Purchase Agreement Fnma

On September 6, 2008, as part of a four-part government intervention, the Federal Housing Finance Agency (FHFA) added the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), two state-sponsored companies (GSEs) that dominated the U.S. secondary mortgage market. At the same time, the FHFA, as a custodian, entered into senior preferred share purchase agreements (SPAS) with the treasury, under which the treasury committed to provide funds to ensure the positive net assets of the GSEs. In return, Treasury received senior preferred shares and a warrant to purchase 79.9% of the common shares of the GSE. The APSS have been amended three times, imposing additional restrictions and obligations on GSEs. This case indicates that the agreements have achieved their urgent objective of maintaining positive net worth for both ESG. However, the Third Amendment`s variable dividend formula, introduced in 2013, has been discussed by academics and questioned by shareholders. At the time of publication of this case, the SPAS are still in effect and Fannie Mae and Freddie Mac remain at the Conservatory. On September 30, 2019, the Treasury Department and the Federal Housing Finance Agency (FHFA), which served as curators for Fannie Mae and Freddie Mac, announced changes to their respective senior preferred share certificates that will allow Fannie Mae and Freddie Mac to hold in profits beyond the $3 billion in capital reserves previously authorized by the 2017 letter agreements. Fannie Mae and Freddie Mac are now allowed to maintain capital reserves of $25 billion and $20 billion, respectively. These changes were recommended in the Treasury`s Housing Reform Plan released on September 5, 2019. FHFA Director Mark Calabria issued a statement on the 2019 letters of agreement when they were announced.

WASHINGTON – The U.S. Treasury and the Federal Housing Finance Agency (FHFA) today announced an agreement to amend preferred share purchase agreements (PPAs) between the Treasury and each of the Fannie Mae and Freddie Mac (GSEs) to move GSEs to a level of capitalization commensurate with their size, risk and importance to the U.S. economy. and to codify several existing conservatory practices of the FHFA. including providing safeguards to small lenders and limiting future increases in certain higher-risk lending practices. The agreement also outlines a plan for the Ministry of Finance, in consultation with the FHFA, to develop a proposal for GSE reform. In return for its commitment, the Treasury received non-voting senior preferred shares of each GSE, warrants for the purchase of 79.9% of the GSE common shares and a fee for a periodic commitment fee to be determined at a later date. The senior preferred shares liquidation preference increases by the amount of each drawdown of the PSPA financing commitment, and after $191.5 billion in combined draws and $37.2 billion in non-cash increases, the combined senior liquidation preference for GSEs is now $228.7 billion. To better protect against unexpected future losses, Secretary Mnuchin and Director Calabria decided that GSEs should be allowed to continue to accumulate more first-loss capital to stand in front of taxpayers and protect them. To this end, treasury and FHFA have today entered into written agreements that will allow GSEs to continue to hold equity until their minimum regulatory requirements, including capital buffers, as required by the FHFA`s corporate capital framework completed in December 2020. The purchase contract that Fannie Mae requires of the buyer when buying his properties contains a clause in which the buyer agrees to receive a deed with restrictions.

The restrictions of the act can effectively prevent the way in which the real estate investor can finance his rehabilitation. The restrictions of the deed prevent buyers from selling the property for a period of 3 months from the date of purchase for more than 120% of the initial purchase price. In addition, it prevents the buyer from pledging the property in question up to the nominal amount greater than 120% of the purchase price for a period of 3 months from the date of purchase. So, if you intend to complete the rehabilitation quickly and resell the property in question, then this deed restriction would not allow a sale of more than 20% above what you paid in the first 3 months. If you intend to obtain a rehabilitation loan of 20% more than the purchase price of the property, the title cannot be fully insured and the rehabilitation lender will not finance the amount of the loan required to carry out the project. On December 21, 2017, written agreements between the Consolidated Revenue Fund and each corporation amended the terms of the respective senior preferred share certificates issued under the SPAS to allow each corporation to hold a capital reserve of $3 billion on a quarterly basis. Under the 2017 written agreements, each corporation paid a dividend to the Consolidated Revenue Fund equal to the amount whose net worth exceeded $3 billion at the end of each quarter. These conditions applied to the payment of the December 31, 2017 dividend and dividend payments for each quarter thereafter until the signing of the written agreements on September 30, 2019. . .