Fannie Mae-No Politics (FNMA)

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FNMA Q2 filing: 4) Lawsuits Challenging the Senior Preferred Stock Purchase Agreements and Conservatorship


Several lawsuits have been filed in recent months by preferred and common stockholders of Fannie Mae and Freddie Mac against the U.S. government and, in some cases, the Secretary of the Treasury and the Acting Director of FHFA challenging actions taken by Treasury and FHFA relating to the senior preferred stock purchase agreements and conservatorships of Fannie Mae and Freddie Mac.

We are not a party to these lawsuits, except for the Cacciapelle, American European Insurance Company and Dennis suits described in “Note 17, Commitments and Contingencies.” The legal claims being advanced by these lawsuits include challenges to the net worth sweep provisions of the senior preferred stock, which were implemented pursuant to the third amendments to the senior preferred stock purchase agreements entered into in August 2012.

These lawsuits seek various forms of relief, including monetary damages and injunctive relief nullifying the third amendments to the senior preferred stock purchase agreements.
For a description of the third amendment to our senior preferred stock purchase agreement with Treasury, see our current report on Form 8-K filed with the SEC on August 17, 2012.

We cannot predict the course or the outcome of these lawsuits, or the actions the U.S. government (including Treasury or FHFA) may take in response to any ruling or finding in any of these lawsuits. Accordingly, we cannot predict what impact, if any, these lawsuits will have on our business.

Lawsuit Regarding the Housing Trust Fund

In July 2013, a lawsuit was filed against FHFA and the Acting Director of FHFA challenging FHFA’s decision to suspend Fannie Mae’s and Freddie Mac’s contributions to the Department of Housing and Urban Development’s (“HUD”) Housing Trust Fund. See “Legal Proceedings” for a description of this lawsuit and its potential impact on our financial results.

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http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=9442903