Fannie Mae-No Politics (FNMA)

[WB_fan82]

Guido:

On those G-fees, I think they actually are on the balance sheet. They are included in the fair value of the loans. But it is the offsetting LIABILITY that carries the economic effect with regard to capital. It's basically a phantom liability. The liability evaporates over the life of the mortgage (or all at once if the mortgage pays down / refis). That liability should arguably be a capital adjustment.

So the assets ARE there. But the liability booked against them is not an actual economic liability. It only exists to create the timing aspect to recognize the upfront fees as income over time.