FNMA 10-K & 10-Q changes, risk factors and insider trading

The risks we face could materially adversely affect our business, results of operations, financial condition, liquidity and net worth, and could cause our actual results to differ materially from our past results or the results contemplated by any forward-looking statements we make. If any such risk occurs, the market price of our stock could decline and you may lose all or part of your investment. We believe the risks described below and in the other sections of this report referenced below are the most significant we face; however, these are not the only risks we face. We face additional risks and uncertainties not currently known to us or that we currently believe are immaterial.immaterial that may also materially adversely affect us. Refer to “MD&A—Risk Management,” “MD&A—Single-Family Business” and “MD&A—Multifamily Business” for more detailed descriptions of the primary risks to our business and how we seek to manage those risks.

•We are significantly undercapitalized and may be unable to achievefully fullsatisfy capitalization.our regulatory capital requirements.

•FHFA, as our conservator, controls our business activities. We may be required by FHFA to take actions that are difficult to implement, reduce our profitabilityprofitability, create additional challenges in meeting regulatory capital requirements, or expose us to additional risk.

•Our regulator is authorized or required to place us into receivership under specified conditions, which would result in our liquidation. Amounts recovered by our receiver may not be sufficient to pay claims outstanding against us, repay the liquidation preference of our preferred stock or to provide any proceeds to common stockholders.

•Our reliance on CSSU.S. FinTech and the common securitization platform exposes us to significant third-party risk.

•A failure in our operational systems or infrastructure, or those of third parties or the financial services industry, could cause significantmaterial business disruptions, materially adversely affect our business, liquidity, results of operations and financial condition, and materially harm our reputation.

•A decrease in the credit ratings on our senior unsecured debt could increase our borrowing costs and have an adverse effect on our ability to issue debt on reasonable terms, particularly if such a decrease were not based on a similar action on the credit ratings of the U.S. government. A decrease in our credit ratings could also could require that we post additional collateral for our derivatives contracts.

The company faces an uncertain future, including how long we will continue to exist in our current form, what changes may occur to our business model during or following conservatorship, the extent of our role in the market, the level of government support offor our business, how long we will be in conservatorship, what form we will have, what ownership interest, if any, our current common and preferred stockholders will hold in us after the conservatorship is terminated,us, and whether we will continue to exist following conservatorship.exist. The conservatorship has been in place since 2008, is indefinite in duration, and the timing, conditions and likelihood of our emerging from conservatorship are uncertain. Our conservatorship could terminate through a receivership. Actions taken in connection withby the terminationconservator ofor ourby conservatorshipa receiver could substantially dilute or eliminate any value associated with our existing common stock and preferred stock. Termination of the conservatorship, other than in connection with a mandatory receivership, requires Treasury’s consent under the senior preferred stock purchase agreement.

We believe that our return on equity based on our regulatory capital requirements may not be sufficient to attract prospective private investors in our equity securities, which we believe may limit our options to raise, or increase the cost of raising, sufficient capital to exit conservatorship. Increasing our returns to a level sufficient to attract private equity investors may require increases in our pricing or changes in other aspects of our business or regulatory oversight that could affect our competitive position, our loan acquisition volumes and market share, the mix of loans that we acquire or the type of business we do, including the level of support we provide to low- and moderate-income borrowers and renters. Our ability to increase our returns may be limited given our conservatorship status, our business model, our role in the U.S. housing market, and the limitations on our ability to change our guaranty fees and pricing described in “Business—Legislation and Regulation—Guaranty Fees and Pricing.” In addition, we believe that Treasury’s ownership of our senior preferred stock and Treasury’s potential additional substantial equity ownership in our company, along with restrictions imposed on our business and future dividends and fees we will be required to pay to Treasury under the current terms of the senior preferred stock purchase agreement,agreement and senior preferred stock, reduces our attractiveness to potentialprospective equity investors.

TheIn priorrecent Trump Administration was considering plans relating to reform ofmonths, the housing finance system and our eventual exit from conservatorship. As of the date of this filing, the new Trump Administration has notmade issuedpublic planscomments suggesting it is considering various options for housing finance reform or the future of Fannie Mae and Freddie Mac. The Administration and Congress may consider housing finance reforms or legislation that could result in significant changes in our structurestructure, our financial condition, the amount of capital we hold, and our role in the future,market, including proposals that would result in Fannie Mae’s liquidation or dissolution.dissolution, or its merger or consolidation under common ownership with Freddie Mac. In addition, Congress may consider legislation, federal agencies such as FHFA may consider regulations or administrative actions, or the Administration may issue executive orders that directly or indirectly increase the competition we face, reduce our market share, further restrict our ability to change our loan pricing, further expand our obligations to provide funds to Treasury, further constrain our business operations, or subject us to other obligations or restrictions that may adversely affect our business. We cannot predict the likelihood, timing or contentnature of housing finance reform legislation or other legislation, regulations or administrative actions that will impact our activities,activities or relating to our future, nor can we predict the extent of such impact.

We are significantly undercapitalized and may be unable to achievefully fullsatisfy capitalization.our regulatory capital requirements.

OurAs currentof December 31, 2025, we had a $22 billion deficit in available capital levelsfor arepurposes negativeof our risk-based adjusted total capital requirement, and area significantly$215 belowbillion theshortfall levelsto requiredour underrisk-based theadjusted enterprise regulatorytotal capital framework.requirement including buffers. We may be unable to achievefully fullsatisfy capitalizationour capital requirements under the enterprise regulatory capital framework, as dividends to Treasury on the senior preferred stock may resume before we reach full capitalization. Our efforts to build capital to meet our requirements can be significantly affected by the amount, type and pricing of our new loan acquisitions, which can drive increases in our required capital that offset or even outpace increases in our available capital. Other factors that can result in increases in our capital requirements include the size and performance of our guaranty book and retained mortgage portfolio, the level of our participation in credit risk transfer transactions, and economic conditions. For more information on the enterprise regulatory capital framework and our capital metrics as of December 31, 2024,2025, see “Business—Legislation and Regulation—Capital Requirements” and “MD&A—Liquidity and Capital Management— Capital Management—Capital Requirements.”

