Replies to post #382369 on Fannie Mae-No Politics (FNMA)

[stockprofitter]

Paid in full no matter how you spin the math..

[2cuall]

R u and alongz brothers

[obiterdictum]

Obit, you may have answered this and I am way behind

from the linked post

That any dividends paid by the enterprise to the Department of the Treasury under the Senior Preferred Stock Agreement before such modification of such Agreement shall be treated as payments of principal and interest due under the loan referred to in paragraph

if the law (proposed) sets interest at 5% - how is anything (even a dollar) amortized until there is an overpayment - which I believe did not happen for quite a while ?

I do not understand your question.

Even so, Bill H.R. 491 proposes to change the senior preferred stock /dividends/NWS investment arrangement currently established by the SPSPAs via a mutual agreement between Treasury and the GSEs into a set of 30 year loans on amortization schedules at 5% interest. In this change, dividends paid are assigned and counted as principal and interest paid for these amortized loans beginning the with first originated loan and then going to the next.

Here are loan arrangements in H.R. 491:

SEC. 2. REPAYMENT OF TREASURY BORROWING.

The Secretary of the Treasury and each enterprise (acting through the conservator for the enterprise appointed pursuant to section 1367 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4617)) shall enter into an agreement that modifies the Preferred Stock Purchase Agreement for such enterprise to provide as follows:

(1) TERMINATION OF DIVIDENDS.—That after such modification, any Senior Preferred Stock purchased under such Agreement by the Department of the Treasury shall not accrue further dividends.

(2) Treatment of enterprise draws on Treasury

That any amounts received, before or after such modification, during a single year by the enterprise as a draw on the commitment made by the Department of the Treasury under such an Agreement, shall be treated as a loan made by the Treasury to the enterprise that—

(A) was originated on the date of the last such draw during such year;

(B) has an original principal obligation in an amount equal to the aggregate amount of such draws;

(C) has a term to maturity of 30 years;

(D) has an annual interest rate of 5 percent for the entire term of the loan;

(E) has terms that provide for full amortization of the loan over such term to maturity; and

(F) shall be repaid by the enterprise in accordance with the amortization schedule established for the loan pursuant to subparagraph (E) of this paragraph, subject to paragraph (3).

(3)Treatment of dividends paid
That any dividends paid by the enterprise to the Department of the Treasury under the Senior Preferred Stock Agreement before such modification of such Agreement shall be treated as payments of principal and interest due under the loan referred to in paragraph (2), and shall be credited against payments due under the terms of such loan (in accordance with the amortization schedule established for such loan pursuant to paragraph (2)(E)), first to such loan having the earliest origination date that has not yet been fully repaid until such loan is repaid, and then to the next such loan having the next earliest origination date until such loan is repaid.

Source:
H.R. 491
https://www.congress.gov/bill/115th-congress/house-bill/491/text