Fannie Mae Preferred S (FNMAS)

[jwnoble3]

I believe they would not want to re-capitalize until the 200B in lawsuits are settled with money center banks.

Also, Very interesting on page 8, the allowance to build a networth reserve starting at $3B (2013), $2.4B (2014), $1.8B (2015)...$0 in 2018. Trying to figure out - why allow the networth reserve until 2018? Isn't this equity? Is TSY leaving an out to allow them to recapitalize and sell off thier stake?


On August 17, 2012, Treasury announced modifications to the Purchase Agreement aimed at supporting the continued flow of mortgage credit by providing the market with additional confidence in the ability of the GSEs to meet their commitments while operating under conservatorship
The modifications to the Agreement include:
» Replacement of the fixed 10% dividend payment with a variable dividend payment based on net worth (a “net worth sweep” dividend) beginning for the first quarter of 2013
– The agreement allows Freddie Mac to build a net worth reserve of $3 billion during 2013; the reserve will be reduced by $600 million each year beginning in 2014 until
it reaches zero in 2018
– The “net worth sweep” dividend for a quarter would be equal to the amount of Freddie Mac’s net worth in excess of the reserve at the end of the immediately preceding quarter
– If the calculation of the dividend amount for a quarter does not exceed zero, then no dividend will be paid for that quarter.