Fannie and Freddie Now Allowed to Keep Some Profits

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Posted To: MND NewsWire

Agreement has been reached between the Federal Housing Finance Agency (FHFA) and the Department of the Treasury to reinstate a $3 billion capital reserve amount under the Senior Preferred Stock Purchase Agreements (SPSA) for Fannie Mae and Freddie Mac beginning in the fourth quarter of 2017. The change will be effective for the dividend reflecting the GSEs’ financial condition as of the fourth quarter of 2017 which ends on December 31. An amendment to the SPSA agreement in 2012 changed the dividend payment from the GSEs to Treasury from a percentage of the GSE’s net quarterly profits as originally agreed, to a sweep of all profits less a capital reserve amount that steadily decreased. The reserve was due to hit zero after the 4th quarter 2017 payment. Watt released an announcement Thursday…(read more)

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