Federal National Mortgage Association Fannie Mae: Form 10-Q for the period ended Mar 31, 2026

You should read this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) in conjunction with our unaudited condensed consolidated financial statements and related notes in this report and the more detailed information in our annual report on Form 10-K for the year ended December 31, 2025 (“2025 Form 10-K”). You can find a “Glossary of Terms Used in This Report” in MD&A in our 2025 Form 10-K.

This report includes forward-looking statements based on management’s current expectations that are subject to significant uncertainties. Future events and our results may differ materially from those reflected in our forward-looking statements due to a variety of factors, including those discussed in “Forward-Looking Statements” and elsewhere in this report and in “Risk Factors” and elsewhere in our 2025 Form 10-K.

About Fannie Mae

Fannie Mae is a leading source of financing for residential mortgages in the United States. We provided $115.8 billion in liquidity to the mortgage market in the first quarter of 2026, which enabled the financing of approximately 385,000 home purchases, refinancings, and rental units.

We are a government-sponsored, stockholder-owned corporation, chartered by Congress to provide liquidity and stability to the U.S. housing market and to promote access to mortgage credit. We primarily do this by buying residential mortgage loans that are originated by lenders. We place these loans into trusts and issue guaranteed mortgage-backed securities (“MBS” or “Fannie Mae MBS”) that global investors buy from us. We do not originate mortgage loans or lend money directly to borrowers.

We provide a guaranty on the MBS that we issue. If a borrower fails to make a payment on a mortgage loan that is included in a Fannie Mae MBS, we pay the shortfall amount to the MBS investor. In exchange for providing this guaranty, we receive a guaranty fee. Guaranty fees are the primary source of our revenues.

Because we assume the credit risk for mortgage loans in our MBS, our earnings are affected by the credit performance of these loans. Credit risk management is therefore key to our business and financial results. To help manage our mortgage credit risk exposure, and in response to capital and other requirements, we transfer some of our credit risk exposure to third parties through credit risk transfer and mortgage insurance. For a discussion of how we manage credit risk, see “MD&A—Single-Family Business—Single-Family Mortgage Credit Risk Management” and “MD&A—Multifamily Business—Multifamily Mortgage Credit Risk Management” in this report and in our 2025 Form 10-K.

We support both single-family and multifamily housing. Our Single-Family business provides financing for properties that have four or fewer residential units. Our Multifamily business provides financing for residential buildings with five or more units. As of December 31, 2025 (the latest date for which information is available), Fannie Mae owned or guaranteed an estimated 24% of single-family mortgage debt outstanding and an estimated 21% of multifamily mortgage debt outstanding in the United States.

We have been in conservatorship since 2008. The Federal Housing Finance Agency (“FHFA”) is our conservator. During conservatorship, our Board has no fiduciary duties to the company or its stockholders, as they owe their fiduciary duties of care and loyalty solely to FHFA as conservator. Since March 17, 2025, the FHFA Director has served as the Chair of our Board, and FHFA’s General Counsel has also served as a member of our Board. Conservatorship and our agreements with the U.S. Department of the Treasury (“Treasury”) significantly restrict our business activities and stockholder rights. For more information about the impact of conservatorship and these agreements on our business, stockholders, and our uncertain future, see “Business—Conservatorship and Treasury Agreements” and “Risk Factors—GSE and Conservatorship Risk” in our 2025 Form 10-K.

Recent Developments

New Credit Score Models

In April 2026, we updated our Selling Guide to allow for two new credit score models—VantageScore® 4.0 and FICO® Score 10T. For additional information on these new models, see “Single-Family Business—Single-Family Mortgage Credit Risk Management—Single-Family Acquisition and Servicing Policies and Underwriting and Servicing Standards—New Credit Score Models.”

MD&A | Recent Developments

Cybersecurity Risks and Risk Management

Recently announced new artificial intelligence (“AI”) models have raised concerns that the new models may significantly increase the ability of cyber threat actors (including the AI itself acting autonomously) to use AI tools to find and exploit cybersecurity vulnerabilities. We are engaging with industry leaders and have established plans to prepare for this heightened cyber risk environment. Notwithstanding our efforts to manage these and other cybersecurity risks, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on our business, including our business strategy, results of operations and financial condition. See “Risk Factors—Operational and Model Risk” in our 2025 Form 10-K for additional discussion of cybersecurity risks to our business.

Financial Results Summary

Please read this summary together with our MD&A, our condensed consolidated financial statements and the accompanying notes included in this report.

• Net income was $3.7 billion for both the first quarter of 2026 and the first quarter of 2025. Net income increased by $59 million from the first quarter of 2025, primarily driven by a $247 million decrease in administrative expenses, a $195 million increase in net revenues and a $121 million decrease in credit enhancement expense, which were mostly offset by a $276 million increase in investment losses and a $253 million increase in provision for credit losses.
• Net revenues totaled $7.3 billion in the first quarter of 2026, up $195 million from the first quarter of 2025, primarily driven by a $120 million increase in net interest income from portfolios and a $76 million increase in net interest income from base guaranty fees.
• Provision for credit losses was $277 million in the first quarter of 2026, consisting of a $103 million single-family provision for credit losses and a $174 million multifamily provision for credit losses. The single-family provision was primarily driven by current-period loan acquisitions and newly delinquent loans, partially offset by a benefit from actual home price growth. The multifamily provision was primarily driven by an increase in loan delinquencies and by weakened property valuations on properties in our multifamily guaranty book of business where foreclosure was probable.
• Non-interest expense was $2.2 billion in the first quarter of 2026, a decrease of $416 million from the first quarter of 2025, primarily due to a $247 million decrease in administrative expenses and a $121 million decrease in credit enhancement expense.
• Net worth increased by $3.7 billion in the first quarter of 2026 to $112.7 billion as of March 31, 2026.

For more information on the drivers of our financial results, see “Consolidated Results of Operations.”

Key Market Economic Indicators

In “MD&A—Key Market Economic Indicators” in our 2025 Form 10-K, we discuss how varying macroeconomic conditions can influence our financial results across different business and economic environments, and we provide forecasts and expectations with respect to some of these macroeconomic conditions. Below we provide an update to these forecasts and expectations, as well as updates to certain macroeconomic information. Our forecasts and

MD&A | Key Market Economic Indicators

expectations are based on many assumptions, subject to many uncertainties and may change, perhaps substantially, from our current forecasts and expectations. See “Risk Factors” in our 2025 Form 10-K and “Forward-Looking Statements” in this report for a discussion of factors that could cause actual results to differ materially from our current forecasts and expectations.

Market Interest Rates

Selected Market Interest Rates

(1) Refers to the U.S. weekly average fixed-rate mortgage rate according to Freddie Mac’s Primary Mortgage Market Survey®. These rates are reported using the latest available data for a given period.

(2) According to Bloomberg.

(3) Refers to the daily rate per the Federal Reserve Bank of New York.

The U.S. weekly average 30-year fixed-rate mortgage rate increased to 6.38% at the end of the first quarter of 2026, compared to 6.15% at the end of the fourth quarter of 2025.

Home Prices

Single-Family Quarterly Home Price Growth (Decline) Rate(1)

(1) Calculated internally using property data on loans purchased by Fannie Mae, Freddie Mac and other third-party home sales data. Fannie Mae’s home price index is a weighted repeat-transactions index, measuring average price changes in repeat sales on the same properties. Fannie Mae’s home price index excludes prices on properties sold in foreclosure. Fannie Mae’s home price growth rates represent estimates based on non-seasonally adjusted preliminary data and are subject to change as additional data becomes available.

We currently estimate home prices on a national basis increased by 1.2% in the first quarter of 2026. We expect home price growth of 3.2% on a national basis in 2026. We also expect regional variation in the timing and rate of home price changes.

MD&A | Key Market Economic Indicators

Economic Activity

GDP and Unemployment Rate

(1) Real GDP growth (decline) is based on the quarterly series calculated by the Bureau of Economic Analysis and is subject to revision.

(2) According to the U.S. Bureau of Labor Statistics and subject to revision.

U.S. gross domestic product (“GDP”) increased by 0.5% in the fourth quarter of 2025. Bureau of Economic Analysis GDP data for the first quarter of 2026 was not available at the time of filing this report. We expect GDP will continue to grow in 2026. The unemployment rate decreased to 4.3% in the first quarter of 2026, compared with 4.4% in the fourth quarter of 2025. We expect the unemployment rate to remain relatively stable in 2026.

The impact of trade, fiscal, monetary, regulatory, and immigration policies is uncertain and could materially impact our outlook for interest rates, home price growth, and economic growth. Our housing and economic outlook also could be affected by the impact of geopolitical events, including the continuation or worsening of the conflict in the Middle East. See “Risk Factors—Credit Risk” and “Risk Factors—Market and Industry Risk” in our 2025 Form 10-K for discussion of risks to our business and financial results associated with interest rates, home prices, economic conditions, and geopolitical events.

Consolidated Results of Operations

This section discusses our condensed consolidated results of operations and should be read together with our condensed consolidated financial statements and the accompanying notes.

Summary of Condensed Consolidated Results of Operations

(Dollars in millions)

(1) Includes net interest income generated by the 10 basis point guaranty fee increase we implemented pursuant to the Temporary Payroll Tax Cut Continuation Act of 2011 (“TCCA”), and as extended by the Infrastructure Investment and Jobs Act, which is paid to Treasury and not retained by us. We refer to this as TCCA fees, or income related to TCCA.

(2) Consists of salaries and employee benefits and professional services, technology and occupancy expenses.

(3) Consists of TCCA fees, affordable housing allocations and FHFA assessments.

(4) Single-family credit enhancement expense consists of costs associated with our freestanding credit enhancements, which primarily include our Connecticut Avenue Securities® (“CAS”) and Credit Insurance Risk Transfer™ (“CIRTTM”) programs, enterprise-paid mortgage insurance (“EPMI”) and certain lender risk-sharing programs. Multifamily credit enhancement expense primarily consists of costs associated with our Multifamily CIRTTM (“MCIRTTM”) and Multifamily Connecticut Avenue Securities® (“MCASTM”) programs as well as amortization expense for certain lender risk-sharing programs. Excludes CAS transactions accounted for as debt instruments and credit risk transfer programs accounted for as derivative instruments.

(5) Primarily consists of foreclosed property income (expense), change in the expected benefits from our freestanding credit enhancements, and gains (losses) from partnership investments.

Net Interest Income

Overview

Our primary source of net interest income is guaranty fees we receive for assuming the credit risk on mortgage loans underlying Fannie Mae MBS held by third parties in our guaranty book of business. We also recognize net interest income on the difference between interest income earned on the assets in our retained mortgage portfolio and our corporate liquidity portfolio (collectively, our “portfolios”) and the interest expense associated with our funding debt. In addition, income or expense from hedge accounting is a component of our net interest income. See “MD&A—Consolidated Results of Operations—Net Interest Income” in our 2025 Form 10-K for more information about the sources of our net interest income.

Components of Net Interest Income

The table below displays the components of our net interest income from our guaranty book of business, from our portfolios, as well as from hedge accounting.

Components of Net Interest Income

(Dollars in millions)

(1) Includes interest income from assets held in our retained mortgage portfolio and our corporate liquidity portfolio, as well as other assets used to support lender liquidity. Also includes interest expense on our funding debt.

(2) For more information about our hedge accounting program, see “Note 9, Derivative Instruments.”

Net interest income increased by $197 million in the first quarter of 2026 compared with the first quarter of 2025 primarily driven by higher net interest income from portfolios and higher base guaranty fee income.

• Higher net interest income from portfolios. Higher net interest income from portfolios in the first quarter of 2026 compared with the first quarter of 2025 was primarily due to a higher average balance outstanding on our retained mortgage portfolio, primarily driven by an increase in our acquisition of agency MBS. This was partially offset by a decrease in net interest income from our corporate liquidity portfolio as we reinvested a portion of these funds into agency MBS. See “Retained Mortgage Portfolio” for more information about our retained mortgage portfolio and “Liquidity and Capital Management—Liquidity Management—Corporate Liquidity Portfolio” for more information about our corporate liquidity portfolio.
• Higher base guaranty fee income. Higher base guaranty fee income in the first quarter of 2026 compared with the first quarter of 2025 was primarily due to an increase in the size of our multifamily guaranty book of business, higher yield maintenance revenue we recognized on the prepayment of multifamily loans, and higher average guaranty fees on our single-family conventional guaranty book of business.

Analysis of Unamortized Deferred Guaranty Fees

The following charts present information about the interest rates of the loans in our single-family conventional guaranty book of business as well as information about our deferred guaranty fees.

As shown in the chart below (on the left), most of our single-family conventional guaranty book of business as of March 31, 2026 had an interest rate lower than the U.S. weekly average 30-year fixed-rate mortgage rate. Per Freddie Mac’s Primary Mortgage Market Survey®, as of March 26, 2026, the U.S. weekly average interest rate for a single-family 30-year fixed-rate mortgage was 6.38%. Accordingly, even if interest rates decline to 5%, most of the borrowers whose mortgage loans are in our single-family conventional guaranty book of business still would not be incentivized to refinance.

The other chart below (on the right) presents guaranty fees that will be amortized into deferred guaranty fee income in future periods, which we refer to as “unamortized deferred guaranty fees,” as described in “MD&A—Consolidated Results of Operations—Net Interest Income—Analysis of Unamortized Deferred Guaranty Fees” in our 2025 Form 10-K.

The amount of deferred guaranty fee income we record can vary and is primarily impacted by: (1) the amount of upfront fees we charge on single-family mortgage loans, (2) changes in interest rates, which affect the premiums and discounts we record on newly acquired mortgage loans and newly created debt of consolidated trusts, and (3) the amount by which premiums and discounts on existing loans and debt of consolidated trust are different compared to newly acquired loans and debt.

Analysis of Net Interest Income

The table below displays an analysis of our net interest income, average balances and related yields earned on assets and incurred on liabilities. For most components of the average balances, we use a daily weighted average of the unpaid principal balance (“UPB”) net of unamortized cost basis adjustments. When daily average balance information is not available, such as for mortgage loans, we use monthly averages.

Analysis of Net Interest Income and Yield(1)

(Dollars in millions)

(1) Includes the effects of discounts, premiums and other cost basis adjustments, including basis adjustments related to hedge accounting.

(2) Average balance includes mortgage loans on nonaccrual status. Interest income includes loan fees of $790 million for the first quarter of 2026, compared with $645 million for the first quarter of 2025. Loan fees primarily consist of yield maintenance revenue we recognized on the prepayment of multifamily mortgage loans and the amortization of upfront cash fees exchanged when we acquire the mortgage loan.

(Provision) Benefit for Credit Losses

The table below presents our single-family and multifamily benefit or provision for credit losses and the change in expected credit enhancement recoveries. The benefit or provision for credit losses includes our benefit or provision for loan losses, advances of pre-foreclosure costs, accrued interest receivable losses, our guaranty loss reserves and credit losses on our available-for-sale (“AFS”) debt securities.

