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SEC Filings

10-Q
FEDERAL NATIONAL MORTGAGE ASSOCIATION FANNIE MAE filed this Form 10-Q on 05/07/2015
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metrics may be useful to investors as the losses are presented as a percentage of our book of business and have historically been used by analysts, investors and other companies within the financial services industry. Moreover, by presenting credit losses with and without the effect of fair value losses associated with the acquisition of credit-impaired loans, investors are able to evaluate our credit performance on a more consistent basis among periods. Table 10 displays the components of our credit loss performance metrics as well as our single-family and multifamily initial charge-off severity rates.
Table 10: Credit Loss Performance Metrics
 
For the Three Months Ended March 31,
 
2015
 
2014
 
Amount
 
Ratio(1)
 
Amount
 
Ratio(1)
 
(Dollars in millions) 
Charge-offs, net of recoveries
$
1,212

 
15.9
bps
 
$
1,235

 
16.0

bps
Adoption of Advisory Bulletin and change in accounting principle(2)
3,555

 
46.6
 
 

 

 
Foreclosed property expense (income)
473

 
6.2
 
 
(262
)
 
(3.4
)
 
Credit losses including the effect of fair value losses on acquired credit-impaired loans
5,240

 
68.7
 
 
973

 
12.6

 
Plus: Impact of acquired credit-impaired loans on charge offs and foreclosed property expense (income)(3)
136

 
1.8
 
 
160

 
2.1

 
Credit losses and credit loss ratio
$
5,376

 
70.5
bps
 
$
1,133

 
14.7

bps
Credit losses attributable to:
 
 
 
 
 
 
 
 
 
Single-family
$
5,373

 
 
 
 
$
1,127

 
 
 
Multifamily
3

 
 
 
 
6

 
 
 
     Total
$
5,376

 
 
 
 
$
1,133

 
 
 
Single-family initial charge-off severity rate(4)
 
 
17.99
%
 
 
 
20.31

%
Multifamily initial charge-off severity rate(4)
 
 
23.60
%
 
 
 
29.91

%
__________
(1) 
Basis points are based on the annualized amount for each line item presented divided by the average guaranty book of business during the period.
(2) 
Includes charge-offs of (1) $1.8 billion in loans held for investment and $724 million in preforeclosure property taxes and insurance receivable in connection with our adoption of the Advisory Bulletin and (2) $1.1 billion in accrued interest receivable in connection with our adoption of a change in accounting principle related to the treatment of interest previously accrued, but not collected, at the date that loans are placed on nonaccrual status. See “Note 1, Summary of Significant Accounting Policies” for more information on this policy change.
(3) 
Includes fair value losses from acquired credit-impaired loans.
(4) 
Single-family and multifamily rates exclude fair value losses on credit-impaired loans acquired from MBS trusts and any costs, gains or losses associated with REO after initial acquisition through final disposition. Single-family rate excludes charge-offs prior to foreclosure and other liquidations, short sales and third-party sales. Multifamily rate is net of risk-sharing agreements.
Credit losses and our credit loss ratio increased in the first quarter of 2015 compared with the first quarter of 2014 primarily due to our adoption of the Advisory Bulletin beginning on January 1, 2015 as well as a change in our accounting policy for nonaccrual loans.
We discuss our expectations regarding our future credit losses in “Executive Summary—Outlook—Credit Losses.”
Other Non-Interest Expenses
Other non-interest expenses decreased in the first quarter of 2015 compared with the first quarter of 2014 primarily due to higher gains from the sale of partnership investments. These gains were partially offset by an increase in expenses related to TCCA fees in the first quarter of 2015 compared with the first quarter of 2014 due to an increase in the percentage of loans in our single-family guaranty book of business subject to TCCA fees. We expect the guaranty fees collected and expenses incurred under the TCCA to continue to increase in the future.

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