JPS's fair value today =6% of par value. FnF record the JPS on the Balance Sheet at their par value $25 or $50. $33B in total. But a different thing is their market price they should be trading at, according to a fair value that we can assessed today, discounting all the fraud and illegal actions that the JPS holders are delighted with. A conversion JPS to Common Stock is wishful thinking. Here's why: First, the conservator is barred from authorizing a haircut on the JPS par value, because it's recorded in Core Capital and its mandate is the Recapitalization: Put FnF in a sound and solvent condition.
Second. They have performed as they are meant to be. A non-cumulative JPS is core capital due to its loss-absorbing capacity with the dividend suspended for Capital adequacy purposes, unlike the cumulative dividend SPS.
Third. The fair value of the JPS (a fixed-income security) in the absence of dividend payment (coupon), trades at an annual 6% discount rate to par value, like the 30-year zero coupon callable Medium Term Notes in FnF. 6% rate is what the hedge funds demanded in these MTNs, when they were issued to defraud FnF in early Conservatorship, thinking that no one would notice it (screenshots on Twitter) With an adjusted $400B capital shortfall over Minimum Leverage Capital requirement that marks the Undercapitalized threshold, it means that it would take 16 years to meet it (the Risk-Based Capital requirement for the Adequately Capitalized threshold, is lower). One year more to meet the 25% of the Capital Buffer threshold that determines the date of dividend resumption per Table 8 of the Capital Rule, and it's not until then when the JPS's fair value fetches its par value. 17 years at a 6% discount rate, the fair value is approximately 6% of par value. Fourth. Therefore, in the case of a haircut today, it'd be a 94% haircut in the JPSs.
Fifth. The JPSs are non-convertible securities. Sixth. The dividend was impeccably suspended: -Restricted by law when undercapitalized. -Suspended by the conservator is authorized in its contract. -No legally available funds for distribution as dividend, out of a Retained Earnings account with deficit all along (Latest: adjusted $-216B) Seventh. A Conservatorship cannot be used for the assault on the ownership of FnF, the Common Stock.
Eighth. The JPS get a higher dividend rate than the interest rate on similar obligations, due to this risk of dividend suspension for Capital adequacy matters. Now the Risk-Based Capital requirement is 189% and 258% higher than 2008, in FNMA and FMCC, respectively. Let alone the statutory FHEFSSA Minimum (Leverage) Capital requirement that was 0.45% of the off-balance sheet obligations (MBS Trusts) and now, it's 2.5%. They have suffered Regulatory Risk. Blame the FHFA.
Ninth. Talk about restructuring 15 years into a Conservatorship, is crazy. The idea that all the actions by the conservator are legal, is crazy, regardless of the financial illiterates and crooked courts, that are precluded from getting involved in the Conservatorships.12 U.S. Code § 4617 (f)
BOTTOM LINE Their desire to tumble the Common Stock price with all this noise of Court news, nowadays with "cramdown", etc, will backfire. With the Separate Account plan according to the Law, Rules and Finance, it's estimated that the fair value of the JPSs fetched their par value in mid 2022 in Freddie Mac and the third quarter in Fannie Mae. They succeeded just because the Common Stock succeeded first, as for the threshold of dividend resumption, the Common Equity has to be built in the first place, avoiding any threat of dilution as a result. The JPS holders will get the par value of their stocks in full, whether they want it or not! The penalties for peddling the Govt theft story in formal documents will be devastating, plus penalties on the independent auditors that helped the conservator FHFA to commit the 8 Securities Law violations.
Never understood why the US Govt would screw themselves owning 79.9% of the common stock…. Huge frickin windfall to USG…. I own both, but Jesus, Joseph, and Mary…. Doesn’t make sense….
Quote: Our regulator is authorized or required to place us into receivership under specified conditions, which would result in our liquidation.” End of Quote
SPECIFIED CONDITIONS
The Treasury owns the whole of the companies. And could easily demand payment by placing the companies in receivership and there’s absolutely nothing we could do about it. And some how you think your JPS will be saved!
Your JPS is not protected with some kind of special immunity. Unless the Treasury writes down the LP and cancels the SPS the shareholders are history both common and JPS.
The Treasury wipes out the Shareholders and at the same time sells the companies in the open market as an IPO. The Treasury collects the entire value of the companies. And we get nothing.
READ IT !
Company’s financial statement
Risk Factors Summary GSE and Conservatorship Risk
Quote: "Our business activities are significantly affected by the senior preferred stock purchase agreement. Our regulator is authorized or required to place us into receivership under specified conditions, which would result in our liquidation. Amounts recovered by our receiver may not be sufficient to pay claims outstanding against us, repay the liquidation preference of our preferred stock or to provide any proceeds to common shareholders." End of Quote Page 33
Their leadership team could be veryy well quickly replaced if real shareholders have their say and the GSE's are not wholey owned subsidiaries of the government at release. No true shareholder here (I think), wants a bunch of hand selected government stooges running our companies.
If government ends up the primary apex voter on all things GSE after release then pref's and ommons will definitely get screwed on a dividend longer term.
News 
Market Data 
Discover 
AI
