There is power in

AGENCY

“The market for Agency mortgage-backed securities…is closely linked to the Treasury market and critically supports the ability of people to get a mortgage to buy a house or refinance an existing mortgage.”

Jerome Powell, Chair of the U.S. Federal Reserve

FOMC Press Conference, March 2020

Benefits of Agency MBS

Differentiated Asset

Fundamental fixed income asset class that supports the U.S. mortgage market with minimal correlation to equities

Government Support

Agency-backed guarantee from Fannie Mae, Freddie Mac, or Ginnie Mae eliminates credit risk for investors

Substantial Yield Opportunity

Ability to employ leverage through highly attractive funding enhances return potential

Highly Liquid Market

Massive fixed income asset class with substantial trading liquidity, second only to the U.S. Treasury market

Investment Opportunity in
a Fundamental Asset

The Agency MBS market is regarded by the Federal Reserve as a pillar of our financial system, and AGNC provides a liquid and efficient way for stockholders to gain exposure to this impactful asset class.

$46T
U.S. Housing Market Size
$9T
Agency MBS Market Size
$254B
Agency MBS Average Daily Trading Volume

The Agency MBS Lifecycle

The dynamic ecosystem between lenders, the Agencies, and investors such as AGNC is crucial to ensuring capital is available to facilitate U.S. homeownership.

Homeowners Apply

1

Borrower applies for a mortgage loan from a bank or other lender to purchase or refinance a home

  • Lender analyzes borrower’s financial information to evaluate credit quality and minimize risk of homeowner default on the mortgage.
  • Borrower is approved for mortgage to buy or refinance the home if proper requirements are met, and the property serves as collateral to secure the loan.

Agencies Bundle

2

Lenders transfer eligible mortgages to the Agencies, which bundle them into guaranteed securities known as Agency MBS

  • Agencies Fannie Mae, Freddie Mac, and Ginnie Mae guarantee millions of conforming mortgages originated by U.S. lenders each year, which protects investors in the event that homeowners default on these loans.
  • Each MBS represents a diversified pool of thousands of mortgages secured by residential properties across the U.S. that conform with the Agencies’ rigorous underwriting standards.

Investors Purchase

3

AGNC and other fixed income investors purchase pools of Agency MBS, which include an Agency-backed guarantee against default

  • Agency MBS provide attractive yields for investors seeking steady income without default risk, such as banks, pension funds, ETFs, and REITs.
  • MBS investors receive monthly distributions of the cash flows generated by principal and interest payments from the underlying pool of mortgages.

Capital Recycles

4

Investor capital cycles through this housing ecosystem, increasing the availability of financing to homeowners

  • Investors’ capital used to purchase Agency MBS flows back to lenders, who then use the capital to originate more loans for other borrowers.
  • As monthly cash flows are received, investors generate yield and actively reinvest capital into new Agency MBS pools, and the cycle continues.
The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) are U.S. Government-sponsored enterprises (GSEs) that issue and guarantee mortgage-backed securities (MBS). The Government National Mortgage Association (Ginnie Mae) is a U.S. Government agency that guarantees MBS issued by approved lenders who participate in its programs. These three entities are collectively referred to as the “Agencies,” and the mortgage-backed securities that are guaranteed by one of these three entities are “Agency MBS.”