After all these years, it is very clear. Their intention was to kill Fannie and Freddie. First, they exaggerated the bookloss and requested 10% interest paid quarterly. No organisation can afford that in 2009 given the housing crisis. Then, the Net Worth Sweep in 2012 made sure Fannie and Freddie can never exit their conservatorship. They show no respect to private property. Whatever their intention, this is unconstitutional.
Lucky for the shareholders, the NWS loan term is too innovative and completely ILLEGAL. In layman terms, “I am afraid you can never afford the interest payment. So from now on, I will suspend the interest payment. You pay me quarterly everything you have including any income or earning perpetually as dividend.” We need just one court case to get Fannie and Freddie out of their C-ship. No court dares saying that the NWS loan term is legal.
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