Aspiration to Own a Home is Strong Across Ethnicities and Regions

Great Desire to Own a Home by Growing Ethnic and Immigrant Populations Could Drive Future Purchasing

WASHINGTON, December 16, 2010 - Fannie Mae (OTC Bulletin Board: FNMA) today released the second
installment of its 2010 Own-Rent Analysis, with highlights of the last two of
the report's four major themes: Renting and Owning Behaviors by Race,
Ethnicity, and Immigration Status and Economics of Owning and Renting Through
the Cycle and Across Geographies. Highlights of the first two themes were
announced last week, focusing on the finding that despite the housing crisis,
Americans maintain a strong desire to own a home. Today's highlights explore
attitudes and behaviors toward homeownership among ethnic groups and
immigrants and the economics of owning and renting over time and by
geographic region.

According to the study, all racial and ethnic groups polled, as well as
immigrants, strongly aspire to own a home, despite current disparities in
homeownership rates for these groups. Additionally, if personal finances
improve for these groups as they continue to grow in number, homeownership
rate disparities may not persist. However, the analysis also found that if
homeownership rates by race and ethnicity remained constant at 2009 levels,
projected homeownership would decline fairly steadily until 2050.

"Our study gives us reason to believe that the homeownership rates for
ethnic groups and immigrants will be higher than indicated solely by the
projected growth of the racial and demographic population," said Doug Duncan,
Fannie Mae Vice President and Chief Economist. "We routinely conduct research
like this to help us better understand the views of homeowners and renters
across specific demographics so that we can provide the best support possible
for the market."

On the geographic front, residents of Cleveland, Ohio; Phoenix, Arizona;
and Seattle, Washington were surveyed to measure attitudes and behavior
differences in cities with distinct real estate market characteristics. The
analysis found that despite dramatically differing housing markets and
percentages of underwater and delinquent mortgage borrowers, residents of all
three cities have similar, positive views about the benefits of owning for
both financial and lifestyle reasons.

The Fannie Mae 2010 Own-Rent Analysis is based on extensive primary
research with homeowners and renters (including focus groups and a
quantitative survey), U.S. Census Bureau data, and micro- and macro- economic
parameters, and explores the factors influencing consumers' decisions to buy
or rent a home. The analysis compares current consumer actions, attitudes,
and financial considerations with historical consumer behaviors, market
experience, and economic conditions. The results of the study were published
in a series of themed reports that cut the data across consumer life stage;
ethnicity/race/immigration status; and demographic, geographic, housing, and
economic status. The reports are available on www.fanniemae.com.

Overview of Key Findings

Ethnic Results

According to U.S. Census Bureau forecasts, the population is predicted to
become more racially and ethnically diverse, and most population growth will
come from immigrants and their descendants.

    - The U.S. population is projected to grow by nearly 130 million people
      over the next 40 years. Much of this growth will be driven by
      immigrants and their descendants. By 2050, non-Hispanic whites are
      projected to compose 46 percent of the population, compared with 65
      percent today.

Strong homeownership aspirations exist across races, ethnicities, and
immigrant groups, indicating that current disparities in homeownership rates
may not persist in the future, particularly if personal finances improve.

    - For first generation immigrants and for minorities, the percentages of
      survey respondents intending to own a home if they were to move in the
      future are higher than current ownership rates.

    - First generation immigrants and minorities are more likely to be living
      in multifamily housing and more likely to want to own these units.

    - Among all sub-groups surveyed, African Americans are most likely to
      rent their homes; 52 percent of African Americans rent, compared to 41
      percent of first-generation immigrants, 38 percent of Hispanics, and 25
      percent of whites.

    - If current racial and ethnic homeownership rates remain unchanged,
      overall homeownership will decrease in the U.S. by four percentage
      points by 2050, as immigrants and ethnic groups currently have lower
      homeownership rates than non-immigrants and whites.

Homeownership rates converge regardless of race, ethnicity, and
immigration status among people with higher incomes. And for immigrants,
homeownership also increases with tenure in the U.S.

    - According to U.S. Census Bureau data, among ethnic groups, non-Hispanic
      whites currently have the highest rate of homeownership at 76 percent,
      compared to 51 percent for white Hispanics, 47 percents for non
      Hispanic blacks, and 34 percent for black Hispanics.

