Citing Turmoil in Other Financial Markets, Fannie Mae CEO Johnson Says U.S. Home Buyers are Well-Protected from Credit Shortages.

CHICAGO--(BUSINESS WIRE)--Oct. 19, 1998--In contrast to other credit markets, there will be no credit crunch for housing in the United States, according to James A. Johnson, chairman and chief executive officer of Fannie Mae (FNM/NYSE), the nation's largest source of home mortgage funds.

"Fluctuating markets, currency swings, and interest rate drops have drained liquidity from other credit markets in the United States," Johnson said here at the annual convention of the Mortgage Bankers Association of America.

"But I can say with complete confidence that American home buyers will continue to have uninterrupted access to credit markets that sovereign governments and global institutions will find it hard, if not impossible, to tap."

Johnson said that the American housing market is insulated from a credit crunch by the presence of Fannie Mae and its counterpart in the secondary mortgage market, Freddie Mac.

In September, Fannie Mae and Freddie Mac provided $84 billion in housing finance to consumers, and $230 billion in the third quarter. Johnson also said U.S. home buyers, unlike others in today's weakened credit markets, are assured of a reliable credit supply, in particular, because of Fannie Mae's unique access to capital markets and the foresightedness of the company's congressional charter.

"A consumer anywhere in the country has no fear about whether there will be a stable supply of mortgage money for the home he wants to buy or refinance," said Johnson. "This puts him in a stronger position than any multinational corporation and virtually any financial institution."

"The reason is the genius of our charter, Fannie Mae's careful management of our access to the capital markets, and the work we have done over the past year to tap into new sources of capital for housing with tools like our Benchmark Notes," he said.

Last week, Fannie Mae offered a $3 billion global Benchmark Note as company executives met with bankers and financial officials in Asia. Asian investors bought 45 percent of the 3-year offering, "a sign of our ability to put capital from around the world to work on behalf of the American home buyer," Johnson said.

Johnson said the company's activities in the global financial markets was one example of the many modern techniques and tools for capital management that Fannie Mae uses to carry out the public mission mandated by Congress.

"Through our charter, Congress wants us to promote access to mortgage credit throughout the nation, increase liquidity of mortgage investments and improve the distribution of investment capital available for residential mortgage financing," Johnson said.

"It is our innovation and leadership in capital management, and the other ways we carry out this important mission, that assures the availability of funds and the affordability of credit to home buyers in times of financial instability."

Fannie Mae is a congressionally chartered, shareholder-owned company and the nation's largest source of funds for home mortgages. It has committed to provide $1 trillion in targeted lending for ten million homes by the end of the decade.

The targeted lending will serve low- and moderate-income families, minorities, and new immigrants, residents of central cities and other underserved areas, and people who have special housing needs.

Over the past 30 years, Fannie Mae has provided $2.5 trillion in mortgage financing for 32 million families. More information about Fannie Mae can be found on the Internet at http://www.fanniemae.com.

Style Usage: Fannie Mae's Board of Directors has authorized the company to operate as "Fannie Mae," and the company's stock is now listed on the NYSE as "Fannie Mae." In order to facilitate clarity and avoid confusion, news organizations are asked to refer to the company exclusively as "Fannie Mae."