Fannie and Freddie investors are now at the mercy of Congress

Draft bill could make -- or cost -- hedge funds billions

TRD New York /
Jan.January 04, 2018 11:10 AM

Bob Corker and Mark Warner

Hedge funds that own billions worth of preferred shares in Fannie Mae and Freddie Mac are keeping an anxious eye on Washington, D.C. as Congress works on a draft bill to determine the future of the two mortgage giants.

The draft Senate bill, authored by Bob Corker and Mark Warner, would put the two mortgage companies into receivership and force them to sell their assets. Two new companies would eventually take up their functions, but under different names.

Still an open question is how the firms’ shareholders would get compensated. If the government walks away from its $195.5 billion in senior preferred shares, other shareholders such as Paulson & Co., the Blackstone Group and Bill Ackman’s Pershing Square Capital Management could see big profits on their investments, Bloomberg reported.

Bloomberg reported that the senators are considering paying owners of preferred shares close to the full book value of their holdings, while owners of common shares would get far less.

Fannie and Freddie buy mortgages from lenders and stamp them with a de-facto repayment guarantee, giving them a key role in the U.S. housing market. [Bloomberg] Konrad Putzier


Related Articles

arrow_forward_ios
Alexandria Ocasio-Cortez, Bernie Sanders and Elizabeth Warren

By the numbers: Breaking down national housing agendas from the far left

Nuveen CEO Vijay Advani, Blackstone President & COO Jonathan Gray and one of the Texas properties

Blackstone just sold off a 29M sf national industrial portfolio

The purge continues: WeWork’s head of real estate is leaving

Cammeby's International Group founder Rubin Schron and, from top: 194-05 67th Avenue, 189-15 73rd Avenue and 64-05 186th Lane (Credit: Google Maps)

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio

Judith and Rudy Giuliani Rudolph and Judith Giuliani are divorcing after 16 years. (Credit: Getty Images, Trulia, Highrises)

Luxury properties at play in Rudy Giuliani’s ugly divorce

Governor Andrew Cuomo and Senator James Skoufis (Credit: Getty Images, NY Senate)

Owners of some residential properties can’t hide behind
LLCs anymore

1735 York Avenue and Bonjour Capital's Charles Dayan (Credit: Google Maps)

Dayan’s Bonjour Capital inks $115M refi for Upper East Side building

Jimmy Van Bramer (Credit: NYC.gov, iStock)

After failing to meet his own deadline, Queens council member returns thousands in real estate donations

arrow_forward_ios