"Division") of the United States Securities and Exchange Commission (the "Commission") into

UNITED STATES OF AMERICA 

SECURITIES AND EXCHANGE COMMISSION 

NON-PROSECUTION AGREEMENT 
1. This agreement arises out of an investigation by the Division of Enforcement (the 
"Division") 
of the United States Securities and Exchange Commission (the "Commission") into 
possible violations 
of the federal securities laws by the Federal National Mortgage Association 
(the "Respondent" or "Fannie Mae") and others that occurred in or about December 2006 
through September 
6, 2008, arising from, among other things, public statements concerning 
Fannie 
Mae's exposure to SUbprime and Alt-A mortgages (collectively, the "Investigation"). 
Prior to a public enforcement action being brought by the Commission against Fannie Mae, 
without admitting or denying liability, Respondent has offered to accept responsibility for its 
conduct and to not dispute, contest, or contradict the factual statements set forth in Exhibit 
A, as 
specifically provided herein. Accordingly, the Commission and the Respondent enter into this 
Non-Prosecution Agreement (the "Agreement"). 
2. The Respondent is  a corporation organized and operated under the laws of the United 
States 
of America, subject to the ongoing supervision of the Federal Housing Finance Agency 
("FHF A"). On September 
6, 2008, FHF A placed the Respondent into conservatorship, and as 
conservator, succeeded to all rights, titles, powers and privileges 
of the Respondent and its 
shareholders, officers, and directors with respect to the Respondent and its assets. As 
conservator, FHF A maintains a continuous on-site presence at the Respondent and provides 
substantial oversight over the Respondent, including, among other things, with respect to its 
corporate governance, regulatory compliance and operations. In addition, the United States 
Treasury has made substantial capital investments in the Respondent and holds senior preferred 
stock, as well as warrants representing an ownership stake 
of up to 79.9 percent of the 
Respondent's common stock. 
3. In entering into this Agreement, the Commission recognizes the unique circumstances 
presented 
by the Respondent's current status, including the financial support provided to the 
Respondent by the 
US. Treasury, the role of another government agency (FHFA) as conservator, 
and the costs that may be imposed on 
US. taxpayers. Based on these circumstances and in 
consideration of the public interest, subject to the full, truthful, and continuing cooperation of the 
Respondent as described below and its satisfactory performance 
of all obligations and 
undertakings herein, the Commission and Respondent enter into this Agreement with the terms 
and conditions contained herein. 
COOPERATION 
4. The Respondent agrees to cooperate fully and truthfully in the Investigation and any 
other related enforcement litigation or proceeding to which the Commission is  a party (the 
"Proceedings"), without regard to the time period in which the cooperation is  required 
("Cooperation Period"). In addition, the Respondent agrees to cooperate fully and truthfully, 
when directed by the Division's staff, in any other related official investigation or proceeding by 
any 
US. federal agency (the "Other Proceedings"). The Respondent acknowledges and 
1 


understands that its ongoing cooperation with the Commission is  an important and material 
factor underlying the Commission's decision to enter into this Agreement. The full, truthful, and 
continuing cooperation 
ofthe Respondent shall include, but not be limited to: 
a. identifying, assembling, organizing and producing, in a responsive and prompt 
manner, all non-privileged, non-attorney work-product documents, information, and other 
materials (including but not limited to providing reports or analyses 
of data concerning 
Respondent's models, credit risk reporting or data systems) to the Commission as requested by 
the Division's staff, wherever located, in the possession, custody, or control 
of the Respondent; 
b. providing declarations authenticating all documents, information, and other 
materials produced to the Commission 
by Respondent upon request by the Division's staff; 
c. providing declarations, upon request by the Division's staff, certifying that 
documents, information, and other materials produced to the Commission 
by Respondent 
comply with Federal Rule 
of Evidence 902(11)(A-C); 
d. providing Federal Rule of Civil Procedure 30(b)(6) witnesses, and authenticating 
documents, for the purpose of establishing the facts set forth in Exhibit A; 
e. using its best efforts to secure the full, truthful, and continuing cooperation, as 
defined in Paragraph 5, ofFannie Mae's current and former board members, officers, employees 
and agents, including making these persons available, when requested to do so by the Division's 
staff, for interviews and the provision 
oftestimony in the investigation, deposition, trial and 
other judicial proceedings in connection with the Proceedings 
or Other Proceedings; 
f. authenticating all documents, information, and other materials identified by the 
Division's staff, to the extent able to do so; 
g. responding to all inquiries, when requested to do so by the Division's staff, in 
connection with the Proceedings or Other Proceedings; 
h. producing to the Commission, in a responsive and prompt manner, any 
documents, information and materials not previously produced to the Commission that are 
provided formally or informally to any party for use in the Proceedings or Other Proceedings at 
the request 
of such party or otherwise; 
i. notifying the Division's staff, in a prompt manner, ofthe receipt and substance of 
any request for documents, information or materials by a party to the Proceedings or Other 
Proceedings or the scheduling or facilitation 
of interviews or meetings between parties to the 
Proceedings or Other Proceedings (or their counsel) and any 
of Fannie Mae's current and former 
board members, officers, employees and agents in connection with the Proceedings or Other 
Proceedings; 
j. maintaining the confidentiality 
of communications with the Division's staff 
relating to the cooperation required under paragraphs a-i above, and refusing to enter into, not 
entering into, modifying or withdrawing from existing formal or informal joint-defense 
agreements or arrangements with any person relating to the Proceedings or Other Proceedings to 
2 


the extent such agreements limit Respondent's ability to provide or share information with the 
Commission; 
and, 
k. providing appropriate assistance to the Commission to obtain documents or other 
information necessary for the Commission to assess and respond to defenses raised in the 
Proceedings or Other Proceedings. 
5. The full, truthful, and continuing cooperation of each person described in Paragraph 4( e ) 
above will be subject to the procedures and protections 
ofthis Paragraph, and shall include, but 
not be limited to: 
a. producing all non-privileged documents, information, and other materials as 
requested 
by the Division's staff;· 
b. appearing for interviews, at such times and places as requested by the Division's 
staff; 
c. authenticating all documents, information, and other materials identified by the 
Division's staff, to the extent able to do so; 
d. responding to all inquiries, when requested to do so by the Division's staff, in 
connection with the Proceedings or Other Proceedings; 
and, 
e. testifying at deposition, at trial and in other judicial proceedings, when requested 
to do so 
by the Division's staff, in connection with the Proceedings or Other Proceedings. 
STATUTE OF LIMITATIONS 
6. The Respondent agrees that the running of any statute of limitations applicable to any 
action or proceeding against it authorized, instituted, or brought 
by or on behalf of the 
Commission arising out 
of the Investigation (the "Enforcement Proceeding"), including any 
sanctions or relief that 
may be imposed therein, is tolled and suspended during the Cooperation 
Period. 
a. The Respondent and any of its attorneys or agents shall not include the 
Cooperation Period in the calculation 
of the running of any statute of limitations or for any other 
time-related defense applicable to the Enforcement Proceeding, including any sanctions or relief 
that may be imposed therein, in asserting or relying upon any such time-related defense. 
b. This agreement shall not affect any applicable statute 
of limitations defense or any 
other time-related defense that may be available to Respondent before the commencement 
of the 
Cooperation Period or be construed to revive an Enforcement Proceeding that may be barred 
by 
any applicable statute of limitations or any other time-related defense before the commencement 
ofthe Cooperation Period. 
c. The running of any statute of limitations applicable to the Enforcement 
Proceeding shall commence again after the end 
ofthe Cooperation Period, unless there is  an 
extension 
ofthe tolling period executed in writing by or on behalf ofthe parties hereto. 
3 


d. This agreement shall not be construed as an admission by the Commission 
relating to the applicability 
of any statute of limitations to the Enforcement Proceeding, including 
any sanctions or relief that may be imposed therein, or to the length 
of any limitations period that 
may apply, or to the applicability 
of any other time-related defense. 
UNDERTAKINGS 
7. During the Cooperation Period, the Respondent understands and agrees to perform the 
following undertakings: 
a. to provide written notification to the Division, within five days, if it has been 
questioned in the context 
of an investigation, charged, or convicted of an offense related to the 
securities laws 
by any federal, state, or local law enforcement organization or regulatory agency; 
and 
b. to submit a report to the Division detailing its efforts to identify and implement 
improved disclosure procedures since being placed into conservatorship on September 6,2008, 
and, 
if requested, to meet with the Division's staff to discuss the report and its progress with 
respect to its obligations pursuant to this Agreement. 
PUBLIC STATEMENTS 
8. The Respondent agrees not to take any action or to make or permit any public statement 
through present or future attorneys, employees, agents, Or other persons authorized to speak for it 
("Related Person"), except in legal proceedings in which the Commission is  not a party, denying, 
directly or indirectly, any aspect 
of this Agreement or creating the impression that the statements 
in Exhibit A to this Agreement are without factual basis. This paragraph is not intended to apply 
to any statement made by an individual in the course 
of any criminal, civil, or regulatory 
proceeding initiated 
by the government or self-regulatory organization against such individual, 
unless such individual is  speaking on behalf 
of the Respondent. 1 If it is  determined by the 
Commission that a public statement by the Respondent or any Related Person contradicts 
in 
whole or in part this Agreement, at its sole discretion, the Commission may bring an 
enforcement action in accordance with Paragraphs 15 through 18, but only provided that 
Respondent does not cure the statement by promptly making appropriate public statements or 
court filings satisfactory to the Commission after a reasonable opportunity to do so by the 
Commission. 
9. Prior to issuing any press release concerning this Agreement, the Respondent agrees to 
have the text 
of the release approved by the staff of the Division. 
Nothing in this Agreement affects Respondent's and Related Person's (i) testimonial obligations or (ii) right to 
take legal or factual positions in litigation or other legal proceedings in which the Commission is  not a party. 
4 


