Replies to post #553553 on Fannie Mae-No Politics (FNMA)

[Brooge warrants cancelled]

https://www.bloomberg.com/news/articles/2019-09-06/fannie-freddie-slump-as-trump-plan-disappoints-wall-street

[RickNagra]

This is a great article and worth reading several times. Highlights include :

Treasury's reform plan most closely resembles the "Recapitalize and Release" option as outlined in Fitch's "U.S. Housing Finance: Potential Paths of Reform for Fannie Mae and Freddie Mac" report from April 2018. The Treasury plan advocates for Fannie and Freddie to build capital with the eventual goal of re-privatizing the GSEs and releasing them from conservatorship.

Amendment to PSPA Sought
Importantly, Treasury and the Federal Housing Finance Agency (FHFA) are expected to amend the Treasury's Senior Preferred Stock Purchase Agreement (PSPA); however, the number of steps to be completed prior to amending the PSPA would require a moderate level of time and resources.

Amending the PSPA to replace the net worth sweep with a periodic commitment fee would allow Fannie and Freddie to start building capital and prepare them for a post-conservatorship world. Treasury's plan calls for continued support through continuation of the PSPA after the GSE's would be released from conservatorship to the extent that Congress does not enact an explicit guarantee on the mortgage-backed securities (MBS).

Are you kidding Fitch ?

Fitch expects that the FHFA will likely release an updated capital adequacy proposal that would require more capital than the FHFA's proposed (but not finalized) capital rule from June 2018.