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Secretary Snow described the concept of a “new program” very well in his recent testimony before the Senate: New programs are akin to "new lines of business."

Some proposals have suggested that a regulator should review all of the "new activities” of Fannie Mae. In H.R. 2575, for example, the term “activities” is broadly defined to include “any program, activity, business process, or investment that directly or indirectly provides financing or other services related to conventional mortgages.” This definition is so broad that it could encompass every change in underwriting standards made by Fannie Mae or every transaction in which we buy mortgages.

Bank regulators do not mandate prior approval for "activities” in the manner some have suggested would be appropriate for Fannie Mae's “activities.” In the banking context, the term “activities” is used to mean “lines of business.” The Gramm-Leach-Bliley Act contains a list of preapproved “activities” financial institutions may undertake. The “activities” listed in the statute are broad lines of business, including insurance business, securities underwriting business, and merchant banking business.

Any proposal requiring prior notice for Fannie Mae's “activities," as defined in H.R. 2575, clearly has no parallel in current banking

law.

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At Wacoesday's Financial Services Corrmance bouring you beward the newertica thene Fannie Mine laga thue primary turket in finding morteage long for low-income und minority bokebuyers. This is metra. Ima wating to you today to set the record straight

The meth in the Pannie Moo is the nation's largest private investor in affordable housing und waarity being in 1994, we havchied our Million Dollar Commitment to pred merteta nad incitude acou to martonges crecik Upon completion in 2000, we followed up thing asocou by mnouncing our $2 tillon American Dream Comentimient, a decachon long effort to close homeownership wapo wad arengthen communities. The results are that, shoce 1994, Pannie Moe han tindaced home for more than 12 million low-end wodaruto-income families and more than 4.8 mitkon minority Bacollien Further, the finest is thuit - which mayered comedy - Fanio Meo's performance in attordable housing leading has consistently surpassed the prinaury mushat's performance. Audio Handeninggahiztuntia Fannie Mino resoning the leader in affordable houging and minority landing racuy. We me the largest single provider of Dabartinge credit to low-end moderate-tocome and minorky familien. En 2002 slot, Panie Mae provided more thua s279 billion in credit serving low- and moderate income householda Fannio Morris $136.2 bilioa kuvertente in morte co to minority familles exceeded that of my other private financial services institution and even greatly exceeded the Federal Housing Administration'. $46.4 billion la minority loun originations that year.

Our growth to minority londing over time hina bona extraordinary. Comparing 1994 to 2002, lowo to African Americans increased 219 percent and long to Hispania Increased 24 percent, while our love to non-minoritia mireased by ouły 62 percent.

Pannie Mac has pledged to invest at least $700 billion to finance mortgage for minority families between 2000 and 2009 in rapport of the President's initiative to spend minority homeownership. As of the end of June 2003, we had favented $81 bilion toward that contentment, helping 2.8 trillion minority familias - by far the largest single contribution of nay one of HUD's "Blueprint Puther"

Leadership in Affordable Rental Horting and commonly Development Onar landakip in the finmcial services incluntry extends well beyond the provision of mongnge wat to homeowner. For example, we are the nation's largest investor in wukitumily and single-family rental bonding In 2002, Fanie Mae provided mortgage financing supporting more than 1,000,000 units of rental housing in singlo-mally and muhifamily properties, of which more than two-third served foeter wat inconnus below 80 percent of ura medias incomon. We are also the nation's largest lovator in the Low-become Housing Tax Credit (LIHTC). In 2002, we committed more than $1.6 billion in LIHIC investment to scopport the production and preservation of mestimated 37,500 horan affordable to very low-income function. In adetition, we are the nation's largest taxestor. in monterage rovenie boods (MRB), smother important source of low-cost capital for affordable housing Our 2002 investuot of more than 1.2 billion in daty bondho minde pouble affordable financing for an estimated 90,463 families. Through the end of 2002, Fannie Moo's American Communities Fund (ACE) has cloned more than $725 million in commitments on more than 216 transactions making a tangible difference in anumitia Mon the country. And none of the ACE, LIRTC, a MRB investerents count asiat o BUD gout-very important point when trying to sew leadership in the market. Leaderkte tectaging Imovation de Marteana Mache Market leadership is about quatintive u wel u quantitative contribution Fauna Mine head boran na inovative leader in the attordablo bousing field. We were not the forefront of the mortgage industry aprosion sato low-downpayuncat latin creating the Fannic 91 mortogo in 1994 a

fora widely available and standardized 3 percent down payment monteres product and obtaing lout with little w 1$500 contribution for the borsuwur today. Our low downpayment handling han increased twenty-fold over this time Our investment in technology have increased the underwriting themibilities available through our product offering, espanded markets for our leader partners, and-by reductag the cont of originations - enhanced affondability for the bome buyu. Man recently, we have luncher der etter to deve borrowed with bleminhad credit historica Our Bappreaded

Approval and Timely Payment Kowned martinga reomples of how we help couveational mortgage lenders broaden their markets to marre bortowana previousty het only to mubprime leaders. Along with our incontry-leading and predatory lending guidelines, we have introduced this product in a prudent and roupangible mmenet port of our strategy to expand responsible landing and combat butive leading practices.