SERVICE 

10. The Respondent agrees to serve 
by hand delivery or by next-day mail all written notices 
and correspondence required 
by or related to this Agreement to Charles Cain, Assistant Director, 
100 F  Street, N.E., Washington, D.C. 20549 
«202) 551-4911), unless otherwise directed in 
writing 
by the staff of the Division. 
VIOLATION OF AGREEMENT 
11. The Respondent understands and agrees that it shall 
be a violation of this Agreement if it 
knowingly provides false or misleading information or materials in connection with the 
Proceedings or 
Other Proceedings. In the event 
of such misconduct, the Division will advise the 
Commission 
of the Respondent's misconduct and may make a criminal referral for providing 
false information (18 U.S.C. 
§ 1001), contempt (18 U.S.c. §§ 401-402) and/or obstructing 
justice (18 U.S.C. § 1503 
et seq.). 
12. The Respondent understands and agrees that should the Division determine that the 
Respondent has failed materially to comply with any term or condition 
of this Agreement, the 
Division will notify the Respondent 
or its counsel of the fact and provide an opportunity for the 
Respondent to make a Wells submission pursuant to the Securities 
Act of 1933 Release No. 
5310. Under these circumstances, the Division may, in its sole discretion and 
not subject to 
judicial review, recommend to the Commission an enforcement action against the Respondent 
for any securities law violations, including, but not limited to, the substantive offenses relating to 
the Investigation. 
13. The Respondent understands and agrees that in any future enforcement action resulting 
from its violation 
of the Agreement, any documents, statements, information, testimony, or 
evidence provided 
by it during the Investigation, Proceedings or Other Proceedings, and any 
leads derived there from, 
may be used against it in future legal proceedings. 
14. In the event it breaches this Agreement, the Respondent agrees not to dispute, contest, or 
contradict the factual statements contained in Exhibit A, or their admissibility, in any future 
Commission enforcement action against it. 
COMPLIANCE WITH AGREEMENT 
15. Subject to the full, truthful, and continuing cooperation 
of the Respondent, as described 
in Paragraphs 4 and 5, and compliance 
by Respondent with all obligations and undertakings in 
this Agreement, the Commission agrees not to bring any enforcement action or proceeding 
against the Respondent arising from the Investigation. This Agreement should not, however, be 
deemed to exonerate the Respondent 
or be construed as a finding by the Commission that 
violations 
of the federal securities laws have not occurred. 
16. The Respondent understands and agrees that this Agreement does 
not bind other U.S. 
federal, state or self-regulatory organizations, 
but the Commission may, at its discretion, issue a 
letter to these organizations detailing the fact, manner, and extent 
of its cooperation during the 
Proceedings 
or Other Proceedings, upon the written request of the Respondent. 
5 


17. The Respondent understands and agrees that if it sells, merges, or transfers all or 
substantially all 
of its business operations as they exist as of the date of this Agreement, whether 
such a sale is  structured as a stock or asset sale, merger, or transfer during the Cooperation 
Period, it shall include in any contract for sale, merger, or transfer a provision binding the 
purchaser or successor in interest 
to the obligations set forth in this Agreement. 
18. The Respondent understands and agrees that the Agreement only provides protection 
against enforcement actions arising from the Investigation and does not relate to any other 
violations, or 
to any individual or entity other than the Respondent. 
VOLUNTARY AGREEMENT 
19. The Respondent's decision to enter into this Agreement is  freely and voluntarily made 
and is not the result 
of force, threats, assurances, promises, or representations other than those 
contained in this Agreement. 
20. The Respondent has read and understands this Agreement. Furthermore, the Respondent 
has reviewed all legal and factual aspects 
of this matter with its attorney and is fully satisfied 
with its attorney's legal representation. The Respondent has thoroughly reviewed this 
Agreement with its attorney and has received satisfactory explanations concerning each 
paragraph 
ofthe Agreement. After conferring with its attorney and considering all available 
alternatives, the Respondent has made a knowing decision 
to enter into the Agreement. 
21. The Respondent represents that its Board 
of Directors has duly authorized, in the 
resolution attached 
as Exhibit B to this Agreement, the execution and delivery of this Agreement, 
and that the person signing this Agreement has authority to bind the Respondent. 
ENTIRETY 
OF AGREEMENT 
22. This Agreement constitutes the entire agreement between the Commission and the 
Respondent, and supersedes all prior understandings, 
if any, whether oral or written, relating to 
the subject matter herein. 
23. This Agreement cannot be modified except in writing, signed by the Respondent and 
an 
authorized representative of the Commission. 
24. This agreement may be executed in counterparts. 
6 


25. In the event an ambiguity or a question of intent or interpretation arises, this Agreement 
shall be construed 
as if drafted jointly by the parties hereto, and no presumption or burden of 
proof shall arise favoring or disfavoring the Commission or the Respondent by virtue of the 
authorship 
of any of the provisions of the Agreement. 
The signatories below acknowledge acceptance 
of the foregoing terms and conditions. 
RESPONDENT: 
011 
3900 Wisconsin Avenue NW 
Washington, DC 
20016 
,Fannie Mae 
Attached hereto is  the Certificate of the Secretary to the Board of Directors of Federal National 
Mortgage Association, certifying that Michael 
J. Williams is, and at the time of the signing and 
delivery 
of the Agreement was, the duly appointed, qualified and acting Chief Executive Officer 
of Fannie Mae and duly authorized to execute the Agreement on behalf of Fannie Mae, and that 
the signature of Michael 1. Williams appearing on the Agreement is  his genuine signature. 
RESPONDENT'S COUNSEL: 
Approved as to form: 
1875 Pennsylvania Avenue 
NW 
Washington, D.C. 20006 
SECURITIES AND EXCHANGE COMMISSION 
DIVISION OF ENFORCEMENT: 
Director, Enforcement Division 
United States Securities and Exchange 
Commission 
100 F Street, N.E. 
Washington, D.C. 20549 
7 


EXHIBIT A 

STATEMENT OF FACTS 
Fannie Mae 
1. 	Federal National Mortgage Association ("Fannie Mae") is a government-sponsored 
enterprise that was chartered 
by Congress in 1938 to support liquidity, stability and 
affordability in the secondary mortgage market, where existing mortgage-related assets 
are purchased and sold. Fannie Mae provides market liquidity 
by securitizing mortgage 
loans originated 
by lenders in the primary mortgage market into Fannie Mae mortgage­
backed securities ("MBS"), known as Fannie 
Mae MBS, and purchasing mortgage loans 
and mortgage-related securities in the secondary market for its mortgage portfolio. 
In or 
about February 2008, Fannie Mae began reporting billion-dollar credit losses resulting 
from its portfolio 
of mortgage-related assets and guaranty contracts. For the period 
January 
1, 2007 through March 31, 2011, Fannie Mae reported cumulative net losses of 
$153.2 billion. 
2. 	From 1992 until July 
30,2008, Fannie Mae's primary regulator was the Office of Federal 
Housing Enterprise Oversight ("OFHEO"). 
3. 	On July 
30,2008, when the President signed into law the Housing and Economic 
Recovery Act 
of2008, the Federal Housing Finance Agency ("FHFA") became Fannie 
Mae's primary regulator. On September 6, 2008, FHF A placed Fannie Mae into 
conservatorship, and as conservator succeeded to all rights, titles, powers and privileges 
of Fannie Mae, its shareholders, and the officers or directors of Fannie Mae with respect 
to the company and its assets. 
4. 	On July 
8, 2010, Fannie Mae's common stock was delisted from the New York Stock 
Exchange and the Chicago Stock Exchange. Fannie 
Mae's common stock currently is 
traded in the over-the-counter market and quoted on the OTC Bulletin Board under the 
ticker symbol "FNMA." Fannie 
Mae's debt securities are actively traded in the over-the­
counter market. 
5. 	From December 6, 2006 through November 10,2008 (the "Relevant Period"), Fannie 
Mae provided mortgage credit risk disclosures in its periodic filings and other filings with 
the Securities and Exchange Commission (the "Commission") relating to Fannie 
Mae's 
single-family mortgage credit book ofbusiness, which consisted of whole single-family 
mortgage loans and Fannie Mae MBS backed 
by single-family mortgage loans (whether 
held in its portfolio or 
by third parties). 
6. 	During the Relevant Period, Fannie Mae provided disclosures regarding its exposure to 
Alt-A and subprime mortgage loans in its single-family mortgage credit book 
ofbusiness. 
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Subprime Disclosures 
7. 	On February 27,2007 Fannie Mae provided its first public quantitative disclosure of its 
exposure to subprime mortgage loans in a  12b-25 filing with the Commission (the 
"February 2007 12b-25 Filing"). 
8. 	The February 2007 12b-25 Filing stated that "[a]lthough there is  no uniform definition 
for sUb-prime and Alt-A loans across the mortgage industry, Alt-A loans are generally 
defined 
as loans with lower or alternative documentation requirements, while sUb-prime 
loans typically are made to borrowers with weaker credit histories." The February 2007 
12b-25 Filing further stated: 
• 	
"We estimate that approximately 0.2% of our single-family mortgage 
credit book 
ofbusiness as of December 31, 2006 consisted of sub-prime 
mortgage loans or structured Fannie Mae MBS backed 
by sub-prime 
mortgage loans." 
• 	
"We estimate that approximately 2% of our single-family mortgage credit 
book 
ofbusiness as of December 31, 2006 consisted ofprivate-label 
mortgage-related securities backed 
by sub-prime mortgage loans and, to a 
lesser extent, resecuritizations 
ofprivate-label mortgage-related securities 
backed 
by sub-prime mortgage loans." 
9. 	During the Relevant Period, one of Fannie Mae's primary mortgage loan products 
targeted towards borrowers with weaker credit histories was called Expanded 
ApprovaVTimely Payment Rewards ("EA"). As 
of December 31, 2006, the percentage 
ofEA loans held on Fannie Mae' book ofbusiness was 1.8%. 
10. The Unpaid Principal Balance ("UPB") ofEA loans owned or securitized by Fannie Mae 
in its single-family mortgage credit book 
ofbusiness was $39.7 billion as of December 
31,2005, $43.3 billion as ofDecember 31,2006, and $55.6 billion as of December 31, 
2007. The UPB 
ofloans Fannie Mae classified and disclosed as subprime, which it 
owned or securitized in its single-family mortgage credit book 
ofbusiness, was $2.3 
billion as 
of December 31,2005, $4.8 billion as of December 31,2006, and $8.3 billion 
as 
of December 31,2007. In addition to EA, Fannie Mae had other mortgage loan 
programs, such as 
My Community Mortgage ("MCM") that served low-to-moderate 
income borrowers, including borrowers with weaker credit histories. 
11. In anticipation of communications with investors in March, 2004, Fannie Mae's then­
Chief Executive Officer ("CEO") received a document listing questions and answers 
("Q&A") relating to Fannie 
Mae's business. That document stated in part: " .... 
Delinquencies in the subprime market have been rising. What is Fannie Mae's exposure 
to subprime loans? Does subprime include Alt-A loans? ANSWER 
[:] Our strong risk 
management tools and practices have enabled expansion 
of Fannie Mae's product 
offerings to include products targeted to borrowers with minor credit blemishes. The 
most notable product line for reaching these borrowers, Expanded Approval with Timely 
2 