FHFA, as our conservator, controls our business activities. We may be required by FHFA to take actions that are difficult to implement, reduce our profitabilityprofitability, create additional challenges in meeting regulatory capital requirements, or expose us to additional risk.

In conservatorship, our business is not managed with a strategy to maximize stockholder value. Our directors owe their fiduciary duties of care and loyalty solely to the conservator. Thus, while we are in conservatorship, the Board has no fiduciary duties to the company or its stockholders. Our directors are also elected by the conservator, not by our stockholders. The Supreme Court has interpreted FHFA’s authority as conservator expansively, noting that “when the FHFA acts as a conservator, it may aim to rehabilitate the regulated entity in a way that, while not in the best interests of the regulated entity, is beneficial to the Agency and, by extension, the public it serves.” As conservator, FHFA can direct us to enter into contracts or enter into contracts on our behalf, and generally has the power to transfer or sell any of our assets or liabilities. Since March 17, 2025, the FHFA Director has served as the Chair of our Board, and FHFA’s General Counsel has also served as a member of our Board. The Board of Directors has delegated to the Chair of the Board the authority to approve or take any action on behalf of the Board or any Board Committee or Board Committee Chair, other than the Audit Committee or Audit Committee Chair. Following this delegation, the Chair of the Board has approved certain Board and Board Committee actions on behalf of the Board and certain of its Committees, including a number of Board and executive officer appointments and compensation decisions, and may continue to do so in the future.

Our strategic direction is subject to FHFA review and approval. FHFA has also requiresrequired us to meet specified annual corporate performance objectives referred to as the conservatorship scorecard. We face a variety of different, and sometimes competing, business objectives and FHFA-mandated activities, such as the initiatives we have been pursuing under the conservatorship scorecards.activities. FHFA has and may require us to undertake activities that are costly or difficult to implement and that increase our operational risk. FHFA also has required us to make changes to our business that have adversely affected our financial results and could require us to make additional changes at any time. FHFA may require us to undertake some activities that: reduce our profitability or net worth; create additional challenges in meeting regulatory capital requirements; expose us to additional credit, market, funding, operational, model, legal, strategic, reputational, and other risks; or provide additional support for the mortgage market that serves our mission, but adversely affects our financial results. For example, if FHFA directs us to begin acquiring new or novel loan products, it could result in increased credit risk, operational risk, model risk and market risk, and adversely affect our financial results.

FHFA can prevent us from engaging in business activities or transactions that we believe would benefit our business and financial results, and from time to time has done so. For example, FHFA can both prevent us from making, and direct us to make, changes to our guaranty fee pricing, and has currently set minimum return thresholds for our loan acquisitions, as described in “Business—Legislation and Regulation—Guaranty Fees and Pricing.” These factors constrain our ability to address changing market conditions, pursue certain strategic objectives, manage the mix of loans we acquire, and compete with Freddie Mac and other market competitors for the acquisition of loans.

With FHFA’s broad powers as conservator, changes in leadership at FHFA,FHFA includinghave those resulting from the recent change in the Administration, could resultresulted in significant changes to the goals, directiondirections and regulations that FHFA establishes for usus, and could result in significant additional changes to these goals, directions and regulations. These changes could have a material impact on our businessfinancial results and financial results. The President has the power to remove the FHFA Director.condition.

The FHFA Director is required to place us into receivership if theyhe makemakes a written determination that our assets are less than our obligations or if we have not been paying our debts as they become due, in either case, for a period of 60 days after the SEC filing deadline for any of our Form 10-Ks or Form 10-Qs. Although Treasury committed to providing us funds in accordance with the terms of the senior preferred stock purchase agreement, if we need funding from Treasury to avoid triggering FHFA’s obligation to place us into receivership, Treasury may not be able to provide sufficient funds to us within the required 60 days if it has exhausted its borrowing authority, if there is a government shutdown, or if the funding we need exceeds the amount available to us under the agreement. In addition, with the prior written consent of Treasury, we could be put into receivership at the discretion of the FHFA Director at any time for the reasons set forth in the GSE Act, including if our board of directors or stockholders consent to the appointment of a receiver or, if under the definitions in the GSE Act, we are undercapitalized with no reasonable prospect of becoming adequately capitalized or we are critically undercapitalized. Under the GSE Act, FHFA succeeded to all of the rights, titles, powers and privileges of our board of directors and stockholders.

In the event of a liquidation of our assets,assets by FHFA as receiver, only after payment of secured claims, administrative expenses of the receiver and the immediately preceding conservator, other obligations of the company (other than obligations to stockholders), and the liquidation preference of the senior preferred stock, would any liquidation proceeds be available to repay the liquidation preference on any other series of preferred stock. Finally, only after the liquidation preference on all series of preferred stock is repaid would any liquidation proceeds be available for distribution to the holders of our common stock. In the event of such a liquidation, we can make no assurances that there would be sufficient proceeds to make any distribution to holders of our preferred stock or common stock, other than to the holder of our senior preferred stock. As described in “Business—Conservatorship and Treasury Agreements—Treasury Agreements—Senior Preferred Stock Purchase Agreement and Senior Preferred Stock,” under the current terms of the senior preferred stock, until the capital reserve end date, the liquidation preference of the senior preferred stock increases each quarter by the amount of the increase in our net worth, if any, during the immediately prior fiscal quarter.

Actions taken by Congress, FHFA and Treasury to date, or that may be taken by them or other government agencies in the future, have had and are expected to continue to have an adverse effect on our retention and recruitment of executives. We are subject to significant restrictions on the amount and type of compensation we may pay as a result of the senior preferred stock purchase agreement and conservatorship, as described in more detail in “Executive Compensation—Compensation Discussion and Analysis—Restrictions on Executive Compensation.” For example, during conservatorship direct annual compensation for our chief executive officer (“CEO”) role is limited to base salary at an annual rate of $600,000 and our senior executives are prohibited from receiving bonuses. The cap on our CEO compensation continues to make retention and succession planning for this position difficult, and it may make it difficult to attract qualified candidates for this critical role in the future. As a result of the restrictions on our compensation, we have not been able to incent and reward excellent performance and appropriate risk taking with compensation structures that provide upside potential to our executives, which places us at a disadvantage compared to many other companies in attracting and retaining executives.

