Conservatorship, Senior Preferred Stock Purchase Agreement and Related Matters

12 Months Ended

Dec. 31, 2025

Conservatorship, Preferred Stock Agreements, And Related Parties [Abstract]

Conservatorship, Preferred Stock Agreements, And Related Parties

Conservatorship, Senior Preferred Stock Purchase Agreement and

Related Matters

Conservatorship

In September 2008, FHFA was appointed as our conservator pursuant to authority provided by the Federal Housing

Enterprises Financial Safety and Soundness Act of 1992, as amended (the “GSE Act”). Conservatorship is a statutory

process designed to preserve and conserve our assets and property and put the company in a sound and solvent

condition. Our conservatorship has no specified termination date.

FHFA, as conservator, succeeded to:

•all rights, titles, powers and privileges of Fannie Mae, and of any stockholder, officer or director of Fannie Mae

with respect to Fannie Mae and its assets; and

•title to the books, records and assets of any other legal custodian of Fannie Mae.

As conservator, FHFA has broad authority over our business and operations, including the authority to:

•direct us to enter into contracts or enter into contracts on our behalf; and

•transfer or sell our assets or liabilities.

The GSE Act provides special protections for mortgage loans and mortgage-related assets we hold in trust. Specifically,

mortgage loans and mortgage-related assets that have been transferred to a Fannie Mae MBS trust must be held by the

conservator for the beneficial owners of such MBS and cannot be used to satisfy the company’s general creditors.

While we are operating in conservatorship, our directors:

•serve on behalf of the conservator;

•exercise their authority as directed by and with the approval (where required) of the conservator;

•owe their fiduciary duties of care and loyalty solely to the conservator, and not to either the company or the

stockholders; and

•are elected by the conservator, not by our stockholders.

FHFA, as conservator, has issued an order authorizing our Board of Directors to exercise specified functions and

authorities, and instructions regarding matters for which conservator decision or notification is required. The conservator

retains the authority to amend or withdraw its order and instructions at any time.

The conservator has suspended stockholder meetings since conservatorship, and our common stockholders are not

empowered to vote on directors or any other matters. The conservator also eliminated dividends on our common and

preferred stock (other than dividends on the senior preferred stock described below) during the conservatorship.

Receivership

Under the GSE Act, the FHFA Director must place us into receivership if he determines that our assets are less than our

obligations (that is, we have a net worth deficit) or if we have not been paying our debts as they become due, in either

case, for a period of 60 days. FHFA has clarified that the 60-day measurement period will commence no earlier than the

SEC filing deadline for our Form 10-K or Form 10-Q for the relevant period. In addition, the FHFA Director may, with the

prior consent of Treasury, place us into receivership at the Director’s discretion at any time for other reasons set forth in

the GSE Act, including if we are critically undercapitalized or if we are undercapitalized and have no reasonable

prospect of becoming adequately capitalized. Should we be placed into receivership, different assumptions would be

required to determine the carrying value of our assets, which would likely lead to substantially different financial results.

Senior Preferred Stock Purchase Agreement

Overview

FHFA, as conservator, entered into a senior preferred stock purchase agreement with the U.S. Department of the

Treasury (“Treasury”) on our behalf in September 2008. In connection with that agreement, we issued Treasury one

million shares of Variable Liquidation Preference Senior Preferred Stock, Series 2008-2, which we refer to as the “senior

preferred stock,” and a warrant to purchase shares equal to 79.9% of our common stock, on a fully diluted basis, for a

nominal price of $0.00001 per share. As described in the table below, Treasury made a commitment under the senior

preferred stock purchase agreement to provide funding to us under certain circumstances if we have a net worth deficit.

We have assigned a value of $4.5 billion to Treasury’s commitment, which was recorded as a reduction to additional

paid-in-capital at the time of the issuance and was partially offset by the aggregate fair value of the warrant of $3.5

billion. We received no cash consideration for issuing either the senior preferred stock or the warrant.

