Fannie Mae-No Politics (FNMA)

[Wise Man]

Now, that's a spin! "SPS LP only paid upon Liquidation".

That repayment obligation only triggers if and when FnF are actually liquidated.

It's the residual value on the balance sheet after liabilities are subtracted from assets. That doesn't require actual repayment of the debts.

"The SPS LP is a debt that is owed to Treasury."
Only upon liquidation.

-First, all the Preferred Stocks are permanent securities but redeemable at the option of the issuer by definition.

-The feature that makes them Equity, is the Liquidation Right.

-Equity doesn't mean that they cannot be redeemed by the companies, like any other similar fixed-income security recorded in Debt.

-In the case of a JPS, the feature that makes them regulatory capital is the Non-Cumulative dividend feature (loss-absorbing capacity Capital-wise).

-The Liquidation Preference is how the no par value SPS is valued on the Balance Sheets. I've seen many other series of Preferred Stocks on the market that are also valued at their Liquidation Value, instead of their par value even in they have one.
On the other hand, the JPS that also have a Liquidation Right, are valued at par value $25 or $50.
A Liquidation Right is related to the preference in the distribution of dividends and funds upon Liquidation, but it doesn't mean that the SPS or JPS are paid off or redeemed only upon Liquidation. For instance, the JPS have a Redemption Value and different Redemption dates in their prospectus, which now can be trumped by the FHFA-C's Incidental Power. It isn't specified in the SPS certificate. It doesn't mean that they cannot be reduced and it has more to do with obscurantism and a plan of deception from the onset.

-Other theme is that the JPS have a Fair Value like any stock.

The attorney kthomp19 reminds me of Timothy Howard with "the SPS are non-repayable securities" in an amicus brief at the SCOTUS, something not written anywhere.
Both attempt to hinder the Separate Account and the fact that the reduction of SPS is the only capital distribution authorized in the law.
Let alone that the repayment of the taxpayer's assistance is the first thing to do.
Pagliara's clerk, Guido, also said something like this, stating that the Liquidation Preference only matters upon Liquidation. A half truth, because it's also the value chosen for their daily stock valuation.

BOTTOM LINE
The attempt to replicate the bailout of the FHLBanks in 1989, with FnF paying only dividends and then, the SPS are repaid at the end (this is why the assessments by the FHLBanks sent to their Separate Account were reinvested in zero coupon Treasuries -Source-, so that the face value matches the principal of the RefCorp obligation at maturity), went wrong.
FnF paid dividends, not interests, and those are restricted. It's legalized contending that the whole "cash dividend" was an assessment for the reduction of SPS, which were repaid at the same time (watch my signature image below with Freddie Mac) as the Common Equity increased, not at some point in the future.
What has been reinvested in zero-coupon Treasuries, theoretically, is the $110B SPS overpayment, plus the Charter-unauthorized CRT expenses, net, plus the $25B PLMBS lawsuit settlement. The interests due are, in turn, netted with the cumulative dividend on SPS owed by FnF (weighted-average 1.8% div rate with a 0.5% spread over Treasuries, versus a 0.299% spread in the FHLBanks -GAO report-).
DeMarco understood it right from the beginning and this is why he enacted the NWS dividend, the fastest pace to that end, that followed up with the Separate Account for their recapitalization.