We face competition from the financial services and technology industries, and from businesses outside of these industries, for qualified executives and other employees. If future competition for executive and employee talent remainsis strong and if we are unable to attract, promote and retain executives and other employees with the necessary skills and talent, we would face increased risks for operational failures. In the future, if there are several high-level departures at approximately the same time, our ability to conduct our business could be materially adversely affected, which could have a material adverse effect on our results of operations and financial condition.

We are required by the GSE Act and FHFA regulation to support the housing market in ways that could materially adversely affect our financial results and condition. For example, we are subject to housing goals that require a portion of the mortgage loans we acquire to meet specified standards relating to affordability or location. We also have a duty to serve very low-, low-low-, and moderate-income families in three specified underserved markets: manufactured housing, affordable housing preservation and rural housing.

We are taking actions to support the housing market that could materially adversely affect our profitability and our ability to meet our targeted return requirements established by FHFA. For example, we are acquiring loans to meet our housing mission requirements that generally offer lower expected returns than the returns earned on non-mission-related loans, which negatively affects our ability to meet our targeted return requirements established by FHFA. In addition, some of the loans we acquireare acquiring to meet our housing mission requirements pose a higher credit risk than the other loans we purchase, which could materially increase our provision for credit losses and our write-offs.

No dividends toon common or preferred stockholders,stock, other than tosenior Treasury.preferred stock. Our conservator announced in September

September 2008 that we would not pay any dividends on the common stock or on any series of preferred stock, other than the senior preferred stock, while we are in conservatorship. In addition, under the current terms of the senior preferred stock purchase agreement, dividends may not be paid to common or preferred stockholders (other than on the senior preferred stock) without the prior written consent of Treasury, regardless of whether we are in conservatorship.

Our profits directly increase the liquidation preference of Treasury’sthe senior preferred stock and we will be required to pay dividends on the senior preferred stock in the future. The senior preferred stock ranks senior to our common stock and all other series of our preferred stock, as well as any capital stock we issue in the future, as to both dividends and distributions upon liquidation. Accordingly, if we are liquidated, the senior preferred stock is entitled to its then-current liquidation preference, before any distribution is made to the holders of our common stock or other preferred stock.

Exercise of the Treasury warrant would substantially dilute the investment of current common stockholders. If Treasury exercises its warrant to purchase shares of our common stock equal to 79.9% of the total number of shares of our common stock outstanding on a fully diluted basis, the ownership interest in the company of our then-existing common stockholders will be substantially diluted.

From time to time, we may need to adjust our pricing for a particular new production pool category orcategory, introduce new initiativesinitiatives, or change our loan acquisition strategy to maintain alignment and competitiveness with Freddie Mac with respect to the acquisition of such pools. Depending on the amount of pricing adjustments in any period, it is possible that those adjustments could adversely affect our guaranty fee revenues for that period.

Our reliance on CSSU.S. FinTech and the common securitization platform exposes us to significant third-party risk.

We rely on CSSU.S. FinTech and its common securitization platform for the operation of a majority of our single-family securitization activities. Although we jointly own CSSU.S. FinTech with Freddie Mac, there are limitations on our ability to control CSS.the company.

The U.S. FinTech Board of Managers currently has seven members—the U.S. FinTech CEO, one member appointed by Fannie Mae, two members appointed by Freddie Mac, and three members appointed by FHFA, which includes the Board Chair. Fannie Mae and FHFA each has the right to appoint one additional board member. If FHFA appoints an additional board member, the four CSSU.S. BoardFinTech board members that we and Freddie Mac have the right to appoint could be outvoted by the other five Boardboard members on any matter during conservatorship and on a number of significant matters after conservatorship.

Once either Fannie Mae or Freddie Mac has exited conservatorship and is not in receivership, the Board Chair and any board members appointed by FHFA may be removed by a unanimous vote of the Fannie Mae and Freddie Mac members and the CSSU.S. FinTech CEO. Although the limited liability company agreement would require our approval for certain “material decisions” if either we or Freddie Mac have exited conservatorship, the CSSU.S. FinTech Board of Managers may approve a number of actions even after conservatorship over the objection of the board members we appoint, including: approval of the annual budget and strategic plan for CSSU.S. FinTech (so long as it does not involve a material business change); withdrawal of capital by a member; and requiring capital contributions necessary to support CSS’sU.S. FinTech’s ordinary business operations. It is possible that FHFA may require us to make additional changes to the CSSU.S. FinTech limited liability company agreement, or may otherwise impose restrictions or provisions relating to CSS or UMBS, that may adversely affect us.U.S.

We do not currently pay service fees to U.S. FinTech under our customer services agreement; its operations are funded entirely through capital contributions from Fannie Mae and Freddie Mac pursuant to the limited liability company agreement. During conservatorship, FHFA can direct us to enter into an amendment of the customer services agreement, or enter such an amendment on our behalf, that could provide for a fee structure that would survive an exit from conservatorship absent a further amendment to the customer services agreement, which a majority of the Boardboard would have to approve. Although implementation of any fee changes could require a further amendment to the customer services agreement, we might not have significant leverage to negotiate that amendment and the associated fee changes given our dependence on U.S. FinTech.

Our securitization activities are complex and present significant operational and technological challenges and risks. Any measures we take to mitigate these challenges and risks might not be sufficient to prevent a disruption to our securitization activities. Our business activities could be adversely affected and the market for single-family Fannie Mae MBS could be disrupted if the common securitization platform were to fail or otherwise become unavailable to us or if CSSU.S. FinTech were unable to perform its obligations to us. Any such failure or unavailability could have a significant adverse impact on our business and could adversely affect the liquidity or market value of our single-family MBS. In addition, a failure by CSSU.S. FinTech to maintain effective controls and procedures could result in material errors in our reported results or in disclosures that are materially incomplete or materially inaccurate.

Our common stock and preferred stock are now traded exclusively in the over-the-counter market, and are not currently listed on any securities exchanges. We cannot predict the actions of market makers, investors or other market participants, and can offer no assurances that the market for our securities will be stable. If there is no active trading market in our equity securities, the market price and liquidity of the securities will be adversely affected. In addition, the market price of our common stock and preferred stock ishas been and may continue to be subject to significant volatility, which may be due to other factors described in these “Risk Factors,” as well as speculation regarding our future, economic and political conditions generally, liquidity in the over-the-counter market in which our stock trades, and other factors, many of which are beyond our control. Such factors could cause the market price of our common stock and preferred stock to decline significantly from their current levels, which may result in significant losses to holders of our common stock and preferred stock.

