Fannie Mae-No Politics (FNMA)

[nats1]

If they were to maximize their value it would go like this.
1. SPS convert to commons.
2. Convert JPS to commons.
3. Exercise warrants to dilute JPS.

I hear you - and it makes sense. And they may do this. The Trump letter re-enforces the concept that the Government - meaning both parties -regardless of who is in power) intends to come out of this with big bucks. This is what our situation has been all about. And other similar situations in the past. The Government never loses.

That being said - there are other factors that may (I think would) have the Government backing off from squeezing us dry (us meaning both common and juniors). The court cases, politics, and social needs. It needs to resolve the major court cases and this means compromises. I don't think the Government wants this to go on beyond the 2024 election - or no money for the administration's housing agenda.

In terms of the JPS - the major holders will never agree to a settlement where this is even a chance - they aren't that stupid - and would just let things sit. As I have said before, I think the Government maxes out if they just simply redeem the JPS and after that gets the added benefit of reaping the resulting income taxes on profits by the evil hedge funds. So never rule out redemption.

The bottom line for me is that the Government will exercise the warrants and deem the seniors paid off and the LP cancelled or greatly reduced. So the commons and the juniors have a lot of value from here. But, at this point in the situation everything is on the table - including the status quo for the foreseeable future.

Nats