(Provision) Benefit for Credit Losses and Change in Expected Credit Enhancement Recoveries by Segment

(Dollars in millions)

(1) Consists of estimated changes in benefits from our freestanding credit enhancements, which are recognized as a component of “Other income (expense), net” in our condensed consolidated statements of operations and comprehensive income.

Single-Family (Provision) Benefit for Credit Losses

Our single-family provision for credit losses in the first quarter of 2026 was primarily driven by provision associated with loans that we acquired during the period, the majority of which consisted of purchase loans, and by provision from newly delinquent loans, partially offset by a benefit from actual home price growth.

Our single-family provision for credit losses of $24 million in the first quarter of 2025 reflected the impact of economic uncertainty and improvements in actual and forecasted home price growth.

More specifically, the provision from economic uncertainty was offset by a benefit from actual and forecasted home price growth as described below:

• Provision from economic uncertainty. During the first quarter of 2025, the impact of economic uncertainty associated with recent trade and fiscal policies led to market volatility, which increased our estimate for credit losses and resulted in a provision.
• Benefit from actual and forecasted home price growth. During the first quarter of 2025, actual home prices appreciated more than originally projected and our forecast of future home prices also improved.

For further discussion of how our single-family provision is affected by purchase loan acquisitions, loan delinquencies, and home prices, see “MD&A—Consolidated Results of Operations—(Provision) Benefit for Credit Losses” in our 2025 Form 10-K. Additional information on home price growth and our home price forecast is provided in “Key Market Economic Indicators” in this report and in our 2025 Form 10-K. Also see “Critical Accounting Estimates” in this report for further discussion of our home price and interest rate forecasts and their impact on our single-family (provision) benefit for credit losses.

Multifamily (Provision) Benefit for Credit Losses

Our multifamily provision for credit losses in the first quarter of 2026 was primarily driven by an increase in loan delinquencies and by weakened property valuations on properties in our multifamily guaranty book of business where foreclosure was probable.

Our multifamily (provision) benefit for credit losses in the first quarter of 2025 was neutral. Our multifamily allowance for credit losses as of March 31, 2025 included a component related to economic uncertainty, particularly uncertainty related to multifamily property values.

Fair Value Gains (Losses), Net

The estimated fair value of our derivatives, trading securities and other financial instruments carried at fair value may fluctuate substantially from period to period because of changes in interest rates, the yield curve, mortgage and credit spreads and implied volatility, as well as activity related to these financial instruments.

Our hedge accounting program is designed to hedge our exposure to changes in benchmark interest rates, specifically the Secured Overnight Financing Rate (“SOFR”), and cannot be applied to changes in interest rate spreads, convexity, or seasoning (i.e., the effect of financial instruments moving closer to maturity). As a result, our fair value gains and losses after the impact of hedge accounting are impacted by components unrelated to changes in SOFR. See “Note 1, Summary of Significant Accounting Policies—Fair Value Hedge Accounting” in our 2025 Form 10-K for additional information.

The table below displays our fair value gains (losses) both including and excluding the impact of hedge accounting.

Fair Value Gains (Losses), Net

(Dollars in millions)

(1) The “Impact of hedge accounting” reflected in this table shows the net gain or loss from swaps in hedging relationships plus any accrued interest during the applicable periods, which are recognized in “Net interest income.”

In the first quarter of 2026 and 2025, our hedge accounting program largely mitigated the impact of benchmark interest rate-driven fair value movements. The net fair value gains recognized for those periods reflect residual impacts not addressed by hedge accounting. For the first quarter of 2026, the net fair value gains recognized included net gains on mortgage commitment derivatives and mortgage-related securities resulting from the widening of the secondary spread, which is the spread between the 30-year MBS current coupon yield and the 10-year U.S. Treasury rate. For the first quarter of 2025, the net fair value gains recognized included gains on our fixed-rate trading securities.

Investment Gains (Losses), Net

Investment losses, net increased by $276 million in the first quarter of 2026 compared with the first quarter of 2025, primarily driven by debt extinguishment losses in the first quarter of 2026 resulting from our acquisitions of Fannie Mae MBS for our retained mortgage portfolio. See “Note 1, Summary of Significant Accounting Policies—Debt” in our 2025 Form 10-K for more information about how we record debt extinguishment gains or losses.

Administrative Expenses

Administrative expenses decreased by $247 million in the first quarter of 2026 compared with the first quarter of 2025, primarily driven by lower professional services fees, severance costs and employee headcount, and a reduced real-estate footprint.

Legislative Assessments

The table below displays the components of our legislative assessments.

Legislative Assessments

(Dollars in millions)

(1) TCCA fees are expenses recognized as a result of the 10 basis point increase in guaranty fees on all single-family mortgages delivered to us on or after April 1, 2012 pursuant to the Temporary Payroll Tax Cut Continuation Act of 2011 and as extended by the Infrastructure Investment and Jobs Act, which we pay to Treasury.

(2) FHFA assessments are expenses relating to our obligation under the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended (the “GSE Act”), to pay FHFA to cover a portion of its costs, expenses and working capital.

(3) Affordable housing allocations relates to the GSE Act requirement to set aside each year an amount equal to 4.2 basis points of the UPB of our new business purchases and to pay this amount to specified U.S. Department of Housing and Urban Development (“HUD”) and Treasury funds in support of affordable housing. In March 2026, we paid $171 million to the funds based on $408.2 billion new business purchases in 2025. For the first quarter of 2026, we recognized an expense of $49 million related to this obligation based on $115.5 billion in new business purchases during the period. We expect to pay this amount to the funds in 2027, plus additional amounts to be accrued based on our new business purchases in the remaining nine months of 2026.

Credit Enhancement Expense

Credit enhancement expense decreased by $121 million in the first quarter of 2026 compared with first quarter of 2025. This decrease was primarily driven by cancellation fees paid in the first quarter of 2025 to terminate certain single-family lender risk-sharing transactions.

MD&A | Consolidated Balance Sheet Analysis

Consolidated Balance Sheet Analysis

This section discusses our condensed consolidated balance sheets and should be read together with our condensed consolidated financial statements and the accompanying notes.

Summary of Condensed Consolidated Balance Sheets

(Dollars in millions)

Restricted Cash

The increase in restricted cash from December 31, 2025 to March 31, 2026, was primarily driven by an increase in prepayments of loans held in consolidated trusts, resulting in higher cash balances held in trusts at period end. For information on our accounting policy for restricted cash, see “Note 1, Summary of Significant Accounting Policies” in our 2025 Form 10-K.

Securities Purchased Under Agreements to Resell

The decrease in securities purchased under agreements to resell from December 31, 2025 to March 31, 2026, was due to maturities, with proceeds reinvested into agency MBS investments held in our retained mortgage portfolio. See “Liquidity and Capital Management—Liquidity Management—Corporate Liquidity Portfolio” and “Retained Mortgage Portfolio” for additional information.

Investments in Securities, at Fair Value

The primary driver of the increase in investments in securities, at fair value, from December 31, 2025 to March 31, 2026, was the reallocation of investable funds to agency MBS securities held in our retained mortgage portfolio and purchases of U.S. Treasury securities.

Mortgage Loans, Net of Allowance for Loan Losses

The mortgage loans reported in our condensed consolidated balance sheets are classified as either held for sale (“HFS”) or held for investment (“HFI”) and include loans owned by Fannie Mae and loans held in consolidated trusts.

Mortgage loans, net of allowance for loan losses decreased from December 31, 2025 to March 31, 2026, driven primarily by loan paydowns and liquidations outpacing acquisitions during the first quarter of 2026.

MD&A | Consolidated Balance Sheet Analysis

For additional information on our mortgage loans, see “Note 4, Mortgage Loans,” and for additional information on changes in our allowance for loan losses, see “Note 5, Allowance for Credit Losses.”

Debt

The increase in debt of Fannie Mae from December 31, 2025 to March 31, 2026 was primarily driven by long-term debt issuances to replace debt scheduled to mature later in the year and to further enhance our liquidity position by taking advantage of favorable market conditions. The decrease in debt of consolidated trusts from December 31, 2025 to March 31, 2026 was primarily driven by an increase in Fannie Mae MBS held in our retained mortgage portfolio, and liquidations of single-family Fannie Mae MBS outpacing issuances. Purchases of Fannie Mae MBS from consolidated trusts for our retained mortgage portfolio result in the derecognition of related balances in debt of consolidated trusts. See “Liquidity and Capital Management—Liquidity Management—Debt Funding” for a summary of activity in debt of Fannie Mae and information on our outstanding short-term and long-term debt. Also see “Note 8, Short-Term and Long-Term Debt” for additional information on our total outstanding debt.

Retained Mortgage Portfolio

Our retained mortgage portfolio consists of mortgage loans and mortgage-related securities that we own, including Fannie Mae MBS and non-Fannie Mae mortgage-related securities. Assets held by consolidated MBS trusts that back mortgage-related securities owned by third parties are not included in our retained mortgage portfolio.

We classify our retained mortgage portfolio into three categories:

• Agency MBS investments and lender liquidity includes balances related to agency MBS that we have purchased for investment purposes as well as balances related to our portfolio securitization activity, which supports our efforts to provide liquidity to the single-family and multifamily mortgage markets.
• Loss mitigation includes delinquent mortgage loans we purchase from our MBS trusts, which enables us to initiate certain loss mitigation efforts.
• Other primarily includes legacy assets that we purchased for investment purposes prior to our entry into conservatorship in 2008.

MD&A | Retained Mortgage Portfolio

The following table displays the components of our retained mortgage portfolio, based on UPB. The presentation of mortgage loans and mortgage-related securities in our condensed consolidated balance sheets is dependent upon the nature of the asset. For mortgage-related securities, purchases of Fannie Mae MBS for our retained mortgage portfolio result in the derecognition of related balances in debt of consolidated trusts, and therefore remain in “Mortgage loans, net of allowance for loan losses,” while purchases of non-Fannie Mae MBS are included in “Investments in securities, at fair value.”

Retained Mortgage Portfolio

(Dollars in millions)

(1) Consists of Fannie Mae, Freddie Mac and Ginnie Mae mortgage-related securities, including Freddie Mac securities guaranteed by Fannie Mae. Excludes Fannie Mae and Ginnie Mae reverse mortgage securities and Fannie Mae-wrapped private-label securities.

(2) Includes single-family loans on nonaccrual status of $13.5 billion and $12.7 billion as of March 31, 2026 and December 31, 2025, respectively. Also includes multifamily loans on nonaccrual status of $3.2 billion and $3.0 billion as of March 31, 2026 and December 31, 2025, respectively.

(3) Includes Fannie Mae and Ginnie Mae reverse mortgage securities.

(4) Other mortgage loans primarily includes single-family loans that are not included in the loss mitigation or agency MBS investments and lender liquidity categories and multifamily loans on accrual status. Other mortgage securities primarily includes private-label securities and mortgage revenue bonds.

The retained mortgage portfolio increased $36.3 billion in the first quarter of 2026 to $168.7 billion as of March 31, 2026, primarily driven by an increase in our acquisition of agency MBS for investment purposes following FHFA’s January 2026 increase to our agency MBS investment limit to allow us to further support the secondary mortgage market, while generating viable economic returns. Our agency MBS investments may fluctuate based on market conditions and other purchases for our retained mortgage portfolio, such as purchases of loans from our MBS trusts for loss mitigation purposes and to facilitate lender liquidity, as well as other factors.

The amount of mortgage assets that we may own is capped at $225 billion under the terms of our senior preferred stock purchase agreement with Treasury. We are also subject to specified limitations on the composition of our retained mortgage portfolio pursuant to FHFA guidance, which are described in “MD&A—Retained Mortgage Portfolio” in our 2025 Form 10-K.

We include 10% of the notional value of the interest-only securities we hold in calculating the size of the retained mortgage portfolio for the purpose of determining compliance with the senior preferred stock purchase agreement mortgage assets cap and associated FHFA instructions. As of March 31, 2026, 10% of the notional value of our interest-only securities was $2.2 billion, which is not included in the table above.

Under the terms of our MBS trust documents, we have the option or, in some instances, the obligation, to purchase mortgage loans that meet specific criteria from an MBS trust. FHFA has also provided us with instruction on our single-family delinquent loan buyout policy. The purchase price for these loans is the UPB of the loans plus accrued interest. In support of our loss mitigation strategies, we purchased $4.0 billion of loans from our single-family MBS trusts in the first quarter of 2026, the substantial majority of which were delinquent, compared with $3.6 billion of loans in the first quarter of 2025.

MD&A | Guaranty Book of Business

Guaranty Book of Business

When we securitize mortgage loans originated by lenders into Fannie Mae mortgage-backed securities, we issue guarantees, assuming the credit risk for those mortgage loans. Our guaranty book of business offers insight into both the guarantees we’ve issued and the credit risk of the loans we’ve acquired that back our MBS outstanding or that are held in our retained mortgage portfolio.

Our “guaranty book of business” consists of: (1) Fannie Mae MBS outstanding, excluding the portions of any structured securities we issue that are backed by Freddie Mac securities, (2) mortgage loans of Fannie Mae held in our retained mortgage portfolio, and (3) other credit enhancements that we provide on mortgage assets. These components are categorized as either conventional or government based on whether the underlying mortgage loans or securities are fully or partially guaranteed or insured by the U.S. government (referred to as “government”) or are not fully or partially guaranteed or insured by the U.S. government (referred to as “conventional”).

We use the term “Fannie Mae MBS” or “our MBS” to refer to any type of mortgage-backed security that we issue, including Fannie Mae-issued uniform mortgage-backed securities, or “UMBS®,” and structured securities such as Supers® and Real Estate Mortgage Investment Conduit securities (“REMICs”).

We and Freddie Mac each issue single-family UMBS. In some instances, our MBS are resecuritizations of securities backed in whole or in part by Freddie Mac-issued UMBS, in which case our guaranty extends to the underlying Freddie Mac securities, shown as “Freddie Mac securities guaranteed by Fannie Mae” in the table below. The Freddie Mac securities guaranteed by Fannie Mae are excluded from our “guaranty book of business” because Freddie Mac continues to guarantee the payment of principal and interest on the underlying Freddie Mac securities, but included in “Total Fannie Mae guarantees” as presented in the table below.

We present our guaranty book of business in this section and in our Monthly Summary reports available on our website based on the UPB of our MBS outstanding. In the “Single-Family Business” and “Multifamily Business” sections, we present our single-family conventional guaranty book of business and our multifamily guaranty book of business based on the UPB of mortgage loans underlying our MBS. The difference between these two measures, which is generally less than 1%, is primarily the result of payments we receive on underlying loans that have not yet been paid to the MBS holders or instances where we have advanced missed borrower payments on mortgage loans to make required distributions to MBS holders. Using these two presentations allows us to base the disclosure in this section and in our Monthly Summary reports on the MBS measurement, and disclosures about the composition of loans in our guaranty book of business on the loan measurement.

The table below displays the composition of our guaranty book of business and our total Fannie Mae guarantees based on UPB.

