The January 2021 letter agreement states that Treasury, in consultation with FHFA, should endeavor to transmit this proposal to both Houses of Congress by September 30, 2021. At the same time the January 2021 letter agreement was announced, Treasury issued a Blueprint on Next Steps for GSE Reform. Indicating that “Congress is best positioned to adopt comprehensive housing finance reform,” Treasury addressed five key considerations in the blueprint that should inform Treasury’s continued work with FHFA to meet the goals described above: build GSE equity capital, determine GSE capital structure, set commitment fee for ongoing government support, establish appropriate pricing oversight, and assess appropriate market concentration. In the blueprint, Treasury indicated that, among other things, consideration should be given to whether consolidating our and Freddie Mac’s operations into a single entity would more efficiently fulfill our mission and promote the interests of stakeholders, including taxpayers. It is unclear how or whether Treasury in the current Administration will prioritize or act on the commitments set forth in the letter agreement or the considerations set forth in the Blueprint. There continues to be significant uncertainty regarding the timing, content and impact of future legislative and regulatory actions affecting us, including the enactment of housing finance reform legislation.us. See “Risk Factors—GSE and Conservatorship Risk” for a description of risks associated with our future and potential housing finance reform.

We describe below regulationsmatters applicable specifically to us pursuantFannie Mae. These matters relate to legislation, regulation or, in some cases, conservatorship. In the GSE Act,following section, we describe matters that are applicable more broadly or to other legislationmortgage or capital market participants and related regulatory matters. We also describe some regulations applicable to the mortgage industry and the securities markets that may directly or indirectly affect us.

The GSE Act sets forth minimum and critical capital requirements for Fannie Mae and Freddie Mac and provides that the Director of FHFA shall establish risk-based capital requirements and may establish higher minimum capital requirements. FHFA has suspended the statute’s capital classifications during conservatorship. Although existing statutory and regulatory capital requirements are not binding during conservatorship, we continue to submit capital reports to FHFA and FHFA monitors our capital levels. See “Note 12, Regulatory Capital Requirements” for information on the amount of regulatory capital we held as of December 31, 2020.

In 2017, FHFA directed Fannie Mae and Freddie Mac to implement an aligned risk measurement framework for evaluating business decisions and performance during conservatorship. The conservatorship capital framework includesincluded specific requirements relating to the risk onof our book of business and modeled returns on our new acquisitions. We are required to submit quarterly reports to FHFA relating to the framework’s requirements. We discuss below our transition from the conservatorship capital framework to our new enterprise regulatory capital framework.

In November 2020, FHFA adopted a final rule establishing a new regulatory capital framework for the GSEs, which was published in the Federal Register on December 17, 2020.GSEs. The new regulatory capital framework implements the statutory capital requirements and establishes supplemental risk-based and leverage-based capital requirements beyond what is expressly required in the GSE Act. The framework provides a granular assessment of credit risk specific to different mortgage loan categories, as well as components for market risk and operational risk. The regulatory capital framework set forth in the final rule includes the following:

When it is fully applicable to Fannie Mae, this framework will require us to hold significantly more capital than the statutory minimum capital requirement, and priorwe currently have a $100.3 billion deficit of core capital relative to that statutory requirement. We believe that, if we were fully capitalized under the framework, our returns on our current business would not be sufficient to attract private investors. See “Risk Factors—GSE and Conservatorship Risk” for a discussion of Fannie Mae’s uncertain future and the potential impact of insufficient returns on capital. See “Note 12, Regulatory Capital Requirements” for more information about our statutory capital classification measures.

Since the enterprise regulatory capital framework went into effect, we held as of December 31, 2020.

The GSE Act requires FHFA to establish standards governing our portfolio holdings, to ensure that they are backed by sufficient capital and consistent with our mission and safe and sound operations. FHFA is also required to monitor our portfolio and, in some circumstances, may require us to dispose of or acquire assets. In 2010, FHFA adopted, as the standard for our portfolio holdings, the portfolio limits specified in the senior preferred stock purchase agreement described under “Conservatorship, Treasury Agreements and Housing Finance Reform—Treasury Agreements—Covenants under Treasury Agreements,” as it may be amended from time to time. The rule is effective for as long as we remain subject to the terms and obligations of the senior preferred stock purchase agreement.

The GSEDodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) requires certain financial companies to conduct annual stress tests to determine whether the companies have the capital necessary to absorb losses as a result of adverse economic conditions. Under FHFA regulations implementing this requirement, each year we are required to conduct a stress test using two different scenarios of financial conditions provided by FHFA—baseline and severely adverse—and to publish a summary of our stress test results for the severely adverse scenario by August 15. We publish our stress test results on our website. We and FHFA published our most recent stress test results for the severely adverse scenario on August 13, 2021.

Under the GSE Act, FHFA must place us into receivership if the Director of FHFA makes a written determination that our assets are less than our obligations (that is, we have a net worth deficit) or if we have not been paying our debts as they become due, in either case, for a period of 60 days. FHFA has notified us that the measurement period for any mandatory receivership determination with respect to our assets and liabilities would commence no earlier than the SEC public filing deadline for our quarterly or annual financial statements and would continue for 60 calendar days thereafter. FHFA has advised us that if, during that 60-day period, we receive funds from Treasury in an amount at least equal to the deficiency amount under the senior preferred stock purchase agreement, the Director of FHFA will not make a mandatory receivership determination.

In addition, we could be put into receivership at the discretion of the Director of FHFA at any time for other reasons set forth in the GSE Act. The statutory grounds for discretionary appointment of a receiver include: a substantial dissipation of assets or earnings due to unsafe or unsound practices; the existence of an unsafe or unsound condition to transact business; an inability to meet our obligations in the ordinary course of business; a weakening of our condition due to unsafe or unsound practices or conditions; critical undercapitalization; undercapitalization and no reasonable prospect of becoming adequately capitalized; the likelihood of losses that will deplete substantially all of our capital; or by consent.

The appointment of FHFA as receiver would immediately terminate the conservatorship. In the event of receivership, the GSE Act requires FHFA, as the receiver, to organize a limited-life regulated entity with respect to Fannie Mae. Among other requirements, the GSE Act provides that this limited-life regulated entity:

Placement into receivership would likely have a material adverse effect on holders of our common stock and preferred stock, and could have a material adverse effect on holders of our debt securities and Fannie Mae MBS. Should we be placed into receivership, different assumptions would be required to determine the carrying value of our assets, which could lead to substantially different financial results. For more information on the risks to our business relating to receivership and uncertainties regarding the future of our business, see “Risk Factors—GSE and Conservatorship Risk.”

The GSE Act requires us to set aside in each fiscal year an amount equal to 4.2 basis points for each dollar of the unpaid principal balance of our new business purchases and to pay this amount to specified HUD and Treasury funds in support of affordable housing. New business purchases consist of single-family and multifamily whole mortgage loans purchased during the period and single-family and multifamily mortgage loans underlying Fannie Mae MBS issued

The GSE Act requires the Secretary of HUD to assure that Fannie Mae and Freddie Mac meet their fair lending obligations. Among other things, HUD periodically reviews and comments on our underwriting and appraisal guidelines to ensure consistency with the Fair Housing Act. 

Our housing goals, which are established by FHFA in accordance with the GSE Act, require that a specified amount of mortgage loans we acquire meet standards relating to affordability or location. For single-family goals, our acquisitions are measured against the lower of benchmarks set by FHFA or the level of goals-qualifying originations in the primary mortgage market. Multifamily goals are established as a number of units to be financed.

In October 2020,December 2021, FHFA determined that we met all of our 20192020 single-family and multifamily housing goals. We will reportbelieve we also met our 20202021 single-family and multifamily housing goals, performance to FHFA in March 2021, and FHFA will make a final determination regarding our 20202021 performance later in the year, after data regarding the share of goals-qualifying originations in the primary mortgage market, reported under the Home Mortgage Disclosure Act, becomes available. The tables below display information about our housing goals for 2020 and 2021 and performance against our 2020 goals.

In December 2020,2021, FHFA established single-family and multifamily housing goals for Fannie Mae and Freddie Mac for 2021. In the past, FHFA has established housing goals forpublished a three-year period, but due to the COVID-19 pandemic and associated economic uncertainty, FHFA established benchmark levels for only the 2021 calendar year. Thefinal rule establishing new benchmark levels for our single-family housing goals for 2022 through 2024 and new multifamily housing goals remainfor 2022.