Fondo Machu aluo contributed nearly 3500 million tice 1996 to the independent
Fronle Mine Roundation, the largest corporate foundation devoted to housing and
Comentady developmoat in the country. This finding kusable the Poondundo,

other things, to chary out furu. cctorudian md ostrach other that hene led to more than 9 milion Guilius receiving importante sanalitingaal information about credit mortuges, md the housebuying procen.

pominante del Maresme Oos lost mrame of mindket landeship, a comparison of Fumio Meo's affordable howing pastormance in our tinglo-Billy businone to the Hora Mortense Diclomot Ac (HODA) data wed to describe the primary muerten. We lead the mounted on this basis who

HUD www thi HIMDA-bured approach for meaning matet londanship. Over the year, Parmie Mme he disagreed with HUD's methodology primarily because the Department beta med dottorition of the primary murdered that overweight and prions leading which had not traditionally been available to Fannie Mira Done cartes de bured mentre loadership matyti show that we have consistently led at matched the conventional market ta the past. I have attached soveral chart to illustrate this poist.

In 2001, 43.1 percent of Tennis Mino's daglo-fondly buuteen verred bow and moderate income borrowed coupared to 120 percent her the conventional conforming met described by HMDA date. A total D.O percent of Funnie Mino's burinen ved minority homebuyan compared to 21.3 perong for the conventional contrag midt We led the conventional conforming artikel in kading to African Amerika, 5.2 percent to 44 percent, and matched the market in beating to Bippraia x 9.0 percent Themes comparison me bunad on ownerwocoopiad, home purchwe mortgage I MSAS - the appropriate roboot for comparisons between HMDA data and Fundo Meo's pastorace

Mardover, avto wing HUD', methodology and including half of mubprime leading in the complirica moket, the 2001 data reveal the Frendo Mag wil would have led the market in leading to low-nad moderato-income households (13.1 peront to 427 percent), miority borrowers (21.9 pancent to 20.8 percent), and Africa America barwowen (5.2 percent to 5.0 parend).

Fannie Moo's affordable landing performanca la 2002 walno akcellent, with the peroutages of our single-mily business serving low- and moderate-conte ad minority borrowen increasing over the captional 2001 lovala. For owner-occuplod, home purcha leading in metropolitan arcu, Purnia Mas achieved 1 45.7 percent loved in low-mod landing (reprenesting a total investecat of $69.3 billion for the bomowen), 326.2 percent level in minority landing (546.1 billion), a 5.4 percent level in leading to African Americana (53.3 billion), and 11.0 percent level in lending to paaias (18.3 bition) Tho 2002 MDA data for the mute ww roloned in August, but cannot be fully manlyzed natal HUD provides tas tint of subprimo lindas reporting to HMDAwhich we spect to receive in October

Criticism of our rapport for first time homebuyers is based on week, outdated dan PADA dog not identity fest-time homebuyut, therefore, BUD's analyu's augum atbu da source that monot true mortgage rutet estimates. Moreover, the HID analysis covers the period from 1997 to 1999. Whaa one looks x 2001 und 2002, Pante Mao's average namenal aumber of louw to minority best trao bomobeyun lacroused by more than 10 percent In 2002, Pennie Mac fiamcing helped more than 351,000 tunities purchase their first homes, 30 percent of whom were minority howetoida White 24 percent of ou non-stoority purchase money investerende bolped first time bombebayas, 33 percent of such pasting to African-American helped first time home bayer, 31 percent of ad landing to topnia want to fiat time homebuyers, tad 33 parteat of och leading to all morttia went to frutine bombayers

FELA remains a ponatul force in supporting fra tid homebuyer, especially among minorition. However, band insured by FHA do not count in our housing gele med therefore should be excluded from market comparisons, something HUD's Boretti bordebuyer malyais did not do. Our steady czoptasta ou moestening low downpayu options for conventional borrowen is having an irapuet in the murder oven with bearry PHA influence. Por instance, in 1994, FBA necounted for 56 percent of all

very low downpayment purchase money mortgacha intered by FHA a faced by Farmie Man Five years later, in 2001, FHA's share had dropped to only 26 percent while Famio Mas's share had grown to 14 percent, demonstrating the increasing role we we playing in providing adorable credit to new hometaryens.

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