Financial Guarantees

12 Months Ended

Dec. 31, 2014

We generate revenue by absorbing the credit risk of mortgage loans in unconsolidated trusts in exchange for a guaranty fee. We also provide credit enhancements on taxable or tax-exempt mortgage revenue bonds issued by state and local governmental entities to finance multifamily housing for low- and moderate-income families. Additionally, we issue long-term standby commitments that generally require us to purchase loans from lenders if the loans meet certain delinquency criteria.

We recognize a guaranty obligation for our obligation to stand ready to perform on our guarantees to unconsolidated trusts and other guaranty arrangements. These guarantees expose us to credit losses on the mortgage loans or, in the case of mortgage-related securities, the underlying mortgage loans of the related securities. The remaining contractual terms of our guarantees range from 30 days to 38 years; however, the actual term of each guaranty may be significantly less than the contractual term based on the prepayment characteristics of the related mortgage loans.

The following table displays our maximum exposure, guaranty obligation recognized in our consolidated balance sheets and the maximum potential recovery from third parties through available credit enhancements and recourse related to our financial guarantees as of December 31, 2014 and 2013.



	As of December 31,
	2014									2013
	Maximum Exposure⁽¹⁾		Guaranty Obligation			Maximum Recovery⁽²⁾			Maximum Exposure⁽¹⁾			Guaranty Obligation			Maximum Recovery⁽²⁾
	(Dollars in millions)
Non-consolidated Fannie Mae MBS	$	17,184		$	214		$	9,775		$	19,317		$	232		$	10,541
Other guaranty arrangements⁽³⁾	18,781			168			4,447			30,598			253			4,525
Total	$	35,965		$	382		$	14,222		$	49,915		$	485		$	15,066

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⁽¹⁾	Primarily consists of the unpaid principal balance of the underlying mortgage loans.


⁽²⁾	Recoverability of such credit enhancements and recourse is subject to, among other factors, our mortgage insurers’ and financial guarantors’ ability to meet their obligations to us. For information on our mortgage insurers and financial guarantors, see “Note 16, Concentrations of Credit Risk.”


⁽³⁾	Primarily consists of credit enhancements, long-term standby commitments, and our commitment under the TCLF program.