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SEC Filings

10-Q
FEDERAL NATIONAL MORTGAGE ASSOCIATION FANNIE MAE filed this Form 10-Q on 11/02/2018
Entire Document
 
 
Notes to Condensed Consolidated Financial Statements | Equity


The following table displays changes in accumulated other comprehensive income, net of tax.
 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
 
AFS(1)
 
Other
 
Total
 
AFS(1)
 
Other
 
Total
 
AFS(1)
 
Other
 
Total
 
AFS(1)
 
Other
 
Total
 
(Dollars in millions)

Beginning balance
$
304

 
$
45

 
$
349

 
$
643

 
$
39

 
$
682

 
$
510

 
$
43

 
$
553

 
$
716

 
$
43

 
$
759

Reclassification of accumulated other comprehensive income to retained earnings resulting from the enactment of the Tax Cuts and Jobs Act(2)

 

 

 

 

 

 
110

 
7

 
117

 

 

 

Other comprehensive income (loss) before reclassifications
(31
)
 

 
(31
)
 
47

 

 
47

 
(84
)
 

 
(84
)
 
67

 

 
67

Amounts reclassified from other comprehensive income (loss)
(2
)
 
(3
)
 
(5
)
 
(20
)
 
(2
)
 
(22
)
 
(265
)
 
(8
)
 
(273
)
 
(113
)
 
(6
)
 
(119
)
Net other comprehensive income (loss)
(33
)
 
(3
)
 
(36
)
 
27

 
(2
)
 
25

 
(349
)
 
(8
)
 
(357
)
 
(46
)
 
(6
)
 
(52
)
Ending balance
$
271

 
$
42

 
$
313

 
$
670

 
$
37

 
$
707

 
$
271

 
$
42

 
$
313

 
$
670

 
$
37

 
$
707

__________
(1) 
The amounts reclassified from accumulated other comprehensive income represent the gain or loss recognized in earnings due to a sale of an AFS security or the recognition of a net impairment recognized in earnings, which are recorded in “Investment gains, net” in our condensed consolidated statements of operations and comprehensive income.
(2) 
Reclassification from accumulated other comprehensive income to retained earnings of the tax effects resulting from the enactment of tax legislation on December 22, 2017 that reduced the federal corporate income tax rate from 35% to 21% effective January 1, 2018. This amount is not included in net other comprehensive income (loss) for the three or nine months ended September 30, 2018.
11.  Concentrations of Credit Risk
Risk Characteristics of our Guaranty Book of Business
One of the measures by which we gauge our performance risk under our guaranty is the delinquency status of the mortgage loans we hold in our retained mortgage portfolio, or in the case of mortgage-backed securities, the mortgage loans underlying the related securities.
For single-family loans, management monitors the serious delinquency rate, which is the percentage of single-family loans, based on number of loans, that are 90 days or more past due or in the foreclosure process, and loans that have higher risk characteristics, such as high mark-to-market LTV ratios.
For multifamily loans, management monitors the serious delinquency rate, which is the percentage of multifamily loans, based on unpaid principal balance, that are 60 days or more past due, and other loans that have higher risk characteristics, to determine our overall credit quality indicator. Higher risk characteristics include, but are not limited to, current debt service coverage ratio (“DSCR”) below 1.0 and high original LTV ratios. We stratify multifamily loans into different internal risk categories based on the credit risk inherent in each individual loan.
For single-family and multifamily loans, we use this information, in conjunction with housing market and economic conditions, to structure our pricing and our eligibility and underwriting criteria to reflect the current risk of loans with these higher-risk characteristics, and in some cases we decide to significantly reduce our participation in riskier loan product categories. Management also uses this data together with other credit risk measures to identify key trends that guide the development of our loss mitigation strategies.

Fannie Mae (In conservatorship) Third Quarter 2018 Form 10-Q
81