Segment Reporting

12 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

We have two reportable business segments, which are based on the type of business activities each perform: Single-Family and Multifamily. Results of our two business segments are intended to reflect each segment as if it were a stand-alone business. The sum of the results for our two business segments equals our consolidated results of operations.

The section below provides a discussion of our business segments.

Single-Family Business Segment

•Works with our lender customers to acquire and securitize single-family mortgage loans delivered to us by lenders into Fannie Mae MBS.

•Issues structured Fannie Mae MBS backed by single-family mortgage assets and provides other services to our lender customers.

•Prices and manages the credit risk on loans in our single-family guaranty book of business. Also enters into transactions that transfer a portion of the credit risk on some of the loans in our single-family guaranty book of business to third parties.

•Works to reduce costs of defaulted single-family loans through home retention solutions and foreclosure alternatives, management of foreclosures and our REO inventory, selling nonperforming loans and pursuing contractual remedies from lenders, servicers and providers of credit enhancements.

Multifamily Business Segment

•Works with our lender customers to acquire and securitize multifamily mortgage loans delivered to us by lenders into Fannie Mae MBS.

•Issues structured multifamily Fannie Mae MBS through our Fannie Mae Guaranteed Multifamily Structures (“Fannie Mae GeMS”) program and provides other services to our lender customers.

•Prices and manages the credit risk on loans in our multifamily guaranty book of business. Lenders retain a portion of the credit risk in most multifamily transactions.

•Enters into transactions that transfer an additional portion of Fannie Mae’s credit risk on some of the loans in our multifamily guaranty book of business to third parties.

•Works to maintain credit quality of the book, prevent foreclosure, reduce costs of defaulted multifamily loans, manage our REO inventory, and pursue contractual remedies from lenders, servicers and providers of credit enhancements.

Segment Allocations and Results

The majority of our assets, revenues and expenses are directly associated with each respective business segment and are included in determining its asset balance and operating results. Those assets, revenues and expenses that are not directly attributable to a particular business segment are allocated based on the size of each segment’s guaranty book of business. The substantial majority of the gains and losses associated with our risk management derivatives are allocated to our Single-Family business segment.

The following table displays total assets by segment.

	As of December 31,
	2020		2019
	(Dollars in millions)
Single-Family	$	3,569,130	$	3,149,212
Multifamily	416,619		354,107
Total assets	$	3,985,749	$	3,503,319

We operate our business solely in the United States and its territories, and accordingly, we generate no revenue from and have no long-lived assets, other than financial instruments, in geographic locations other than the United States and its territories.

The following tables display our segment results.

	For the Year Ended December 31, 2020
	Single-Family		Multifamily		Total
	(Dollars in millions)
Net interest income(1)	$	21,502	$	3,364	$	24,866
Fee and other income(2)	368		94		462
Net revenues	21,870		3,458		25,328
Investment gains, net(3)	728		179		907
Fair value gains (losses), net(4)	(2,539)		38		(2,501)
Administrative expenses	(2,559)		(509)		(3,068)
Credit-related expense:(5)
Provision for credit losses	(75)		(603)		(678)
Foreclosed property expense	(157)		(20)		(177)
Total credit-related expense	(232)		(623)		(855)
TCCA fees(6)	(2,673)		—		(2,673)
Credit enhancement expense(7)	(1,141)		(220)		(1,361)
Change in expected credit enhancement recoveries(8)	89		144		233
Other expenses, net	(1,055)		(76)		(1,131)
Income before federal income taxes	12,488		2,391		14,879
Provision for federal income taxes	(2,607)		(467)		(3,074)
Net income	$	9,881	$	1,924	$	11,805

	For the Year Ended December 31, 2019
	Single-Family		Multifamily		Total
	(Dollars in millions)
Net interest income(1)	$	18,013	$	3,280	$	21,293
Fee and other income(2)	453		113		566
Net revenues	18,466		3,393		21,859
Investment gains, net(3)	1,589		181		1,770
Fair value gains (losses), net(4)	(2,216)		2		(2,214)
Administrative expenses	(2,565)		(458)		(3,023)
Credit-related income (expense):(5)
Benefit (provision) for credit losses	4,038		(27)		4,011
Foreclosed property income (expense)	(523)		8		(515)
Total credit-related income (expense)	3,515		(19)		3,496
TCCA fees(6)	(2,432)		—		(2,432)
Credit enhancement expense(7)	(927)		(207)		(1,134)
Change in expected credit enhancement recoveries(8)	—		—		—
Other expenses, net	(734)		(11)		(745)
Income before federal income taxes	14,696		2,881		17,577
Provision for federal income taxes	(2,859)		(558)		(3,417)
Net income	$	11,837	$	2,323	$	14,160