FHFA will continue to evaluate our performance against the samesingle-family housing goals using a two-part approach that compares the goals-qualifying share of our single-family mortgage acquisitions against both a benchmark level and a market level. To meet a single-family housing goal or subgoal, the percentage of our mortgage acquisitions that meet each goal or subgoal must equal or exceed either the benchmark level set in advance by FHFA or the market level for that year. The market level is determined retrospectively each year based on actual goals-qualifying originations in the primary mortgage market as those applicablemeasured by FHFA based on Home Mortgage Disclosure Act data for 2020. that year.

In this and the following sections, we serve very low-, low-,discuss our housing goals and moderate-income families in three specified underserved markets: manufactured housing, affordable housing preservation and rural housing. In December 2016, FHFA published a final rule implementing our duty to serve these underserved markets. Under the rule, we are requiredobligations pursuant to adopt an underserved markets plan for each underserved market covering a three-year period that sets forth the activities and objectives we will undertake to meet our duty to serve that market. Our underserved markets plans, which are effective for 2018 to 2020, received non-objections from FHFA, were initially finalized and published in December 2017 and have been updated since that time.

Our housing goals, which are established by state and local governments, subjectFHFA in accordance with the GSE Act, require that a specified amount of mortgage loans we acquire meet standards relating to affordability or location. For single-family goals, our acquisitions are measured against the lower of benchmarks set by FHFA approval. Duty to serve credit also is available for activities related to small multifamily rental properties, energy efficiency improvements on existing multifamily rental and single-family first lien properties, certain shared equity homeownership programs,or the purchase or rehabilitationlevel of certain distressed properties, and activities under HUD’s Choice Neighborhoods Initiative and Rental Assistance Demonstration programs.

In December 2021, FHFA determined that we met all of our 2020 FHFA advised us that it has no objection tosingle-family and multifamily housing goals. We believe we also met our 2021 duty-to-serve plan.single-family and multifamily housing goals, and FHFA will make a final determination regarding our 2021 performance later in the year, after data regarding the share of goals-qualifying originations in the primary mortgage market, reported under the Home Mortgage Disclosure Act, becomes available. The tables below display information about our housing goals for 2020 and 2021 and performance against our 2020 goals.

In December 2020, the CFPB2021, FHFA published a final rule establishing new benchmark levels for our single-family housing goals for 2022 through 2024 and new multifamily housing goals for 2022.

FHFA will continue to evaluate our performance against the single-family housing goals using a two-part approach that eliminatescompares the qualifiedgoals-qualifying share of our single-family mortgage patchacquisitions against both a benchmark level and replacesa market level. To meet a single-family housing goal or subgoal, the current 43% DTI ratio limit and Appendix Q requirementspercentage of our mortgage acquisitions that meet each goal or subgoal must equal or exceed either the benchmark level set in advance by FHFA or the market level for a standard qualifiedthat year. The market level is determined retrospectively each year based on actual goals-qualifying originations in the primary mortgage with a pricing and underwriting framework. The pricing framework hingesmarket as measured by FHFA based on the difference between a loan’s annual percentage rate (“APR”) and the average prime offer rate (“APOR”)Home Mortgage Disclosure Act data for comparable transactions. A loan will receive a conclusive presumption—a safe harbor for lenders—that the consumer had the ability to repay if the APR does not exceed the APOR by 1.50 percentage points. A loan will receive a rebuttable presumption that the consumer had the ability to repay if the APR exceeds the APOR by 1.50 percentage points but by less than 2.25 percentage points. Higher pricing thresholds exist for smaller loan amounts and manufactured housing loans. The underwriting framework requires lenders to consider and verify the borrower’s current or reasonably expected income, assets, debt obligations, alimony, child support, and monthly DTI ratio or residual income before originating a loan.year.