Composition of Fannie Mae Guaranty Book of Business

(Dollars in millions)

(1) Represents the UPB of Freddie Mac-issued UMBS backing Fannie Mae-issued Supers and REMICs. Because we do not have the power to direct matters (primarily the servicing of mortgage loans) that impact the credit risk to which we are exposed, which constitute control of these securitization trusts, we do not consolidate these trusts in our condensed consolidated balance sheets, giving rise to off-balance sheet exposure. See “Liquidity and Capital Management—Liquidity Management—Off-Balance Sheet Arrangements” and “Note 7, Financial Guarantees” for more information regarding our maximum exposure to loss on unconsolidated Fannie Mae MBS and Freddie Mac securities.

MD&A | Business Segments Financial Results

Business Segment Financial Results

We have two reportable business segments: Single-Family and Multifamily. This section discusses the primary components of net income for our Single-Family Business and Multifamily Business segments. This information complements the discussion of our condensed consolidated financial results in “Consolidated Results of Operations.”

Quarterly Business Segment Financial Results(1)

(Dollars in millions)

(1) See “Note 10, Segment Reporting” for information about our segment allocation methodology.

(2) For single-family, includes net interest income generated by the 10 basis point guaranty fee increase we implemented pursuant to the Temporary Payroll Tax Cut Continuation Act of 2011, and as extended by the Infrastructure Investment and Jobs Act, which is paid to Treasury and not retained by us.

(3) Consists of salaries and employee benefits and professional services, technology and occupancy expenses.

(4) For single-family, consists of the portion of our single-family guaranty fees that is paid to Treasury pursuant to the TCCA, affordable housing allocations and FHFA assessments. For multifamily, consists of affordable housing allocations and FHFA assessments.

(5) Single-family credit enhancement expense consists of costs associated with our freestanding credit enhancements, which primarily include our CAS and CIRT programs, enterprise-paid mortgage insurance programs and certain lender risk-sharing programs. Multifamily credit enhancement expense primarily consists of costs associated with our MCIRT and MCAS programs as well as amortization expense for certain lender risk-sharing programs. Excludes CAS transactions accounted for as debt instruments and credit risk transfer programs accounted for as derivative instruments.

(6) Primarily consists of foreclosed property income (expense), change in the expected benefits from our freestanding credit enhancements and gains (losses) from partnership investments.

We highlight below our segment results for net interest income and fair value gains (losses). For discussion of our single-family and multifamily (provision) benefit for credit losses, see “Consolidated Results of Operations—(Provision) Benefit for Credit Losses.” Investment gains (losses), administrative expenses, and credit enhancement expenses within the Single‑Family business represent the substantial majority of our consolidated results. See our “Consolidated Results of Operations” for a discussion of these line items.

MD&A | Business Segments Financial Results

Net Interest Income

(Dollars in millions)

Single-Family

Net interest income increased by $112 million in the first quarter of 2026 compared with the first quarter of 2025, primarily driven by higher net interest income from portfolios and higher base guaranty fee income.

The drivers of net interest income for the Single-Family segment are consistent with the drivers of net interest income in our condensed consolidated statements of operations and comprehensive income. See “Consolidated Results of Operations—Net Interest Income” for more information on the factors that impact our single-family net interest income.

Multifamily

Net interest income increased by $85 million in the first quarter of 2026 compared with the first quarter of 2025, primarily driven by higher guaranty fee income as a result of an increase in the size of our multifamily guaranty book of business and higher yield maintenance income, partially offset by lower average charged guaranty fees.

Fair Value Gains (Losses), Net

(Dollars in millions)

Fair value gains (losses), net in the first quarter of 2026 was primarily driven by activity within our Single-Family segment. See “Consolidated Results of Operations—Fair Value Gains (Losses), Net” for a discussion of our consolidated fair value gains (losses).

Single-Family Business

This section supplements and updates information regarding our Single-Family business segment in our 2025 Form 10-K. See “MD&A—Single-Family Business” in our 2025 Form 10-K for additional information regarding the primary business activities, lenders, investors and competition of our Single-Family business.

Single-Family Mortgage Market

Total housing activity modestly decreased in the first quarter of 2026 compared with the fourth quarter of 2025. Existing single-family home sales averaged 4.04 million units annualized in the first quarter of 2026, compared with 4.16 million units annualized in the fourth quarter of 2025, as reported by the National Association of REALTORS®.

MD&A | Single-Family Business | Single-Family Mortgage Market

According to the April forecast from our Economic and Strategic Research Group, new single-family home sales averaged 652,000 units annualized in the first quarter of 2026, compared with 709,000 units annualized in the fourth quarter of 2025, as reported by the U.S. Census Bureau.

The U.S. weekly average 30-year fixed mortgage rate was 6.38% as of March 26, 2026, compared with 6.15% as of December 31, 2025, and averaged 6.11% in the first quarter of 2026, compared with 6.23% in the fourth quarter of 2025, according to Freddie Mac’s Primary Mortgage Market Survey®.

Single-family mortgage market originations increased from an estimated $371 billion in the first quarter of 2025 to an estimated $533 billion in the first quarter of 2026. According to the April forecast from our Economic and Strategic Research Group, total originations in the U.S. single-family mortgage market in 2026 are forecasted to increase from 2025 levels by approximately 19%, from an estimated $1.96 trillion in 2025 to $2.34 trillion in 2026, and the amount of refinance originations in the U.S. single-family mortgage market are forecasted to increase from an estimated $573 billion in 2025 to $911 billion in 2026. Our Economic and Strategic Research Group’s April forecast is based on data available as of April 13, 2026. See “Key Market Economic Indicators” in our 2025 Form 10-K and this report for additional discussion of how housing activity can affect our financial results and the uncertainties that may affect our forecasts and expectations.

Single-Family Mortgage-Related Securities Issuances Share

Our single-family Fannie Mae MBS issuances were $98.2 billion for the first quarter of 2026, compared with $69.0 billion for the first quarter of 2025. The increase in issuances compared to the first quarter of 2025 was primarily driven by an increase in refinancing activity in the first quarter of 2026, reflecting lower mortgage rates. Based on the latest data available, the charts below display our estimated share of single-family mortgage-related securities issuances as compared with that of our primary competitors for the issuance of single-family mortgage-related securities for the periods indicated.

Single-Family Mortgage-Related Securities Issuances Share

Fannie Mae First Quarter 2026 Form 10-Q 18

MD&A | Single-Family Business | Single-Family Mortgage-Related Securities Issuances Share

Our market share is influenced by various factors, primarily the pricing of single-family loans and the competitive market environment. When making pricing and acquisition decisions for single-family loans, we must consider a mix of often competing factors, such as competitive market dynamics, our capital requirements, our housing mission requirements and UMBS market liquidity objectives. Balancing these considerations can sometimes create challenges that impact our ability to compete effectively in the marketplace. For a discussion of factors that affect or could affect our business, our competitive environment, demand for our MBS, or the liquidity and market value of our MBS, as well as the risks associated with our conservatorship, our higher capital requirements under the enterprise regulatory capital framework relative to that of our primary competitor driven primarily by our larger share of U.S. residential mortgage debt outstanding, our housing mission requirements, the UMBS market and the performance of our MBS, see “Business—Conservatorship and Treasury Agreements,” “Business—Legislation and Regulation,” “Risk Factors” and “MD&A—Single-Family Business—Single-Family Competition” in our 2025 Form 10-K.

Single-Family Business Metrics

Select Business Metrics

The charts below display our average charged guaranty fees, net of TCCA fees, on our single-family conventional guaranty book of business and on new single-family conventional loan acquisitions, along with our average single-family conventional guaranty book of business and our single-family conventional loan acquisitions for the periods presented.

Select Single-Family Business Metrics(1)

(Dollars in billions)

(1) For information reported in this “Single-Family Business” section, our single-family conventional guaranty book of business is measured using the UPB of our mortgage loans underlying Fannie Mae MBS outstanding.

(2) Excludes the impact of a 10 basis point (“bps”) guaranty fee increase implemented pursuant to the TCCA, the incremental revenue from which is paid to Treasury and not retained by us.

(3) Our single-family conventional guaranty book of business primarily consists of single-family conventional mortgage loans underlying Fannie Mae MBS outstanding. It also includes single-family conventional mortgage loans of Fannie Mae held in our retained mortgage portfolio, and other credit enhancements that we provide on single-family conventional mortgage assets. Our single-family conventional guaranty book of business does not include: (a) mortgage loans guaranteed or insured, in whole or in part, by the U.S. government; (b) Freddie Mac-acquired mortgage loans underlying Freddie Mac-issued UMBS that we have resecuritized; or (c) non-Fannie Mae single-family mortgage-related securities held in our retained mortgage portfolio for which we do not provide a guaranty. Our average single-family conventional guaranty book of business is based on the average of quarter-end balances.

Our single-family conventional loan acquisition volumes increased in the first quarter of 2026 compared with the first quarter of 2025. Lower mortgage rates drove higher refinance acquisitions in the first quarter of 2026. Purchase acquisitions also increased slightly but remained impacted by housing affordability constraints, limited supply, and market competition.

Average charged guaranty fee on newly acquired conventional single-family loans is a metric management uses to measure the amount we earn as compensation for the credit risk we manage and to assess our return. Average charged guaranty fee represents, on an annualized basis, the average of the base guaranty fees charged during the period for our single-family conventional guaranty arrangements, which we receive monthly over the life of the loan, plus the recognition of any upfront cash payments, including loan-level price adjustments, based on an estimated average life at the time of acquisition.

MD&A | Single-Family Business | Single-Family Business Metrics

Our average charged guaranty fee on newly acquired conventional single-family loans, net of TCCA fees, decreased in the first quarter of 2026 compared with the first quarter of 2025, primarily as a result of a shift in the profile of loans we acquired.

Single-Family Mortgage Credit Risk Management

This section updates our discussion of single-family mortgage credit risk management in our 2025 Form 10-K. For additional information on our single-family acquisition and servicing policies, underwriting and servicing standards, quality control process, repurchase requests, and representation and warranty framework, see “MD&A—Single-Family Business—Single-Family Mortgage Credit Risk Management” in our 2025 Form 10-K.

Single-Family Acquisition and Servicing Policies and Underwriting and Servicing Standards

New Credit Score Models

Fannie Mae uses credit scores to provide a foundation for risk-based pricing, and support disclosures to investors. In April 2026, we updated our Selling Guide to allow for two new credit score models—VantageScore® 4.0 and FICO® Score 10T—in addition to the classic FICO® Score from Fair Isaac Corporation that we already use as a credit score model.

VantageScore 4.0 is currently available for loans delivered to Fannie Mae by a limited number of approved lenders. This limited lender rollout is intended to help ensure operational readiness across our systems and the industry before making it broadly available. We plan to make FICO Score 10T available at a later date, with advance notice and implementation guidance to come before launch. We intend to publish on our website additional historical credit score data for loans acquired during specified periods for VantageScore 4.0 and FICO Score 10T in the summer of 2026.

Single-Family Guaranty Book Diversification and Monitoring

The following table displays our single-family conventional business volumes and our single-family conventional guaranty book of business, based on certain key risk characteristics that we use to evaluate the risk profile and credit quality of our single-family loans. For a description of the key risk characteristics of our single-family conventional guaranty book of business, see “MD&A—Single-Family Business—Single-Family Mortgage Credit Risk Management—Single-Family Guaranty Book Diversification and Monitoring—Overview” in our 2025 Form 10-K.

We provide additional information on the credit characteristics of our single-family loans in our quarterly earnings presentations and financial supplements, which we furnish to the Securities and Exchange Commission (the “SEC”) with current reports on Form 8-K and make available on our website. Information in our quarterly earnings presentations and financial supplements is not incorporated by reference into this report.

MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management

Key Risk Characteristics of Single-Family Conventional Business Volume and Guaranty Book of Business(1)

Fannie Mae First Quarter 2026 Form 10-Q 21

MD&A | Single-Family Business | Single-Family Mortgage Credit Risk Management

* Represents less than 0.5% of single-family conventional business volume or guaranty book of business.

(1) Second-lien mortgage loans held by third parties are not reflected in the original LTV or the estimated mark-to-market LTV ratios in this table.

(2) Calculated based on the UPB of single-family loans for each category at time of acquisition.

(3) Calculated based on the aggregate UPB of single-family loans for each category divided by the aggregate UPB of loans in our single-family conventional guaranty book of business as of the end of each period.

(4) The original LTV ratio generally is based on the original UPB of the loan divided by the appraised property value reported to us at the time of acquisition of the loan. Excludes loans for which this information is not readily available.

(5) The aggregate estimated mark-to-market LTV ratio is based on the UPB of the loan as of the end of each reported period divided by the estimated current value of the property, which we calculate using an internal valuation model that estimates periodic changes in home value. Excludes loans for which this information is not readily available.

(6) Loans with unavailable FICO credit scores represent less than 0.5% of single-family conventional business volume or guaranty book of business, and therefore are not presented separately in this table.

(7) Excludes loans for which this information is not readily available.

(8) Long-term fixed-rate consists of mortgage loans with maturities greater than 15 years, while intermediate-term fixed-rate loans have maturities equal to or less than 15 years.

(9) Midwest consists of IL, IN, IA, MI, MN, NE, ND, OH, SD and WI. Northeast consists of CT, DE, ME, MA, NH, NJ, NY, PA, PR, RI, VT and VI. Southeast consists of AL, DC, FL, GA, KY, MD, MS, NC, SC, TN, VA and WV. Southwest consists of AZ, AR, CO, KS, LA, MO, NM, OK, TX and UT. West consists of AK, CA, GU, HI, ID, MT, NV, OR, WA and WY.

The share of our single-family loan acquisitions consisting of refinance loans increased to 44% in the first quarter of 2026 compared with 22% in the first quarter of 2025 driven by lower mortgage rates in the first quarter of 2026. Although the weighted average FICO credit score at origination of the single-family loans we acquired in the first quarter of 2026 remained unchanged from the first quarter of 2025 at 757, the percentage of loans we acquired with FICO credit scores less than 620 increased to 2% of our single-family loan acquisitions in the first quarter of 2026, from less than 0.5% of our first quarter 2025 single-family loan acquisitions, due to our removal of the 620 minimum FICO credit score requirement for loans submitted to Desktop Underwriter® (DU®) effective in November 2025; the minimum credit score requirement was replaced with a minimum credit risk standard based on the credit risk factor evaluation within the DU credit risk assessment.

For a discussion of factors that may impact the volume and credit characteristics of loans we acquire in the future, see “MD&A—Single-Family Business—Single-Family Mortgage Credit Risk Management—Single-Family Guaranty Book Diversification and Monitoring” in our 2025 Form 10-K. In this section of our 2025 Form 10-K, we also provide more information on the credit characteristics of loans in our single-family conventional guaranty book of business, including high-balance loans and adjustable-rate mortgages.