We have loans in our single-family guaranty book of business that are typically associated with higher levels of credit risk, such as loans with high LTV ratios, high debt-to-income (“DTI”) ratios and lower FICO credit scores. Similarly, we have loans in our multifamily guaranty book of business that may present higher credit risk, such as loans with high LTV ratios and lower debt service coverage ratios (“DSCRs”). We present detailed information about the risk characteristics of our single-family conventional guaranty book of business in “MD&A—Single-Family Business” and our multifamily guaranty book of business in “MD&A—Multifamily Business.” At any time, the risk characteristics of the loans we acquire may change due to new or revised guidance from FHFA or due to other federal government policy changes established through legislation, rulemaking or other actions.

We require borrowers to obtain and maintain property insurance to cover the risk of damage to their homes or properties resulting from hazards such as fire, hail, wind and, for properties in a Federal Emergency Management Agency (“FEMA”)-designated Special Flood Hazard Area, flooding. However, insurance would not cover property damage from hazards for which we do not generally require insurance, such as earthquake damage or flood damage on a property located outside a Special Flood Hazard Area. There may be instances in which borrowers’ claims under insurance policies are not paid, borrowers’ insurance is insufficient to cover their losses, borrowers fail to use insurance proceeds to make improvements to the property commensurate with the value of the damaged improvements, or borrowers fail to maintain insurance and suffer property damage. Additionally, hazard insurers may experience significant financial strain and be unable to make payments on related claims during a period in which significant numbers of mortgaged properties are damaged by natural or other disasters. Since we generally permit borrowers to select and obtain required hazard insurance policies, our requirements for hazard insurance coverage are verified by the lender or servicer, as applicable. For single-family loans, we require a minimum financial strength rating for nongovernmental hazard insurers that must be provided by S&P Global, Demotech, AM Best or KBRA, while for multifamily loans the rating must be provided by Demotech or AM Best. We do not independently verify the financial condition of these hazard insurers and rely on these rating agencies for their assessment of the financial condition of these insurers. To the extent that borrowers suffer property damage as a result of a hazard that is uninsured or underinsured, or the hazard insurer does not pay their claim, the borrowers may not pay their mortgage loans. If borrowers fail to make required payments on mortgage loans we own or guarantee, we could experience significant provisions for credit losses and write-offs on the loans in our book of business.

We estimate that, as of December 31, 2024,2025, only a small portion of loans in our guaranty book of business were located in a Special Flood Hazard Area, for which we require flood insurance: 3.3%3.2% of loans in our single-family guaranty book of business and 7.4%7.3% of loans in our multifamily guaranty book of business. We believe that only a small portion of borrowers in most places outside of these areas obtain flood insurance. The risk of significant flooding in places outside of a Special Flood Hazard Area is expected to increase due to climatea change.number of factors. Furthermore, FEMA flood maps may not accurately reflect the extent of flood risks in certain areas, and do not indicate how the risk will change in the future.

Single-family borrowers who obtain flood insurance generally rely on the National Flood Insurance Program (“NFIP”), which wasrequires recentlyperiodic extendedcongressional through March 14, 2025.reauthorization. If Congress fails to extend or re-authorize the program upon future expirations,program, FEMA may not have sufficient funds to pay claims for flood damage, and borrowers may not be able to renew their flood insurance coverage or obtain new policies through the NFIP. In addition, NFIP insurance does not cover temporary living expenses, and the maximum limit of coverage available under NFIP for a single-family residential property is $250,000, which may not be sufficient to cover all losses.

Increases in the intensity or frequency of floods or other weather-related disasters asmay aamplify resultmany of climate change are expected to increase the foregoingthese risks. In some areas, some insurers have ceased writing new coverage or have significantly increased insurance premiums for certain perils.perils or conditions. As coverage becomes unavailable or prohibitively expensive in an area, home prices or multifamily property values may experience considerable negative impacts, and borrowers may face greater financial strain. For example, the recent California wildfires have resulted in widespread property damage, which may lead to increased insurance costs, diminished housing affordability and economic instability in that region. Ultimately, the desirability of areas that frequently experience hurricanes, wildfires, or other natural disasters or face chronic climate-relatedweather-related physicalrisks risks,such as persistent drought or excessive heat, may diminish over time. This could adversely affect those regions’ economies, home prices and multifamily property values, which may negatively impact our financial results.results or condition. In addition, investors may place greater weight on climate-related risks when making investment decisions, which could increase our cost or ability to transfer credit risk.

A major disruptive event that either damages or destroys single-family or multifamily real estate securing mortgage loans in our book of business or negatively impacts the ability of borrowers to make principal and interest payments on mortgage loans in our book of business could increase our delinquency rates, default rates and average loan loss severity of our book of business in the affected region or regions. The amount of losses we incur following a major disruptive event is affected by the availability of federal, state, or local assistance to borrowers affected by the event. If such assistance is unavailable or severely limited following a major disruptive event, it could impact borrowers’ ability to repay their mortgage loans and adversely affect our business and financial results. In January 2025, the Administration issued an executive order establishing a council to provide recommendations for FEMA’s reform.

Further, a major disruptive event or a long-lasting increase in the vulnerability of an area to disasters thatmay affectssignificantly borrowers’ ability to make payments on their mortgages, discouragesdiscourage housing activity, including homebuilding or home buying,buying and affect borrowers’ ability or causeswillingness ato deteriorationmake inpayments on their mortgages. It could also deteriorate housing conditions or the general economy in the affected regionregion, could lower the volume of originations in thelowering mortgage market,originations, influencenegatively affecting home prices and multifamily property valuesvalues, innegatively impacting the affectedavailability, region or in adjacent regionsquality and increaseaffordability of insurance, and increasing delinquency rates and default rates. Any of these outcomes could generate significant provisions for credit losses and write-offs.

