This report does not constitute a rating action. Overview Key strengths Key risks Critical role in implementing U.S. government housing policy. Substantial uncertainties regarding the probability, timing, and scenario under which it can exit conservatorship. Integral link to U.S. government. Significant undercapitalization and will take several years to build capital toward regulatory requirements. Dominant market position as a secondary-market liquidity provider to the U.S. residential mortgage market. Monoline exposure to the U.S. mortgage market. Significant improvements in risk management since entering conservatorship. In our view, Fannie Mae has an integral link to the government and plays a critical role in U.S. housing policy. Our view is supported by past government actions--especially during economic uncertainty--which included providing additional liquidity, mortgage forbearance
