Fannie Mae-No Politics (FNMA)

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IMF News: Fannie and Freddie Have a Liquidation Value of $200 Billion?
By Paul Muolo

Fannie Mae and Freddie Mac have a liquidation value – excluding what they’ve already paid to the federal government – of roughly $200 billion, according to an independent evaluation conducted on the two GSEs, said officials with knowledge of the audit.

The report, conducted by Alvarez & Marsal, was making the rounds in Washington Wednesday morning. John O’Neill, a managing director in the evaluation firm of Alvarez & Marsal, confirmed to IMFnews that his company conducted an evaluation on the GSEs for the Blackstone Group, but said he was not at liberty to discuss its contents.

At press time, no other information was available on the matter.

Several hedge funds have bought large stakes in Fannie/Freddie junior preferred and common the past two years, essentially placing a bet on their return to profitability and the likelihood that down the road they might be entitled to a payout.

By the end of March, Fannie and Freddie will reach a milestone: they will have paid the U.S. more in dividends than the $188 billion in federal assistance they received from the U.S. Treasury. For more on the story, see the Thursday edition of Inside Mortgage Finance.