Single-Family Credit Enhancement and Transfer of Mortgage Credit Risk

Our charter generally requires credit enhancement on any single-family conventional mortgage loan that we purchase or securitize if it has an LTV ratio over 80% at the time of acquisition. We generally achieve this through primary mortgage insurance. We also enter into various other types of transactions in which we transfer mortgage credit risk to third parties. For a discussion of our exposure to and management of the counterparty credit risk associated with the providers of these credit enhancements, see “MD&A—Risk Management—Institutional Counterparty Credit Risk Management,” “Note 14, Concentrations of Credit Risk” and “Risk Factors—Credit Risk” in our 2025 Form 10-K.

The table below displays information about loans in our single-family conventional guaranty book of business covered by one or more forms of credit enhancement, including mortgage insurance or a credit risk transfer transaction. The risk in force of our back-end single-family credit risk transfer transactions, which refers to the maximum amount of losses that could be absorbed by credit risk transfer investors, was approximately $38 billion as of March 31, 2026, compared with approximately $39 billion as of December 31, 2025. Our mortgage insurance risk in force, which refers to our maximum potential loss recovery under the applicable mortgage insurance policies in force, was approximately $200 billion as of March 31, 2026, compared with approximately $201 billion as of December 31, 2025.

Single-Family Loans with Credit Enhancement

(Dollars in billions)

See “MD&A—Single-Family Business—Single-Family Credit Enhancement and Transfer of Mortgage Credit Risk" in our 2025 Form 10-K for information about our single-family loans without credit enhancements.

Transfer of Mortgage Credit Risk

In addition to primary mortgage insurance, our Single-Family business has developed other risk-sharing capabilities to transfer portions of our single-family mortgage credit risk to the private market. Our two primary single-family credit risk transfer programs are Connecticut Avenue Securities® (“CAS”) and Credit Insurance Risk Transfer™ (“CIRT™”). For a description of our single-family credit risk transfer transactions, see "MD&A—Single-Family Business—Single-Family Mortgage Credit Risk Management—Single-Family Credit Enhancement and Transfer of Mortgage Credit Risk" in our 2025 Form 10-K.

In the first quarter of 2026, we transferred a portion of the mortgage credit risk on single-family mortgage loans with a UPB of $36.9 billion at the time of the transactions.

We provide a portion of the guaranty fee to investors in our credit risk transfer transactions as compensation for their taking on a share of the credit risk of the related loans. We record the substantial majority of expenses related to our credit risk transfer transactions in “Credit enhancement expense” within our condensed consolidated statements of operations and comprehensive income.

Single-Family Problem Loan Management

Overview

Our problem loan management strategies focus primarily on reducing defaults to avoid losses that would otherwise occur and pursuing foreclosure alternatives to mitigate the severity of the losses we incur. See “MD&A—Single-Family Business—Single-Family Mortgage Credit Risk Management—Single-Family Problem Loan Management” in our 2025 Form 10-K for a discussion of delinquency statistics on our problem loans, efforts undertaken to manage our problem loans, metrics regarding our loan workout activities, real estate owned (“REO”) management and other single-family credit-related information. The discussion below updates some of that information. We also provide ongoing credit performance information on loans underlying single-family Fannie Mae MBS and loans covered by single-family credit risk transfer transactions. For loans backing Fannie Mae MBS, see the “Forbearance and Delinquency Dashboard” available in the MBS section of our Data Dynamics® tool, which is available at www.fanniemae.com/datadynamics (http://www.fanniemae.com/datadynamics). For loans covered by credit risk transfer transactions, see the “Deal Performance Data” report available in the CAS and CIRT sections of the tool. Information on our website is not incorporated into this report. Information in Data Dynamics may differ from similar measures presented in our financial statements and other public disclosures for a variety of reasons, including as a result of variations in the loan population covered, timing differences in reporting and other factors.

Delinquency

The tables below display the delinquency status of loans and changes in the volume of seriously delinquent loans in our single-family conventional guaranty book of business based on the number of loans. Single-family seriously delinquent loans are loans that are 90 days or more past due or in the foreclosure process. Our single-family serious delinquency rate is expressed as a percentage of our single-family conventional guaranty book of business based on loan count. Management monitors the single-family serious delinquency rate as an indicator of potential future credit losses and loss mitigation activities. Serious delinquency rates are reflective of our performance in assessing and managing credit risk associated with single-family loans in our guaranty book of business. A higher serious delinquency rate may result in a higher allowance for loan losses. For information on our single-family serious delinquency rate based on UPB, see "Note 11, Concentrations of Credit Risk—Risk Characteristics of our Guaranty Book of Business—Single-Family Credit Risk Characteristics."

Delinquency Status and Activity of Single-Family Conventional Loans

Our single-family serious delinquency rate remained flat at 0.58% as of March 31, 2026 and December 31, 2025, and continues to remain near historically low levels. Given our expectation of slower home price growth in 2026 and 2027, the credit performance of the loans in our single-family guaranty book of business may decline compared with recent performance, which could lead to higher delinquencies or an increase in our single-family serious delinquency rate. For information about factors that affect our single-family serious delinquency rate, see “MD&A—Single-Family Business—Single-Family Mortgage Credit Risk Management—Single-Family Problem Loan Management” in our 2025 Form 10-K. See “Note 11, Concentrations of Credit Risk” and the table below for additional information on the delinquency status and serious delinquency rates for specified loan categories of our single-family conventional guaranty book of business.

The table below displays the serious delinquency rates for, and the percentage of our seriously delinquent single-family conventional loans represented by, the specified loan categories.

* Represents less than 0.5% of single-family conventional guaranty book of business.

(1) Percentage of book amounts represent the UPB of loans for each category divided by the UPB of our total single-family conventional guaranty book of business.

(2) Calculated based on the number of single-family loans that were seriously delinquent for each category divided by the total number of single-family conventional loans that were seriously delinquent.

(3) The credit-enhanced categories are not mutually exclusive. A loan with primary mortgage insurance that is also covered by a credit risk transfer transaction will be included in both the “Primary MI & other” category and the “Credit risk transfer” category. As a result, the “Credit enhanced” and “Non-credit enhanced” categories do not sum to 100%. The total percentage of our single-family conventional guaranty book of business with some form of credit enhancement as of March 31, 2026 was 46%.

(4) Refers to loans included in an agreement used to reduce credit risk by requiring primary mortgage insurance, collateral, letters of credit, corporate guarantees, or other agreements to provide an entity with some assurance that it will be compensated to some degree in the event of a financial loss. Excludes loans covered by credit risk transfer transactions unless such loans are also covered by primary mortgage insurance.

(5) Refers to loans included in reference pools for credit risk transfer transactions, including loans in these transactions that are also covered by primary mortgage insurance. For CAS and some lender risk-sharing transactions, this represents the outstanding UPB of the underlying loans on the single-family mortgage credit book, not the outstanding reference pool, as of the specified date.

Forbearance Plans and Loan Workouts

As a part of our credit risk management efforts, we offer several types of loss mitigation options to help homeowners stay in their home or to otherwise avoid foreclosure. Loss mitigation options can consist of a forbearance plan or a loan workout. Our loan workouts reflect additional types of home retention solutions that help reinstate loans to current status, including repayment plans, payment deferrals, and loan modifications. Our loan workouts also include foreclosure alternatives, such as short sales and deeds-in-lieu of foreclosure.

As of March 31, 2026, the UPB of single-family loans in forbearance was $6.0 billion, or 0.2% of our single-family conventional guaranty book of business, compared with $7.5 billion, or 0.2% of our single-family conventional guaranty book of business, as of December 31, 2025.

The chart below displays the UPB of our completed single-family loan workouts by type, as well as the number of loan workouts. This table does not include loans in an active forbearance arrangement, trial modifications, and repayment plans that have been initiated but not completed.

Completed Loan Workout Activity

(Dollars in billions)

(1) Excludes approximately 22,300 loans and 24,000 loans in a trial modification period that was not yet complete as of March 31, 2026 and 2025, respectively.

(2) Other was $213 million and $158 million for the first quarter of 2026 and the first quarter of 2025, respectively. Other includes repayment plans and foreclosure alternatives. Repayment plans reflect only those plans associated with loans that were 60 days or more delinquent at the execution of the plan.

Single-Family REO Management

If a loan defaults, we may acquire the property through foreclosure or a deed-in-lieu of foreclosure. The table below displays our REO activity by region. Regional REO acquisition trends generally follow a pattern that is similar to, but lags, that of regional delinquency trends.

Single-Family REO Properties

(1) Consists of held-for sale and held-for-use properties, which are reported in our condensed consolidated balance sheets as a component of “Other assets.”

(2) See footnote 9 to the “Key Risk Characteristics of Single-Family Conventional Business Volume and Guaranty Book of Business” table for states included in each geographic region.

(3) Estimated based on the annualized total number of properties acquired through foreclosure or deeds-in-lieu of foreclosure as a percentage of the total number of loans in our single-family conventional guaranty book of business as of the end of each period.

(4) Calculated as the amount of sale proceeds received on disposition of REO properties during the respective periods, excluding those subject to repurchase requests made to our sellers or servicers, divided by the aggregate UPB of the related loans at the time of foreclosure. Net sales price represents the contract sales price less selling costs for the property and other charges paid by the seller at closing, and excludes the costs associated with any property repairs.

(5) Calculated as the amount of sale proceeds received on disposition of REO properties during the respective periods, excluding those subject to repurchase requests made to our sellers or servicers, divided by the aggregate UPB of the related loans at the time of foreclosure and costs to repair the property. Net sales price represents the contract sales price less selling costs for the property and other charges paid by the seller at closing.

(6) Calculated as the amount of sale proceeds received on properties sold in short sale transactions during the respective periods divided by the aggregate UPB of the related loans. Net sales price includes borrower relocation incentive payments and subordinate lien(s) negotiated payoffs.

The decline in single-family REO properties in the first quarter of 2026 compared with the first quarter of 2025 was primarily due to lower overall REO inventory levels, despite higher REO acquisitions during the period. The increase in REO acquisitions was primarily driven by fewer third-party sales at foreclosure. Properties that are sold to third parties at foreclosure do not enter our REO inventory; therefore, when these sales decrease, it contributes to a higher number of properties entering our REO inventory.

Our REO net sales price to UPB, excluding costs to repair, declined to 103% for the first three months of 2026 compared to 146% for the first three months of 2025, primarily driven by REO properties with higher LTV ratios at foreclosure, resulting in a higher average UPB of the loan relative to the sales price of the REO.

Single-Family Credit Loss Performance Metrics and Loan Sale Performance

The single-family credit loss performance metrics and loan sale performance measures below present information about losses or gains we realized on our single-family loans during the periods presented. For the purposes of our single-family credit loss performance metrics, credit losses or gains represent write-offs net of recoveries on our credit loss reserves as well as foreclosed property income or expense. Our credit loss reserves consists of our allowance for loan losses, accrued interest receivable and our guaranty loss reserves. The amount of these losses or gains in a given period is driven by foreclosures, pre-foreclosure sales, post-foreclosure REO activity, mortgage loan redesignations, and other events that trigger write-offs and recoveries. The single-family credit loss metrics we present are not defined terms and may not be calculated in the same manner as similarly titled measures reported by other companies. Management uses these measures to evaluate the effectiveness of our single-family credit risk management strategies in conjunction with leading indicators such as serious delinquency and forbearance rates, which are potential indicators of future realized single-family credit losses. We believe these measures provide useful information about our single-family credit performance and the factors that impact it.

The table below displays the components of our single-family credit loss performance metrics. Because sales of nonperforming and reperforming loans are a part of our credit loss mitigation strategy, we also provide information in the table below on our loan sale performance through the “Gains (losses) on sales and other valuation adjustments” line item.

Single-Family Credit Loss Performance Metrics and Loan Sale Performance

(Dollars in millions)

(1) Consists of the lower of cost or fair value adjustment at time of redesignation.

(2) Consists of gains or losses realized on the sales of nonperforming and reperforming mortgage loans during the period and temporary lower of cost or market adjustments on HFS loans, which are recognized in “Investment gains (losses), net” in our condensed consolidated statements of operations and comprehensive income.

(3) Calculated based on the annualized amount of “Credit gains (losses)” divided by the average single-family conventional guaranty book of business during the period.

(4) Calculated based on the annualized amount of “Net credit gains (losses), write-offs on redesignations and gains (losses) on sales and other valuation adjustments” divided by the average single-family conventional guaranty book of business during the period.

The main driver of the decline in single-family net credit gains (losses), write-offs on redesignations and gains (losses) on sales and other valuation adjustments from $226 million in net losses in the first quarter of 2025 to $128 million in net losses in the first quarter of 2026 was that we did not redesignate any mortgage loans from HFI to HFS in the first quarter of 2026, while such redesignations in the first quarter of 2025 resulted in $69 million in write-offs.

MD&A | Multifamily Business | Multifamily Mortgage Market

Multifamily Business

This section supplements and updates information regarding our Multifamily business segment in our 2025 Form 10-K. See “MD&A—Multifamily Business” in our 2025 Form 10-K for additional information regarding the primary business activities, lenders, investors and competition of our Multifamily business.

Multifamily Mortgage Market

The multifamily market saw rental demand continue to slow moderately along with continued elevated levels of new supply entering the market in the first quarter of 2026. Continued high interest rates and seasonal trends were associated with a slowdown in multifamily property sales transactions, and multifamily property valuations remained flat year over year.

• Vacancy rates. Based on data from Moody’s Analytics, the national multifamily vacancy rate for institutional investment-type apartment properties increased to 6.8% as of March 31, 2026, compared with 6.7% as of December 31, 2025, and 6.4% as of March 31, 2025. The estimated average national multifamily vacancy rate over the last 15 years was approximately 5.0%.
• Rents. Based on Moody’s Analytics data, effective rents increased 0.6% during the first quarter of 2026, compared to a decrease of 0.8% during the fourth quarter of 2025 and an increase of 0.2% during the first quarter of 2025. Effective rents as of the first quarter of 2026 increased 0.3% from the first quarter of 2025.
• Net absorption. Net absorption, the net change in the total number of occupied multifamily rental units, slowed for the three months ending February 2026, consistent with the increase in vacancy rates. Based on Moody’s Analytics data, net absorption for the December 2025 to February 2026 period declined 59% compared with the comparable period ending February 2025.
• Property sales volumes. Based on preliminary MSCI RCA data, multifamily property sales for the first quarter of 2026 were $32.0 billion, roughly in line with the $31.9 billion volume during the first quarter of 2025, but below the 2015 to 2019 quarterly average level of $35.6 billion.
• Property values. According to data from the MSCI RCA Commercial Property Price Index (“RCA CPPITM”), multifamily property values declined 18.1% from their peak in the second quarter of 2022 to the first quarter of 2026 and remained flat year over year from the first quarter of 2025 to the first quarter of 2026.

