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SEC Filings

10-Q
FEDERAL NATIONAL MORTGAGE ASSOCIATION FANNIE MAE filed this Form 10-Q on 08/03/2017
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MD&A | Consolidated Balance Sheet Analysis


Investments in Mortgage-Related Securities
Our investments in mortgage-related securities are classified in our condensed consolidated balance sheets as either trading or available-for-sale and are measured at fair value. Table 10 displays the fair value of our investments in trading and available-for-sale mortgage-related securities. We classify private-label securities as Alt-A, subprime or commercial mortgage-backed securities (“CMBS”) if the securities were labeled as such when issued. We have also invested in subprime private-label mortgage-related securities that we have resecuritized to include our guaranty.
Table 10: Summary of Mortgage-Related Securities at Fair Value
 
As of
 
June 30, 2017
 
December 31, 2016
 
(Dollars in millions)
Mortgage-related securities:
 
 
 
 
 
 
 
Fannie Mae
 
$
6,549

 
 
 
$
7,323

 
Other agency
 
2,401

 
 
 
2,605

 
Alt-A and subprime private-label securities
 
2,755

 
 
 
3,345

 
CMBS
 
275

 
 
 
1,580

 
Mortgage revenue bonds
 
874

 
 
 
1,293

 
Other mortgage-related securities
 
410

 
 
 
462

 
Total
 
$
13,264

 
 
 
$
16,608

 
The decrease in mortgage-related securities at fair value from December 31, 2016 to June 30, 2017 was primarily driven by liquidations and sales of securities.
See “Note 5, Investments in Securities” for additional information on our investments in mortgage-related securities, including the composition of our trading and available-for-sale securities at amortized cost and fair value and the gross unrealized gains and losses related to our available-for-sale securities as of June 30, 2017 and December 31, 2016.
Mortgage Loans and Allowance for Loan Losses
The increase in mortgage loans, net of allowance, from December 31, 2016 to June 30, 2017 was driven by an increase in mortgage loans of consolidated trusts as we continued to add to our guaranty book of business through securitization activity. Partially offsetting this was a decline in mortgage loans of Fannie Mae resulting from liquidations, portfolio securitizations and sales. For additional information on our mortgage loans, see “Note 3, Mortgage Loans.”
The decrease in our allowance for loan losses from December 31, 2016 to June 30, 2017 was driven primarily by the redesignations of loans from HFI to HFS, liquidations and an increase in actual and forecasted home prices. See “Consolidated Results of OperationsCredit-Related Income (Expense)Provision (Benefit) for Credit Losses” for more information.
Other Assets
The decrease in other assets from December 31, 2016 to June 30, 2017 was primarily driven by a decrease in advances to lenders as a result of lower lender funding needs. For additional information on our accounting policy for advances to lenders, refer to “Note 1, Summary of Significant Accounting Policies” in our 2016 Form 10-K.
Debt
Debt of Fannie Mae is the primary means of funding our mortgage acquisitions. Debt of consolidated trusts represents the amount of Fannie Mae MBS issued from consolidated trusts and held by third-party certificateholders. We provide a summary of the activity of the debt of Fannie Mae and a comparison of the mix between our outstanding short-term and long-term debt in “Liquidity and Capital ManagementLiquidity ManagementDebt Funding.” Also see “Note 7, Short-Term Borrowings and Long-Term Debt” for additional information on our outstanding debt.
The decrease in debt of Fannie Mae from December 31, 2016 to June 30, 2017 was primarily driven by lower funding needs, as our retained mortgage portfolio decreased. The increase in debt of consolidated trusts from

Fannie Mae Second Quarter 2017 Form 10-Q
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