Replies to post #449483 on Fannie Mae-No Politics (FNMA)

[Cubshawk]

DumbDumberDumbest Making a mistake saying repeatedly that FnF have negative Equity, just because you haven't read carefully the how the SPSPA explains the mechanism of the draw and the Deficiency Amount, is unforgivable.

Surely you can find a way to forgive him...

[contrarian bull]

Thanks for the help, Dumb. I think everyone on here wants to fully understand the net worth since it is critical to the value of the stock.

I agree with all you said. The draws show up twice in the balance sheet - once as cash or equivalent in the asset section, and once as senior preferred stock in the liabilities section. Do we not agree?

So when they take a draw - the same numbers appear on both sides of the balance sheet and cancel out, so no change to net worth. What am I missing?

I do want to correct where you say Deficiency Amount is assets less liabilities. Don't forget to exclude the senior preferred obligation from libilities as specified in the PSPA.

After 9 years into Conservatorship you lack understanding of basic concepts.
The draw and the Senior Preferred Stocks are the same. I mean both occur at the same time and for the same amount of money. FnF get the money and issue SPS to Treasury as a compromise of repayment. The SPS are accounted for in the Balance Sheet and is what "zeroes" the Net Worth.
The Deficiency Amount is Assets less Liabilities, in other words, the Net Worth.