Letter From the CEO
Home.It is a word that can mean very different things to different people. For homeowners and renters, perhaps it is a place to raise a family. For those who build or invest in housing, it can be a career or a way to improve the local community. For those without a home, it might be the dream of a safe, warm place to live.
Whatever “home” means to you, Fannie Mae is committed to making it possible.
In our role in the mortgage market, we provide affordable, large-scale access to housing in America. We do this by buying the loans that banks and other lenders originate so they have the funds to issue new loans, which enables more people across the country to buy, refinance, or rent a home. This process helps create stability in the housing market and attracts global capital to America. For the individual, it means affordable mortgage credit is available across the country at all times. For our nation, it means a more stable economy.
We are proud of the role we play in America’s housing finance system. More importantly, we are improving the way we perform that role in order to meet the needs of an ever-changing market. Fannie Mae today is different than it was in the past. In the last five years, we have supported the housing recovery, strengthened our company, and improved the way we and industry partners do business. We are working to fix the defects of the old system and we are helping to build a safer, more sustainable housing finance system for the future. In 2013, we continued to see our progress against these priorities.
Our financial performance has improved significantly during the past few years. In 2013, we reported $84.0 billion in net income and $38.6 billion in pre-tax income, the highest annual income and annual pre-tax income in our company’s history. The fourth quarter of 2013 marked our eighth consecutive quarterly profit, and we expect to be profitable for the foreseeable future. We expect our annual earnings to remain strong over the next few years, but substantially lower than in 2013.
Fannie Mae's profits go back to taxpayers. We will have paid a total of $121.1 billion in dividends to Treasury as of March 2014, which is approximately $5 billion more than we have received in taxpayer support.
Additionally, we have strengthened our underwriting and eligibility standards to promote sustainable homeownership and stability in the housing market. Roughly 77 percent of the loans in our $2.9 trillion single-family guaranty book were purchased between 2009 and 2013, and we expect this new single-family book will be profitable over its lifetime. Our multifamily credit book also continues to perform well – as it did throughout the credit crisis – with extremely low delinquency rates.
We also have helped people keep their homes or otherwise avoid foreclosure by completing more than 1.5 million workout solutions since 2009. In 2013, we completed 234,000 foreclosure prevention solutions. Less than 1 percent of the single-family loans in our book went into foreclosure in 2013, and we strive to help every at-risk family find an alternative to foreclosure.
We have made significant progress in improving our business and we remain committed to working with FHFA to meet its strategic goals for our conservatorship. We are seeing the results of our efforts to build a strong new book of business and we continue to work on our goal of improving the nation's housing finance system, to make it safer and more transparent for consumers, lenders, and investors. We are passionate about this. We know that when the market works well, communities across our country prosper. That is why “home” is better when Fannie Mae is part of it.
In the pages of this report, we share our progress and the evidence of our dedication to support the recovery, improve our company, and make housing better.
Timothy J. Mayopoulos
President and Chief Executive Officer, Fannie Mae
For more information on our business, including information on our 2013 financial results and credit performance, the credit profile of our book of business, our expectations for our future financial performance, and significant risks relating to our business, see our annual report on Form 10-K for the year ended December 31, 2013, filed with the Securities and Exchange Commission on February 21, 2014 (“2013 Form 10-K”).