We maintain an allowance for loan losses for HFI loans held by Fannie Mae and by consolidated Fannie Mae MBS trusts, excluding loans for which we have elected the fair value option. When calculating our allowance for loan losses, we consider the unpaid principal balance, net of unamortized premiums and discounts, and other cost basis adjustments of HFI loans at the balance sheet date. We record write-offs as a reduction to our allowance for loan losses at the point of foreclosure, completion of a short sale, upon the redesignation of nonperforming and reperforming loans from HFI to HFS or when a loan is determined to be uncollectible.

The following table displays changes in our allowance for single-family loans, multifamily loans and total allowance for loan losses. The benefit or provision for loan losses excludes provision for accrued interest receivable losses, guaranty loss reserves and credit losses on available-for-sale (“AFS”) debt securities. Cumulatively, these amounts are recognized as “Benefit (provision) for credit losses” in our condensed consolidated statements of operations and comprehensive income.


	For the Three Months Ended March 31,
			2024		2023
		(Dollars in millions)
Single-family allowance for loan losses:
Beginning balance			$	(6,671)	$	(9,443)
Benefit for loan losses			339		4
Write-offs			115		42
Recoveries			(58)		(76)
Other			—		(6)
Ending balance			$	(6,275)	$	(9,479)
Multifamily allowance for loan losses:
Beginning balance			$	(2,059)	$	(1,904)
Provision for loan losses			(157)		(180)
Write-offs			133		237
Recoveries			(21)		(9)

Ending balance			$	(2,104)	$	(1,856)
Total allowance for loan losses:
Beginning balance			$	(8,730)	$	(11,347)
Benefit (provision) for loan losses			182		(176)
Write-offs			248		279
Recoveries			(79)		(85)
Other			—		(6)
Ending balance			$	(8,379)	$	(11,335)

Our benefit or provision for loan losses can vary substantially from period to period based on a number of factors, such as changes in actual and forecasted home prices or property valuations, fluctuations in actual and forecasted interest rates, borrower payment behavior, events such as natural disasters or pandemics, the type, volume and effectiveness of our loss mitigation activities, including forbearances and loan modifications, the volume of foreclosures completed, and the volume and pricing of loans redesignated from HFI to HFS. Our benefit or provision can also be impacted by updates to the models, assumptions, and data used in determining our allowance for loan losses.

Our single-family benefit for loan losses in the first quarter of 2024 was primarily driven by a benefit from forecasted home price growth, partially offset by a provision from changes in loan activity and a provision from actual and projected interest rates, as described below:

•Benefit from actual and forecasted home price growth. During the first quarter of 2024, we observed stronger-than-expected forecasted home price appreciation. Higher home prices decrease the likelihood that loans will default and reduce the amount of losses on loans that do default, which impacts our estimate of losses and ultimately reduces our loss reserves and provision for loan losses.

•Provision from changes in loan activity, which includes provision on newly acquired loans. This was primarily driven by the credit risk profile of our first quarter 2024 single-family acquisitions, which primarily consisted of purchase loans. Purchase loans generally have higher origination LTV ratios than refinance loans; therefore, purchase loans have a higher estimated risk of default and loss severity in the allowance than refinance loans and a correspondingly higher loan loss provision at the time of acquisition.

•Provision from actual and projected interest rates. Actual and projected interest rates increased in the first quarter of 2024 compared with our prior forecast. As mortgage rates increase, we expect a decrease in future prepayments on single-family loans. Lower expected prepayments extend the expected life of the loan, which increases our expectation of loan losses.

We recognized a modest single-family benefit for loan losses in the first quarter of 2023, primarily driven by a benefit from actual and forecasted home price growth, substantially offset by a provision on newly acquired loans, as described in more detail below:

•Benefit from actual and forecasted home price growth. During the first quarter of 2023, we observed modest actual home price appreciation. In addition, our updated 2023 home price forecast changed from our prior estimate, resulting in a lower estimate of home price declines for the year.

•Provision from changes in loan activity, which includes provision on newly acquired loans. This was primarily driven by the credit risk profile of our first quarter 2023 single-family acquisitions, as described in our quarterly report on Form 10-Q for the quarter ended March 31, 2023.

Our multifamily provision for loan losses in the first quarter of 2024 was primarily driven by continued declines in actual and projected multifamily property values, which includes an adjustment of $150 million to supplement model results relating to property value uncertainty, as well as increases in actual and projected interest rates compared to our prior forecast. Our forecast of multifamily property value estimates further declines in the near term offset by a long-term improvement.

•Provision for actual and projected economic data, which was primarily driven by decreases in actual and projected multifamily property values. This resulted in higher estimated LTV ratios, which increased our estimate of expected loan losses.

•Provision relating to our multifamily seniors housing loans. In the first quarter of 2023, uncertainty related to our seniors housing loans remained elevated, including uncertainty related to adjustable-rate loans.

•Benefit from actual and projected interest rates. Actual and projected interest rates decreased in the first quarter of 2023, which reduced the probability of default resulting in a benefit for loan losses.

Multifamily write-offs for the first quarter of 2023 were due to write-offs on a seniors housing portfolio. The seniors housing loans in our multifamily book had been disproportionately affected by the COVID-19 pandemic and ongoing economic trends, higher operating costs exacerbated by the increase in inflation, and higher short-term interest rates for adjustable-rate mortgages, resulting in increased costs for these borrowers.