    - Among survey respondents, whites have a homeownership rate of 71
      percent, compared to 44 percent for blacks and 53 percent for
      Hispanics. However, for blacks whose annual family income is between
      $50,000 and $99,000, the ownership rate soars to 60 percent (compared
      to 79 percent of whites) and for Hispanics, 63 percent.

    - Immigrants also tend to have lower homeownership rates but the gap
      quickly narrows over time as tenure in the U.S. increases. Within 30
      years of arrival in the U.S., immigrant homeownership rates catch up
      with overall average U.S. homeownership rates.

Geographic Results

While overall homeownership rates are fairly similar across Cleveland,
Phoenix, and Seattle, home prices and unemployment rates varied, contributing
to very distinct real estate markets.

    - Overall ownership rates are fairly similar across the three cities with
      the highest rate of ownership in Phoenix (66 percent) - although with
      more mortgages than the other cities (49 percent in Phoenix versus 37
      percent in Cleveland and 44 percent in Seattle). Seattle had the
      largest percentage of renters (35 percent) among the three cities (33
      percent in Cleveland and 31 percent in Phoenix).

    - Home price experience in the three cities has varied. Phoenix
      experienced the biggest house price bust, while prices have stayed at a
      fairly constant low level in Cleveland. Seattle has the highest prices
      and experienced a moderate drop during the crisis.

    - The unemployment rate has generally been highest in Cleveland and
      lowest in Phoenix.

    - The serious delinquency rate is highest in Phoenix, at 15.8 percent,
      and lowest in Seattle, at 7.7 percent.

    - Phoenix has the highest rate of self-reported underwater mortgage
      borrowers - 41 percent of all mortgage borrowers in Phoenix say the
      amount they owe on their mortgage is at least 5 percent more than the
      current value of their home (28 percent of mortgage borrowers in
      Seattle and 27 percent in Cleveland).

Despite these differing housing market histories, residents of all three
cities have similar, positive views about the benefits of owning for both
financial and lifestyle reasons:

    - For example, residents of Phoenix are more likely (76 percent) to say
      that given their current household finances, they are better off owning
      than residents of Seattle (69 percent) despite a far greater percentage
      of underwater borrowers (41 percent in Phoenix versus 28 percent in
      Seattle.)

    - Similarly, given current household finances, 72 percent in Cleveland
      say they are better off owning than renting, compared with 74 percent
      for the general population.

    - In all three cities, people are willing to spend more money to own
      their homes rather than rent.

    - In all three cities, residents are willing to buy even if they will
      stay in the home very briefly. Half of respondents will consider buying
      even if they plan to stay in the home two years or less, including 53
      percent in Cleveland, 51 percent in Phoenix, and 46 percent in Seattle.

In addition to examining attitudes and behaviors toward homeownership by
ethnicity, immigrant status, and geography, the analysis looked at the
economics of owning and renting. According to the analysis:

The complexity of weighing both financial and lifestyle factors when
deciding whether to own or to rent may result in some people favoring
homeownership over renting, even if renting is the more beneficial housing
decision.

    - Sixty-six percent of respondents say they believe that housing is a
      safe investment - as safe as an IRA or a 401(k) plan.

    - More than half say they believe that owning is a good idea, even if
      they plan to stay in the home less than three years.

    - Eighty-six percent identify tax benefits as a reason to buy, even
      though tax benefits are small or non-existent for many homeowners.

Survey Methodology

Penn Schoen Berland, in partnership with Oliver Wyman, conducted
telephone interviews with 2,041 members of the United States general
population plus 1,566 additional respondents from geographic areas of
interest. To inform the survey design, focus groups were held in Washington,
DC and Phoenix, Arizona during July and August 2010. The telephone interviews
were carried out during August and September 2010. In addition to the focus
groups and telephone survey, additional research was conducted to evaluate
the survey findings comparatively with historical market experience.

Fannie Mae exists to expand affordable housing and bring global capital
to local communities in order to serve the U.S. housing market. Fannie Mae
has a federal charter and operates in America's secondary mortgage market to
enhance the liquidity of the mortgage market by providing funds to mortgage
bankers and other lenders so that they may lend to home buyers. Our job is to
help those who house America.

Follow us on Twitter: twitter.com/FannieMae.

Subscribe to our RSS feed at www.fanniemae.com/rss/rss.xml.

Pete Bakel, Fannie Mae, +1-202-752-2034