The final rule is scheduledestablishes two new single-family home purchase subgoals to go into effectreplace the prior low-income areas subgoal. The new minority census tracts subgoal targets borrowers with income at or below area median income (“AMI”) who reside in March 2021,minority census tracts (defined as census tracts with lenders requireda minority population of at least 30% and a median income below AMI). The new low-income census tracts subgoal targets (1) borrowers who reside in low-income census tracts that are not minority census tracts, regardless of income, and (2) borrowers with income greater than AMI who reside in low-income census tracts that are minority census tracts. Consistent with current practice, FHFA will set the overall low-income areas goal on an annual basis to comply beginningtake account of mortgage loans made to borrowers who reside in July 2021. Between March and July 1, 2021 lenders can choosedesignated disaster areas.

In response to comply with either the qualified mortgage patch or the new qualified mortgage rule. On February 4, 2021, the Acting Director of the CFPB indicated that he may seek to delay implementation of the newcomments on its rule to preserve flexibility for President Biden’s nominee for CFPB Director, once confirmed. If the rule’s implementation is delayed, the qualified mortgage patch will continue in place until the mandatory compliance date of theproposal, FHFA's final rule or a replacement rule. We do not expectestablished multifamily housing goals for 2022 only, rather than for 2022 through 2024. FHFA will evaluate our performance for 2022 against the final rule, as published, to impact our business significantly, but it may increase competition. We cannot predict the impact of any replacement rule that may be adopted in its stead. See “Risk Factors—GSEfollowing multifamily goals and Conservatorship Risk” and “—Legal, Regulatory and Other Risks” for more information on risks presented by regulatory changes in the financial services industry.subgoals.

As our conservator, FHFA has established caps on our new multifamily business volume and requirements that a portion of our multifamily volume be focused on affordable and underserved markets. Our multifamily loan purchase cap for 2022 is not directly applicable to us, we could face potential liability for certain errors in the required disclosures in connection with the loans we acquire from lenders. It remains unclear what sorts of errors will give rise to liability. Also in October 2015, FHFA directed us and Freddie Mac not to conduct post-purchase loan file reviews for technical compliance with TRID. Consistent with FHFA’s directive, we currently do not intend to exercise our contractual remedies, including requiring the lender to repurchase the loan, for noncompliance with the provisions of TRID, except in two limited circumstances: if the required form is not used; or if a particular practice would impair enforcement of the note or mortgage or would result in assignee liability,$78 billion, and a courtminimum of law, regulator50% of loan purchases must be mission-driven, focused on specified affordable and underserved market segments. In addition, 25% of loan purchases must be affordable to residents earning 60% or other authoritative body has determinedless of area median income, up from the 20% requirement in 2021. Multifamily business that such practice violates TRID. meets the minimum 25% requirement also counts as meeting the minimum 50% requirement. See “MD&A—Multifamily Business—Multifamily Business Metrics” for more information about our multifamily business volume cap, which is a requirement under the scorecard FHFA issued establishing 2022 corporate performance objectives for us. More information on FHFA’s 2022 Scorecard is provided in our current report on Form 8-K filed on November 18, 2021.

The Federal Reserve Board has adopted rules to restrict the counterparty credit exposures of U.S.-based global systemically important banks (“U.S. GSIBs”) and certain large bank holding companies, large savings and loan holding companies, and U.S. intermediate holding companies that are subsidiaries of foreign banking organizations. These rules which have various implementation dates depending on the type of covered organization, generally limit the exposure of a covered organization to any counterparty and its affiliates to no more than 25% of the covered organization’s tier 1 capital. U.S. GSIBs must adhere to a stricter limit of 15% of their tier 1 capital for exposures to any other U.S. GSIB or non-bank entity supervised by the Federal Reserve. 

While Fannie Mae is in conservatorship, a covered organization’s exposures involving claims on or directly and fully guaranteed by Fannie Mae are exempt from these restrictions and Fannie Mae MBS and debt can be used as collateral to reduce a banking organization’s counterparty exposure. At this time, weWe do not know what impact, if any, these rules willmay have on our customers’lenders’ or counterparties’ business practices, or whether and to what extent this rule may adversely affect demand for or the liquidity of securities we issue. 

We arehave been actively seeking to facilitate an orderly transition from LIBOR.