The senior preferred stock purchase agreement and the terms of the senior preferred stock have been amended

multiple times since 2008 by FHFA (acting on our behalf) and Treasury. Such amendments to the senior preferred stock

qualified as modifications rather than the extinguishment and issuance of a new equity instrument. As a result, the

amendments did not trigger a change in the carrying value of the senior preferred stock when such amendments were

executed.

The senior preferred stock purchase agreement and accompanying stock certificate as amended to date include key

provisions that impact us, including those described in the table below. For a discussion of the current terms of the

senior preferred stock related to dividends, liquidation preference, and limits on redemptions and paydowns, see “Note

12, Equity.”


Treasury Funding Commitment	•On a quarterly basis, we may draw funds from Treasury to cover the amount that our total liabilities exceed our total assets for the applicable fiscal quarter (referred to as the “deficiency amount”), up to the amount of remaining funding commitment under the agreement. •As of the date of this filing: ◦$119.8 billion has been paid to us by Treasury under this funding commitment; and ◦$113.9 billion of funding commitment from Treasury remains; this amount would be reduced by any future payments by Treasury under the commitment.
Termination Provisions for Funding Commitment	•Treasury’s funding commitment has no specified end date, but will terminate upon: ◦our liquidation and the fulfillment of Treasury’s obligations under its funding commitment; ◦the payment in full of, or reasonable provision for, our liabilities (whether or not contingent, including guaranty obligations); or ◦Treasury funding the maximum amount under the agreement. •Treasury also may terminate its funding commitment and void the agreement if a court vacates, modifies, amends, conditions, enjoins, stays or otherwise affects the appointment of the conservator or curtails the conservator’s powers.
Rights of Debt and MBS Holders	•Holders of our debt securities or our guaranteed MBS may file a claim in the United States Court of Federal Claims for relief if we default on our payment obligations on those securities and: ◦we and the conservator fail to exercise all rights under the agreement to draw on Treasury’s funding commitment, or ◦Treasury fails to perform its obligations under its funding commitment and we and/or the conservator are not diligently pursuing remedies for Treasury’s failure. •Holders may seek to require Treasury to fund us up to: ◦the amount necessary to cure the relevant payment defaults; ◦the deficiency amount; or ◦the amount of remaining funding under the agreement, whichever is the least. Any Treasury funding provided under these circumstances would increase the liquidation preference of the senior preferred stock. •The terms of the agreement generally may be amended or waived; however, no such amendment or waiver may decrease Treasury’s aggregate funding commitment or add conditions to Treasury’s funding commitment that would adversely affect in any material respect the holders of our debt or guaranteed MBS.

Commitment Fee

•The agreement provides for the payment of an unspecified quarterly commitment fee to

Treasury to compensate it for its ongoing support under the agreement.

•The agreement also provides that:

◦Until the capital reserve end date, the periodic commitment fee will not be set, accrue, or

be payable. The capital reserve end date is defined as the last day of the second

consecutive fiscal quarter during which we have had and maintained capital equal to or

exceeding the capital requirements and buffers set forth in the enterprise regulatory

capital framework.

◦No later than the capital reserve end date, we and Treasury, in consultation with the Chair

of the Federal Reserve, will agree on the amount of the periodic commitment fee.

Covenants

The senior preferred stock purchase agreement contains covenants that prohibit us (and, in one instance, FHFA) from

taking several actions without the prior written consent of Treasury or require us to take specified actions, including the

following described in the table below:


