Financial Guarantees

9 Months Ended

Sep. 30, 2015

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 1 day to 37 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 condensed consolidated balance sheets and the maximum potential recovery from third parties through available credit enhancements and recourse related to our financial guarantees.



	As of
	September 30, 2015									December 31, 2014
	Maximum Exposure⁽¹⁾		Guaranty Obligation			Maximum Recovery⁽²⁾			Maximum Exposure⁽¹⁾			Guaranty Obligation			Maximum Recovery⁽²⁾
	(Dollars in millions)
Unconsolidated Fannie Mae MBS	$	15,556		$	198		$	9,077		$	17,184		$	214		$	9,775
Other guaranty arrangements⁽³⁾	16,783			140			2,971			18,781			168			4,447
Total	$	32,339		$	338		$	12,048		$	35,965		$	382		$	14,222

__________


⁽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, see “Note 13, Concentrations of Credit Risk.”


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

The fair value of our guaranty obligations associated with the Fannie Mae MBS included in “Investments in securities” in our condensed consolidated balance sheets was $729 million and $797 million as of September 30, 2015 and December 31, 2014, respectively. These Fannie Mae MBS consist primarily of private-label wraps where our guaranty arrangement is with an unconsolidated MBS trust.