We estimate that more than 500,000 multifamily rental units were delivered to the U.S. housing market in 2025, which is above the past 10-year average of 424,000 units delivered annually. Additionally, there were approximately 80,000 units delivered or with expected completions in the first quarter of 2026, with approximately 800,000 additional multifamily rental units underway as of February 2026. Of these, approximately 500,000 units are estimated for delivery in 2026, and the remainder in future years. New supply is expected to slow by the end of 2026.

Vacancy rates and rents are important to loan performance because multifamily loans are generally repaid from the cash flows generated by the underlying property. We expect vacancy rates will decline slightly by the end of 2026, and we expect cumulative rent growth below 2.0% for the year. We also expect slowing household formation, but elevated single-family housing prices in many places continue to push many new households into the rental market and keep a number of tenants renting longer. If job growth slows substantially, lower demand could push up vacancies and limit rent growth potential. The information we provide above on vacancy rates, rents and other market trends are provided on a national basis. Regional market trends may also be important to loan performance.

Property value is important to credit quality because when a multifamily loan matures, a borrower may be required to make up any value shortfalls if the value estimate has declined below the UPB of the loan and the borrower needs new financing for the property. A borrower may default on its loan if the UPB of the loan is significantly higher than the current property value.

Multifamily property capitalization rates, the indicated rate of return on investment for commercial properties sold during the quarter, were estimated at 5.8% in the first quarter of 2026, up modestly from 5.6% in the fourth quarter of 2025, and the average rate of 5.6% for 2025. Multifamily capitalization rates increased substantially between the first quarter of 2022 and the fourth quarter of 2023 but have averaged around 5.6% since then, with the spread between multifamily capitalization rates and 10-year Treasury rates, an important consideration for commercial real estate investors, remaining significantly narrower than the spread that was observed prior to 2022.

MD&A | Multifamily Business | Multifamily Business Metrics

Multifamily Business Metrics

Multifamily New Business Volume

The chart below displays our new multifamily loan acquisitions by UPB and number of units financed.

Multifamily New Business Volume

(Dollars in billions)

(1) Reflects UPB of new multifamily loans securitized or purchased as well as credit enhancements provided during the period. These figures will not agree to Fannie Mae MBS issued during the period, as Fannie Mae MBS issued also include portfolio securitizations and certain conversions that result in a new Fannie Mae MBS issuance without a newly created loan and exclude bond or mortgage loan credit enhancements.

(2) Reflects newly acquired units financed by first liens and excludes manufactured housing rentals.

Multifamily business volumes increased by 45% in the first quarter of 2026 compared with the first quarter of 2025, reflecting higher market activity in the fourth quarter of 2025, which resulted in some business volume committed in the fourth quarter of 2025 being acquired in the first quarter of 2026. For 2026, FHFA has capped our multifamily loan purchases at $88 billion. FHFA has exempted from the volume cap loans financing workforce housing properties meeting specified criteria that preserve long-term affordability for the properties.

Multifamily Guaranty Book of Business and Average Charged Guaranty Fee

The chart below displays the UPB and average charged guaranty fee related to our multifamily guaranty book of business.

Multifamily Guaranty Book of Business and Charged Fee

(Dollars in billions)

(1) Our multifamily guaranty book of business primarily consists of multifamily mortgage loans underlying Fannie Mae MBS outstanding, multifamily mortgage loans of Fannie Mae held in our retained mortgage portfolio, and other credit enhancements that we provide on multifamily mortgage assets. It does not include non-Fannie Mae multifamily mortgage-related securities held in our retained mortgage portfolio for which we do not provide a guaranty.

MD&A | Multifamily Business | Multifamily Business Metrics

Our multifamily guaranty book of business grew to $542.5 billion as of March 31, 2026, an 8% increase from March 31, 2025. The average charged guaranty fee on our multifamily guaranty book of business decreased 3.0 bps as of March 31, 2026 compared with March 31, 2025, due to lower average charged fees on our acquisitions for the twelve months ended March 31, 2026 compared with the existing loans in our multifamily guaranty book of business. For additional information regarding our average charged guaranty fee, see “MD&A—Multifamily Business—Multifamily Business Metrics—Multifamily Guaranty Book of Business and Average Charged Guaranty Fee” in our 2025 Form 10-K.

Multifamily Mortgage Credit Risk Management

This section supplements and updates our discussion of multifamily mortgage credit risk management in our 2025 Form 10-K in “MD&A—Multifamily Business—Multifamily Mortgage Credit Risk Management.” For additional information on the primary components of our strategy for managing multifamily credit risk, the factors that influence the credit risk profile of our multifamily guaranty book of business, our multifamily underwriting standards, our multifamily guaranty book diversification and monitoring, and our transfer of multifamily mortgage credit risk, as well as our reliance on representations from lenders and servicers regarding the accuracy of credit information on loans in our guaranty book of business, see the discussion in our 2025 Form 10-K.

Multifamily Guaranty Book Diversification and Monitoring

The following table displays our multifamily business volumes and our multifamily guaranty book of business, based on certain key risk characteristics that we use to evaluate the risk profile and credit quality of our multifamily loans. For additional information on our multifamily guaranty book diversification and monitoring, see “MD&A—Multifamily Business—Multifamily Mortgage Credit Risk Management—Multifamily Guaranty Book Diversification and Monitoring” in our 2025 Form 10-K.

MD&A | Multifamily Business | Multifamily Mortgage Credit Risk Management

We provide additional information on the credit characteristics of our multifamily loans in our quarterly earnings presentations and financial supplements, which we furnish to the SEC with current reports on Form 8-K and make available on our website. Information in our quarterly earnings presentations and financial supplements is not incorporated by reference into this report.

Key Risk Characteristics of Multifamily Business Volume and Guaranty Book of Business

* Represents less than 0.5% of multifamily business volume or guaranty book of business.

(1) Calculated based on the UPB of multifamily loans for each category divided by the aggregate UPB at time of acquisition, excluding small balance loans which is calculated based on loan count rather than UPB.

(2) Calculated based on the aggregate UPB of multifamily loans for each category divided by the aggregate UPB of loans in our multifamily guaranty book of business as of the end of each period, excluding small balance loans which is calculated based on loan count rather than UPB.

MD&A | Multifamily Business | Multifamily Mortgage Credit Risk Management

(3) For our business volumes, the DSCR is calculated using the actual debt service payments for the loan. For our book of business, our estimates of current DSCRs are based on the latest available income information, including the related debt service covering a 12-month period, from quarterly and annual statements for these properties. When an annual statement is the latest statement available, it is used. When operating statement information is not available, the underwritten DSCR is used. Co-op loans are excluded from this metric.

(4) Consists of mortgage loans that were underwritten with an interest-only term, regardless of whether the loan is currently in its interest-only period.

(5) Represents Multifamily Affordable Housing (“MAH”) loans, which are defined as financing for properties that are under an agreement that provides long-term affordability, such as properties with rent subsidies or income restrictions. MAH loans are included within the asset class categories referenced above.

(6) Small balance loans refer to multifamily loans with an original UPB of up to $9 million. Small balance loans are included within the asset class categories referenced above. We present this metric in the table based on loan count rather than UPB. Small balance loans comprised 10% of our multifamily guaranty book of business as of both March 31, 2026 and December 31, 2025, based on UPB of the loans.

(7) Midwest consists of IL, IN, IA, MI, MN, NE, ND, OH, SD and WI. Northeast consists of CT, DE, ME, MA, NH, NJ, NY, PA, PR, RI, VT and VI. Southeast consists of AL, DC, FL, GA, KY, MD, MS, NC, SC, TN, VA and WV. Southwest consists of AZ, AR, CO, KS, LA, MO, NM, OK, TX and UT. West consists of AK, CA, GU, HI, ID, MT, NV, OR, WA and WY.

Multifamily Transfer of Mortgage Credit Risk

Front-End Credit Risk Sharing

We primarily transfer credit risk on the multifamily loans we guarantee through our Delegated Underwriting and Servicing (“DUS®”) program, which delegates to DUS lenders the ability to underwrite and service multifamily loans, in accordance with our standards and requirements. Loans serviced by DUS lenders and their affiliates represented substantially all of our multifamily guaranty book of business as of March 31, 2026 and December 31, 2025. See “MD&A—Multifamily Business—Multifamily Mortgage Credit Risk Management—Multifamily Transfer of Mortgage Credit Risk” in our 2025 Form 10-K for a description of our DUS program.

Back-End Credit Risk Sharing

To complement our DUS front-end lender-risk sharing program, we also engage in back-end credit risk transfer transactions through our Multifamily CIRTTM (“MCIRTTM”) and Multifamily Connecticut Avenue Securities® (“MCASTM”) programs. Our back-end MCIRT and MCAS credit risk transfer programs transfer a portion of the credit risk associated with a reference pool of multifamily mortgage loans to insurers, reinsurers, or investors.

The table below displays the total UPB of multifamily loans and the percentage of our multifamily guaranty book of business, based on UPB, that is covered by a back-end credit risk transfer transaction. The table does not reflect front-end lender risk-sharing arrangements, as only a small portion of our multifamily guaranty book of business is not covered by these arrangements.

Multifamily Loans in Back-End Credit Risk Transfer Transactions

(Dollars in millions)

Fannie Mae First Quarter 2026 Form 10-Q 34

MD&A | Multifamily Business | Multifamily Mortgage Credit Risk Management

Multifamily Problem Loan Management

Credit Performance Statistics on Multifamily Problem Loans

The percentage of loans in our multifamily guaranty book of business that were criticized was 6% as of both March 31, 2026 and December 31, 2025. The criticized loans category substantially consists of loans classified as “Substandard” and also includes loans classified as “Special Mention” or “Doubtful.” Substandard loans are loans that have a well-defined weakness that could impact their timely full repayment. While the majority of the substandard loans in our multifamily guaranty book of business are currently making timely payments, we continue to monitor the performance of our substandard loan population. For more information on our credit quality indicators, including our population of substandard loans, see “Note 4, Mortgage Loans.”

Our multifamily serious delinquency rate increased to 0.78% as of March 31, 2026, compared with 0.74% as of December 31, 2025, as additional loans became seriously delinquent as a result of sustained market challenges in recent periods. A recent loan modification is expected to result in a decrease in our multifamily serious delinquency rate in April 2026; however, the rate may increase further later in 2026 as market challenges are expected to persist. Our multifamily serious delinquency rate consists of multifamily loans that were 60 days or more past due based on UPB, expressed as a percentage of our multifamily guaranty book of business.

Management monitors the multifamily serious delinquency rate as an indicator of potential future credit losses and loss mitigation activities. Serious delinquency rates are reflective of our performance in assessing and managing credit risk associated with multifamily loans in our guaranty book of business. A higher serious delinquency rate may result in a higher allowance for loan losses. The percentage of loans in our multifamily guaranty book of business that were 180 days or more delinquent was 0.56% as of both March 31, 2026 and December 31, 2025.

In addition to the credit performance information on our multifamily loans provided in this report, we provide additional information about the performance of our multifamily loans that back MBS and whole loan REMICs in the “Data Collections” section of our DUS Disclose® tool, available at www.fanniemae.com/dusdisclose (http://www.fanniemae.com/dusdisclose). Information on our website is not incorporated into this report. Information in Data Collections may differ from similar measures presented in our financial statements and other public disclosures for a variety of reasons, including as a result of variations in the loan population covered, timing differences in reporting and other factors.

Multifamily REO Management

As of March 31, 2026, we held 201 multifamily REO properties with a carrying value of $1.2 billion, compared with 181 properties with a carrying value of $1.0 billion as of December 31, 2025. The increase in foreclosure activity was primarily driven by recent periods of rising delinquencies, which we expect to continue to drive elevated foreclosure activity. The foreclosure process could take longer for properties that are located in certain judicial foreclosure states with historically long foreclosure timelines.

Multifamily Credit Loss Performance Metrics

The amount of multifamily credit losses or gains we realize in a given period is driven by foreclosures, pre-foreclosure sales, post-foreclosure REO activity and other events that trigger write-offs and recoveries. Our multifamily credit loss performance metrics are not defined terms and may not be calculated in the same manner as similarly titled measures reported by other companies. For the purposes of our multifamily credit loss performance metrics, credit losses or gains represent write-offs net of recoveries on our credit loss reserves as well as foreclosed property income or expense. Our credit loss reserves consists of our allowance for loan losses, accrued interest receivable and our guaranty loss reserves. We believe our multifamily credit losses, and our multifamily credit losses net of freestanding loss-sharing arrangements, provide useful information about our multifamily credit performance because they display our multifamily credit losses in the context of our multifamily guaranty book of business, including changes to the benefit we expect to receive from loss-sharing arrangements. Management views multifamily credit losses, net of freestanding loss-sharing arrangements, as a key metric related to our multifamily business model and our strategy to share multifamily credit risk.

MD&A | Multifamily Business | Multifamily Mortgage Credit Risk Management

The table below displays the components of our multifamily credit loss performance metrics, as well as our multifamily initial write-off severity rate and write-off loan count.

Multifamily Credit Loss Performance Metrics

(Dollars in millions)

(1) Represents write-offs at a liquidation event, which includes a foreclosure, a deed-in-lieu of foreclosure or a short-sale, as well as write-offs prior to a liquidation event. Write-offs associated with non-REO sales are net of loss sharing.

(2) Represents changes to the benefit we expect to receive only from write-offs as a result of certain freestanding loss-sharing arrangements, primarily multifamily DUS lender risk-sharing transactions. Changes to the expected benefits we will receive are recorded in “Other income (expense), net” in our condensed consolidated statements of operations and comprehensive income.

(3) Calculated based on the annualized amount of “Credit gains (losses)” and “Credit gains (losses), net of freestanding loss-sharing arrangements,” divided by the average multifamily guaranty book of business during the period.

(4) Rate is calculated as the initial write-off amount divided by the UPB of the loans written off and is based on write-offs associated with a liquidation event. The rate excludes any costs, gains or losses associated with REO after initial acquisition through final disposition. The rate also excludes write-offs when a loan is determined to be uncollectible prior to a liquidation event. Write-offs are net of lender loss-sharing agreements.

(5) Represents the number of loans that experienced write-offs associated with a liquidation event during the period.

Our multifamily credit losses increased in the first quarter of 2026 compared with the first quarter of 2025, primarily driven by weakened multifamily property valuations in the first quarter of 2026, which resulted in increased write-offs and foreclosed property expense.

MD&A | Consolidated Credit Ratios and Select Credit Information

Consolidated Credit Ratios and Select Credit Information

The table below displays select credit ratios on our single-family conventional guaranty book of business and our multifamily guaranty book of business, as well as the inputs used in calculating these ratios. For purposes of calculating our consolidated credit ratios and the credit loss reserves and write-offs, net of recoveries, the ratios are inclusive of our allowance for loan losses, allowance for accrued interest receivable, and reserve for guaranty losses. These amounts exclude reserves for advances of pre-foreclosure costs and the allowance for AFS securities.

(Dollars in millions)

(1) Guaranty book of business is as of period end. For single-family, represents the conventional guaranty book of business.