Payment Rewards, has grown in volume but represents less than two percent of Single 
Family credit portfolio." Further, in March of2005, Fannie Mae's CEO was provided 
with a Q&A that stated in part: " 
.... Delinquencies in the subprime market have been 
rising. What is  Fannie 
Mae's exposure to subprime loans? Does subprime include Alt-A 
loans? ANSWER 
[:] Fannie Mae's subprime exposure primarily consists of our own 
product line for serving credit-impaired 
borrowers-the Expanded Approval with Timely 
Payment Rewards product, and mortgage related securities backed by subprime loans that 
we hold in our mortgage portfolio ... " 
12. Prior to the February 2007 12b-25 Filing, in April 2005 and April 2006, in response to 
requests for information on Fannie Mae single-family subprime loans, Fannie Mae 
provided OFHEO with data and information on mortgage loan purchases and mortgage 
loan securities under its EA program and described the EA loans as its "most significant 
initiative to serve credit-impaired borrowers." 
13. EA loans were not included in Fannie 
Mae's calculation or quantification of its subprime 
mortgage loans or other subprime exposure set forth in Fannie 
Mae's February 2007 12b­
25 Filing. 
14. In its February 2007 12b-25 Filing, Fannie Mae publicly disclosed that its subprime 
exposure as 
of December 31, 2006 was approximately 2.2% of its single-family mortgage 
credit book 
of business, of which approximately 0.2% ($4.8 billion) consisted of 
subprime mortgage loans or structured Fannie Mae MBS backed by subprime mortgage 
loans. Fannie 
Mae's exposure to EA loans in its single-family mortgage credit book of 
business was approximately $43.3 billion as of December 31, 2006. 
15. During the Relevant Period, Fannie Mae tracked the serious delinquency rate ("SDQ 
Rate") 
of its mortgage loan products in order to measure the credit risk of its loan 
portfolio. Fannie Mae defined SDQ 
as a loan that is  90 days or more past due and loans 
that are in the process 
of foreclosure. Generally, the higher the SDQ Rate of loans, the 
higher the credit risk 
of those loans. As Fannie Mae stated in its 2004 Form 10-K: "The 
SDQ is  an indicator 
of potential future foreclosures, although most loan that become 
seriously delinquent do not result in foreclosure. The rate at which new loans become 
seriously delinquent and the rate at which existing seriously delinquent loans are resolved 
significantly affect the level 
of future credit losses." 
16. Internal reports show that Fannie Mae's publicly disclosed subprime loans had an SDQ 
rate 
of 4.72% as of December 31, 2006, and Fannie Mae's EA loans had an SDQ rate of 
5.57% as of December 31,2006. 
17. During the Relevant Period, information described in paragraphs 7-16 above was 
provided and/or available to senior executives, including Fannie Mae's CEO, Fannie 
Mae's Executive Vice President for its Single Family business ("Single Family EVP"), 
and its Chief Risk Officer ("CRO") through internal reports, presentations, and briefings. 
3 


18. The CEO, the Single Family EVP and the CRO each reviewed and approved the 
February 2007 12b-25 Filing. 
19. On May 
2,2007, Fannie Mae filed its 2005 Form 10-K with the Commission (the "May 
2,2007 10-K Filing"). This filing stated "'Subprime mortgage' generally refers to a 
mortgage loan made to a borrower with a weaker credit profile than that 
of a prime 
borrower. As a result 
ofthe weaker credit profile, subprime borrowers have a higher 
likelihood 
of default than prime borrowers. Subprime mortgage loans are often originated 
by lenders specializing in this type 
ofbusiness, using processes unique to subprime loans. 
In reporting our subprime exposure, we have classified mortgage loans as subprime if the 
mortgage loans are originated 
by one of these specialty lenders or, for the original or 
resecuritized private-label, mortgage-related securities that we hold in our portfolio, 
if the 
securities were labeled as subprime when sold." 
20. 
In the May 2,2007 10-K Filing, Fannie Mae also stated that "subprime loans represented 
approximately 2.2% 
of our single-family mortgage credit book of business as of 
December 31,2006, of which approximately 0.2% consisted of sub prime mortgage loans 
or structured Fannie Mae MBS backed 
by subprime mortgage loans and approximately 
2% consisted 
of private-label mortgage-related securities backed by subprime mortgage 
loans and, to a lesser extent, resecuritizations 
ofprivate-label mortgage-related securities 
backed by subprime mortgage loans." 
21. The calculation and quantification 
of Fannie Mae's subprime mortgage loans or other 
subprime exposure set forth in the May 
2,2007 10-K Filing did not include Fannie Mae's 
exposure to EA loans. As 
of December 31, 2006, the percentage of EA loans held on 
Fannie Mae's single-family mortgage credit book 
of business was 1.8%. 
22. During the Relevant Period, the Department 
of Housing and Urban Development 
provided a list 
of lenders specializing in the subprime business (the "HUD Subprime 
Lender List"). As 
of December 31, 2006, the HUD Subprime Lender List consisted of 
210 subprime lenders. 
23. 
In calculating and quantifying its subprime loans and other subprime exposure as 
disclosed in the May 
2,2007 10-K Filing, Fannie Mae did not use the HUD Subprime 
Lender List 
to identify lenders "specializing in this type of business" and included loans 
only from fifteen loan originators. Fannie Mae did not publicly disclose that loans from 
only fifteen originators were considered when calculating its subprime exposure or the 
names 
of those originators. 
24. During the Relevant Period, Fannie Mae purchased and securitized loans from lenders on 
the HUD Subprime Lender List but did not include those loans when calculating or 
quantifying its subprime loans. 
25. On May 2,2007, Fannie 
Mae's CEO certified the May 2,2007 lO-K Filing. The 
certification stated, among other things: 
4 


a. 	[T]his report does not contain any untrue statement of a material fact or omit to state 
a material fact necessary to make the statements made, in light 
of the circumstances 
under which such statements were made, not misleading with respect to the period 
covered 
by this report; and 
b. 	[T]he financial statements, and other financial information included in this report, 
fairly present in all material respects the financial condition, results 
of operations and 
cash flows 
of the registrant as of, and for, the periods presented in this report. 
26. The Single Family EVP and the CRO signed sub-certifications for the May 
2,2007 10-K 
Filing. Those sub-certifications stated, among other things: 
a. 	[T]he Report does not contain any untrue statement 
of a material fact or omit to state 
a material fact necessary to make the statements made, in light 
of the circumstances 
under which such statements were made, not misleading with respect to the periods 
covered 
by the Report. 
b. 	[T]he financial statements, and other financial information included in the Report, 
fairly present in all material respects the financial condition, results 
of operations and 
cash flows 
of the business segments for which I am responsible as of, and for, the 
periods presented in the Report. 
27. On August 16,2007, Fannie Mae provided a virtually identical subprime definition and 
the same subprime quantitative exposure amounts in its 2006 Form 10-K filed with the 
Commission (the "August 2007 10-K Filing") as it  did in its May 
2,2007 10-K Filing. 
28. Fannie 
Mae's calculation and quantification of its subprime loans or other subprime 
exposure set forth in the August 2007 lO-K Filing did not include its 
EA loans. 
29. On August 16,2007, simultaneous with filing its 2006 10-K, Fannie Mae filed an 8-K 
credit supplement (the "August 2007 Credit Supplement Filing"), which disclosed that, 
as 
of June 30, 2007, 1 % of its single family mortgage credit book ofbusiness consisted of 
loans with both a FICO Score below 620 and Original-Loan-To-Value ("OLTV") Greater 
than 90% (the "Low FICOlHigh OLTV Loans"). 
30. As 
of June 30, 2007, only 15.5% ofthe EA loans had both a FICO score below 620 and 
an OLTV greater than 90%. 
31. During the Relevant Period, information described in paragraphs 19-30 was provided 
and/or available to the CEO, the Single Family EVP and the CRO through internal 
reports, presentations, and briefings. 
32. The 
CEO certified the August 2007 lO-K Filing and reviewed and approved the August 
2007 Credit Supplement Filing. The certification was substantially similar to the 
representations set forth above in Paragraph 25. 
33. The Single Family EVP and the CRO sub-certified the August 2007 lO-K Filing. Those 
sub-certifications were substantially similar to the representations set forth above in 
5 

