Fannie Mae-No Politics (FNMA)

[NobodyFromNowhere]

2012 Changes to SPSPAs
In August 2012, Treasury and FHFA changed the Senior Preferred Stock Purchase Agreements with Fannie Mae and Freddie Mac.

In addition to requiring a faster wind-down of their portfolios, the 10 percent fixed-rate dividend was replaced with a variable structure, essentially directing all net income to the Treasury. Replacing the current fixed dividend in the agreements with a variable dividend based on net worth helps ensure stability, fully captures financial benefits for taxpayers, and eliminates the need for Fannie Mae and Freddie Mac to borrow from the Treasury Department to pay dividends.

As Fannie Mae and Freddie Mac shrink, the continued payment of a fixed dividend could have called into question the adequacy of the financial commitment in the preferred stock agreements. The accelerated decrease of the retained mortgage portfolio reduces risk exposure.

The changes also give a level of certainty to Fannie Mae, Freddie Mac, and market participants.

http://www.fhfa.gov/Conservatorship/Pages/Senior-Preferred-Stock-Purchase-Agreements.aspx