Consolidated Write-off Ratio and Select Credit Information

(Dollars in millions)

(1) Represents write-offs when a loan is determined to be uncollectible. For single-family, also includes any write-offs upon the redesignation of mortgage loans from HFI to HFS.

(2) Average guaranty book of business is based on the average of quarter-end balances. For single-family, represents the conventional guaranty book of business.

Liquidity and Capital Management

Liquidity Management

This section supplements and updates information regarding liquidity management in our 2025 Form 10-K. See “MD&A—Liquidity and Capital Management—Liquidity Management” in our 2025 Form 10-K for additional information, including discussions of our primary sources and uses of funds, our liquidity risk management practices and contingency planning, our liquidity requirements, factors that influence our debt funding activity, factors that may impact our access to or the cost of our debt funding and factors that could adversely affect our liquidity and funding. As of March 31, 2026, we were in compliance with all four components of the liquidity requirements outlined in our 2025 Form 10-K. Also see “Risk Factors—Liquidity Risk” in our 2025 Form 10-K for a discussion of liquidity risks.

Debt Funding

The UPB of our aggregate indebtedness was $153.1 billion as of March 31, 2026. Pursuant to the terms of the senior preferred stock purchase agreement with Treasury, we are prohibited from issuing debt without the prior consent of Treasury if it would result in our aggregate indebtedness exceeding our outstanding debt limit, which is set to $270 billion. The calculation of our indebtedness for purposes of complying with our debt limit reflects the UPB and excludes debt basis adjustments and debt of consolidated trusts.

Outstanding Debt

Total outstanding debt of Fannie Mae includes short-term and long-term debt and excludes debt of consolidated trusts. Short-term debt of Fannie Mae consists of borrowings with an original contractual maturity of one year or less and, therefore, does not include the current portion of long-term debt. Long-term debt of Fannie Mae consists of borrowings with an original contractual maturity of greater than one year.

The following chart and table display information on our outstanding short-term and long-term debt based on original contractual maturity. Our outstanding debt increased in the first quarter of 2026. We increased long-term debt issuance during the quarter to replace debt scheduled to mature later in the year and to further enhance our liquidity position by taking advantage of favorable market conditions.

Debt of Fannie Mae(1)

(Dollars in billions)

Short-term debt

Long-term debt maturing within one year

Long-term debt, excluding portion maturing within one year

(1) Outstanding debt balance consists of the UPB, premiums and discounts, fair value adjustments, hedge-related basis adjustments and other cost basis adjustments. Reported amounts include net discount unamortized cost basis adjustments and fair value adjustments of $2.6 billion as of March 31, 2026 and December 31, 2025.

MD&A | Liquidity and Capital Management

Selected Debt Information

(Dollars in billions)

(1) Excludes the effects of fair value adjustments and hedge-related basis adjustments.

(2) Includes short-term callable debt of $310 million and $40 million as of March 31, 2026 and December 31, 2025, respectively.

We intend to repay our short-term and long-term debt obligations as they become due primarily through the issuance of additional debt securities, the sale of assets in our corporate liquidity portfolio, and cash from business operations.

For information on the maturity profile of our outstanding long-term debt, see “Note 8, Short-Term and Long-Term Debt” in this report and in our 2025 Form 10-K.

Debt Funding Activity

The table below displays activity in debt of Fannie Mae. This activity excludes the debt of consolidated trusts and intraday borrowing. The reported amounts of debt issued and paid off during each period represent the face amount of the debt at issuance and redemption.

Activity in Debt of Fannie Mae

(Dollars in millions)

Fannie Mae First Quarter 2026 Form 10-Q 39

(1) Consists of all payments on debt, including regularly scheduled principal payments, payments at maturity, payments resulting from calls and payments for any other repurchases. Repurchases of debt and early retirements of zero-coupon debt are reported at original face value, which does not equal the amount of actual cash payment.

(2) Includes interest generated from negative interest rates on certain repurchase agreements, which offset our short-term funding costs.

Corporate Liquidity Portfolio

The chart below displays information on the composition of our corporate liquidity portfolio. The balance and composition of our corporate liquidity portfolio fluctuates as a result of factors such as changes in our cash flows, liquidity in the fixed-income markets, our investment strategy, and our liquidity risk management framework and practices. Our corporate liquidity portfolio decreased in the first quarter of 2026, as we redeployed a portion of the funds from maturities of securities purchased under agreements to resell into investments in agency MBS held in our retained mortgage portfolio.

U.S. Treasury securities

Securities purchased under agreements to resell

Cash

Off-Balance Sheet Arrangements

We enter into certain business arrangements to facilitate our statutory purpose of providing liquidity to the secondary mortgage market and to reduce our exposure to interest rate fluctuations. Some of these arrangements are not recorded in our condensed consolidated balance sheets or may be recorded in amounts different from the full contract or notional amount of the transaction, depending on the nature or structure of, and the accounting required to be applied to, the arrangement. These arrangements are commonly referred to as “off-balance sheet arrangements” and expose us to potential losses in excess of the amounts recorded in our condensed consolidated balance sheets.

Our off-balance sheet arrangements result primarily from the following:

• our guaranty of mortgage loan securitization and resecuritization transactions over which we have no control, which are reflected in our unconsolidated Fannie Mae MBS net of any beneficial ownership interest we retain, and other financial guarantees that we do not control;
• liquidity support transactions; and
• partnership interests.

The total amount of our off-balance sheet exposure related to unconsolidated Fannie Mae MBS net of any beneficial interest that we retain, and other financial guarantees was $192.4 billion as of March 31, 2026 and $195.7 billion as of December 31, 2025. The majority of the other financial guarantees consists of Freddie Mac securities backing Fannie Mae structured securities. See “Guaranty Book of Business” and “Note 7, Financial Guarantees” for more information regarding our maximum exposure to loss on unconsolidated Fannie Mae MBS and Freddie Mac securities.

Our total outstanding liquidity commitments to advance funds for securities backed by multifamily housing revenue bonds totaled $3.6 billion as of March 31, 2026 and December 31, 2025. These commitments require us to advance funds to third parties that enable them to repurchase tendered bonds or securities that are unable to be remarketed.

We have investments in various limited partnerships and similar legal entities, which consist of LIHTC investments, community investments and investments in other entities. When we do not have a controlling financial interest in those entities, our condensed consolidated balance sheets reflect only our investment rather than the full amount of the partnership’s assets and liabilities. See “Note 3, Consolidations and Transfers of Financial Assets—Unconsolidated VIEs” for information regarding our investments in limited partnerships and similar legal entities.

Cash Flows

Three Months Ended March 31, 2026. Cash and restricted cash increased from $42.6 billion as of December 31, 2025 to $45.3 billion as of March 31, 2026. The increase was primarily driven by cash inflows from (1) proceeds from repayments of loans,(2) the sale of Fannie Mae MBS to third parties, (3) proceeds from issuance of debt of Fannie Mae,(4) maturity of investments in securities purchased under agreements to resell, and (5) proceeds from sales of available-for-sale securities.

Largely offsetting these cash inflows were cash outflows primarily from (1) payments on outstanding debt of consolidated trusts and the purchase of Fannie Mae MBS from third parties, (2) purchases of loans acquired as held for investment, (3) advances to lenders, (4) purchases of available-for-sale securities, and (5) repayments of short-term borrowings.

Three Months Ended March 31, 2025. Cash and restricted cash decreased from $38.5 billion as of December 31, 2024 to $38.1 billion as of March 31, 2025. The decrease was primarily driven by cash outflows from (1) payments on outstanding debt of consolidated trusts, (2) purchases of loans acquired as held for investment, (3) advances to lenders, and (4) investments in securities purchased under agreements to resell.

Partially offsetting these cash inflows were cash inflows primarily from (1) proceeds from repayments of loans and (2) the sale of Fannie Mae MBS to third parties.

Credit Ratings

As of March 31, 2026, our credit ratings issued by the three major credit rating agencies have not changed since December 31, 2025. For information on these credit ratings, see “MD&A—Liquidity and Capital Management—Liquidity Management—Credit Ratings” in our 2025 Form 10-K.

Capital Management

Capital Requirements

For a description of our capital requirements under the enterprise regulatory capital framework, see “Business—Legislation and Regulation—Capital Requirements” in our 2025 Form 10-K. Although the enterprise regulatory capital framework went into effect in February 2021, we are not required to hold capital according to the framework’s requirements until the date of termination of our conservatorship, or such later date as may be ordered by FHFA.

The table below sets forth information about our capital requirements under the standardized approach of the enterprise regulatory capital framework. As of March 31, 2026, we had a deficit in available capital for purposes of our risk-based adjusted total capital requirement under the enterprise regulatory capital framework even though we had positive net worth under U.S. generally accepted accounting principles (“GAAP”) of $112.7 billion primarily because the $120.8 billion stated value of the senior preferred stock does not qualify as regulatory capital. Our deficit in available capital for purposes of our risk-based adjusted total capital requirement declined $4 billion in the first quarter of 2026 from $22 billion as of December 31, 2025 to $18 billion as of March 31, 2026.

As of March 31, 2026, we had a $211 billion shortfall to our risk-based adjusted total capital requirement including buffers, and a $134 billion shortfall to our minimum risk-based adjusted total capital requirement excluding buffers. From December 31, 2025 to March 31, 2026, our capital shortfall including buffers declined by $4 billion and our shortfall excluding buffers declined by $1 billion. The decline in the capital shortfall with and without buffers was primarily driven by the $3.7 billion increase in retained earnings, which more than offset the $3 billion rise in minimum capital requirements associated with higher risk-weighted assets during the first quarter of 2026. Our capital shortfall with buffers also declined due to a $3 billion decrease in the stability capital buffer, as a result of us having a lower total share of U.S. residential mortgage debt outstanding in 2025 than in 2024, which is used to determine the 2026 buffer under the enterprise regulatory capital framework.

The increase in risk-weighted assets during the first quarter of 2026 was largely driven by market risk associated with the increase in retained mortgage portfolio assets and loans we acquired during the period that carried higher credit risk-weights compared to seasoned loans that liquidated, as well as less relief from credit risk transfer transactions. Under the enterprise regulatory capital framework, we are required to hold capital associated with the market risk of the mortgage assets held in our retained mortgage portfolio. As a result, increases in the amount of agency MBS we hold in our retained mortgage portfolio generally result in an increase in the amount of market risk capital we are required to hold.

Capital Metrics under the Enterprise Regulatory Capital Framework as of March 31, 2026(1)

(Dollars in billions)

Capital Metrics under the Enterprise Regulatory Capital Framework as of December 31, 2025(1)

(Dollars in billions)

* Represents amounts less than $500 million.

(1) Ratios are calculated as a percentage of risk-weighted assets for risk-based capital metrics and as a percentage of adjusted total assets for leverage capital metrics.

(2) The capital shortfall in these columns represents the difference between the applicable capital requirement (without or with buffers, as applicable) and the available capital deficit.

(3) Prescribed capital conservation buffer amount, or PCCBA, for risk-based capital and prescribed leverage buffer amount, or PLBA, for leverage capital.

(4) The sum of (a) core capital (see definition in footnote 5 below); and (b) a general allowance for foreclosure losses.

(5) The sum of (a) the stated value of our outstanding common stock (common stock less treasury stock); (b) the stated value of our outstanding perpetual, noncumulative preferred stock; (c) our paid-in capital; and (d) our retained earnings (accumulated deficit).

While it is not applicable until the date of termination of our conservatorship, our maximum payout ratio represents the percentage of eligible retained income that we are permitted to pay out in the form of distributions or discretionary bonus payments under the enterprise regulatory capital framework. As of March 31, 2026, our maximum payout ratio under the enterprise regulatory capital framework was 0%. See “Note 15, Regulatory Capital Requirements” for information on our capital ratios as of March 31, 2026 and December 31, 2025 under the enterprise regulatory capital framework.

The table below presents certain components of our regulatory capital.

(Dollars in millions)

The table below presents certain components of our core capital.

(Dollars in millions)

Capital Activity

Under the terms governing the senior preferred stock, no dividends were payable to Treasury for the first quarter of 2026 and none are payable for the second quarter of 2026.

Under the terms governing the senior preferred stock, through and including the capital reserve end date, any increase in our net worth during a fiscal quarter results in an increase of the same amount in the aggregate liquidation preference of the senior preferred stock in the following quarter. 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 in excess of, all of the capital requirements and buffers under the enterprise regulatory capital framework.

As a result of these terms governing the senior preferred stock, the aggregate liquidation preference of the senior preferred stock increased to $230.5 billion as of March 31, 2026 from $227.0 billion as of December 31, 2025, due to the increase in our net worth in the fourth quarter of 2025. The aggregate liquidation preference of the senior preferred stock will further increase to $234.2 billion as of June 30, 2026, due to the increase in our net worth in the first quarter of 2026. See “Business—Conservatorship and Treasury Agreements—Treasury Agreements” in our 2025 Form 10-K for more information on the terms of our senior preferred stock, including how the aggregate liquidation preference is determined.

Treasury Funding Commitment

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. As of March 31, 2026, the remaining amount of Treasury’s funding commitment to us was $113.9 billion. See “Note 2, Conservatorship, Senior Preferred Stock Purchase Agreement and Related Matters” in our 2025 Form 10-K for more information on Treasury’s funding commitment under the senior preferred stock purchase agreement.

Risk Management

We are exposed to the following principal risk categories: credit risk (including mortgage credit risk and institutional counterparty credit risk), market risk (including interest-rate risk), liquidity risk, operational risk (including cyber and other information security risk), model risk, strategic risk, compliance risk and reputational risk. See “MD&A—Risk Management,” “MD&A—Single-Family Business—Single-Family Mortgage Credit Risk Management,” “MD&A—Multifamily Business—Multifamily Mortgage Credit Risk Management” and “MD&A—Liquidity and Capital Management” in our 2025 Form 10-K for a discussion of our management of the categories of risk we have determined present the most significant exposure. This section, “Single-Family Business—Single-Family Mortgage Credit Risk Management,” “Multifamily Business—Multifamily Mortgage Credit Risk Management” and “Liquidity and Capital Management” in this report supplement and update that discussion, but do not address all of these risk management categories.

Market Risk Management, including Interest-Rate Risk Management

We are subject to market risk, which includes interest-rate risk and spread risk. Interest-rate risk is the risk that movements in interest rates will adversely affect the value of our assets or liabilities or our future earnings or capital. Spread risk is the risk from changes in an instrument’s value that relate to factors other than changes in interest rates. Spread risk is intrinsic to our business model. While we monitor our spread risk exposure and manage the risk where feasible and appropriate, we do not seek to fully mitigate this risk and accept some level of it. See “MD&A—Risk Management—Market Risk Management, including Interest-Rate Risk Management” and “Risk Factors—Market and Industry Risk” in our 2025 Form 10-K for additional information, including our sources of interest-rate risk and spread risk exposure, business risks posed by changes in interest rates, and our strategy for managing market risk, including interest-rate risk.