Paragraph 26. The Single Family EVP and the CRO reviewed and approved the August 
2007 Credit Supplement Filing. 
34. On November 
9,2007, Fannie Mae simultaneously filed its first, second, and third 
quarter 2007 Form 10-Q filings with the Commission (the "November 2007 10-Q 
Filings"). 
35. Each 
of the November 2007 10-Q Filings stated: "A subprime mortgage loan generally 
refers to a mortgage loan made to a borrower with a weaker credit profile than that 
of a 
prime borrower. As a result 
of the weaker credit profile, subprime borrowers have a 
higher likelihood 
of default than prime borrowers. Subprime mortgage loans are typically 
originated by lenders specializing in this type ofbusiness or by subprime divisions of 
large lenders, using processes unique to subprime loans. In reporting our subprime 
exposure, we have classified mortgage loans as subprime 
if the mortgage loans are 
originated 
by one of these specialty lenders or a subprime division of a large lender." 
36. During the Relevant Period, Fannie Mae did not keep separate statistical reports or 
otherwise track loans made 
by the subprime division of originators. It therefore could not 
quantify the number of loans it acquired or securitized that were originated by the 
subprime division of a large lender. 
37. Throughout most 
ofthe Relevant Period, Fannie Mae's largest customer was 
Countrywide Financial Corporation. Countrywide's retail subprime lending division was 
known as Full Spectrum Lending. 
38. Records indicate that Fannie Mae purchased or securitized $7.7 billion worth 
ofloans 
originated by Full Spectrum Lending in 2006, $13.2 billion in 2007, and $7.6 billion in 
2008. 
39. During the Relevant Period, Fannie 
Mae purchased or securitized loans from other 
subprime divisions 
of large lenders. 
40. In the November 2007 10-Q Filings, Fannie Mae stated that approximately 0.2% 
of its 
total single-family mortgage credit book 
ofbusiness as of March 31, 2007 and June 30, 
2007 consisted 
of subprime mortgage loans or Fannie Mae MBS backed by subprime 
mortgage loans and that this percentage increased to approximately 0.3% as of 
September 30,2007. Fannie Mae also disclosed that less than 1 % of its single-family 
business volume for the nine months ended September 30, 2007 consisted 
of subprime 
mortgage loans or Fannie Mae MBS backed by subprime mortgage loans. 
41. In Fannie 
Mae's single family mortgage credit book ofbusiness, the dollar amount ofthe 
subprime loans and other subprime exposure as disclosed in each of Fannie Mae's 
February 2007 12b-25 Filing, May 2,2007 lO-K Filing, August 2007 10-K Filing or 
November 2007 10-Q Filings did not exceed $8.3 billion. 
6 


42. Fannie Mae's quantitative subprime disclosure in the November 2007 lO-Q Filings did 
not include its exposure to EA loans. Fannie 
Mae's quantitative exposure to EA loans for 
the periods covered by the Form 10-Qs was at least $43 billion. 
43. On November 
9,2007, Fannie Mae provided disclosure of its exposure to loans that were 
both Low FICOlHigh OLTV in its Form 8-K Credit Supplement that 
it filed concurrent 
with its November 2007 10-Q Filings with the Commission (the "November 2007 8-K 
Filings"). 
44. Fannie 
Mae's calculation and quantification of its exposure to loans that were both Low 
FICO/High OLTV in the November 2007 8-K Filings did not include all of its EA loans. 
45. During the Relevant Period, members 
of Fannie Mae's senior management were provided. 
with information indicating that Fannie Mae purchased and securitized loans from 
subprime divisions 
oflarge lenders such as Countrywide'S Full Spectrum Lending. For 
example, in a February 2007 meeting, the then-CEO received a presentation on the 
volume 
of agency-eligible loans from each of Countrywide'S four lending divisions, 
including Full Spectrum Lending. 
46. The CEO certified the November 2007 10-Q Filings and reviewed and approved the 
November 2007 8-K Filings. The Single Family EVP and the CRO sub-certified the 
November 2007 10-Q Filings. The Single Family EVP and the CRO reviewed and 
approved the November 2007 8-K Filings. 
47. Post-conservatorship, on November 
10,2008, in its third quarter Form 10-Q ("November 
2008 10-Q Filing"), Fannie Mae disclosed for the first time that certain loans with 
features similar to subprime loans were not included in the calculation or quantification 
of Fannie Mae's subprime exposure. The November 2008 10-Q Filing stated in part: 
"We have classified mortgage loans as subprime if the mortgage loan is originated by a 
lender specializing in subprime business or 
by subprime divisions of large lenders. We 
apply these classification criteria in order to determine our ... subprime loan exposures; 
however, we have other loans with some features that are similar 
to ... subprime loans 
that we have not classified as ... subprime because they do not meet our classification 
criteria. " 
48. On February 
24,2011, in its Form 10-K for the fiscal year 2010, Fannie Mae stated for 
the first time: "We exclude from the subprime classification loans originated by these 
lenders 
if we acquired the loans in accordance with our standard underwriting criteria, 
which typically require compliance 
by the seller with our Selling Guide (including 
standard representations and warranties) and/or evaluation 
of the loans through our 
Desktop Underwriter system." 
7 


Alt-A Disclosures 
49. In its February 2007 12b-25 Filing, Fannie Mae stated that Alt-A loans "are generally 
defined 
as loans with lower or alternative documentation requirements." 
50. Prior to May 2, 2007, Fannie Mae did not quantify its exposure to Alt-A loans in its 
public filings with the SEC or in other disclosures provided to investors. 
51. Fannie Mae increased its acquisition 
ofreduced documentation loans in its conventional 
single family mortgage guarantee business from at least 17.8% percent 
of new 
acquisitions in 2004 to at least 27.8% 
ofnew acquisitions in 2006. 
52. From December 
6,2006 through May 31,2008, according to internal Fannie Mae loan 
acquisition data reports, at least 25% 
of Fannie Mae's loan acquisitions in its 
conventional single family mortgage guarantee business were reduced documentation 
loans. 
53. On May 
9,2007, for the first time in a public filing, Fannie Mae quantified its exposure 
to Alt-A loans in a  12b-25 filed with the Commission (the "May 9,2007 12b-25 Filing"). 
54. 
In the May 9,2007 12b-25 Filing, Fannie Mae stated that in reporting "Alt-A exposure, 
we have classified mortgage loans as Alt-A 
ifthe lenders that deliver the mortgage loans 
to us have classified the loans 
as Alt-A based on documentation or other product features, 
or, for the original or resecuritized private-label, mortgage-related securities that we hold 
in our portfolio, 
if the securities were labeled as Alt-A when sold. We estimate that 
approximately 
11 % of our total single-family mortgage credit book of business as ofboth 
March 31, 2007 and December 31, 2006 consisted 
of Alt-A mortgage loans or structured 
Fannie Mae MBS backed by Alt-A mortgage loans." 
55. Fannie Mae had a coding system to identify the loan characteristics for certain mortgages 
("Special Feature Codes"). Loan sellers in the lender channel were instructed 
by Fannie 
Mae to use certain Special Feature Codes in delivering loans to Fannie Mae. Thus, Fannie 
Mae's coding system determined those loans that such sellers classified as Alt-A. 
56. 
In calculating its Alt-A exposure, Fannie Mae excluded what it classified as lender­
selected loans ("Lender-Selected Reduced Documentation Loans"). 
57. During the Relevant Period, Fannie Mae did not publicly disclose that it  excluded 
Lender-Selected Reduced Documentation Loans from its reported Alt-A exposure. 
58. At times during the Relevant Period, Lender-Selected Reduced Documentation Loans 
had an SDQ Rate that was on average 1.4 times higher than Fannie 
Mae's full 
documentation loans with a similar credit risk profile. 
8 

59. As of March 31,2007, at least 17.9% of Fannie Mae's total conventional single-family 
mortgage guarantee business consisted 
of reduced documentation mortgage loans or 
structured Fannie Mae MBS backed 
by reduced documentation mortgage loans. 
60. During the Relevant Period, information described in paragraphs 49-59 was provided 
and/or available to the CEO, the Single Family EVP and the CRO through internal 
reports, presentations, and/or briefings. 
61. Fannie Mae's CEO certified periodic filings during the Relevant Period that included 
Fannie Mae's Alt-A disclosures. Those certifications were substantially similar to the 
representations set forth above in Paragraph 25. 
62. The Single Family EVP and Fannie 
Mae's CRO sub-certified periodic filings during the 
Relevant Period that included Fannie Mae's Alt-A disclosures. Those sub-certifications 
were substantially similar to the representations set forth above in Paragraph 26. 
63. Fannie 
Mae's CEO, its Single Family EVP and its eRO reviewed and approved Alt-A 
disclosures contained in Fannie 
Mae's 12b-25 filings during the Relevant Period. 
64. Post-conservatorship, in its November 2008 lO-Q Filing, Fannie Mae disclosed for the 
first time that it excluded certain loans with features similar to Alt-A loans from its 
calculation and quantification 
of its Alt-A exposure. The November 2008 10-Q Filing 
stated in part: "We have classified mortgage loans as Alt-A 
if the lender that delivers the 
mortgage to us has classified the loans 
as Alt-A based on documentation or other 
features; however, we have other loans with some features that are similar to ... Alt-A 
loans that we have not classified as ... Alt-A because they do not meet our classification 
criteria. 
" 
9 

