Fannie Mae-No Politics (FNMA)

[obiterdictum]

Capuano Bill H.R. 491 - Does this free the GSEs or keep them in a debtors' prison?

It seems that there are those for, against and neutral toward this bill.

What is most curious about this, is that no opinion has applied the stipulated provisions of the bill to the facts at hand and available to everyone - Treasury draws made by the GSEs and dividends paid by the GSEs - to evaluate the bill.

For example, if the provisions are applied to the GSE draws and GSE dividends paid, what remains for the GSEs and shareholders? Will the loans be paid off or will the GSEs still owe? No one has done an amortization schedule for 30 years at 5% for the four different loans for Fannie Mae or five loans for Freddie Mac as stipulated.

Will their be an overpayment (what $ amount) or an underpayment (what $ amount?) for each of the GSEs? What will be done with an overpayment according to the bill?

It can be asked:

A. If the loans will be paid off as of 12/31/2016 with a remainder, will this not be a good bill to pass? And what will be done with the remainder? What does the bill state regarding overpayments and how to treat overpayment?

B. If the loans will not be paid off as of 12/31/2016 and/or there is considerable amounts in billions to be paid, is this bill worth considering and supporting?

There have been no answers to these questions asked previously.

Here is where due diligence applies.

Here are the provisions given by the bill to be applied using Treasury draws by the GSEs and GSE dividend payments :

(2) Treatment of enterprise draws on Treasury

That any amounts received, before or after such modification, during a single year by the enterprise as a draw on the commitment made by the Department of the Treasury under such an Agreement, shall be treated as a loan made by the Treasury to the enterprise that—

(A) was originated on the date of the last such draw during such year;

(B) has an original principal obligation in an amount equal to the aggregate amount of such draws;

(C) has a term to maturity of 30 years;

(D) has an annual interest rate of 5 percent for the entire term of the loan;

(E) has terms that provide for full amortization of the loan over such term to maturity; and

(F) shall be repaid by the enterprise in accordance with the amortization schedule established for the loan pursuant to subparagraph (E) of this paragraph, subject to paragraph (3).

Here are the official records of the Treasury draws and GSEs dividend payments.

Quarterly Draws on Treasury Commitments to Fannie Mae and Freddie Mac per the Senior Preferred Stock Purchase Agreements
https://www.fhfa.gov/DataTools/Downloads/Documents/Market-Data/Table_1.pdf

Dividends on Enterprise Draws from Treasury
https://www.fhfa.gov/DataTools/Downloads/Documents/Market-Data/Table_2.pdf

Here is an online amortization calculator
http://bretwhissel.net/cgi-bin/amortize -

The max amount that can be entered into this calculator is $10,000,000. So instead of inputting 59,900,000,000, simply input 59,900. Add the required zeros afterwards. Add the 5% interest. Add 12 payments per year. Add the 5% interest rate and 360 regular payments (30 years). Do not add ballon payment or payment amount. Select Show Amortization Schedule and click Calculate.

Try it for Fannie Mae (and/or Freddie Mac).

1. Enter Fannie Mae Aggregate of Draws Made Per Year
2009 - 59,900,000,000 - principal obligation
2010 - 27,700,000,000 - principal obligation
2011 - 23,978,000,000 - principal obligation
2012 - 4,571,000,000 - principal obligation
Total - 116,149,000,000 - principal obligation

The total interest to be paid is at the bottom of the each of the displayed amortization schedules.

2. Add the total principal and add the total interest to be paid for each loan by the end of the 30 years.

3. Sum the total principal and interest for the four loans to get the total amount to be paid the US Treasury according the bill provisions (we do not know what the actual amortization schedule will be as made by the Congress and/or Treasury, so this is an approximation).

4. Subtract the total to be paid by the four loans to the US Treasury from the total dividends paid in by Fannie Mae as of 12/31/2016.

Fannie Mae Total Dividends Paid as of 12/31/2016 - $154,375,000,000.

Is there an overpayment as of 12/31/16? - What amount?
Is there an underpayment as of 12/31/16? - What amount

This is one substantial way to estimate the value of this bill, according to its provision for the GSEs and shareholders.