Fannie Mae (FNMA)

[kthomp19]

I think what Epstein should have used another word besides "commitment". The commitment he is referring to is the termination of how the increase of sps used to be accounted for. That calculation is terminated.

What is misinterpreted here is the definition of commitment. Epstein should have used another word. Using commitment is technically not wrong either. Its just all of us here use it to mean the funding commitment..

The part about "following termination of the commitment" is a direct quote from the senior pref stock certificates, capitalization notwithstanding. Specifically, they are the first four words of Section 3(a) on page 3.

Epstein most certainly was talking about the SPSPA funding commitment from Treasury in his analysis. The problem is that he focused on the part of Section 3(a) that talks about what is possible after the funding commitment has terminated, which is inapplicable in both the past and present because the funding commitment has been in place continuously since 2008.

The part of Section 3(a) that says "Prior to termination of the Commitment" is what matters here, and that part says FnF can only pay down senior pref liquidation preference increases due to incomplete or missing dividend or commitment fee payments. Since none of those ever happened (as Lamberth said, those conditions "have never in fact occurred"), FnF never had the ability to pay down the seniors.

That means any remedy that assumes FnF would have paid down the seniors also has to assume that FHFA and Treasury would have amended the SPSPAs - in August 2012 - to allow that repayment. This was too speculative for Lamberth, which is why he denied the plaintiffs the ability to ask for expectancy damages (which is the source of the $16.92 per share for FMCC number).

Please don't fall victim to Rodney's twin fallacies of argument from authority (Epstein's titles and credentials don't matter here, he was wrong) and argument from repetition (no amount of repetition makes a falsehood true).