In addition to the work we are doing on an enterprise level to facilitate an orderly transition from LIBOR, we also are a voting member of the ARRCAlternative Reference Rates Committee (the “ARRC”) and participate in its working groups. The ARRC is a group of private-market participants convened by the Federal Reserve Board and the Federal Reserve Bank of New York to identify a set of alternative U.S. dollar reference interest rates and an adoption plan for those alternative rates. Banking and financial regulators, including FHFA, also participate in the ARRC as ex-officio members. In 2017, the ARRC recommended an alternative reference rate, referred to as the Secured Overnight Financing Rate (“SOFR”). The Federal Reserve Bank of New York began publishing SOFR in 2018.

In support of the ARRC’s efforts to develop SOFR as a key market index, we issued the market’s first SOFR securities in 2018, and through December 31, 20202021 we have issued a total of $136.1 billion in SOFR-indexed floating-rate corporate debt. We createdSince 2020, we have taken numerous steps to transition our financial instruments away from LIBOR; including using SOFR-indexed adjustable rateadjustable-rate mortgage products for new originations for our single-family business and our multifamily business, during 2020. We ceased purchasingceasing our purchase of any LIBOR adjustable-rate mortgage loans, at the end of 2020. We also started issuing SOFR-indexed REMIC securities, and ceased issuingceasing the issuance of new LIBOR REMIC securities in 2020. In addition, we have entered intosecurities. We supported the initial development of SOFR-indexed interest rate swaps and futures transactions and continue to further support the development of this emerging index.execute these SOFR trades on a frequent basis. We have not issued LIBOR debt securities since 2017, and we no longer enter into new LIBOR derivatives trades that increase our LIBOR risk exposure.

Currently, ourOur LIBOR-indexed derivative contracts represent a substantial portionhistorically represented the single largest category (measured by notional amount) of our LIBOR exposure. In fall 2020,During 2021, we announcedterminated the vast majority of our LIBOR derivatives transactions (and, where appropriate, entered into new SOFR derivatives trades). While we have a small amount of remaining legacy LIBOR derivatives trades that we agreedwill mature after June 2023, the related contracts provide that LIBOR will be replaced with SOFR once LIBOR ceases to industry-adopted amendments aimed at an orderlybe published.

Given that our derivatives LIBOR exposure has been significantly decreased and the transition to SOFR upon any LIBOR cessation forhas been addressed, our derivatives contracts. Anotherthree principal sourcesources of ourcontinued exposure to LIBOR arisesarise from (1) single-family and multifamily LIBOR-based adjustable-rate mortgage loans that we have securitized or own andown; (2) LIBOR-indexed REMIC structured securities that we have issued.issued; and (3) LIBOR indexed credit risk transfer securities. Each of those products allow us to select a replacement index if LIBOR ceases to be published. In addition, we implementedpublished or, for products issued in 2020 or after, uses fallback language based on the recommendations of the ARRCARRC. In coordination with Freddie Mac, and in consultation with FHFA, we have been providing frequent public updates about these LIBOR products by means of a publicly-available LIBOR transition playbook.

While we have the ability to select the replacement index for new issuancesmany of these LIBOR products, during 2020.the transition from LIBOR will require action by many market participants and leadership from organizations such as the ARRC member firms, FHFA, our advisors, and other regulators. In October 2021, the ARRC announced that it will develop any and all remaining final details of the ARRC’s recommended fallback rates for LIBOR consumer products no later than one year before the date when LIBOR is expected to cease (that is, by June 30, 2022). This timeline is meant to provide market participants sufficient time to prepare for an orderly transition. Such an announcement will allow us to announce our transition plans for our LIBOR-indexed consumer products shortly thereafter.

In addition, federal legislation is being considered by Congress that is aimed at providing a fair and orderly transition from LIBOR to alternative rates. In December 2021, the House of Representatives passed the Adjustable Interest Rate (LIBOR) Act of 2021 by an overwhelming vote. The goal of this bill is to facilitate a smooth transition from LIBOR to alternative rates, provide a transparent and fair process, and provide a litigation safe harbor for market participants that act in accordance with such legislation, and related federal agency rulemakings for their contracts associated with their LIBOR financial instruments. We cannot predict the likelihood that any legislation is passed, related rulemakings or decisions are made, or the impact of those actions and decisions. See “Risk Factors—Market and Industry Risk” for a discussion of the risks to our results of operations, financial condition, liquidity and net worth posed by the potential discontinuance of LIBOR.