You should read this MD&A together with our consolidated financial statements as of December 31, 2024 and the accompanying notes.notes included in this report. This MD&A does not discuss 20222023 performance or a comparison of 20222023 versus 20232024 performance for select areas where we have determined the omitted information is not necessary to understand our current-period financial condition, changes in our financial condition, or our results. The omitted information may be found in our 2023 Form 10-K, filed with the SEC on February 15, 2024, in MD&A sections titled “Consolidated Results of2024

Operations,” “Single-Family Business,” “Multifamily Business,” and “Liquidity and Capital Management.”

Below we discuss how varying macroeconomic conditions can influence our financial results across different business and economic environments. Our forecasts and expectations are based on many assumptions, subject to many uncertainties and may change, perhaps substantially, from our current forecasts and expectations. See “Forward- Looking Statements” and “Risk Factors” for a discussion of factors that could cause actual results to differ materially from our current forecasts and expectations. For further discussion on housing activity, see “Single-Family Business— Single-Family Mortgage Market” and “Multifamily Business—Multifamily Mortgage Market.”

Selected BenchmarkMarket Interest Rates (1)Refers to the U.S. weekly average fixed-rate mortgage rate according to Freddie Mac’s Primary Mortgage Market Survey®. These rates are reported using the latest available data for a given period.

•Net interest income. Changes in interest rates impact the timing of when we recognize certain components of net interest income. Our primary source of net interest income is guaranty fees we receive for assuming the credit risk on our guaranty book of business, which consists of upfront and base guaranty fees. Since we amortize upfront guaranty fees over the contractual life of the loan, when a loan prepays, the remaining upfront fees on the loan are recognized as income in that period. In a rising interest-rate environment, our mortgage loans generally prepay more slowly as borrowers are less likely to refinance, which typically results in lower deferred guaranty fee income as those upfront fees are amortized into interest income over a longer period of time. Conversely, in a declining interest-rate environment, our mortgage loans generally prepay faster as borrowers are more likely to refinance, typically resulting in higher deferred guaranty fee income as loan prepayments accelerate the realization of those upfront fees as interest income. However, since most of the loans in our single-family guaranty book of business continue to have mortgage interest rates meaningfully below the current prevailing rate as of December 31, 2024,2025, we may not experience higher deferred guaranty fee income in a declining interest-rate environment unless mortgage interest rates drop to a level that is low enough to incentivize more borrowers to refinance. Interest rates also affect the amount of interest income we earn on our assets. Our corporate liquidity portfolio and certain mortgage-related assets typically earn more interest income in a higher interest-rate environment and less interest income in a lower interest-rate environment. On our corporate debt, we typically pay more interest in a higher interest-rate environment and less interest in a lower interest-rate environment. See “Consolidated Results of Operations—Net Interest Income” for a discussion of how interest rate changes impacted our financial results and for information on the interest rates of the loans in our single-family conventional guaranty book of business compared to the prevailing average 30-year fixed-rate mortgage rate as of year-end 2024.2025.

•Fair value gains (losses). We have exposure to fair value gains and losses resulting from changes in interest rates, primarily through our trading securities, mortgage commitment derivatives and risk management derivatives, which we mark to market through earnings. FairWe value gains and losses on our mortgage commitment derivatives fluctuate depending on how interest rates and prices move between the time a commitment is opened and when it settles. The net position and composition across the yield curve of our risk management derivatives changes over time. As a result, interest rate changes (increases or decreases) and yield curve changes (parallel, steepening or flattening shifts) will generate varying amounts ofapply fair value gainshedge oraccounting lossesto inaddress asome givenof period.this exposure to interest rates. For more information about our fair value gains (losses), see “Consolidated Results of Operations—Fair Value Gains (Losses), Net.”

•Benefit(Provision) (provision)benefit for credit losses. When mortgage interest rates increase, our expected credit losses on loans increasesgenerally increase because (1) we generally expect fewer borrowers will refinance their loans, thereby extending the expected life of the loan, which increases our expectation of loss and (2) borrowers with adjustable-rate loans or multifamily loans with balloon balances due at maturity face increased costs and a reduced ability to refinance. This increase in our expectation of loss contributes to our provision for credit losses. Conversely, when mortgage interest rates decrease, our expectation of loss generally decreases, which reduces our provision for credit losses. For more information on our benefit (provision) benefit for credit losses, see “Consolidated Results of Operations—Benefit (Provision) Benefit for Credit Losses.”

•HomeWe pricecurrently growthestimate home prices on a national basis increased fromby 5.5%3.0% in 2023 to 5.8% in 2024.2025. We expect home price growth of 3.5%2.4% on a national basis in 2025.2026. We also expect regional variation in the timing and rate of home price changes.

GDP and Unemployment Rate (1)Real GDP growth (decline) is based on the quarterly series calculated by the Bureau of Economic Analysis and areis subject to revision.

•Changes in U.S. gross domestic product (“GDP”) and the unemployment rate can affect several mortgage market factors, including the demand for both single-family and multifamily housing and the level of loan delinquencies, which impactsimpact credit losses.

•Economic growth is a key factor for the performance of mortgage-related assets. In a growing economy, employment and income are typically rising,rise, thus allowing borrowers to meet payment requirements, existing homeowners to consider purchasing and moving to another home, and renters to consider becoming homeowners. Homebuilding typically increases to meet the rise in demand. Mortgage delinquencies typically fall in an expanding economy, thereby decreasing credit losses.

•In a slowing economy, income growth and housing activity typically slow as an early indicator of reduced economic activity,slow, followed by slowingsoftening employment. Typically, asAs an economic slowdown intensifies, households typically reduce their spending.spending, Thisfurther reduction in consumption then acceleratesaccelerating the slowdown. An economic slowdown can lead to employment losses, impairing the ability of borrowers and renters to meet mortgage and rental payments, thus causing loan delinquencies to rise.

•PotentialThe changesimpact toof trade, fiscal, regulatorymonetary, regulatory, and immigration policiespolicies, and geopolitical events, is uncertain and could materially impact our outlook for interest rates, home price growth, housing activity and economic growth.

See “Risk Factors—Credit Risk” and “Risk Factors—Market and Industry Risk” for further discussion of risks to our business and financial results associated with interest rates, home prices, housing activity, and economic conditions.

(1)Includes net interest income generated by the 10 basis point guaranty fee increase we implemented pursuant to the Temporary Payroll Tax Cut Continuation Act of 2011, and as extended by the Infrastructure Investment and Jobs Act, which is paid to Treasury and not retained by us. We refer to this as TCCA fees, or income related to TCCA.

