Fannie Mae (FNMA)

[kthomp19]

Voided would indicate the NWS never happened reverting back to 10%.
And if it goes back to 10% then they have been paid back plus some.
So question one is answered with a NO for conversion. No sp would exist.

Plaintiffs in the various cases presented two ways in which to void the NWS. The one you outline is one of them.

The other involves the assumption that FnF would have just paid the 10% dividend on the seniors of $18.7B per year and kept the remainder. Treasury would have to repay this remainder in cash but would keep the seniors fully intact, though only at a liquidation preference of $187B because that's where it stood the day the NWS was signed.

Before the September 2019 letter agreement that remainder (the cash payments over the 10% dividend rate) was $125B. But now that number has gone down because for the last three years, FnF has paid Treasury zero in cash dividends. If the NWS hadn't happened FnF would have paid $18.7B per year instead. So the remainder Treasury would owe FnF in cash is now $69B (in addition to resetting the liquidation preference to $187B), which is $125B minus 3 times $18.7B, and that overage drops every quarter as FnF retain earnings.

At that point there would be no more possible court victories coming, except perhaps damages directly to shareholders in Lamberth's case. In this case, Treasury would be certain to convert the seniors to commons to make up that $69B outlay rather than cancel the seniors and eat a $69B loss.

The problem with your approach, which was the plaintiffs' first recommendation, is that it assumes the seniors could be paid down at any time. This is incorrect, as I showed in this post. Since the funding commitment has never ended, FnF could not and cannot pay down the seniors any time they want(ed). That means unwinding the NWS cannot result in the seniors disappearing because it would violate the terms of the original SPSPAs, which were signed before the NWS and no plaintiff is trying to overturn those.