Fannie Mae Preferred S (FNMAS)

[jwnoble3]

I think its good to review the 3rd amended Sr Pref agreement

See pg 6 specifically. TSY draws the line at no point will they require FMCC to hold less than 250B in Mort. Assets. Also they suspended the periodic commit fee (both good news to me)

http://www.treasury.gov/press-center/press-releases/Documents/Freddie.Mac.Amendment.pdf

Also, at this point they are going to allow FMCC little capital reserve
http://www.freddiemac.com/investors/er/pdf/2012er-3q12_release.pdf

On August 17, 2012, Freddie Mac, acting through FHFA, as Conservator, and Treasury entered into a third
amendment to the Purchase Agreement. This amendment, among other items, replaced the fixed 10 percent dividend rate with a net worth sweep dividend and suspended the periodic commitment fees (both beginning in 2013). Under this amendment, Freddie Mac will be required to pay dividends to the extent that its net worth exceeds the permitted capital reserve. The amount of the permitted capital reserve will be $3 billion in 2013 and will be reduced by $600 million each year thereafter until it reaches zero in 2018. The amendment effectively ends the circular practice of taking draws from Treasury to pay dividends to Treasury

I believe at the ~250B Mort Asset mark a much smaller FMCC is to be re-capitalized w/private capital with Congress charter removed as well and TSY holding warrants for 79.9% to continue to sell off over time.