Posted To: MND NewsWire

Late last week the Federal Housing Finance Agency (FHFA) and the U.S. Department of the Treasury (Treasury) agreed to amend the Preferred Stock Purchase Agreements (PSPAs) which govern the required distribution of dividends to Treasury from the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. The amendments will bring the amount of capital the companies are permitted to retain into conformance with the 2020 Enterprise Capital Rule unveiled by FHFA in November. Under that rule, the GSEs will be allowed to retain earnings to maintain tier 1 capital in excess of 4.0 percent of their guarantee obligations to avoid restrictions on capital distributions and discretionary bonuses. The PSPAs were written when the GSEs were placed in conservatorship in 2008. In return for financial…(read more)

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Source: Mortgage News Daily