(3)Consists of (1) salaries and employee benefits,benefits and (2) professional services, technology and occupancy expenses.

(4)Consists of TCCA fees, affordable housing allocations and FHFA assessments. TCCA fees refers to the portion of our single-family guaranty fees paid to Treasury pursuant to the TCCA.

(5)Single-family credit enhancement expense consists of costs associated with our freestanding credit enhancements, which primarily include our CAS and CIRT programs, enterprise-paid mortgage insurance (“EPMI”) and certain lender risk-sharing programs. Multifamily credit enhancement expense primarily consists of costs associated with our Multifamily CIRTTM (“MCIRTTM”) and Multifamily CASConnecticut Avenue Securities® (“MCASTM”) 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.

Our primary source of net interest income is guaranty fees we receive for assuming the credit risk on mortgage loans underlying Fannie Mae MBS held by third parties.parties in our guaranty book of business. We recognize almost all of our guaranty fee revenue in net interest income because, in our consolidated balance sheets, we consolidate the substantial majority of mortgage loans underlying our Fannie Mae MBS. Guaranty fees from these mortgage loans account for the difference between the interest income on mortgage loans in consolidated trusts and the interest expense on the debt of consolidated trusts.

We also earn interest income from our corporateretained liquiditymortgage portfolio and retainedcorporate mortgageliquidity portfolio as described below.

(31)Includes interest income from assets held in our retained mortgage portfolio and our corporate liquidity portfolio, as well as other assets used to support lender liquidity. Also includes interest expense on our funding debt, including outstanding CAS debt.

•Higher base guaranty fee income. Higher base guaranty fee income was primarily driven by higher average guaranty fees on recent single-family acquisitions as well as an increase in our multifamily guaranty book of Net interest income was relatively flat in 2024 compared with 2023. The $25 million decline was driven by lower deferred guaranty fee income, primarily offset by higher income from base guaranty fees and lower expense from hedge accounting.

•Lower deferred guaranty fee income. The decrease in deferred guaranty fee income in 2024 compared to 2023 was primarily driven by less income from the amortization of premiums on debt of consolidated trusts. This decrease was largely driven by rising interest rates throughout much of 2023 and 2024, which reduced the prices of newly issued MBS debt thereby decreasing premiums.

As shown in the chart below (on the left), most of our single-family conventional guaranty book of business as of December 31, 20242025 had an interest rate lower than the U.S. weekly average 30-year fixed-rate mortgage rate. Per Freddie Mac’s Primary Mortgage Market Survey®, as of December 26,31, 2024,2025, the U.S. weekly average interest rate for a single-family 30-year fixed-rate mortgage was 6.85%.6.15%. Accordingly, even if interest rates decline meaningfully,to 5%, most of the borrowers whose mortgage loans are in our single-family conventional guaranty book of business still would not be incentivized to refinance.

The amount of deferred guaranty fee income we record can vary and is primarily impacted by: (1) the amount of upfront fees we charge on single-family mortgage loans, and (2) changes in interest rates, which affect the premiums and discounts we record on newly acquired mortgage loans and newly created debt of consolidated trusts.trusts, and (3) the amount by which premiums and discounts on existing loans and debt of consolidated trust are different compared to newly acquired loans and debt. The balance of our unamortized deferred guaranty fees decreased as of 2024,December 31, 2025, compared with 2023,December 31, 2024, largely as a result of amortization of existing deferred guarantyupfront fees outpacing upfront guaranty fees received on newly acquired single-family loans.loans and premiums of existing MBS debt. In addition, risinginterest-rate-driven interestpricing rateschanges throughoutresulted muchin of 2024 impactedfewer premiums on newly issued MBS debt asrelative pricesto declined,MBS debt that amortized, which further reduced the balance of unamortized deferred guaranty fees.

The table below displays an analysis of our net interest income, average balances and related yields earned on assets and incurred on liabilities. For most components of the average balances, we use a daily weighted average of unpaidthe principal balanceUPB net of unamortized cost basis adjustments. When daily average balance information is not available, such as for mortgage loans, we use monthly averages.

Fannie Mae is a leading source of financing for residential mortgages in the United States. We provided $115.8$241.2 billion in liquidity to the mortgage market in the first quarterhalf of 2026, which enabled the financing of approximately 385,000802,000 home purchases, refinancings, and rental units.

We support both single-family and multifamily housing. Our Single-Family business provides financing for properties that have four or fewer residential units. Our Multifamily business provides financing for residential buildings with five or more units. As of DecemberMarch 31, 20252026 (the latest date for which information is available), Fannie Mae owned or guaranteed an estimated 24% of single-family mortgage debt outstanding and an estimated 21%22% of multifamily mortgage debt outstanding in the United States.

•Net income was $3.7$4.0 billion for bothin the firstsecond quarter of 2026 andcompared with $3.3 billion in the firstsecond quarter of 2025. Net income increased by $59$665 million from the firstsecond quarter of 2025, primarily driven by a $247$461 million decrease in administrativeprovision expenses,for credit losses, a $195$324 million increase in net revenues and a $121$265 million decrease in creditnon-interest enhancementexpense. expense, whichThese were mostlypartially offset by a $276$287 million increaseshift from fair value gains in investmentthe second quarter of 2025 to fair value losses and a $253 million increase in provisionthe forsecond creditquarter losses.of 2026.

◦Net revenues totaled $7.3$7.6 billion in the firstsecond quarter of 2026, up $195$324 million from the firstsecond quarter of 2025, primarily driven by a $120$177 million increase in net interest income from portfoliosportfolios, a $99 million increase in net deferred guaranty fee income, and a $76$56 million increase in net interest income from base guaranty fees.

◦Provision for credit losses was $277$485 million in the firstsecond quarter of 2026, consisting of a $103$226 million single-family provision for credit losses and a $174$259 million multifamily provision for credit losses. The single-family provision was primarily driven by current-period loan acquisitions andacquisitions, newly delinquent loans, and the impact of the redesignation of loans from held for investment (“HFI”) to held for sale (“HFS”), which was partially offset by a benefit from actual home price growth. The multifamily provision was primarily driven by an increase in loan delinquencies and by weakenedweaker property valuations onand propertiesslower net operating income growth in our multifamily guaranty book of business whereand foreclosureby wasprovision probable.for loans that became seriously delinquent.