Our employees are key to ensuring our long-term success. They are essential tosuccess and meeting our goals of being a return-oriented company able to attract private capital while managing risk, increasing our operational agility and undertaking a digital transformation. Asstrategic objectives. We had approximately 7,400 employees as of December 31, 2020, we had approximately 7,700 employees.18, 2021, our final pay-period end date in 2021. Because we design, build and maintain complex systems to support our specialized role in the secondary mortgage market, approximately 38%39% of our employees work in technology-related jobs. An improving economy and increased remote work opportunities have increased the competition we face from other companies in hiring new employees, as well as in retaining our employees. Competition is especially high for employees with technology skills in the Washington, DC and Dallas metropolitan areas, where mostskills. Voluntary attrition of our employees work.has increased over the past year, consistent with a national trend. In addition to attrition rates, our vacancy rate at any given point in time can be affected by other factors such as hiring priorities, labor market conditions, headcount growth rates, and the timing of onboarding new employees. As of December 18, 2021, approximately 9% of positions across the company were vacant, and approximately 12% of our technology-related positions were vacant. We discuss how restrictions on our compensation and uncertainty with respect to our future negatively affect our ability to retain and recruit employees in “Risk Factors—GSE and Conservatorship Risk.” Despite conservatorship, an uncertain future, and limitations on the compensation we are able to offer, we believe many employees and potential recruits are attracted by our mission and the compelling nature of our work. As of December 31, 2020, approximately 4% of positions across the company were vacant, and approximately 6% of our technology-related positions were vacant.

We are committed to maintaining an engaged workforce as we believe engagement is critical to the ongoing achievement of the company’s and the conservator’s goals. We monitor employee engagement through regular surveys. In 20202021, the vast majority of our employees agreed with statements such as whether they would recommend Fannie Mae as a great place to work, which we consider to be strong indicators of their engagement. We believe our ability to recruit and retain employees and keep them engaged is influenced by the opportunity to do interesting work that supports our mission. We also offer employee benefits to encourage involvement in socially positive efforts, including those that echo our mission. Specifically, we offer employees up to $5,000 per year in matching charitable gifts (subject to overall available funding) and 10 hours of paid leave each month to engage in volunteer activities. We have also established a relief fund to which our employees can make charitable donations to assist employees who have suffered losses as a result of a natural disaster or other catastrophic event.

We invest in our employees’ development because we believe doing so supportsto support the success of the company as well as our employees. We seek to provide training and opportunities that enable employees to develop digital, leadership and other critical skills we need to achieve our strategystrategic objectives and fulfill our mission. In recent years, we have worked on instilling lean management techniques, practices and behaviors throughout our workforce and Agile development principles for employees engaged in product development. We also emphasize to our employees their responsibility for and role in managing risk through our risk-assessment and monitoring activities, training and corporate messaging. In

We took a number of steps in 2020In 2021, we continued to protectprioritize the safety and resiliency of our workforce. From the onset of the COVID-19 pandemic in mid-March through early October 2020, we required nearly all of our workforce to work remotely. Recognizing that our employees wereare balancing a number of competing obligations, we focused on employee wellness and, with the help of a campaignseek to spotlight flexible work options, we createdprovide an environment that supports our business needs while helping employees better meet their personal obligations. We also increased the amountWhile most of family sick leave availableour employees currently work remotely, depending on COVID-19 transmission rates, we permit employees who choose to employees and made other adjustments to support employees. In early October 2020, we began allowing employees, on a voluntary basis, to request approval to returndo so to work at some of our office locations, andupon compliance with established mandatory COVID-19 safety protocols at those locations.protocols. We plan to operate in a hybrid work model in the future, with office space where teams come together when it makes sense, but with flexibility regarding when employees will be in the office. We currently expect that a significant majority of our employees will continue to work remotely for the foreseeable future. To date, our business resiliency plans and technology systems have effectively supported this remote work arrangement. To support our employees in their remote work environment, we have offered technology stipends. We have also taken a number of steps to support employee resiliency, including extending our summertime practice of half-day flexible Fridays through the balance of 2021 and, more recently, through 2022.