Dividends and Share Repurchases	•We may not pay dividends or make other distributions on or repurchase our equity securities (other than the senior preferred stock).
Issuances of Equity Securities	•We may not issue equity securities, except for common stock issued: ◦upon exercise of the warrant; ◦as required by any pre-conservatorship agreements; and ◦following the satisfaction of two conditions: (a) the exercise of the warrant in full, and (b) the resolution of all currently pending significant litigation relating to the conservatorship and the August 2012 amendment to the senior preferred stock purchase agreement.
Termination of Conservatorship	•Neither we nor FHFA may terminate or seek to terminate the conservatorship without the prior consent of Treasury, other than through a mandatory receivership.
Asset Dispositions	•We may not sell, transfer, lease or otherwise dispose of any assets, except for dispositions for fair market value in limited circumstances, including if: ◦the transaction is in the ordinary course of business and consistent with past practice; or ◦the assets have a fair market value individually or in the aggregate of less than $250 million.
Subordinated Debt	•We may not issue any subordinated debt securities.
Mortgage Assets Limit	•We may not hold mortgage assets in excess of $225 billion.
Indebtedness Limit	•We may not have indebtedness in excess of $270 billion.
Executive Compensation	•We may not enter into any new compensation arrangements or increase amounts or benefits payable under existing compensation arrangements with any of our executive officers (as defined by Securities and Exchange Commission (“SEC”) rules) without the consent of the FHFA Director, in consultation with the Secretary of the Treasury.
Equitable Access and Offers for Single-Family Mortgage Loans	•We may not vary our pricing or acquisition terms for single-family loans based on the business characteristics of the seller, including the seller’s size, charter type, or volume of business with us. •We must offer to purchase at all times, for equivalent cash consideration and on substantially the same terms, any single-family mortgage loan that: ◦is of a class of loans that we then offer to acquire for inclusion in our MBS or for other non- cash consideration; ◦is offered by a seller that has been approved to do business with us; and ◦has been originated and sold in compliance with our underwriting standards.


Single-Family Loan Eligibility Program	•We must maintain a program reasonably designed to ensure that the single-family loans we acquire are limited to: ◦qualified mortgages, as defined in the Consumer Financial Protection Bureau’s (the “CFPB’s”) ability-to-repay and qualified mortgage rule; ◦loans exempt from the CFPB’s ability-to-repay and qualified mortgage rule; ◦loans secured by an investment property; ◦refinancing loans with streamlined underwriting originated in accordance with our eligibility criteria for high LTV ratio refinancings; ◦loans originated with temporary underwriting flexibilities during times of exigent circumstances, as determined in consultation with FHFA; ◦loans secured by manufactured housing; and ◦such other loans that FHFA may designate that were eligible for purchase by us as of January 2021. In 2021, FHFA notified us that we are permitted to continue to acquire any government loan that would have been eligible for acquisition by us as of January 2021.
Enterprise Regulatory Capital Framework	•We are required to comply with the enterprise regulatory capital framework rule as amended from time to time.
Risk Management Plan	•While in conservatorship, we must provide an annual risk management plan to Treasury.

Senior Preferred Stock and Common Stock Warrant

For information about the senior preferred stock and the common stock warrant, see “Note 12, Equity.”

Impact of U.S. Government Support

We have been operating under the control of FHFA as conservator since 2008, which is a form of government support.

We continue to rely on financial support from Treasury pursuant to our senior preferred stock purchase agreement to

eliminate any net worth deficits we may experience in the future, which would otherwise trigger our being placed into

receivership by FHFA. Treasury also has authority under the Charter Act to purchase up to $2.25 billion of the debt

obligations that we issue. We believe that continued support from Treasury and our status as a government-sponsored

enterprise are essential to maintaining our access to debt funding and maintaining the liquidity necessary to conduct our

normal business activities. Therefore, changes or perceived changes in (i) our status as a government-sponsored

enterprise, (ii) our support from Treasury and/or (iii) the creditworthiness of the U.S. government could have a material

adverse impact on our access to debt funding or the cost of debt funding. These events would have a negative impact

on our liquidity, financial condition, and results of operations. Our reliance on support from the U.S. government is

critical to keeping us operating as a going concern. Our conservator has not made us aware of any plans that would

fundamentally change our business model or make any other significant changes that would affect our ability to

continue as a going concern.

Related Parties

Because Treasury holds a warrant to purchase shares of Fannie Mae common stock equal to 79.9% of the total number

of shares of Fannie Mae common stock, we and Treasury are deemed related parties. As of December 31, 2025,

Treasury held an investment in our senior preferred stock with an aggregate liquidation preference of $227.0 billion.

FHFA’s control of both Fannie Mae and Freddie Mac has caused Fannie Mae, FHFA and Freddie Mac to be deemed

related parties. Additionally, Fannie Mae and Freddie Mac jointly own U.S. Financial Technology, LLC (“U.S. FinTech”),

formerly named Common Securitization Solutions, LLC, a limited liability company created to operate a common

securitization platform; as a result, U.S. FinTech is deemed a related party.

