Fannie Mae-No Politics (FNMA)

[HoldenWalker99]

An oft ignored fact that hurts common equity valuation.

FnF's earnings have been inflated by $8B per year by a benefit for credit losses that will roll off at the end of the year.

We'll need some commitment from FHFA that (1) Temporary Payroll Tax Cut Continuation Act of 2011 g-fee of 10 bps will go to GSEs not Treasury and (2) g-fees will increase 10 bps to make up this difference.

Each would be worth $4B to offset the $8B above. But (2) have negative consequences on GSEs book of business.