◦Non-interest expense was $2.2$2.1 billion in the firstsecond quarter of 2026, a decrease of $416$265 million from the firstsecond quarter of 2025, primarily due to a $247$185 million decreaseshift from other expenses in administrativethe expensessecond andquarter aof $1212025 millionto decreaseother income in creditthe enhancementsecond expense.quarter of 2026.

•Net worth increased by $3.7$7.5 billion in the first quarterhalf of 2026 to $112.7$116.5 billion as of MarchJune 31,30, 2026.

In “MD&A—Key Market Economic Indicators” in our 2025 Form 10-K, we discuss how varying macroeconomic conditions can influence our financial results across different business and economic environments, and we provide forecasts and expectations with respect to some of these macroeconomic conditions. Below we provide an update to these forecasts and expectations, as well as updates to certain macroeconomic information. Our forecasts and expectations are based on many assumptions, subject to many uncertainties and may change, perhaps substantially, from our current forecasts and expectations. See “Risk Factors” in our 2025 Form 10-K and “Forward-Looking Statements” in this report for a discussion of factors that could cause actual results to differ materially from our current forecasts and expectations.

The U.S. weekly average 30-year fixed-rate mortgage rate increased to 6.49% at the end of the second quarter of 2026, compared to 6.38% at the end of the first quarter of 2026, compared to 6.15% at the end of the fourth quarter of 2025.2026.

We currently estimate home prices on a national basis increased by 1.2%3.7% in the first quarterhalf of 2026. We expect home price growth of 3.2%2.3% on a national basis infor the full year of 2026. We also expect regional variation in the timing and rate of home price changes.

U.S. gross domestic product (“GDP”) increased by 0.5%2.1% in the fourthfirst quarter of 2025.2026. Bureau of Economic Analysis GDP data for the firstsecond quarter of 2026 was not available at the time of filing this report. We expect GDP will continue to grow in 2026. The unemployment rate decreased to 4.2% in the second quarter of 2026, compared with 4.3% in the first quarter of 2026, compared with 4.4% in the fourth quarter of 2025.2026. We expect the unemployment rate to remain relatively stable in 2026.

Net interest income increased by $197$338 million in the firstsecond quarter of 2026 compared with the firstsecond quarter of 20252025, and by $535 million in the first half of 2026 compared with the first half of 2025, primarily driven by higher net interest income from portfolios andportfolios, higher base guaranty fee income and higher net deferred guaranty fee income.

•Higher net interest income from portfolios. Higher net interest income from portfolios in the second quarter and first quarterhalf of 2026 compared with the second quarter and first quarterhalf of 2025 was primarily duedriven to aby higher average balancebalances outstanding onof our retained mortgage portfolio, primarilyreflecting driven by an increase in our acquisitionacquisitions of agency MBS. This increase was partially offset by a decrease inlower net interest income from our corporate liquidity portfolio due to lower average balances, as wewell reinvestedas ahigher portioninterest ofexpense theseon fundsfunding intodebt agencydue MBS.to higher average balances. See “Retained Mortgage Portfolio” for more information about our retained mortgage portfolio and “Liquidity and Capital Management—Liquidity Management—Corporate Liquidity Portfolio” for more information about our corporate liquidity portfolio.

•Higher base guaranty fee income. Higher base guaranty fee income in the second quarter and first quarterhalf of 2026 compared with the second quarter and first quarterhalf of 2025 was primarily due to an increase in the size of our multifamily guaranty book of business, higher yield maintenance revenue we recognized on the prepayment of multifamily loans,business and higher average guaranty fees on our single-family conventional guaranty book of business.

As shown in the chart below (on the left), most of our single-family conventional guaranty book of business as of MarchJune 31,30, 2026 had an interest rate lower than the U.S. weekly average 30-year fixed-rate mortgage rate. Per Freddie Mac’s Primary Mortgage Market Survey®, as of MarchJune 26,25, 2026, the U.S. weekly average interest rate for a single-family 30-year fixed-rate mortgage was 6.38%.6.49%. Accordingly, even if interest rates decline to 5%, mosta majority of the borrowers whose mortgage loans are in our single-family conventional guaranty book of business still would not be incentivized to refinance.

(2) Average balance includes mortgage loans on nonaccrual status. Interest income includes loan fees of $790$784 million and $1.6 billion, respectively, for the second quarter of 2026 and the first quarterhalf of 2026, compared with $645$743 million and $1.4 billion, respectively for the second quarter of 2025 and first quarterhalf of 2025. Loan fees primarily consist of yield maintenance revenue we recognized on the prepayment of multifamily mortgage loans and the amortization of upfront cash fees exchanged when we acquire the mortgage loan.

Our single-family provision for credit losses in the second quarter and first quarterhalf of 2026 was primarily driven by provision associated with loans that we acquired during the period, the majority of which consisted of purchase loans, and by provision from newly delinquent loans,loans. The impact of these drivers was partially offset by a benefit from actual home price growth. In addition, in the second quarter of 2026, the redesignation of loans from HFI to HFS also contributed to provision. Upon redesignation of these loans, we recorded the loans at the lower of cost or fair value with a write-off against the allowance for loan losses.

Our multifamily provision for credit losses in the second quarter and first quarterhalf of 2026 was primarily driven by an increase in loan delinquencies and by weakenedweaker property valuations onand propertiesslower net operating income growth in our multifamily guaranty book of business whereand foreclosureby wasprovision probable.for loans that became seriously delinquent. We continue to observe uncertainty in multifamily property valuations, and we continue to evaluate the extent to which recent market activity in select markets is indicative of broader valuation trends.

Our multifamily (provision) benefit for credit losses in the second quarter and first quarterhalf of 2025 was neutral.primarily Ourdriven multifamilyby allowancedeclines forin creditactual lossesand asestimated ofnear-term March 31, 2025 included a component related to economic uncertainty, particularly uncertainty related toprojected multifamily property values.values and new delinquencies during the second quarter.