UNITED STATES OF AMERICA 

SECURITIES AND EXCHANGE COMMISSION 


NON-PROSECUTION AGREEMENT 

1. This agreement arises out of an investigation by the Division of Enforcement (the 
"Division") of the United States Securities and Exchange Commission (the "Commission") into 
possible violations of the federal securities laws by the Federal National Mortgage Association 
(the "Respondent" or "Fannie Mae") and others that occurred in or about December 2006 
through September 6, 2008, arising from, among other things, public statements concerning 
Fannie Mae's exposure to SUbprime and Alt-A mortgages (collectively, the "Investigation"). 
Prior to a public enforcement action being brought by the Commission against Fannie Mae, 
without admitting or denying liability, Respondent has offered to accept responsibility for its 
conduct and to not dispute, contest, or contradict the factual statements set forth in Exhibit A, as 
specifically provided herein. Accordingly, the Commission and the Respondent enter into this 
Non-Prosecution Agreement (the "Agreement"). 

2. The Respondent is a corporation organized and operated under the laws of the United 
States of America, subject to the ongoing supervision of the Federal Housing Finance Agency 
("FHF A"). On September 6, 2008, FHF A placed the Respondent into conservatorship, and as 
conservator, succeeded to all rights, titles, powers and privileges of the Respondent and its 
shareholders, officers, and directors with respect to the Respondent and its assets. As 
conservator, FHF A maintains a continuous on-site presence at the Respondent and provides 
substantial oversight over the Respondent, including, among other things, with respect to its 
corporate governance, regulatory compliance and operations. In addition, the United States 
Treasury has made substantial capital investments in the Respondent and holds senior preferred 
stock, as well as warrants representing an ownership stake of up to 79.9 percent of the 
Respondent's common stock. 

3. In entering into this Agreement, the Commission recognizes the unique circumstances 
presented by the Respondent's current status, including the financial support provided to the 
Respondent by the US. Treasury, the role of another government agency (FHFA) as conservator, 
and the costs that may be imposed on US. taxpayers. Based on these circumstances and in 
consideration of the public interest, subject to the full, truthful, and continuing cooperation of the 
Respondent as described below and its satisfactory performance of all obligations and 
undertakings herein, the Commission and Respondent enter into this Agreement with the terms 
and conditions contained herein. 

COOPERATION 

4. The Respondent agrees to cooperate fully and truthfully in the Investigation and any 
other related enforcement litigation or proceeding to which the Commission is a party (the 
"Proceedings"), without regard to the time period in which the cooperation is required 
("Cooperation Period"). In addition, the Respondent agrees to cooperate fully and truthfully, 
when directed by the Division's staff, in any other related official investigation or proceeding by 
any US. federal agency (the "Other Proceedings"). The Respondent acknowledges and 

1 




understands that its ongoing cooperation with the Commission is an important and material 
factor underlying the Commission's decision to enter into this Agreement. The full, truthful, and 
continuing cooperation of the Respondent shall include, but not be limited to: 

a. identifying, assembling, organizing and producing, in a responsive and prompt 
manner, all non-privileged, non-attorney work-product documents, information, and other 
materials (including but not limited to providing reports or analyses of data concerning 
Respondent's models, credit risk reporting or data systems) to the Commission as requested by 
the Division's staff, wherever located, in the possession, custody, or control of the Respondent; 

b. providing declarations authenticating all documents, information, and other 
materials produced to the Commission by Respondent upon request by the Division's staff; 

c. providing declarations, upon request by the Division's staff, certifying that 
documents, information, and other materials produced to the Commission by Respondent 
comply with Federal Rule of Evidence 902(11)(A-C); 

d. providing Federal Rule of Civil Procedure 30(b)(6) witnesses, and authenticating 
documents, for the purpose of establishing the facts set forth in Exhibit A; 

e. using its best efforts to secure the full, truthful, and continuing cooperation, as 
defined in Paragraph 5, of Fannie Mae's current and former board members, officers, employees 
and agents, including making these persons available, when requested to do so by the Division's 
staff, for interviews and the provision of testimony in the investigation, deposition, trial and 
other judicial proceedings in connection with the Proceedings or Other Proceedings; 

f. authenticating all documents, information, and other materials identified by the 
Division's staff, to the extent able to do so; 

g. responding to all inquiries, when requested to do so by the Division's staff, in 
connection with the Proceedings or Other Proceedings; 

h. producing to the Commission, in a responsive and prompt manner, any 
documents, information and materials not previously produced to the Commission that are 
provided formally or informally to any party for use in the Proceedings or Other Proceedings at 
the request of such party or otherwise; 

i. notifying the Division's staff, in a prompt manner, of the receipt and substance of 
any request for documents, information or materials by a party to the Proceedings or Other 
Proceedings or the scheduling or facilitation of interviews or meetings between parties to the 
Proceedings or Other Proceedings (or their counsel) and any of Fannie Mae's current and former 
board members, officers, employees and agents in connection with the Proceedings or Other 
Proceedings; 

j. maintaining the confidentiality of communications with the Division's staff 
relating to the cooperation required under paragraphs a-i above, and refusing to enter into, not 
entering into, modifying or withdrawing from existing formal or informal joint-defense 
agreements or arrangements with any person relating to the Proceedings or Other Proceedings to 

2 




the extent such agreements limit Respondent's ability to provide or share information with the 
Commission; and, 

k. providing appropriate assistance to the Commission to obtain documents or other 
information necessary for the Commission to assess and respond to defenses raised in the 
Proceedings or Other Proceedings. 

5. The full, truthful, and continuing cooperation of each person described in Paragraph 4( e ) 
above will be subject to the procedures and protections of this Paragraph, and shall include, but 
not be limited to: 

a. producing all non-privileged documents, information, and other materials as 
requested by the Division's staff;· 

b. appearing for interviews, at such times and places as requested by the Division's 
staff; 

c. authenticating all documents, information, and other materials identified by the 
Division's staff, to the extent able to do so; 

d. responding to all inquiries, when requested to do so by the Division's staff, in 
connection with the Proceedings or Other Proceedings; and, 

e. testifying at deposition, at trial and in other judicial proceedings, when requested 
to do so by the Division's staff, in connection with the Proceedings or Other Proceedings. 

STATUTE OF LIMITATIONS 

6. The Respondent agrees that the running of any statute of limitations applicable to any 
action or proceeding against it authorized, instituted, or brought by or on behalf of the 
Commission arising out of the Investigation (the "Enforcement Proceeding"), including any 
sanctions or relief that may be imposed therein, is tolled and suspended during the Cooperation 
Period. 

a. The Respondent and any of its attorneys or agents shall not include the 
Cooperation Period in the calculation of the running of any statute of limitations or for any other 
time-related defense applicable to the Enforcement Proceeding, including any sanctions or relief 
that may be imposed therein, in asserting or relying upon any such time-related defense. 

b. This agreement shall not affect any applicable statute of limitations defense or any 
other time-related defense that may be available to Respondent before the commencement of the 
Cooperation Period or be construed to revive an Enforcement Proceeding that may be barred by 
any applicable statute of limitations or any other time-related defense before the commencement 
of the Cooperation Period. 

c. The running of any statute of limitations applicable to the Enforcement 
Proceeding shall commence again after the end of the Cooperation Period, unless there is an 
extension ofthe tolling period executed in writing by or on behalf of the parties hereto. 

3 




d. This agreement shall not be construed as an admission by the Commission 
relating to the applicability of any statute of limitations to the Enforcement Proceeding, including 
any sanctions or relief that may be imposed therein, or to the length of any limitations period that 
may apply, or to the applicability of any other time-related defense. 

UNDERTAKINGS 

7. During the Cooperation Period, the Respondent understands and agrees to perform the 
following undertakings: 

a. to provide written notification to the Division, within five days, if it has been 
questioned in the context of an investigation, charged, or convicted of an offense related to the 
securities laws by any federal, state, or local law enforcement organization or regulatory agency; 
and 

b. to submit a report to the Division detailing its efforts to identify and implement 
improved disclosure procedures since being placed into conservatorship on September 6,2008, 
and, if requested, to meet with the Division's staff to discuss the report and its progress with 
respect to its obligations pursuant to this Agreement. 

PUBLIC STATEMENTS 

8. The Respondent agrees not to take any action or to make or permit any public statement 
through present or future attorneys, employees, agents, Or other persons authorized to speak for it 
("Related Person"), except in legal proceedings in which the Commission is not a party, denying, 
directly or indirectly, any aspect of this Agreement or creating the impression that the statements 
in Exhibit A to this Agreement are without factual basis. This paragraph is not intended to apply 
to any statement made by an individual in the course of any criminal, civil, or regulatory 
proceeding initiated by the government or self-regulatory organization against such individual, 
unless such individual is speaking on behalf of the Respondent. 1 If it is determined by the 
Commission that a public statement by the Respondent or any Related Person contradicts in 
whole or in part this Agreement, at its sole discretion, the Commission may bring an 
enforcement action in accordance with Paragraphs 15 through 18, but only provided that 
Respondent does not cure the statement by promptly making appropriate public statements or 
court filings satisfactory to the Commission after a reasonable opportunity to do so by the 
Commission. 

