Fannie Mae Fulfills Commitment to Provide Additional Information on New MBS Issuances
WASHINGTON, DC – Fannie Mae (FNM/NYSE), the nation's largest source of financing for home mortgages, today fulfilled its February 2003 commitment to provide more detailed disclosures on new mortgage-backed securities (MBS) and announced that beginning this June, it will provide the same information for existing MBS.
"Fannie Mae has always been, and will remain, responsive to indications from our MBS investors and others that certain information would be useful in evaluating their investments," said Fannie Mae Chairman and CEO Franklin D. Raines. "This new data, together with the disclosures we have always provided, gives the market a great degree of transparency, while protecting the liquidity and market efficiency that participants have come to value."
Beginning today, for all new MBS issuances, Fannie Mae is disclosing in its Single-Family MBS Prospectus Supplements six additional elements of pool-level information about the mortgages backing its MBS. Following is a list of each of the six new data elements and a detailed description of the information that will be provided for each. The MBS Prospectus Supplements are issued to investors prior to settlement and can also be found on eProSupp on Fannie Mae's Web site.
- Loan-to-value ratios – Fannie Mae will provide the relationship between the mortgage's unpaid principal balance (UPB) at the time of delivery to Fannie Mae and a measure of the property's value, expressed as a percentage ratio. This element will be disclosed as a weighted average and as a quartile distribution including a maximum and minimum value.
- Credit scores of borrowers – Fannie Mae will include credit-scoring data (numerical values that rank a borrower according to his or her credit risk at a given point in time). This element will be disclosed as a weighted average for the pool and as a quartile distribution including a maximum and minimum value. Loans for which the company does not have credit scores will be excluded from both the weighted average and quartile calculation and will be reported under a separate category titled "% UPB Without Credit Score."
- Loan purpose – Fannie Mae will disclose whether the loan was used to "purchase" the home or "refinance" an already purchased home. This element will be in a tabular format that discloses the number of loans in each category, the percentage each category comprises of the total pool, and the aggregate UPB for each category.
- Occupancy type – Fannie Mae will disclose how the borrower will use the property. The disclosure will identify whether the home is owner-occupied, an investment property or a second home. This element will be in a tabular format that discloses the number of loans in each category, the percentage each category comprises of the total pool, and the aggregate UPB for each category.
- Property type – Fannie Mae will describe the type of property by identifying the number of separate dwellings that comprise the single-family property. The disclosure will identify whether the property is a "one unit" property or a "2-4 unit" property. This element will be in a tabular format that discloses the number of loans in each category, the percentage each category comprises of the total pool, and the aggregate UPB for each category.
- Servicer – Fannie Mae will identify the entity that services the mortgages in the pool. The company currently identifies the seller of the loans, and will continue to identify the seller in addition to the servicer. Until June, for pools with multiple servicers, the Prospectus Supplement will state simply that the pool has multiple servicers. Beginning in June, individual servicers for such pools will be identified.
Fannie Mae also announced it will provide the same six new data elements online in Fannie Mae's PoolTalk® and in the Pool Data Direct™ file for existing MBS pools that were issued on or after May 1, 1996, which encompasses over 94 percent of the company's outstanding securities balance. The six new data elements for both these existing and new pools will be updated and released in PoolTalk on an ongoing basis each month beginning June 2003. These items and a description of the methodologies used to calculate each of these disclosures will be found in the MBS section of our corporate Web site when those disclosures are implemented.
Fannie Mae also published a revised Single-Family MBS Base Prospectus today that reflects these changes and provides investors with specific and detailed information about the new disclosures.
Fannie Mae is a New York Stock Exchange company and the largest non-bank financial services company in the world. It operates pursuant to a federal charter and is the nation's largest source of financing for home mortgages. Fannie Mae is working to shrink the nation's "homeownership gaps" through a $2 trillion "American Dream Commitment" to increase homeownership rates and serve 18 million targeted American families by the end of the decade. Since 1968, Fannie Mae has provided $4.5 trillion of mortgage financing for more than 49 million families.
PoolTalk is a registered mark and Pool Data Direct is a trademark of Fannie Mae. Unauthorized use of these marks is prohibited.
Style Usage: Fannie Mae's Board of Directors has authorized the company to operate as "Fannie Mae," and the company's stock is now listed on the NYSE as "FNM." In order to facilitate clarity and avoid confusion, news organizations are asked to refer to the company exclusively as "Fannie Mae."