Allowance for Loan Losses

9 Months Ended

Sep. 30, 2025

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.

The following table displays changes in our allowance for single-family loans, multifamily loans and total allowance for loan losses.


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2025		2024		2025		2024
	(Dollars in millions)
Single-family allowance for loan losses:
Beginning balance	$	(5,777)	$	(5,703)	$	(5,319)	$	(6,671)
(Provision) benefit for loan losses	(269)		409		(992)		1,278
Write-offs	238		231		588		487
Recoveries	(47)		(23)		(132)		(180)

Ending balance	$	(5,855)	$	(5,086)	$	(5,855)	$	(5,086)
Multifamily allowance for loan losses:
Beginning balance	$	(2,470)	$	(2,323)	$	(2,388)	$	(2,059)
(Provision) benefit for loan losses	(63)		(423)		(267)		(825)
Write-offs	167		224		350		395
Recoveries	(25)		(48)		(86)		(81)

Ending balance	$	(2,391)	$	(2,570)	$	(2,391)	$	(2,570)
Total allowance for loan losses:
Beginning balance	$	(8,247)	$	(8,026)	$	(7,707)	$	(8,730)
(Provision) benefit for loan losses	(332)		(14)		(1,259)		453
Write-offs	405		455		938		882
Recoveries	(72)		(71)		(218)		(261)

Ending balance	$	(8,246)	$	(7,656)	$	(8,246)	$	(7,656)

Our single-family provision for loan losses for the three months ended September 30, 2025 was primarily driven by provision associated with loans that we acquired during the period, which primarily consisted of purchase loans. Purchase loans generally have higher original 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.

Our single-family provision for loan losses for the nine months ended September 30, 2025 was primarily driven by provision associated with loans that we acquired during the period, which primarily consisted of purchase loans, and by weaker-than-expected home price growth. Lower home prices increase the likelihood that loans will default and increase the amount of losses on loans that do default, which impacts our estimate of losses and ultimately increases our loss reserves and provision for loan losses.

Our single-family benefit for loan losses for the three months ended September 30, 2024 was primarily driven by a benefit from forecasted home price growth and a benefit from actual and projected interest rates, partially offset by a provision from changes in loan activity, as described below.

•Benefit from forecasted home price growth. During the three months ended September 30, 2024, our forecast of future home prices improved. 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.

•Benefit from actual and projected interest rates. Actual and projected interest rates decreased in the third quarter of 2024, which reduced the probability of default, resulting in a benefit for loan losses.

•Provision from changes in loan activity. This includes provision on newly acquired loans and was primarily driven by the credit risk profile of our single-family acquisitions for the three months ended September 30, 2024, which primarily consisted of purchase loans. Purchase loans generally have higher original 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.

Our single-family benefit for loan losses for the nine months ended September 30, 2024 was primarily driven by a benefit from actual and forecasted home price growth, partially offset by a provision from changes in loan activity.

•Benefit from actual and forecasted home price growth. During the nine months ended September 30, 2024 actual home prices appreciated more than originally projected and our forecast of future home prices also improved.

•Provision from changes in loan activity. This includes provision on newly acquired loans and was primarily driven by the credit risk profile of our single-family acquisitions for the nine months ended September 30, 2024, which primarily consisted of purchase loans.

Our multifamily provision for loan losses for the three and nine months ended September 30, 2025 was primarily driven by an increase in delinquencies including provision from seriously delinquent loans that were written down to the net recoverable amount of the loans’ collateral during the period.

Our multifamily provision for loan losses for the three months ended September 30, 2024 was largely driven by certain adjustable-rate conventional loans that were written down during the period. We also recognized provision for loan losses because, compared to our previous forecast, our third quarter of 2024 forecast expected further slight decreases in projected multifamily property values and a longer period of time for projected multifamily property values to improve.

Our multifamily allowance and estimate for loan losses as of September 30, 2024 also considered uncertainty. This included uncertainty relating to multifamily property values, as well as uncertainty due to the investigation of multifamily lending transactions with suspected fraud, which may increase the risk of default.

Our multifamily provision for loan losses for the nine months ended September 30, 2024 was primarily driven by loan delinquencies in our multifamily guaranty book of business, including provision attributable to adjustable-rate conventional loans that became seriously delinquent and were written down to the net recoverable amount, declines in estimated actual and projected multifamily property values, and provision for uncertainty.