Replies to post #680315 on Fannie Mae-No Politics (FNMA)

[kthomp19]

Great find. Do you have a link handy?

The Budget projects those levels will not be reached during the Budget window and accordingly reflects no dividends through 2031.

That's eye-opening, in my opinion. The value of the seniors is some percentage (or perhaps discounted NPV) of their liquidation preference plus the NPV of future dividends. That would mean that the valuation in the budget doesn't include senior pref dividends at all.

Of course, the "Government-sponsored enterprise stock" line item on page 62 isn't much different than last year, so January's letter agreement doesn't seem to have had any effect on it. I find that quite strange, actually.




I did find a new line in the actual budget, one that hadn't been in past budgets. It's footnote 7 on page 62:

"Treasury’s warrants to purchase 79.9 percent of the common stock of the enterprises expire after September 7, 2028. The warrants were valued at $13 billion at the end of 2020."

In fact, I wrote a Twitter thread on the topic that you can read if you are so inclined.