Recurring transactions with our related parties are described below:


Related Party	Transaction	Description
Treasury	Temporary Payroll Tax Cut Continuation Act of 2011 (“TCCA”)	Under the TCCA, we have an obligation to collect 10 basis points in guaranty fees on single-family mortgages delivered to us and pay the associated revenue to Treasury. The Infrastructure Investment and Jobs Act was enacted in November 2021 and extended our obligation under the TCCA to October 1, 2032. In January 2022, FHFA advised us to continue to collect and pay these TCCA fees on and after October 1, 2032 with respect to loans we acquired before this date until those loans are paid off or otherwise liquidated.
Treasury	Capital Magnet Fund	The GSE Act requires us to set aside funding obligations for Treasury’s Capital Magnet Fund. These funding obligations are measured as the product of 4.2 basis points and the UPB of our total new business purchases for the respective period, with 35% of this amount payable to Treasury’s Capital Magnet Fund.
FHFA	Annual Assessments under the GSE Act	The GSE Act authorizes FHFA to establish an annual assessment for regulated entities, including Fannie Mae, for FHFA’s costs and expenses, as well as to maintain FHFA’s working capital.
Treasury & Freddie Mac	Making Home Affordable Program	We served as program administrator for Treasury’s Home Affordable Modification Program (“HAMP”) and other initiatives under Treasury’s Making Home Affordable Program. Our role as program administrator concluded in the third quarter of 2023. We received reimbursements from Treasury and Freddie Mac for expenses incurred in this role and our final reimbursement was received in the fourth quarter of 2023.
U.S. FinTech & Freddie Mac	Equity Investment in U.S. FinTech	Our investment in U.S. FinTech is accounted for using the equity method. As a part of our joint ownership, Fannie Mae, Freddie Mac and U.S. FinTech are parties to several agreements which set forth the overall framework for the joint venture and the terms under which U.S. FinTech provides mortgage securitization services to us and Freddie Mac. U.S. FinTech operates as a separate company from us and Freddie Mac, with all funding and limited administrative support services and other resources provided to it by us and Freddie Mac.

The following table provides the income statement impact of our related party transactions for the periods presented in

addition to the associated liability at period end. The associated liability represents amounts accrued with respect to the

related party transactions that have not yet been paid to the applicable related parties. In addition to the impact

described in the table below, our equity investment in U.S. FinTech is classified as “Other assets” in our consolidated

balance sheets. We contributed $82 million and $68 million to U.S. FinTech for the years ended December 31, 2025 and

2024, respectively.


Related Party	Activity	Income Statement Classification	For the Year Ended December 31,			Other Liabilities as of December 31,
Related Party	Activity	Income Statement Classification	2025	2024	2023	2025	2024
			(Dollars in millions)
Treasury	TCCA fees	Legislative assessments	$3,424	$3,442	$3,431	$854	$861
Treasury	Treasury’s Capital Magnet Fund	Legislative assessments	60	56	54	60	56
FHFA	FHFA assessments	Legislative assessments	154	164	159	—	—
Treasury & Freddie Mac	Making Home Affordable Program reimbursements	Other income (expense), net	—	—	6	—	—
U.S. FinTech & Freddie Mac	Net operating losses associated with our investment in U.S. FinTech	Other income (expense), net	81	68	72	—	—

In the ordinary course of business, Fannie Mae may purchase and sell securities issued by Treasury and Freddie Mac

in the capital markets. Some of the structured securities we issue are backed in whole or in part by Freddie Mac

securities. Fannie Mae and Freddie Mac each have agreed to indemnify the other party for losses caused by: its failure

to meet its payment or other specified obligations under the trust agreements pursuant to which the underlying

resecuritized securities were issued; its failure to meet its obligations under the customer services agreement; its

violations of laws; or with respect to material misstatements or omissions in offering documents, ongoing disclosures

and materials relating to the underlying resecuritized securities. Additionally, we make regular income tax payments to

and receive tax refunds from the IRS, a bureau of Treasury.