9. Prior to issuing any press release concerning this Agreement, the Respondent agrees to 
have the text of the release approved by the staff of the Division. 

Nothing in this Agreement affects Respondent's and Related Person's (i) testimonial obligations or (ii) right to 
take legal or factual positions in litigation or other legal proceedings in which the Commission is not a party. 

4 




SERVICE 


10. The Respondent agrees to serve by hand delivery or by next-day mail all written notices 
and correspondence required by or related to this Agreement to Charles Cain, Assistant Director, 
100 F Street, N.E., Washington, D.C. 20549 «202) 551-4911), unless otherwise directed in 
writing by the staff of the Division. 

VIOLATION OF AGREEMENT 

11. The Respondent understands and agrees that it shall be a violation of this Agreement if it 
knowingly provides false or misleading information or materials in connection with the 
Proceedings or Other Proceedings. In the event of such misconduct, the Division will advise the 
Commission of the Respondent's misconduct and may make a criminal referral for providing 
false information (18 U.S.C. § 1001), contempt (18 U.S.c. §§ 401-402) and/or obstructing 
justice (18 U.S.C. § 1503 et seq.). 

12. The Respondent understands and agrees that should the Division determine that the 
Respondent has failed materially to comply with any term or condition of this Agreement, the 
Division will notify the Respondent or its counsel of the fact and provide an opportunity for the 
Respondent to make a Wells submission pursuant to the Securities Act of 1933 Release No. 
5310. Under these circumstances, the Division may, in its sole discretion and not subject to 
judicial review, recommend to the Commission an enforcement action against the Respondent 
for any securities law violations, including, but not limited to, the substantive offenses relating to 
the Investigation. 

13. The Respondent understands and agrees that in any future enforcement action resulting 
from its violation of the Agreement, any documents, statements, information, testimony, or 
evidence provided by it during the Investigation, Proceedings or Other Proceedings, and any 
leads derived there from, may be used against it in future legal proceedings. 

14. In the event it breaches this Agreement, the Respondent agrees not to dispute, contest, or 
contradict the factual statements contained in Exhibit A, or their admissibility, in any future 
Commission enforcement action against it. 

COMPLIANCE WITH AGREEMENT 

15. Subject to the full, truthful, and continuing cooperation of the Respondent, as described 
in Paragraphs 4 and 5, and compliance by Respondent with all obligations and undertakings in 
this Agreement, the Commission agrees not to bring any enforcement action or proceeding 
against the Respondent arising from the Investigation. This Agreement should not, however, be 
deemed to exonerate the Respondent or be construed as a finding by the Commission that 
violations of the federal securities laws have not occurred. 

16. The Respondent understands and agrees that this Agreement does not bind other U.S. 
federal, state or self-regulatory organizations, but the Commission may, at its discretion, issue a 
letter to these organizations detailing the fact, manner, and extent of its cooperation during the 
Proceedings or Other Proceedings, upon the written request of the Respondent. 

5 




17. The Respondent understands and agrees that if it sells, merges, or transfers all or 
substantially all of its business operations as they exist as of the date of this Agreement, whether 
such a sale is structured as a stock or asset sale, merger, or transfer during the Cooperation 
Period, it shall include in any contract for sale, merger, or transfer a provision binding the 
purchaser or successor in interest to the obligations set forth in this Agreement. 

18. The Respondent understands and agrees that the Agreement only provides protection 
against enforcement actions arising from the Investigation and does not relate to any other 
violations, or to any individual or entity other than the Respondent. 

VOLUNTARY AGREEMENT 

19. The Respondent's decision to enter into this Agreement is freely and voluntarily made 
and is not the result of force, threats, assurances, promises, or representations other than those 
contained in this Agreement. 

20. The Respondent has read and understands this Agreement. Furthermore, the Respondent 
has reviewed all legal and factual aspects of this matter with its attorney and is fully satisfied 
with its attorney's legal representation. The Respondent has thoroughly reviewed this 
Agreement with its attorney and has received satisfactory explanations concerning each 
paragraph of the Agreement. After conferring with its attorney and considering all available 
alternatives, the Respondent has made a knowing decision to enter into the Agreement. 

21. The Respondent represents that its Board of Directors has duly authorized, in the 
resolution attached as Exhibit B to this Agreement, the execution and delivery of this Agreement, 
and that the person signing this Agreement has authority to bind the Respondent. 

ENTIRETY OF AGREEMENT 

22. This Agreement constitutes the entire agreement between the Commission and the 
Respondent, and supersedes all prior understandings, if any, whether oral or written, relating to 
the subject matter herein. 

23. This Agreement cannot be modified except in writing, signed by the Respondent and an 
authorized representative of the Commission. 

24. This agreement may be executed in counterparts. 

6 




25. In the event an ambiguity or a question of intent or interpretation arises, this Agreement 
shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of 
proof shall arise favoring or disfavoring the Commission or the Respondent by virtue of the 
authorship of any of the provisions of the Agreement. 

The signatories below acknowledge acceptance of the foregoing terms and conditions. 

RESPONDENT: 

011 

3900 Wisconsin Avenue NW 
Washington, DC 
20016 

,Fannie Mae 

Attached hereto is the Certificate of the Secretary to the Board of Directors of Federal National 
Mortgage Association, certifying that Michael J. Williams is, and at the time of the signing and 
delivery of the Agreement was, the duly appointed, qualified and acting Chief Executive Officer 
of Fannie Mae and duly authorized to execute the Agreement on behalf of Fannie Mae, and that 
the signature of Michael 1. Williams appearing on the Agreement is his genuine signature. 

RESPONDENT'S COUNSEL: 

Approved as to form: 

1875 Pennsylvania Avenue NW 
Washington, D.C. 20006 

SECURITIES AND EXCHANGE COMMISSION 
DIVISION OF ENFORCEMENT: 

Director, Enforcement Division 
United States Securities and Exchange 
Commission 
100 F Street, N.E. 
Washington, D.C. 20549 

7 




EXHIBIT A 


STATEMENT OF FACTS 

Fannie Mae 

1. 	 Federal National Mortgage Association ("Fannie Mae") is a government-sponsored 
enterprise that was chartered by Congress in 1938 to support liquidity, stability and 
affordability in the secondary mortgage market, where existing mortgage-related assets 
are purchased and sold. Fannie Mae provides market liquidity by securitizing mortgage 
loans originated by lenders in the primary mortgage market into Fannie Mae mortgage­
backed securities ("MBS"), known as Fannie Mae MBS, and purchasing mortgage loans 
and mortgage-related securities in the secondary market for its mortgage portfolio. In or 
about February 2008, Fannie Mae began reporting billion-dollar credit losses resulting 
from its portfolio of mortgage-related assets and guaranty contracts. For the period 
January 1, 2007 through March 31, 2011, Fannie Mae reported cumulative net losses of 
$153.2 billion. 

2. 	 From 1992 until July 30,2008, Fannie Mae's primary regulator was the Office of Federal 
Housing Enterprise Oversight ("OFHEO"). 

3. 	 On July 30,2008, when the President signed into law the Housing and Economic 
Recovery Act of2008, the Federal Housing Finance Agency ("FHFA") became Fannie 
Mae's primary regulator. On September 6, 2008, FHF A placed Fannie Mae into 
conservatorship, and as conservator succeeded to all rights, titles, powers and privileges 
of Fannie Mae, its shareholders, and the officers or directors of Fannie Mae with respect 
to the company and its assets. 

4. 	 On July 8, 2010, Fannie Mae's common stock was delisted from the New York Stock 
Exchange and the Chicago Stock Exchange. Fannie Mae's common stock currently is 
traded in the over-the-counter market and quoted on the OTC Bulletin Board under the 
ticker symbol "FNMA." Fannie Mae's debt securities are actively traded in the over-the­
counter market. 

5. 	 From December 6, 2006 through November 10,2008 (the "Relevant Period"), Fannie 
Mae provided mortgage credit risk disclosures in its periodic filings and other filings with 
the Securities and Exchange Commission (the "Commission") relating to Fannie Mae's 
single-family mortgage credit book of business, which consisted of whole single-family 
mortgage loans and Fannie Mae MBS backed by single-family mortgage loans (whether 
held in its portfolio or by third parties). 

6. 	 During the Relevant Period, Fannie Mae provided disclosures regarding its exposure to 
Alt-A and subprime mortgage loans in its single-family mortgage credit book of business. 

1 




Subprime Disclosures 

7. 	 On February 27,2007 Fannie Mae provided its first public quantitative disclosure of its 
exposure to subprime mortgage loans in a 12b-25 filing with the Commission (the 
"February 2007 12b-25 Filing"). 

8. 	 The February 2007 12b-25 Filing stated that "[a]lthough there is no uniform definition 
for sUb-prime and Alt-A loans across the mortgage industry, Alt-A loans are generally 
defined as loans with lower or alternative documentation requirements, while sUb-prime 
loans typically are made to borrowers with weaker credit histories." The February 2007 
12b-25 Filing further stated: 

• 	 "We estimate that approximately 0.2% of our single-family mortgage 
credit book of business as of December 31, 2006 consisted of sub-prime 
mortgage loans or structured Fannie Mae MBS backed by sub-prime 
mortgage loans." 

• 	"We estimate that approximately 2% of our single-family mortgage credit 
book of business as of December 31, 2006 consisted of private-label 
mortgage-related securities backed by sub-prime mortgage loans and, to a 
lesser extent, resecuritizations of private-label mortgage-related securities 
backed by sub-prime mortgage loans." 

9. 	 During the Relevant Period, one of Fannie Mae's primary mortgage loan products 
targeted towards borrowers with weaker credit histories was called Expanded 
ApprovaVTimely Payment Rewards ("EA"). As of December 31, 2006, the percentage 
ofEA loans held on Fannie Mae' book of business was 1.8%. 

10. The Unpaid Principal Balance ("UPB") ofEA loans owned or securitized by Fannie Mae 
in its single-family mortgage credit book of business was $39.7 billion as of December 
31,2005, $43.3 billion as ofDecember 31,2006, and $55.6 billion as of December 31, 
2007. The UPB ofloans Fannie Mae classified and disclosed as subprime, which it 
owned or securitized in its single-family mortgage credit book of business, was $2.3 
billion as of December 31,2005, $4.8 billion as of December 31,2006, and $8.3 billion 
as of December 31,2007. In addition to EA, Fannie Mae had other mortgage loan 
programs, such as My Community Mortgage ("MCM") that served low-to-moderate 
income borrowers, including borrowers with weaker credit histories. 

11. In anticipation of communications with investors in March, 2004, Fannie Mae's then­
Chief Executive Officer ("CEO") received a document listing questions and answers 
("Q&A") relating to Fannie Mae's business. That document stated in part: " .... 
Delinquencies in the subprime market have been rising. What is Fannie Mae's exposure 
to subprime loans? Does subprime include Alt-A loans? ANSWER [:] Our strong risk 
management tools and practices have enabled expansion of Fannie Mae's product 
offerings to include products targeted to borrowers with minor credit blemishes. The 
most notable product line for reaching these borrowers, Expanded Approval with Timely 

2 




Payment Rewards, has grown in volume but represents less than two percent of Single 
Family credit portfolio." Further, in March of2005, Fannie Mae's CEO was provided 
with a Q&A that stated in part: " .... Delinquencies in the subprime market have been 
rising. What is Fannie Mae's exposure to subprime loans? Does subprime include Alt-A 
loans? ANSWER [:] Fannie Mae's subprime exposure primarily consists of our own 
product line for serving credit-impaired borrowers-the Expanded Approval with Timely 
Payment Rewards product, and mortgage related securities backed by subprime loans that 
we hold in our mortgage portfolio ... " 

12. Prior to the February 2007 12b-25 Filing, in April 2005 and April 2006, in response to 
requests for information on Fannie Mae single-family subprime loans, Fannie Mae 
provided OFHEO with data and information on mortgage loan purchases and mortgage 
loan securities under its EA program and described the EA loans as its "most significant 
initiative to serve credit-impaired borrowers." 

13. EA loans were not included in Fannie Mae's calculation or quantification of its subprime 
mortgage loans or other subprime exposure set forth in Fannie Mae's February 2007 12b­
25 Filing. 

14. In its February 2007 12b-25 Filing, Fannie Mae publicly disclosed that its subprime 
exposure as of December 31, 2006 was approximately 2.2% of its single-family mortgage 
credit book of business, of which approximately 0.2% ($4.8 billion) consisted of 
subprime mortgage loans or structured Fannie Mae MBS backed by subprime mortgage 
loans. Fannie Mae's exposure to EA loans in its single-family mortgage credit book of 
business was approximately $43.3 billion as of December 31, 2006. 

15. During the Relevant Period, Fannie Mae tracked the serious delinquency rate ("SDQ 
Rate") of its mortgage loan products in order to measure the credit risk of its loan 
portfolio. Fannie Mae defined SDQ as a loan that is 90 days or more past due and loans 
that are in the process of foreclosure. Generally, the higher the SDQ Rate of loans, the 
higher the credit risk of those loans. As Fannie Mae stated in its 2004 Form 10-K: "The 
SDQ is an indicator of potential future foreclosures, although most loan that become 
seriously delinquent do not result in foreclosure. The rate at which new loans become 
seriously delinquent and the rate at which existing seriously delinquent loans are resolved 
significantly affect the level of future credit losses." 

16. Internal reports show that Fannie Mae's publicly disclosed subprime loans had an SDQ 
rate of 4.72% as of December 31, 2006, and Fannie Mae's EA loans had an SDQ rate of 
5.57% as of December 31,2006. 

17. During the Relevant Period, information described in paragraphs 7-16 above was 
provided and/or available to senior executives, including Fannie Mae's CEO, Fannie 
Mae's Executive Vice President for its Single Family business ("Single Family EVP"), 
and its Chief Risk Officer ("CRO") through internal reports, presentations, and briefings. 

3 




18. The CEO, the Single Family EVP and the CRO each reviewed and approved the 
February 2007 12b-25 Filing. 

19. On May 2,2007, Fannie Mae filed its 2005 Form 10-K with the Commission (the "May 
2,2007 10-K Filing"). This filing stated "'Subprime mortgage' generally refers to a 
mortgage loan made to a borrower with a weaker credit profile than that of a prime 
borrower. As a result of the weaker credit profile, subprime borrowers have a higher 
likelihood of default than prime borrowers. Subprime mortgage loans are often originated 
by lenders specializing in this type of business, using processes unique to subprime loans. 
In reporting our subprime exposure, we have classified mortgage loans as subprime if the 
mortgage loans are originated by one of these specialty lenders or, for the original or 
resecuritized private-label, mortgage-related securities that we hold in our portfolio, if the 
securities were labeled as subprime when sold." 

20. In the May 2,2007 10-K Filing, Fannie Mae also stated that "subprime loans represented 
approximately 2.2% of our single-family mortgage credit book of business as of 
December 31,2006, of which approximately 0.2% consisted of sub prime mortgage loans 
or structured Fannie Mae MBS backed by subprime mortgage loans and approximately 
2% consisted of private-label mortgage-related securities backed by subprime mortgage 
loans and, to a lesser extent, resecuritizations ofprivate-label mortgage-related securities 
backed by subprime mortgage loans." 

21. The calculation and quantification of Fannie Mae's subprime mortgage loans or other 
subprime exposure set forth in the May 2,2007 10-K Filing did not include Fannie Mae's 
exposure to EA loans. As of December 31, 2006, the percentage of EA loans held on 
Fannie Mae's single-family mortgage credit book of business was 1.8%. 

22. During the Relevant Period, the Department of Housing and Urban Development 
provided a list of lenders specializing in the subprime business (the "HUD Subprime 
Lender List"). As of December 31, 2006, the HUD Subprime Lender List consisted of 
210 subprime lenders. 

23. In calculating and quantifying its subprime loans and other subprime exposure as 
disclosed in the May 2,2007 10-K Filing, Fannie Mae did not use the HUD Subprime 
Lender List to identify lenders "specializing in this type of business" and included loans 
only from fifteen loan originators. Fannie Mae did not publicly disclose that loans from 
only fifteen originators were considered when calculating its subprime exposure or the 
names of those originators. 

24. During the Relevant Period, Fannie Mae purchased and securitized loans from lenders on 
the HUD Subprime Lender List but did not include those loans when calculating or 
quantifying its subprime loans. 

25. On May 2,2007, Fannie Mae's CEO certified the May 2,2007 lO-K Filing. The 
certification stated, among other things: 

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a. 	 [T]his report does not contain any untrue statement of a material fact or omit to state 
a material fact necessary to make the statements made, in light of the circumstances 
under which such statements were made, not misleading with respect to the period 
covered by this report; and 

b. 	 [T]he financial statements, and other financial information included in this report, 
fairly present in all material respects the financial condition, results of operations and 
cash flows of the registrant as of, and for, the periods presented in this report. 

26. The Single Family EVP and the CRO signed sub-certifications for the May 2,2007 10-K 
Filing. Those sub-certifications stated, among other things: 
a. 	 [T]he Report does not contain any untrue statement of a material fact or omit to state 

a material fact necessary to make the statements made, in light of the circumstances 
under which such statements were made, not misleading with respect to the periods 
covered by the Report. 

b. 	 [T]he financial statements, and other financial information included in the Report, 
fairly present in all material respects the financial condition, results of operations and 
cash flows of the business segments for which I am responsible as of, and for, the 
periods presented in the Report. 

27. On August 16,2007, Fannie Mae provided a virtually identical subprime definition and 
the same subprime quantitative exposure amounts in its 2006 Form 10-K filed with the 
Commission (the "August 2007 10-K Filing") as it did in its May 2,2007 10-K Filing. 

28. Fannie Mae's calculation and quantification of its subprime loans or other subprime 
exposure set forth in the August 2007 lO-K Filing did not include its EA loans. 

29. On August 16,2007, simultaneous with filing its 2006 10-K, Fannie Mae filed an 8-K 
credit supplement (the "August 2007 Credit Supplement Filing"), which disclosed that, as 
of June 30, 2007, 1 % of its single family mortgage credit book of business consisted of 
loans with both a FICO Score below 620 and Original-Loan-To-Value ("OLTV") Greater 
than 90% (the "Low FICOlHigh OLTV Loans"). 

30. As of June 30, 2007, only 15.5% of the EA loans had both a FICO score below 620 and 
an OLTV greater than 90%. 

31. During the Relevant Period, information described in paragraphs 19-30 was provided 
and/or available to the CEO, the Single Family EVP and the CRO through internal 
reports, presentations, and briefings. 

