1. © 2009 Fannie Mae Do You Need to Sell Some Loans? Secondary Mortgage Market Resources North Carolina Affordable Housing Conference Raleigh, NC November 3-4, 2009 Presented by: Miles O. Vaughn Fannie Mae

2. November 2009 | Secondary Mortgage Market Resources 1 The Housing Finance Market Where all activities related to the origination, sale, securitization, and servicing of residential mortgages takes place. Two components: 1.Primary Mortgage Market 2.Secondary Mortgage Market

3. November 2009 | Secondary Mortgage Market Resources 2 Primary Mortgage Market Mortgages are originated and funds loaned directly to borrowers Some key players:  Commercial Banks  Credit Unions  Mortgage Companies  Housing Finance Agencies (i.e. North Carolina Housing Finance Agency)

4. November 2009 | Secondary Mortgage Market Resources 3 Secondary Mortgage Market Market where residential mortgages and mortgage- backed securities (MBS) are bought and sold Mortgage-backed securities are pools of mortgages with similar features bundled into an investment instrument (securitization) Some key players:  Fannie Mae  Freddie Mac  Ginnie Mae  Pension Funds  Commercial Banks

5. November 2009 | Secondary Mortgage Market Resources 4 Housing Finance Market Dynamics Borrowers (Pay Mortgages) Lenders/Originators (Banks, HFA, S&L’s, Credit Unions, etc.) Fannie Mae, Freddie Mac, FHLB Capital Markets Pension Funds, Investors

6. November 2009 | Secondary Mortgage Market Resources 5 Fannie Mae’s History Created in 1938 to help combat the adverse effects of the Great Depression, including:  High unemployment  Massive bank closures  Tightening of availability of mortgage financing Fannie Mae’s mission is to provide stability, liquidity and affordability to the U.S. housing and mortgage markets, in good times and bad.

7. November 2009 | Secondary Mortgage Market Resources 6 How Fannie Mae Provides Liquidity Fannie Mae provides liquidity in two ways: 1. We purchase mortgages from lenders  We then hold these mortgages in our portfolio  We provide cash to lenders so they can fund additional mortgages  In order to finance the mortgages we purchase, we issue debt securities to capital market investors (continued)

8. November 2009 | Secondary Mortgage Market Resources 7 2. We issue mortgage-backed securities (MBS)  Pool the loans from lenders and bundle into MBS  MBS are owned by lenders and are backed by the underlying mortgages  MBS are very liquid and lenders can sell them or hold them  Fannie Mae guarantees timely payments of interest and principal of MBS  Fannie Mae earns a guarantee fee How Fannie Mae Provides Liquidity (con’t)

9. November 2009 | Secondary Mortgage Market Resources 8 Fannie Mae’s Key Business Groups  Capital Markets - Purchases and sells our portfolio mortgage loans, MBS, and other mortgage-related securities  Single-Family Mortgage Business - Offers our lender partners mortgage products and services that helps borrowers buy and keep their homes  Housing and Community Development - Works with housing partners to help stabilize and expand supply of affordable and market-rate rental housing

10. November 2009 | Secondary Mortgage Market Resources 9 Benefits to Borrower  Insures steady stream of funding is available  Allows for competitiveness in mortgage rates  New technologies that make buying a home quicker, easier, and less expensive

11. November 2009 | Secondary Mortgage Market Resources 10 Existing Home Sales Rise With Affordability

12. November 2009 | Secondary Mortgage Market Resources 11 Fannie Mae Serves the Market Every Day  Liquidity  Issuing MBS  Buying loans  Stability  Refinancing and modifying mortgages  Preventing foreclosures  Affordability  Financing loans with low interest rates

13. November 2009 | Secondary Mortgage Market Resources 12 With Support To Do the Job Government investment: Up to $200 billion in funding Liquidity backstop through 2009 Fed pledge to purchase up to: $1.25 trillion in GSE-issued MBS $200 billion in GSE housing- related debt

14. November 2009 | Secondary Mortgage Market Resources 13 Contact Information Miles O. Vaughn Senior Business Developer Fannie Mae 112 South Tryon Street, Suite 1100 Charlotte, N.C. 28284 Miles_o_vaughn@fanniemae.com (704) 344-6964