As Fannie Mae has expanded its mortgage guaranty business to serve the market's urgent need for stability, liquidity and affordability, the company has undertaken a series of steps to protect borrowers, manage the increased credit risk in the market, and fortify the company's capital position. Among these steps, our company is continually assessing and establishing new pricing, eligibility and underwriting criteria for our business that more accurately reflects the current risks in the housing market and guards against the potential for foreclosure. These changes are incorporated into our underwriting system and include adjustments to credit score criteria, loan-to-value ratios, down payment requirements, accurate valuation practices, and consideration of markets where home prices may be falling.

We have taken these steps to ensure that borrowers receive loans that give them the best chance to sustain homeownership. One of the more unfortunate aspects of the housing boom earlier this decade is the number of borrowers whose mortgage terms exceeded their long-term ability to meet the payments, or who bought residences with little or no equity in the transaction and may now end up owing more than their house is worth as property values drop. The resulting impact on families, neighborhoods and communities can be devastating.

In making individual eligibility decisions, our company works closely with lenders and other stakeholders in the housing finance system to make fair and equitable determinations based on the best available data. We are reaching out to the lending industry and housing advocates to explain these decisions and garner feedback and we will continue to do so.

Fannie Mae's underwriting complies with fair lending laws by providing fair, consistent, and equitable loan recommendations. We are carefully instituting these policies, and will continue to ensure that equitable practices are followed.

Our company is chartered to buy mortgages in every market, every day, and we continue to do so. In fact, we remain one of the primary investors in home mortgages in areas that are experiencing housing price declines, and we continue to help thousands of subprime borrowers refinance. Through our Homestay initiative and other company efforts, we continually seek opportunities to serve underserved and at-risk borrowers. Last year alone, Fannie Mae provided mortgage funding that served more than 1.6 million low- and moderate-income families, and helped an estimated 110,000 borrowers either refinance a subprime loan or work out a delinquent loan.

Given the current state of the mortgage and housing markets, it is critical for our company to conservatively manage our business and risks through prudent pricing and underwriting, while providing sustainable liquidity to our lender customers and stability to the markets as part of our core mission. We will continue striving to responsibly strike that balance.

Contact: 202-752-6720