We seek to foster an environment in which all employees are treated with dignity and respect, have the opportunity to contribute to meaningful work, and perform that work in an inclusive environment free from discrimination, harassment, and retaliation. We believe this commitment helps us attract and retain a skilled, diverse workforce. As of December 31, 2020,18, 2021, racial or ethnic minorities constituted 55%57% of our overall workforce and 24% of our officer-level employees, and women constituted 44% of our overall workforce and 37%35% of our officer-level employees. Supporting our role in the secondary mortgage market requires employees with specialized technology skills. As a result, we consider our workforce diversity in the context of fintech companies, whose operations are based on a blend of financial services products and technology platforms, rather than financial services firms or other companies that have significant retail operations or a large number of administrative roles. We sponsor programs and activities to cultivate a diverse and inclusive work environment by focusing on inclusive leadership principles, talent development, enterprise accessibility, team and group dynamics, and a consistent communications strategy that reinforces the practice of driving inclusion to achieve innovative solutions. We established an Employee Inclusive Culture Council in 2021, composed of employees representing a broad cross-section of the diversity at Fannie Mae, to support culture initiatives relating to our mission and values. We also support ten voluntary, grassroots employee resource groups that are open to all employees, support diversity and inclusion, and provide a forum for members to come together for professional growth and development, cultural awareness, education, community service, and networking across the organization. In 2020,2021, we engaged leaders to continue championing diversity and inclusion through our senior managementofficer-led Diversity Advisory Council to ensure the integration of our diversity and inclusion strategy throughout the company. We also sponsored a series ofleveraged our leader-led “Courageous Conversations” to facilitate safe-space discussions for employees to gain anpromote inclusion and understanding by raising awareness of employees' diverse experiences and share differing viewpoints on issues related to social justice.perspectives.

See “Corporate“Directors, Executive Officers and Corporate Governance—Corporate Governance—Human Capital Management Oversight” for information on oversight of human capital management by our Board of Directors’ Compensation and Human Capital Committee. See “Risk Factors—GSECommittee and Conservatorship Risk”see “Directors, Executive Officers and Corporate Governance—ESG Matters—Diversity and Inclusion—Diverse Workforce and Inclusive Workplace” for a discussion of how restrictions on our compensation and uncertainty with respect to our future negatively affects our ability to retain and recruit executives and other employees.additional information.

We make available free of charge through our website our annual reports on Form 10-K, quarterly reports on Form 10‑Q, current reports on Form 8-K and all other SEC reports and amendments to those reports as soon as reasonably practicable after we electronically file the material with, or furnish it to, the SEC. Our website address is www.fanniemae.com. Materials that we file with the SEC are also available from the SEC’s website, www.sec.gov. You may also request copies of any filing from us, at no cost, by calling the Fannie Mae Investor Relations & Marketing Helpline at 1-800-2FANNIE (1-800-232-6643), or by writing. The availability of printed copies of these materials may be delayed at times when our COVID safety protocols require employees to Fannie Mae, Attention: Investor Relations & Marketing, 1100 15th Street, NW, Washington, DC 20005.work remotely.

References in this report to our website or to the SEC’s website do not incorporate information appearing on those websites unless we explicitly state that we are incorporating the information.

This report includes statements that constitute forward-looking statements within the meaning of Section 21E of the Exchange Act. In addition, we and our senior management may from time to time make forward-looking statements in our other filings with the SEC, our other publicly available written statements and orally to analysts, investors, the news media and others. Forward-looking statements often include words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “forecast,” “project,” “would,” “should,” “could,” “likely,” “may,” “will” or similar words. Examples of forward-looking statements in this report include, among others, statements relating to our expectations regarding the following matters:

Forward-looking statements reflect our management’s current expectations, forecasts or predictions of future conditions, events or results based on various assumptions and management’s estimates of trends and economic factors in the markets in which we are active and that otherwise impact our business plans. Forward-looking statements are not guarantees of future performance. By their nature, forward-looking statements are subject to significant risks and uncertainties and changes in circumstances. Our actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements.