Replies to post #550924 on Fannie Mae-No Politics (FNMA)

[YanksGhost]

Hi Fully,

Guarantee fees are recorded as gross margin and any surplus gets recorded as income and becomes accretive to retained earnings. Retained earnings are part of regulatory capital.

Fees assessed as provisions for loan loss reserves get recorded as reserves, not gross margin, and are ineligible to qualify as regulatory capital. This explains why the GSEs loan loss reserves were not taken by Treasury via the NWS, but all the capital was taken (excepting the piddly $3 B buffers).

It's five o'clock somewhere.