Fannie and Freddie investors are now at the mercy of Congress

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

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
From left: Boston Mayor Michelle Wu and South Boston Senator Nick Collins with Boston City Hall
Controversial transfer tax bill advances in Boston
Controversial transfer tax bill advances in Boston
City Planning chair Dan Garodnick, City Council member Julie Won, City Council member Marjorie Velázquez, City Council speaker Adrienne Adams (Illustration by Kevin Cifuentes for The Real Deal with Getty Images, NYC.gov, council.nyc.gov, Twitter)
The rezoning conundrum
The rezoning conundrum
From left: Letitia James, Donald Trump, Eric Trump, Ivanka Trump, Allen Weisselberg, and Donald Trump Jr. (Photo Illustration by Steven Dilakian for The Real Deal with Getty Images)
NY AG files civil fraud suit against Trump, children and company
NY AG files civil fraud suit against Trump, children and company
Tiffany Cabán (right) and Sen. Jabari Brisport, and a rendering of the Hallets North project (Getty, Studio V, New York Senate Photo, CC BY 2.0, via Wikimedia Commons)
In socialists we trust: Tiffany Cabán and the great housing breakthrough
In socialists we trust: Tiffany Cabán and the great housing breakthrough
Gregory Russ and Mayor Eric Adams (Getty)
Adams ousts NYCHA chief after arsenic scare
Adams ousts NYCHA chief after arsenic scare
New York City Council member Tiffany Cabán along with a rendering of the Hallets North development (Photo Illustration by Steven Dilakian for The Real Deal with Getty Images, Studio V Architecture PLLC)
Far-left Council member approves 1,400-unit Queens development
Far-left Council member approves 1,400-unit Queens development
City Council member Kristin Jordan and developer Bruce Teitelbaum with West 145th Street and Lenox Avenue (Illustration by The Real Deal with Getty)
Developer to Harlem pol who blocked project: “Truck you!”
Developer to Harlem pol who blocked project: “Truck you!”
Residential Real Estate, Housing Market, Fannie Mae
Sentiment sinks deeper as market sidelines buyers and sellers
Sentiment sinks deeper as market sidelines buyers and sellers
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...