32. The CEO certified the August 2007 lO-K Filing and reviewed and approved the August 
2007 Credit Supplement Filing. The certification was substantially similar to the 
representations set forth above in Paragraph 25. 

33. The Single Family EVP and the CRO sub-certified the August 2007 lO-K Filing. Those 
sub-certifications were substantially similar to the representations set forth above in 

5 



Paragraph 26. The Single Family EVP and the CRO reviewed and approved the August 
2007 Credit Supplement Filing. 

34. On November 9,2007, Fannie Mae simultaneously filed its first, second, and third 
quarter 2007 Form 10-Q filings with the Commission (the "November 2007 10-Q 
Filings"). 

35. Each of the November 2007 10-Q Filings stated: "A subprime mortgage loan generally 
refers to a mortgage loan made to a borrower with a weaker credit profile than that of a 
prime borrower. As a result of the weaker credit profile, subprime borrowers have a 
higher likelihood of default than prime borrowers. Subprime mortgage loans are typically 
originated by lenders specializing in this type of business or by subprime divisions of 
large lenders, using processes unique to subprime loans. In reporting our subprime 
exposure, we have classified mortgage loans as subprime if the mortgage loans are 
originated by one of these specialty lenders or a subprime division of a large lender." 

36. During the Relevant Period, Fannie Mae did not keep separate statistical reports or 
otherwise track loans made by the subprime division of originators. It therefore could not 
quantify the number of loans it acquired or securitized that were originated by the 
subprime division of a large lender. 

37. Throughout most ofthe Relevant Period, Fannie Mae's largest customer was 
Countrywide Financial Corporation. Countrywide's retail subprime lending division was 
known as Full Spectrum Lending. 

38. Records indicate that Fannie Mae purchased or securitized $7.7 billion worth ofloans 
originated by Full Spectrum Lending in 2006, $13.2 billion in 2007, and $7.6 billion in 
2008. 

39. During the Relevant Period, Fannie Mae purchased or securitized loans from other 
subprime divisions of large lenders. 

40. In the November 2007 10-Q Filings, Fannie Mae stated that approximately 0.2% of its 
total single-family mortgage credit book of business as of March 31, 2007 and June 30, 
2007 consisted of subprime mortgage loans or Fannie Mae MBS backed by subprime 
mortgage loans and that this percentage increased to approximately 0.3% as of 
September 30,2007. Fannie Mae also disclosed that less than 1 % of its single-family 
business volume for the nine months ended September 30, 2007 consisted of subprime 
mortgage loans or Fannie Mae MBS backed by subprime mortgage loans. 

41. In Fannie Mae's single family mortgage credit book of business, the dollar amount of the 
subprime loans and other subprime exposure as disclosed in each of Fannie Mae's 
February 2007 12b-25 Filing, May 2,2007 lO-K Filing, August 2007 10-K Filing or 
November 2007 10-Q Filings did not exceed $8.3 billion. 

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42. Fannie Mae's quantitative subprime disclosure in the November 2007 lO-Q Filings did 
not include its exposure to EA loans. Fannie Mae's quantitative exposure to EA loans for 
the periods covered by the Form 10-Qs was at least $43 billion. 

43. On November 9,2007, Fannie Mae provided disclosure of its exposure to loans that were 
both Low FICOlHigh OLTV in its Form 8-K Credit Supplement that it filed concurrent 
with its November 2007 10-Q Filings with the Commission (the "November 2007 8-K 
Filings"). 

44. Fannie Mae's calculation and quantification of its exposure to loans that were both Low 
FICO/High OLTV in the November 2007 8-K Filings did not include all of its EA loans. 

45. During the Relevant Period, members of Fannie Mae's senior management were provided. 
with information indicating that Fannie Mae purchased and securitized loans from 
subprime divisions oflarge lenders such as Countrywide'S Full Spectrum Lending. For 
example, in a February 2007 meeting, the then-CEO received a presentation on the 
volume of agency-eligible loans from each of Countrywide'S four lending divisions, 
including Full Spectrum Lending. 

46. The CEO certified the November 2007 10-Q Filings and reviewed and approved the 
November 2007 8-K Filings. The Single Family EVP and the CRO sub-certified the 
November 2007 10-Q Filings. The Single Family EVP and the CRO reviewed and 
approved the November 2007 8-K Filings. 

47. Post-conservatorship, on November 10,2008, in its third quarter Form 10-Q ("November 
2008 10-Q Filing"), Fannie Mae disclosed for the first time that certain loans with 
features similar to subprime loans were not included in the calculation or quantification 
of Fannie Mae's subprime exposure. The November 2008 10-Q Filing stated in part: 
"We have classified mortgage loans as subprime if the mortgage loan is originated by a 
lender specializing in subprime business or by subprime divisions of large lenders. We 
apply these classification criteria in order to determine our ... subprime loan exposures; 
however, we have other loans with some features that are similar to ... subprime loans 
that we have not classified as ... subprime because they do not meet our classification 
criteria. " 

48. On February 24,2011, in its Form 10-K for the fiscal year 2010, Fannie Mae stated for 
the first time: "We exclude from the subprime classification loans originated by these 
lenders if we acquired the loans in accordance with our standard underwriting criteria, 
which typically require compliance by the seller with our Selling Guide (including 
standard representations and warranties) and/or evaluation of the loans through our 
Desktop Underwriter system." 

7 




Alt-A Disclosures 

49. In its February 2007 12b-25 Filing, Fannie Mae stated that Alt-A loans "are generally 
defined as loans with lower or alternative documentation requirements." 

50. Prior to May 2, 2007, Fannie Mae did not quantify its exposure to Alt-A loans in its 
public filings with the SEC or in other disclosures provided to investors. 

51. Fannie Mae increased its acquisition of reduced documentation loans in its conventional 
single family mortgage guarantee business from at least 17.8% percent of new 
acquisitions in 2004 to at least 27.8% of new acquisitions in 2006. 

52. From December 6,2006 through May 31,2008, according to internal Fannie Mae loan 
acquisition data reports, at least 25% of Fannie Mae's loan acquisitions in its 
conventional single family mortgage guarantee business were reduced documentation 
loans. 

53. On May 9,2007, for the first time in a public filing, Fannie Mae quantified its exposure 
to Alt-A loans in a 12b-25 filed with the Commission (the "May 9,2007 12b-25 Filing"). 

54. In the May 9,2007 12b-25 Filing, Fannie Mae stated that in reporting "Alt-A exposure, 
we have classified mortgage loans as Alt-A if the lenders that deliver the mortgage loans 
to us have classified the loans as Alt-A based on documentation or other product features, 
or, for the original or resecuritized private-label, mortgage-related securities that we hold 
in our portfolio, if the securities were labeled as Alt-A when sold. We estimate that 
approximately 11 % of our total single-family mortgage credit book of business as of both 
March 31, 2007 and December 31, 2006 consisted of Alt-A mortgage loans or structured 
Fannie Mae MBS backed by Alt-A mortgage loans." 

55. Fannie Mae had a coding system to identify the loan characteristics for certain mortgages 
("Special Feature Codes"). Loan sellers in the lender channel were instructed by Fannie 
Mae to use certain Special Feature Codes in delivering loans to Fannie Mae. Thus, Fannie 
Mae's coding system determined those loans that such sellers classified as Alt-A. 

56. In calculating its Alt-A exposure, Fannie Mae excluded what it classified as lender­
selected loans ("Lender-Selected Reduced Documentation Loans"). 

57. During the Relevant Period, Fannie Mae did not publicly disclose that it excluded 
Lender-Selected Reduced Documentation Loans from its reported Alt-A exposure. 

58. At times during the Relevant Period, Lender-Selected Reduced Documentation Loans 
had an SDQ Rate that was on average 1.4 times higher than Fannie Mae's full 
documentation loans with a similar credit risk profile. 

8 



59. As of March 31,2007, at least 17.9% of Fannie Mae's total conventional single-family 
mortgage guarantee business consisted of reduced documentation mortgage loans or 
structured Fannie Mae MBS backed by reduced documentation mortgage loans. 

60. During the Relevant Period, information described in paragraphs 49-59 was provided 
and/or available to the CEO, the Single Family EVP and the CRO through internal 
reports, presentations, and/or briefings. 

61. Fannie Mae's CEO certified periodic filings during the Relevant Period that included 
Fannie Mae's Alt-A disclosures. Those certifications were substantially similar to the 
representations set forth above in Paragraph 25. 

62. The Single Family EVP and Fannie Mae's CRO sub-certified periodic filings during the 
Relevant Period that included Fannie Mae's Alt-A disclosures. Those sub-certifications 
were substantially similar to the representations set forth above in Paragraph 26. 

63. Fannie Mae's CEO, its Single Family EVP and its eRO reviewed and approved Alt-A 
disclosures contained in Fannie Mae's 12b-25 filings during the Relevant Period. 

64. Post-conservatorship, in its November 2008 lO-Q Filing, Fannie Mae disclosed for the 
first time that it excluded certain loans with features similar to Alt-A loans from its 
calculation and quantification of its Alt-A exposure. The November 2008 10-Q Filing 
stated in part: "We have classified mortgage loans as Alt-A if the lender that delivers the 
mortgage to us has classified the loans as Alt-A based on documentation or other 
features; however, we have other loans with some features that are similar to ... Alt-A 
loans that we have not classified as ... Alt-A because they do not meet our classification 
criteria. " 

9