Historically, our interest-rate risk management strategy focused primarily on maintaining an asset duration closely matched to our liability duration, net of derivatives, to minimize exposure to interest-rate movements. Beginning in the fourth quarter of 2025, we adjusted our interest-rate risk management strategy to balance this objective with the goal of managing the volatility of our earnings associated with short-term interest rate changes. As a result, pursuant to this new strategy, we are accepting additional interest rate risk associated with duration by increasing our exposure to longer-term rate positions, which reduces the sensitivity of our earnings to short-term interest rate movements and helps manage interest-rate related volatility associated with our retained mortgage portfolio and corporate liquidity portfolio investments.

Market Value Sensitivity

Our goal for managing the interest-rate risk of our net portfolio is to manage to a low level of exposure to movements in interest rates and volatility. We collectively define our net portfolio as: our retained mortgage portfolio assets; our corporate liquidity portfolio; outstanding debt of Fannie Mae; mortgage commitments; and risk management derivatives. This involves asset selection and structuring of our liabilities to match and offset the interest-rate characteristics of our retained mortgage portfolio and our investments in non-mortgage securities. We actively manage the interest-rate risk of our net portfolio through a strategy incorporating debt instruments, derivative instruments, and portfolio rebalancing, as described in “MD&A—Risk Management—Market Risk Management, including Interest-Rate Risk Management—Interest-Rate Risk Management” in our 2025 Form 10-K.

MD&A | Risk Management | Market Risk Management, including Interest-Rate Risk Management

Earnings Sensitivity

We also manage the earnings sensitivity of our consolidated balance sheet arising from interest rate movements. The risk management approach utilizes financial instruments, such as U.S. Treasuries, agency mortgage-backed securities and interest rate derivatives, to mitigate earnings volatility driven by interest rate movements. While this strategy reduces downside risk to our earnings when interest rates drop, it may limit potential upside benefits of our earnings when interest rates rise.

We utilize fair value hedge accounting to align the timing of when we recognize the interest-rate driven fair value changes in hedged mortgage loans and funding debt with derivative hedging instruments to mitigate GAAP earnings exposure to interest-rate changes, including any short-term earnings volatility that might result from economic hedging. Our hedge accounting program is specifically designed to address the volatility of our financial results associated with changes in fair value related to changes in benchmark interest rates. As such, earnings variability driven by other factors, such as spreads or changes in cost basis amortization recognized in net interest income, remains. In addition, our ability to effectively reduce earnings volatility is impacted by the volume and type of interest-rate swaps available for hedging, which is driven by our interest-rate risk management strategy discussed above. As our range of available interest-rate swaps varies over time, our ability to reduce earnings volatility through hedge accounting may vary as well. When the shape of the yield curve shifts significantly from period to period, hedge accounting may be less effective. In our current program, we typically establish new hedging relationships each business day to provide flexibility in our overall risk management strategy.

See “Note 1, Summary of Significant Accounting Policies” in our 2025 Form 10-K and “Note 9, Derivative Instruments” in this report for additional information on our fair value hedge accounting policy and related disclosures.

MD&A | Risk Management | Market Risk Management, including Interest-Rate Risk Management

Measurement of Market Value Sensitivity of our Net Portfolio

The table below displays the pre-tax market value sensitivity of our net portfolio to changes in the level of interest rates and the slope of the applicable yield curve as measured on the last day of each period presented. The table below also provides the daily average, minimum, maximum and standard deviation values for duration gap and for the most adverse market value impact on the net portfolio to changes in the level of interest rates and the slope of the applicable yield curve for the three months ended March 31, 2026 and 2025. Our practice is to allow interest rates to go below zero in the downward shock models unless otherwise prevented through contractual floors.

For information on how we measure our interest-rate risk, see “MD&A—Risk Management—Market Risk Management, including Interest-Rate Risk Management” in our 2025 Form 10-K.

Market Value Sensitivity of Net Portfolio to Changes in Interest-Rate Level and Slope of Yield Curve

(Dollars in millions)

(Dollars in millions)

(Dollars in millions)

(1) Computed based on changes in SOFR interest-rates swap curve.

(2) Measured on the last business day of each period presented.

(3) Computed based on daily values during the period presented.

The market value sensitivity of our net portfolio varies across a range of interest-rate shocks depending upon the duration and convexity profile of our net portfolio. The market value sensitivity of the net portfolio is measured by quantifying the change in the present value of the cash flows of our financial assets and liabilities that would result from an instantaneous shock to interest rates, assuming spreads are held constant. As a result of changes in our interest-rate risk management strategy, our duration gap has increased, resulting in greater market value sensitivity of our net portfolio.

MD&A | Risk Management | Market Risk Management, including Interest-Rate Risk Management

We use derivatives to help manage the residual interest-rate risk exposure between the assets and liabilities in our net portfolio. Derivatives have enabled us to manage our economic interest-rate risk exposure in a wide range of interest-rate environments. The table below displays an example of how derivatives impacted the net market value exposure for a 50 basis point parallel interest-rate shock. For additional information on our derivative positions, see “Note 9, Derivative Instruments” in our 2025 Form 10-K and in this report.

Derivative Impact on Interest-Rate Risk (50 Basis Points)

(Dollars in millions)

(1) Measured on the last business day of each period presented.

Critical Accounting Estimates

The preparation of financial statements in accordance with GAAP requires management to make a number of judgments, estimates and assumptions that affect the reported amount of assets, liabilities, income and expenses in our condensed consolidated financial statements. Understanding our accounting policies and the extent to which we use management judgment and estimates in applying these policies is integral to understanding our financial statements. We describe our most significant accounting policies in “Note 1, Summary of Significant Accounting Policies” in this report and in our 2025 Form 10-K.

We evaluate our critical accounting estimates and judgments required by our policies on an ongoing basis and update them as necessary based on changing conditions. Management has discussed any significant changes in judgments and assumptions in applying our critical accounting estimates with the Audit Committee of our Board of Directors. See “Risk Factors—General Risk” in our 2025 Form 10-K for a discussion of the risks associated with the need for management to make judgments and estimates in applying our accounting policies and methods. We have identified one of our accounting estimates, allowance for loan losses, as critical because it involves significant judgments and assumptions about highly complex and inherently uncertain matters, and the use of reasonably different judgments and assumptions could have a material impact on our reported results of operations or financial condition.

Allowance for Loan Losses

The allowance for loan losses is an estimate of single-family and multifamily HFI loan receivables that we expect will not be collected related to loans held by Fannie Mae or by consolidated Fannie Mae MBS trusts. The expected credit losses are deducted from the amortized cost basis of HFI loans to present the net amount expected to be received.

The allowance for loan losses involves substantial judgment on a number of matters including the development and weighting of macroeconomic forecasts, the reversion period applied, the assessment of similar risk characteristics, which determines the historic loss experience used to derive probability of loan default, the valuation of collateral, which includes judgments about the property condition at the time of foreclosure, and the determination of a loan’s remaining expected life. Our most significant judgments involved in estimating our allowance for loan losses relate to the modeled macroeconomic data used to develop reasonable and supportable forecasts for key economic drivers, which are subject to significant inherent uncertainty. Most notably, for single-family, the model uses forecasted single-family home prices as well as a range of possible future interest rate environments. For multifamily, the model uses forecasted net operating income and property valuations. In developing a reasonable and supportable forecast, the model simulates multiple paths of interest rates, net operating income and property values based on current market conditions.

MD&A | Critical Accounting Estimates

Quantitative Component

We use a discounted cash flow method to measure expected credit losses on our single-family mortgage loans and an undiscounted loss method to measure expected credit losses on our multifamily mortgage loans.

Our modeled loan performance is based on our historical experience of loans with similar risk characteristics adjusted to reflect current conditions and reasonable and supportable forecasts. Our historical loss experience and our loan loss estimates capture the possibility of a multitude of events, including remote events that could result in credit losses on loans that are considered low risk. Our credit loss models, including the macroeconomic forecast data used as key inputs, are subject to our model oversight and review processes as well as other established governance and controls.

Qualitative Component

Our process for measuring expected credit losses is complex and involves significant management judgment, including a reliance on historical loss information and current economic forecasts that may not be representative of credit losses we ultimately realize. Management adjustments may be necessary to take into consideration external factors and current macroeconomic events that have occurred but are not yet reflected in the data used to derive the model outputs. Qualitative factors and events not previously observed by the models through historical loss experience may also be considered, as well as the uncertainty of their impact on credit loss estimates.

Macroeconomic Variables and Sensitivities

Our (provision) benefit for credit losses can vary substantially from period to period based on forecasted macroeconomic inputs. For single-family, we have determined that our most significant macroeconomic inputs used in determining our allowance for loan losses consist of forecasted home price growth rates and interest rates. For multifamily, we have determined that our most significant macroeconomic inputs used in determining our allowance for loan losses consist of net operating income and property value growth rates.

In evaluating the sensitivities of our allowance to these macroeconomic inputs, it is difficult to estimate how potential changes in any one factor or input might affect the overall credit loss estimates, because management considers a wide variety of factors and inputs in estimating the allowance for loan losses. Changes in the factors and inputs considered may not occur at the same rate and may not be consistent across all geographies or loan types, and changes in factors and inputs may be directionally inconsistent, such that improvement in one factor or input may offset deterioration in others. Changes in our assumptions and forecasts of economic conditions could significantly affect our estimate of expected credit losses and lead to significant changes in the estimate from one reporting period to the next.

We provide more detailed information on our accounting for the allowance for loan losses in “Note 1, Summary of Significant Accounting Policies” in our 2025 Form 10-K. See “Note 5, Allowance for Credit Losses” for additional information about our current period (provision) benefit for loan losses.

MD&A | Critical Accounting Estimates

Single-Family Sensitivities and Inputs

The table below provides information about our most significant macroeconomic inputs used in determining our single-family allowance for loan losses: forecasted home price growth rates and interest rates. Although the model consumes a wide range of possible regional home price forecasts and interest rate scenarios that take into account inherent uncertainty, the forecasts below represent the mean path of those simulations used in determining the single-family allowance for the quarter ended March 31, 2026, and for each quarter during the year ended December 31, 2025, and how those forecasts have changed between periods of estimate. Below we present our home price growth and interest rate estimates used in our estimate of expected credit losses. Our forecasts include estimates for periods beyond those presented below.

(1) These forecasts are provided solely for the purpose of providing insight into our credit loss model. Forecasts for future periods are subject to significant uncertainty, which increases for periods that are further in the future. We provide our most recent forecasts for certain macroeconomic and housing market conditions in “Key Market Economic Indicators.” In addition, each month our Economic and Strategic Research Group provides its economic and housing forecasts, which are available in the “Data and Insights” section of our website, www.fanniemae.com (http://www.fanniemae.com). Information on our website is not incorporated into this report.

(2) These estimates are based on our national home price index, which is calculated differently from the S&P Cotality Case-Shiller U.S. National Home Price Index and therefore results in different percentages for comparable growth. We periodically update our home price growth estimates and forecasts as new data become available. The forecast data in this table may also differ from the forecasted home price growth rate presented in “Key Market Economic Indicators,” because that section reflects our most recent forecast as of the filing date of this report, while this table reflects the quantitative forecast data we used in our model to estimate credit losses for the periods shown. Management continues to monitor macroeconomic updates to our inputs in our credit loss model from the time they are approved as part of our established governance process to assess the reasonableness of the inputs used to calculate estimated credit losses. The forecast data excludes the impact of any qualitative adjustments.

(3) Forecasted 30-year interest rates represent the mean of possible future interest rate environments that are simulated by our interest rate model and used in the estimation of credit losses. Forecasts through the end of December 31, 2026 and 2025 represent the average forecasted rate from the quarter-end through the calendar year-end of December 31st. The fourth quarter of 2025 interest rate represents the 30-year interest rate as of December 31, 2025. This table reflects the forecasted interest rate data we used in estimating credit losses for the periods shown and does not reflect changes in interest rates that occurred after the forecast date.

MD&A | Critical Accounting Estimates

As noted above, our single-family allowance for loan losses is sensitive to changes in home prices and interest rate changes. We present in the table below the impact of hypothetical changes in home prices and 30-year interest rates, with all other factors held constant.

(1) Calculated as a percentage of our single-family allowance for loan losses.

(2) Change in home price shown on a normalized basis.

The above sensitivity analyses are hypothetical and are provided solely for the purpose of providing insight into our credit loss model inputs. In addition, sensitivities for home price and interest rate changes are non-linear. As a result, changes in these estimates are not always incrementally proportional. The purpose of this analysis is to provide an indication of the impact of changes in home prices and 30-year interest rates on the estimate of the single-family allowance for credit losses. This analysis is not intended to imply management’s expectation of future changes in our forecasts or any other variables that may change as a result.

See “Key Market Economic Indicators” in our 2025 Form 10-K and in this report for additional information about how home prices and interest rates can affect our credit loss estimates, including a discussion of home price growth rates and our home price forecast. Also see “Consolidated Results of Operations—(Provision) Benefit for Credit Losses” for information on how our home price forecast impacted our single-family (provision) benefit for credit losses.

Multifamily Sensitivities and Inputs

The table below provides information about our most significant macroeconomic inputs used in determining our multifamily allowance for loan losses: multifamily property net operating income and property value growth rates. Although the model consumes a wide range of possible future economic scenarios, the forecasts below represent the mean path of those simulations used in determining the multifamily allowance for the quarter ended March 31, 2026, and for the quarter ended December 31, 2025, and how those forecasts have changed between periods of estimate. Our forecasts include estimates for periods beyond those presented below.

Select Multifamily Macroeconomic Model Inputs(1)

N/A Not applicable. For purposes of this disclosure, we provide the forecasted net operating income growth rate and property value growth rate for the period of estimate and the two years following the period of estimate.

(1) These forecasts are provided solely for the purpose of providing insight into our credit loss model. Forecasts for future periods are subject to significant uncertainty, which increases for periods that are further in the future, and may not align to other market forecasts.

MD&A | Critical Accounting Estimates

As noted above, our multifamily allowance for loan losses is sensitive to changes in net operating income and property value growth rate changes. We present in the table below the impact of hypothetical changes in net operating income and property value growth rates, with all other factors held constant.

(1) Calculated as a percentage of our multifamily allowance for loan losses.

The above sensitivity analyses are hypothetical and are provided solely for the purpose of providing insight into our credit loss model inputs. In addition, sensitivities for net operating income and property value growth rate changes are non-linear. As a result, changes in these estimates are not always incrementally proportional. The purpose of this analysis is to provide an indication of the impact of net operating income and property value growth rate changes on the estimate of the multifamily allowance for credit losses. This analysis is not intended to imply management’s expectation of future changes in our forecasts or any other variables that may change as a result.

See “Consolidated Results of Operations—(Provision) Benefit for Credit Losses” for information on how property valuations impacted our multifamily (provision) benefit for credit losses.

Impact of Future Adoption of New Accounting Guidance

We evaluate the impact on our condensed consolidated financial statements of recently issued accounting guidance in “Note 1, Summary of Significant Accounting Policies.”