In the firstsecond quarter and first half of 2026 and 2025, our hedge accounting program largely mitigated the impact of benchmark interest rate-driven fair value movements. The net fair value gains recognized for those periods reflect residual impacts not addressed by hedge accounting.accounting, For the first quarter of 2026, the net fair value gains recognized included netincluding gains on mortgagerisk commitmentmanagement derivatives and mortgage-related securities resulting from the widening of the secondary spread, which is the spread between the 30-year MBS current coupon yield and the 10-year U.S. Treasury rate. For the first quarter of 2025, the net fair value gains recognized included gains on our fixed-rate trading securities.

Investment losses, net increased by $276$204 million in the first quarterhalf of 2026 compared with the first quarterhalf of 2025,2025 and were primarily driven by debt extinguishment losses in the first quarterhalf of 2026 resulting from our acquisitions of Fannie Mae MBS for our retained mortgage portfolio. See “Note 1, Summary of Significant Accounting Policies—Debt” in our 2025 Form 10-K for more information about how we record debt extinguishment gains or losses.

Administrative expenses decreased by $247$283 million in the first quarterhalf of 2026 compared with the first quarterhalf of 2025, primarily driven by lower professional services fees, severance costs and employee headcount, and aseverance reduced real-estate footprint.costs.

(3)Affordable housing allocations relates to the GSE Act requirement to set aside each year an amount equal to 4.2 basis points of the UPB of our new business purchases and to pay this amount to specified U.S. Department of Housing and Urban Development (“HUD”) and Treasury funds in support of affordable housing. In March 2026, we paid $171 million to the funds based on $408.2 billion in new business purchases in 2025. For the first quarterhalf of 2026, we recognized an expenseexpenses of $49$101 million related to this obligation based on $115.5$240.8 billion in new business purchases during the period. We expect to pay this amount to the funds in 2027, plus additional amounts to be accrued based on our new business purchases in the remainingsecond nine monthshalf of 2026.

CreditOther EnhancementIncome (Expense), Net

The decrease in securities purchased under agreements to resell from December 31, 2025 to MarchJune 31,30, 2026, was primarily due to maturities, with proceeds reinvested into agency MBS investments held in our retained mortgage portfolio. See “Liquidity and Capital Management—Liquidity Management—Corporate Liquidity Portfolio” and “Retained Mortgage Portfolio” for additional information.

The primary driver of the increase in investments in securities, at fair value, from December 31, 2025 to MarchJune 31,30, 2026, was the reallocation of investable funds to agency MBS securities held in our retained mortgage portfolio and purchases of U.S. Treasury securities. See “Note 6, Investments in Securities” and “Liquidity and Capital Management—Liquidity Management—Corporate Liquidity Portfolio" for additional information.

The mortgage loans reported in our condensed consolidated balance sheets are classified as either held for sale (“HFS”) or held for investment (“HFI”) and include loans owned by Fannie Mae and loans held in consolidated trusts.

MortgageThe slight increase in mortgage loans, net of allowance for loan losses decreased from December 31, 2025 to MarchJune 31,30, 2026, drivenwas primarily driven by acquisitions outpacing loan paydowns and liquidations outpacing acquisitions during the first quarter of 2026.liquidations.

The increase in debt of Fannie Mae from December 31, 2025 to March 31, 2026 was primarily driven by long-term debt issuances to replace debt scheduled to mature later in the year and to further enhance our liquidity position by taking advantage of favorable market conditions. The decrease in debt of consolidated trusts from December 31, 2025 to MarchJune 31,30, 2026 was primarily driven by an increase in Fannie Mae MBS held in our retained mortgage portfolio,portfolio and liquidations of single-family Fannie Mae MBS outpacing issuances. Purchases of Fannie Mae MBS from consolidated trusts for our retained mortgage portfolio result in the derecognition of related balances in debt of consolidated trusts. See “Liquidity and Capital Management—Liquidity Management—Debt Funding” for a summary of activity in debt of Fannie Mae and information on our outstanding short-term and long-term debt. Also see “Note 8, Short-Term and Long-Term Debt” for additional information on our total outstanding debt.

(2)Includes single-family loans on nonaccrual status of $13.5$14.1 billion and $12.7 billion as of MarchJune 31,30, 2026 and December 31, 2025, respectively. Also includes multifamily loans on nonaccrual status of $3.2 billion and $3.0 billion as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

The retained mortgage portfolio increased $36.3$42.6 billion in the first quarterhalf of 2026 to $168.7$175.0 billion as of MarchJune 31,30, 2026,2026. The increase was primarily driven by an increase in our acquisition of agency MBS for investment purposes in the first quarter of 2026 following FHFA’s January 2026 increase to our agency MBS investment limit to allow us to further support the secondary mortgage market, while generating viable economic returns. The increase was further driven by purchases of mortgage loans that have not yet been securitized. Our agency MBS investments may fluctuate based on market conditions and other purchases for our retained mortgage portfolio, such as purchases of loans from our MBS trusts for loss mitigation purposes and to facilitate lender liquidity, as well as other factors.

We include 10% of the notional value of the interest-only securities we hold in calculating the size of the retained mortgage portfolio for the purpose of determining compliance with the senior preferred stock purchase agreement mortgage assets cap and associated FHFA instructions. As of MarchJune 31,30, 2026, 10% of the notional value of our interest-only securities was $2.2$2.4 billion, which is not included in the table above.

Under the terms of our MBS trust documents, we have the option or, in some instances, the obligation, to purchase mortgage loans that meet specific criteria from an MBS trust. FHFA has also provided us with instruction on our single-family delinquent loan buyout policy. The purchase price for these loans is the UPB of the loans plus accrued interest. In support of our loss mitigation strategies, we purchased $4.0$8.0 billion of loans from our single-family MBS trusts in the first quarterhalf of 2026, the substantial majority of which were delinquent, compared with $3.6$7.8 billion of loans in the first quarterhalf of 2025.

We highlight below our segment results for net interest income andincome, fair value gains (losses)., net and other income (expense), net. For discussion of our single-family and multifamily (provision) benefit for credit losses, see “Consolidated Results of Operations—(Provision) Benefit for Credit Losses.” Investment gains (losses), administrative expenses, and credit enhancementadministrative expenses within the Single‑Family business represent the substantial majority of our consolidated results. See our “Consolidated Results of Operations” for a discussion of these line items.