Fannie Mae (FNMA), Freddie Mac (FMCC): New Document Release

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A new screenshot floating around Twitter today hints at a new release from Judge Sweeney’s court.  (Edit: Confirmed on Pacer The full exhibit is available here The release is 727 pages and this is just 173 pages of exhibits.). The new documents shine some interesting light into the original government plans for Federal National Mortgage Assctn Fnni Me (OTCMKTS:FNMA), and Federal Home Loan Mortgage Corp (OTCMKTS:FMCC). The document shows a transition timeline which had no net worth sweep but a plan to take the companies private. Clearly the government changed their  plan when it went with the Net Worth Sweep in 2012.

Plan was supposed to take Fannie and Freddie Private and Out of Conservatorship

The plan would have converted Treasury Preferred to non-cumulative preferred stock, and passed some sort of drafted legislation in 2013. The companies would have been allowed to start building capital in 2014-2015. 2016 would have been a bigger year with the companies leaving conservatorship and the preferred stock being converted to common stock with a full recovery of net cash investment for the Treasury. The companies would have also conducted an equity rights offering to accelerate the Treasury’s repayment. From 2017 to 2020 the Treasury would have divested the remaining amount of their common stock.

Plan would mean dilution for Common Shares

One element to note in this plan is that it would have diluted common holders as the government would have converted its preferred into common shares by 2016 at a valuation that would ensure full recovery of net cash investment for the Treasury. There is no indication as to what the government planned to do with their warrants.

New Question: Why did Government go a new route?

The government clearly had a plan to free both companies from conservatorship and return them back to private ownership. These documents raise the question as to why they decided to audible to enact the Net Worth Sweep and go a different route when they had a very viable plan to free the companies. The new question is why? What we know for sure is it was not motivated by avoidance of a death spiral as was originally fed to us.

Editor’s Note: This document is a part of this exhibit.

Disclaimer: Author has positions in Fannie Mae Preferred, and Freddie Mac Junior Preferred.

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  • Speedjcp


    • Gus Noriega

      There is NO “Freddy Fannie Gate” though I also think its time for the Government to let them back into the FREE MARKET.
      When the crash of 2008 happened they were the biggest reason why and need 187 billion dollar bailout. Was the Government supposed to say ‘ok you paid the money back here go back to the free-market and fuck shit up again? No! The #1 duty of the government is to *protect* its people from natural, physical and financial disaster. For the crash of 2008 someone had to be made an example of and it was F&F.

      Though how much is enough? When do we forgive and give another chance to them? In the US if you do some wrong you pay the price and then you are forgiven. What did they get sentenced to life?

  • Jarvis210

    If you like corruption, then the U.S. is the place to be. . One only needs to take a walk down to their local county courthouse to see the TRUTH. Foreclosures are at an all time high. Most state regulators do NOTHING to help homeowners by refusing to go after the banksters who CONTINUE to STEAL AND PILFER by perpetuating FRAUD on the courts and the people… The banks–one example: Ditech Financial…formerly Green Tree Financial (name change to cover up illegal practices and $60 million fine by CFPB)…hand in hand with Bank of America, or as they like to refer to themselves..FKA cahoots with their slimy, underhanded Substitute Trustee attorneys (ie Samuel I White PC )..are submitting FORGERIES of owners signatures on mortgage notes, along with fake stamped TA-DA endorsements and are using these fabricated documents as evidence in courts across the country to steal homes in FRAUDULENT foreclosures. The forgeries are done through trace/digital means and the felonies and fraud upon the courts are happening in MASSIVE numbers as the judges, and state regulators turn a blind eye to the banksters who CONTINUE to steal and pilfer. Mail Fraud, forgery, racketeering, etc…..instead Bail outs and settlements are given to hide their crimes, loans that have been paid off over and over to the banks through the biggest ponzi scheme the world has seen., lies about modifications…AND not one gold collared bankster goes to prison…and instead…they CONTINUE to commit their crimes. The so called “judicial ” system cares not to do what it is supposed to do and merely denies justice and reaffirms most every case brought before it. Other states, such as Florida are not taking it any longer and are beginning to stop the crimes. ( Judge Butchko, a judge who ISN”T bought and paid for) IT’s truly a sad, demonic thing that is being perpetuated on homeowners and the sicko banksters who are running the beast system from behind their ugly curtain are …. pathetic. Massive fraud continues to take place and continues to be covered up). Anyone who believes the Wall Street bailout ended in 2008 is SADLY mistaken.

  • Franklin Johnson

    Let’s not get too excited. This was not the U.S. Government’s plan. The document cited is from Jim Millstein, who was not with the U.S. Government at the time, and whose ideas on housing finance reform were rejected by Treasury and the White House.

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