	For the Year Ended December 31, 2018
	Single-Family		Multifamily		Total
	(Dollars in millions)
Net interest income(1)	$	18,162	$	3,111	$	21,273
Fee and other income(2)	450		105		555
Net revenues	18,612		3,216		21,828
Investment gains, net(3)	850		102		952
Fair value gains (losses), net(4)	1,210		(89)		1,121
Administrative expenses	(2,631)		(428)		(3,059)
Credit-related income (expense):(5)
Benefit (provision) for credit losses	3,313		(4)		3,309
Foreclosed property expense	(604)		(13)		(617)
Total credit-related income (expense)	2,709		(17)		2,692
TCCA fees(6)	(2,284)		—		(2,284)
Credit enhancement expense(7)	(514)		(165)		(679)
Change in expected credit enhancement recoveries(8)	—		—		—
Other income (expenses), net	(498)		26		(472)
Income before federal income taxes	17,454		2,645		20,099
Provision for federal income taxes	(3,708)		(432)		(4,140)
Net income	$	13,746	$	2,213	$	15,959

(1)Net interest income primarily consists of guaranty fees received as compensation for assuming and managing the credit risk on loans underlying Fannie Mae MBS held by third parties for the respective business segment, and the difference between the interest income earned on the respective business segment’s mortgage assets in our retained mortgage portfolio and the interest expense associated with the debt funding those assets. Revenues from single-family guaranty fees include revenues generated by the 10 basis point increase in guaranty fees pursuant to the TCCA, the incremental revenue from which is remitted to Treasury and not retained by us. Also includes yield maintenance fees we recognized on the prepayment of multifamily loans. Prior periods have been restated to conform to current-period presentation. See “Note 1, Summary of Significant Accounting Policies” for more information about our change in presentation.

(2)Single-family fee and other income primarily consists of compensation for engaging in structured transactions and providing other lender services. Multifamily fee and other income consists of fees associated with Multifamily business activities.

(3)Single-family investment gains and losses primarily consist of gains and losses on the sale of mortgage assets. Multifamily investment gains and losses primarily consists of gains and losses on resecuritization activity.

(4)Single-family fair value gains and losses primarily consist of fair value gains and losses on risk management and mortgage commitment derivatives, trading securities, fair value option debt, and other financial instruments associated with our single-family guaranty book of business. Multifamily fair value gains and losses primarily consist of fair value gains and losses on MBS commitment derivatives, trading securities and other financial instruments associated with our multifamily guaranty book of business.

(5)Credit-related income or expense is based on the guaranty book of business of the respective business segment and consists of the applicable segment’s benefit or provision for credit losses and foreclosed property income or expense on loans underlying the segment’s guaranty book of business. The presentation of our credit-related income or expense as of December 31, 2019 and 2018 represents amounts recognized prior to our transition to the lifetime loss model prescribed by the CECL standard.

(6)Consists of the portion of our single-family guaranty fees that is remitted to Treasury pursuant to the TCCA.

(7)Single-family credit enhancement expense consists of costs associated with our freestanding credit enhancements, which include primarily costs associated with our CIRT, CAS and EPMI programs. Multifamily credit enhancement expense primarily consists of costs associated with our MCIRT and MCAS programs as well as amortization expense for certain lender risk-sharing programs. Excludes CAS transactions accounted for as debt instruments and credit risk transfer programs accounted for as derivative instruments.

(8)Consists of change in benefits recognized from our freestanding credit enhancements, primarily from our CAS and CIRT programs as well as certain lender risk-sharing arrangements, including our multifamily DUS program. See “Note 1, Summary of Significant Accounting Policies” for more information about our change in presentation.