FNMA Key Documents


FNMA 1Q15 10Q


NYT Response August 2015

Steele F&F Brief August 2015

USG Response to NYT 8.10.2015

USG Response to Fairholme 8.10.2015

Starr v. United States


Columbia Global Reports and ‘Shaky Ground’ Launch Event


Leaked Treasury Memo

NYUJLB Epstein Article

Pershing Square F&F Proposal

Fairholme F&F Proposal

Blackstone F&F Proposal

Millstein F&F Proposal

BlackRock Housing Finance Update August 2013

Blackstone F&F Article

17 Mile FNMA Restructuring Analysis October 2014

Millstein Statement 4.2013

Millstein Statement 11.2013

Housing Finance Reform & Taxpayer Protection Act of 2013

  • Federal Mortgage Insurance Corporation
    • Develop standard form credit risk-sharing mechanisms, products, structures, contracts, or other security agreements that require private market holders of a covered security insured under this Act to assume the first loss position with respect to losses incurred on such securities
    • Provide insurance on covered securities
    • Facilitate securitization of eligible mortgages originated by credit unions and community and mid- size banks without securitization capabilities
    • Ensure discipline and integrity in the market for covered securities by setting standards for the approval of private mortgage insurers, servicers, issuers, and bond guarantors
    • Standardize securitization agreements
    • Oversee and supervise the common securitization platform developed by the business entity announced by the Federal Housing Finance Agency and established by the enterprises
  • Risk Sharing
    • Private sector takes first-loss position of no less than 10% of outstanding covered security principle
    • Examine various risk-sharing mechanisms:
      • Examine proposals that include a senior-subordinated deal structure, credit-linked structures, and the use of regulated guarantors with sufficient equity capital to absorb losses associated with moderate or severe economic downturns
      • Consider any risk-sharing mechanisms, products, structures, contracts, or other security agreements undertaken by the business entity announced by the Federal Housing Finance Agency and established by the enterprises to provide a common securitization platform for issuers in the secondary mortgage market
    • Mortgage Insurance Fund
      • Reserve fund balance 1.25% of face value of insured covered securities within 5 years; and 2.5% within 10 years
    • Private Mortgage Insurers & Bond Guarantors

      • Standards developed by the Corporation (i.e. FMIC) for private mortgage insurers to insure the first-loss position in covered securities
      • Ditto for bond guarantors
  • FMIC Mutual Securitization Company
    • Provides securitization services to small financial institutions with less than $15B in total assets
    • F&F to sell securitization assets necessary for this operation to the FMIC MSC
  • Wind Down of F&F
    • Proceeds from wind down paid first to Senior Pref, followed by Junior Pref and Common in that order.
    • Goal is to maximize the return to the Senior Pref position

FNMA Corporate Charter (As amended through July 30, 2008)

  • Succession
    • The Association shall have succession until dissolved
      by Act of Congress
  • Treasury Temporary Authority
    • In addition to the authority under subsection (c) of this section, the Secretary of the Treasury is authorized to purchase any obligations and other securities issued by the corpora- tion under any section of this Act, on such terms and conditions as the Secretary may determine and in such amounts as the Secretary may determine. Nothing in this subsection requires the corporation to issue obligations or securities to the Secretary without mutual agreement between the Secretary and the corporation. Nothing in this subsection permits or authorizes the Secretary, without the agreement of the corpo- ration, to engage in open market purchases of the common securities of the corporation.
    • Emergency determination required. Actions must:
      • Provide stability to the financial markets
      • Prevent disruptions in the availability of mortgage finance
      • Protect the taxpayer
    • To protect the taxpayers, the Secretary of the Treasury shall take into consideration the following in connection with exercising the authority contained in this paragraph:
      • The need for preferences or priorities regarding payments to the Government.
      • Limits on maturity or disposition of obligations or securities to be purchased.
      • The corporation’s plan for the orderly resumption of private market funding or capital market access.
      • The probability of the corporation fulfilling the terms of any such obligation or other security, including repayment.
      • The need to maintain the corporation’s status as a private shareholder-owned company.
      • Restrictions on the use of corporation resources, including limitations on the payment of dividends and executive compensation and any such other terms and conditions as appropriate for those purposes.

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