Legislation and Regulation

For information regarding legislative, regulatory, conservatorship and other related matters affecting our business, see “Business—Conservatorship and Treasury Agreements” and “Business—Legislation and Regulation” in our 2025 Form 10-K. Also see “Risk Factors” in our 2025 Form 10-K for discussions of risks relating to legislative and regulatory matters.

Forward-Looking Statements

This report includes statements that constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). In addition, we and our senior management may from time to time make forward-looking statements in our other filings with the SEC, our other publicly available written statements, and orally to analysts, investors, the news media and others. Forward-looking statements often include words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “forecast,” “project,” “would,” “should,” “could,” “likely,” “may,” “will” or similar words. Examples of forward-looking statements in this report include, among others, statements relating to our beliefs and expectations regarding the following matters:

• economic, mortgage market and housing market conditions (including expectations regarding economic growth, home price growth, multifamily property value growth, the unemployment rate, loan origination volumes, interest rates and multifamily property net operating income), the factors that will affect those conditions, and the impact of those conditions on our business and financial results;
• the impact of hedge accounting and our risk management approach on the volatility of our financial results;
• the future aggregate liquidation preference of our senior preferred stock;
• our future dividend payments on the senior preferred stock and the factors that will affect them;

MD&A | Forward-Looking Statements

• our business plans and strategies, and their impact, including our plans relating to new credit score models;
• the credit performance of loans in our guaranty book of business (including future loan delinquencies and foreclosures) and the factors that will affect such performance;
• how we intend to repay our debt obligations;
• our payments to specified HUD and Treasury funds in support of affordable housing under the GSE Act;
• the impact of the adoption of new accounting guidance;
• legal and regulatory proceedings; and
• the risks to our business and the factors that will affect those risks.

Forward-looking statements reflect our management’s current expectations, forecasts or predictions of future conditions, events or results based on various assumptions and management’s estimates of trends and economic conditions in the markets in which we are active and that otherwise impact our business plans. Forward-looking statements are not guarantees of future performance. By their nature, forward-looking statements are subject to significant risks and uncertainties and changes in circumstances. Our actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements.

There are a number of factors that could cause actual conditions, events or results to differ materially from those described in our forward-looking statements, including, among others, the following:

• growth, deterioration and the overall health and stability of the U.S. economy, including GDP, unemployment rates, personal income, inflation and other indicators thereof;
• the impact of trade, fiscal, monetary, regulatory and immigration policies;
• deterioration in a specific sector of the U.S. economy or in one or more regional areas of the United States;
• future interest rates and credit spreads;
• the timing and level of, as well as regional variation in, home price changes;
• the size and our share of the U.S. mortgage market (including the volume of mortgage originations) and the factors that affect them, including population growth and household formation;
• changes in fiscal or monetary policy of the U.S. or other countries, and the impact of such changes on domestic and international financial markets;
• domestic, regional and global political risks and uncertainties, including conflicts in the Middle East and other regions, and geopolitical instability;
• developments that may be difficult to predict, including: market conditions that result in changes in our deferred guaranty fee income or changes in net interest income from our portfolios; fluctuations in the estimated fair value of our assets and liabilities; and developments that affect our loss reserves, such as changes in interest rates or home prices;
• disruptions or instability in the housing and credit markets;
• changes in the demand for Fannie Mae MBS, our debt securities or our credit risk transfer securities, in general or from one or more major groups of investors;
• constraints on our entry into new credit risk transfer transactions;
• a decrease in our credit ratings;
• limitations on our ability to access the debt capital markets;
• changes in our funding needs or our sources or uses of funds;
• the size, composition, quality and performance of our guaranty book of business and retained mortgage portfolio;
• how long loans in our guaranty book of business remain outstanding;
• our and our competitors’ future guaranty fee pricing and the impact of that pricing on our competitive environment and guaranty fee revenues;
• the competitive environment in which we operate, including the impact of legislative, regulatory or other developments on levels of competition in our industry and other factors affecting our market share;
• the impact of interdependence between the single-family mortgage securitization programs of Fannie Mae and Freddie Mac in connection with UMBS;

MD&A | Forward-Looking Statements

• significant challenges we face in retaining and hiring qualified executives and other employees;
• our conservatorship, including any changes to or termination (by receivership or otherwise) of the conservatorship and its effect on our business;
• the investment by Treasury, including the impact of past or potential future changes to the terms of the senior preferred stock purchase agreement, senior preferred stock or warrant, and their effect on our business, including current or future restrictions or requirements imposed on us by the terms of the senior preferred stock purchase agreement, the senior preferred stock, or the warrant, as well as the extent that these or other restrictions on our business and activities are applied to us through other mechanisms even if we cease to be subject to these agreements and instruments;
• uncertainty regarding our future, including relating to: our exit from conservatorship; our ability to raise, earn or retain the capital needed to meet our capital requirements; our future capital structure; and our future dividend requirements;
• the impact of the enterprise regulatory capital framework on our business and financial results;
• future legislative and regulatory requirements or changes, governmental initiatives, or executive orders affecting us, such as the enactment of housing finance reform legislation, including changes that limit our business activities or our footprint, impose new mandates on us, or affect our ability to change our pricing;
• future legislative and regulatory requirements or changes, governmental initiatives, or executive orders affecting macroeconomic conditions, such as changes to trade, fiscal, monetary, tax or immigration policies;
• actions by FHFA, Treasury, the Federal Reserve, the Office of the Comptroller of the Currency (“OCC”), the Federal Deposit Insurance Corporation (“FDIC”), the Commodity Futures Trading Commission (“CFTC”), HUD, the Consumer Financial Protection Bureau, the SEC or other regulators, Congress, the Executive Branch, or state or local governments that affect our business;
• changes in the structure and regulation of the financial services industry;
• the possibility that changes in leadership at FHFA or the Administration will result in additional changes that affect our company or our business;
• actions we may be required to take by FHFA, in its role as our conservator or as our regulator, such as changes in the type of business we do, actions relating to UMBS or our resecuritization of Freddie Mac-issued securities, or credit risk management actions;
• limitations on our business imposed by FHFA, in its role as our conservator or as our regulator;
• adverse effects from activities we undertake to support the mortgage market and help borrowers, renters, lenders and servicers, including actions we may take to reach additional underserved borrowers, or from pursuing new business activities;
• a default by the United States government on its obligations;
• a partial or full shutdown of the United States government;
• significant changes in forbearance, modification and foreclosure activity;
• the volume and pace of any future nonperforming and reperforming loan sales and their impact on our financial results and serious delinquency rates;
• changes in borrower behavior;
• actions we may take to mitigate losses, and the effectiveness of our loss mitigation strategies, management of our REO inventory and pursuit of contractual remedies;
• environmental disasters, terrorist attacks, widespread health emergencies or pandemics, infrastructure failures, or other disruptive or catastrophic events;
• the expiration of the National Flood Insurance Program on September 30, 2026, without re-authorization, including the impact of any disruptions in the payment of claims and of delays in obtaining or renewing coverage;
• earthquakes or other natural disasters, including those for which we may be uninsured or under-insured or that may affect our counterparties or the hazard insurers insuring properties underlying our guaranty book of business;

MD&A | Forward-Looking Statements

• severe weather events, fires, floods, hail, wind or other natural disaster-related events or impacts, including those for which we may be uninsured or under-insured or that may affect our counterparties or the hazard insurers insuring properties underlying our guaranty book of business, and other natural disaster-related risks;
• defaults by one or more of our counterparties or by the hazard insurers insuring properties underlying our guaranty book of business;
• resolution or settlement agreements we may enter into with our counterparties;
• our need to rely on third parties to achieve some of our corporate objectives, including our reliance on mortgage servicers;
• our reliance on U.S. Financial Technology, LLC (“U.S. FinTech”) and the common securitization platform U.S. FinTech operates for a majority of our single-family securitization activities; provisions in the limited liability company agreement with U.S. FinTech that permit FHFA to appoint members to the U.S. FinTech Board of Managers, which limit the ability of Fannie Mae and Freddie Mac to control decisions of the U.S. FinTech Board of Managers; and changes FHFA may require in our relationship with or in our support of U.S. FinTech;
• the effectiveness of our risk management processes and related controls;
• the effectiveness of our business resiliency plans and systems;
• the stability and adequacy of the systems and infrastructure that impact our operations, including ours and those of U.S. FinTech, our other counterparties and other third parties;
• our reliance on models and future updates we make to our models, including the data and assumptions used by these models;
• opportunities and risks presented by the use or anticipated use of AI technologies and other emerging technologies by us or third parties, including generative AI and agentic AI;
• cyber attacks or other cybersecurity breaches or threats impacting us, the third parties with which we do business or our regulators;
• changes in GAAP, guidance by the Financial Accounting Standards Board (“FASB”), SEC guidance, and our accounting policies; and
• the other factors described in “Risk Factors” in our 2025 Form 10-K.

Readers are cautioned not to unduly rely on the forward-looking statements we make and to place these forward-looking statements into proper context by carefully considering the factors identified above and those discussed in “Risk Factors” in our 2025 Form 10-K. These forward-looking statements are representative only as of the date they are made, and we undertake no obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under the federal securities laws.

Financial Statements | Condensed Consolidated Statements of Operations and Comprehensive Income

Information about market risk is set forth in “MD&A—Risk Management—Market Risk Management, including Interest-Rate Risk Management.”

Overview

We are required under applicable laws and regulations to maintain controls and procedures, which include disclosure controls and procedures as well as internal control over financial reporting, as further described below.

Evaluation of Disclosure Controls and Procedures

Disclosure Controls and Procedures

Disclosure controls and procedures refer to controls and other procedures designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding our required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply its judgment in evaluating and implementing possible controls and procedures.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures in effect as of March 31, 2026, the end of the period covered by this report. As a result of management’s evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective at a reasonable assurance level as of March 31, 2026, or as of the date of filing this report.

Our disclosure controls and procedures were not effective as of March 31, 2026, or as of the date of filing this report because they did not adequately ensure the accumulation and communication to management of information known to FHFA that is needed to meet our disclosure obligations under the federal securities laws. As a result, we were not able to rely upon the disclosure controls and procedures that were in place as of March 31, 2026, or as of the date of this filing, and we continue to have a material weakness in our internal control over financial reporting. This material weakness is described in more detail below under “Description of Material Weakness.” Based on discussions with FHFA and the structural nature of this material weakness, we do not expect to remediate this material weakness while we are under conservatorship.

Description of Material Weakness

The Public Company Accounting Oversight Board’s Auditing Standard 2201 defines a material weakness as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Management has determined that we continued to have the following material weakness as of March 31, 2026, and as of the date of filing this report:

• Disclosure Controls and Procedures. We have been under the conservatorship of FHFA since September 2008. Under the GSE Act, FHFA is an independent agency that currently functions as both our conservator and our regulator with respect to our safety, soundness, and mission. Because of the nature of the conservatorship under the GSE Act, which places us under the “control” of FHFA (as that term is defined by securities laws), some of the information that we may need to meet our disclosure obligations may be solely within the knowledge of FHFA. As our conservator, FHFA has the power to take actions without our knowledge that could be material to our stockholders and other stakeholders, and could significantly affect our financial performance or our continued existence as an ongoing business. Although we and FHFA attempted to design and implement

Controls and Procedures

disclosure policies and procedures that would account for the conservatorship and accomplish the same objectives as a disclosure controls and procedures policy of a typical reporting company, there are inherent structural limitations on our ability to design, implement, operate, and test effective disclosure controls and procedures. As both our regulator and our conservator under the GSE Act, FHFA is limited in its ability to design and implement a complete set of disclosure controls and procedures relating to Fannie Mae, particularly with respect to current reporting pursuant to Form 8-K. Similarly, as a regulated entity, we are limited in our ability to design, implement, operate, and test the controls and procedures for which FHFA is responsible.

Due to these circumstances, we have not been able to update our disclosure controls and procedures in a manner that adequately ensures the accumulation and communication to management of information known to FHFA that is needed to meet our disclosure obligations under the federal securities laws, including disclosures affecting our condensed consolidated financial statements. As a result, we did not maintain effective controls and procedures designed to ensure complete and accurate disclosure as required by GAAP as of March 31, 2026, or as of the date of filing this report. Based on discussions with FHFA and the structural nature of this weakness, we do not expect to remediate this material weakness while we are under conservatorship.

Mitigating Actions Related to Material Weakness

We and FHFA have engaged in the following practices intended to permit accumulation and communication to management of information needed to meet our disclosure obligations under the federal securities laws:

• FHFA has established a process to facilitate operation of the company under the oversight of the conservator.
• FHFA personnel, including senior officials, have reviewed our quarterly and annual SEC filings prior to filing, including this quarterly report on Form 10-Q for the quarter ended March 31, 2026 (“First Quarter 2026 Form 10-Q”), and engaged in discussions regarding issues associated with the information contained in those filings. Prior to filing our First Quarter 2026 Form 10-Q, FHFA provided Fannie Mae management with written acknowledgment that it had reviewed the First Quarter 2026 Form 10-Q, and it was not aware of any material misstatements or omissions in the First Quarter 2026 Form 10-Q and had no objection to our filing the First Quarter 2026 Form 10-Q.
• We have also provided FHFA personnel drafts of our Form 8-K filings, press releases, media statements, and certain executive speeches for review prior to filing or release.
• Our senior management meets regularly with senior leadership at FHFA. In addition, the FHFA Director serves as Chair of our Board of Directors.
• FHFA representatives attend meetings frequently with various groups within the company to enhance the flow of information and to provide oversight on a variety of matters, including accounting, credit and market risk management, external communications, and legal matters.
• Senior officials within FHFA’s Office of the Chief Accountant have met frequently with our senior finance executives regarding our accounting policies, practices, and procedures.

Changes in Internal Control Over Financial Reporting

Management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, whether any changes in our internal control over financial reporting that occurred during our last fiscal quarter have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. There were no changes in our internal control over financial reporting from January 1, 2026 through March 31, 2026 that management believes have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In the ordinary course of business, we review our system of internal control over financial reporting and make changes that we believe will improve these controls and increase efficiency, while continuing to ensure that we maintain effective internal controls. Changes may include implementing new, more efficient systems, automating manual processes, changes in personnel performing controls, and updating existing systems.

Other Information

In addition to the information in this report, you should carefully consider the risks relating to our business that we identify in “Risk Factors” in our 2025 Form 10-K. Also refer to “MD&A—Risk Management,” “MD&A—Single-Family Business” and “MD&A—Multifamily Business” in our 2025 Form 10-K and in this report for more detailed descriptions of the primary risks to our business and how we seek to manage those risks.

The risks we face could materially adversely affect our business, results of operations, financial condition, liquidity and net worth, and could cause our actual results to differ materially from our past results or the results contemplated by any forward-looking statements we make. We believe the risks described in the sections of this report and our 2025 Form

Other Information

10-K referenced above are the most significant we face; however, these are not the only risks we face. We face additional risks and uncertainties not currently known to us or that we currently believe are immaterial.