Fannie, Freddie Would Need New Bailout in Downturn, FHFA Says

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Fannie, Freddie Would Need New Bailout in Downturn, FHFA Says

Fannie Mae and Freddie Mac (FMCC) could require an additional bailout of as much as $190 billion in a severe economic downturn, according to the results of stress tests released by the regulator for the U.S.-owned companies.

The two mortgage-finance giants, which have already taken $187.5 billion in taxpayer aid since 2008, would need more funds to stay afloat if home prices plummeted in a severe downturn, the Federal Housing Finance Agency said in a report today. The stress tests, mandated by the Dodd-Frank Act, use the same assumptions that the Federal Reserve does in gauging the ability of the nation’s largest banks to withstand a recession.

The results reflect the terms of the companies’ bailout, which require them to send to the Treasury all of their quarterly profits above a minimum net worth threshold. That money, counted as a return on the U.S. investment, prevents them from rebuilding capital or paying down debt to taxpayers.

“These results of the severely adverse scenario are not surprising given the company’s limited capital,” Fannie Mae (FNMA) Senior Vice President Kelli Parsons said in a statement. “Under the terms of the senior preferred stock purchase agreement, Fannie Mae is not permitted to retain capital to withstand a sudden, unexpected economic shock of the magnitude required by the stress test.”

The companies would need $84 billion to $190 billion by the end of 2015 in the worst circumstances, depending on accounting assumptions, the tests showed.

More from Bloomberg here…

Copy of the report below…

Additional links:

2014 Summary Instructions and Guidance
2014 Scenario Assumptions (PDF)
2014 Scenario Assumptions (spreadsheet)
2014 Global Market Shock Assumptions (spreadsheet)
2014 Reporting Templates – Enterprises (spreadsheet)
2014 Reporting Templates – Scenario Variables and Assumptions (spreadsheet)




Projections of the Enterprises’ Financial Performance

3 Responses to “Fannie, Freddie Would Need New Bailout in Downturn, FHFA Says”
  1. Bobbi Swann says:

    Two things – first I was part of a class action suit against Midland and received a letter today that $1000 worth of credit is being applied to any accounts currently outstanding with Midland for violating the debt collection act. I recorded their conversation as did many others involved in the class action. Take that, Midland

    Second, this article posted here comes behind an advertisement that began airing TODAY that says ‘when the people needed help for home ownership Fannie/Freddie were there……and when Fannie/Freddie needed help citizens came to their rescue (meaning the bailout). We are proud to announce that Fannie/Freddie has repaid it all.’

    Now this article appears….blows my mind but really doesn’t surprise me much.

    • al says:

      you should see the papers they filed….we had to ” take the case” because unethical “attorneys” sold us. summary judgment was granted with not even the fake note filed (florida requires the note to be filed).
      the first fraudclosure complaint dissipated from court file ( we found this is really very commune practice of mr douglas zahm mill ) funny thing clerk has no registry of anyone checking the file (hahahah, that one was funny). also, the unindorsed “original” was declared lost stolen….of course after years mr zahm “magically” “found” another “original” (i think number 4, apparently they couldn’t decide which fraud copy to use

      in short after about 4 years they got (stole) the property with the blessing of the trial and appeallate courts ….they just ignored all our motions and proofs… i been reading several cases and a lot of stuff for years and to this date i can’t find any similar case with the amount of fraudulent stuff used against us….

      it is outrageous , even in their own fake papers they wrote a different plaintiff , we presented this to the courts , because they had no standing , a blatant proof a different fake entity was fraudclosing …but they did nothing.

      midland mortgage and midfirst, just debt collectors , apparently fraudclose for ginnie mae pools

  2. al says:

    that’s sound logical , if FHA is paying insurance claims filed by fake “lenders” , (plus default swaps and other securitization insurance persuant the PSA, ohh don’t forget the “servicer debt collector upfront payments)

    for example in our fraudclosure, there was a alleged claim for 90 k that for some reason the fake “lender” received almost 130k.(plus payments, stolen furniture and stuff inside the illegally taken property [thanks trial and appellate judges]……….so that’s why they need more money to pay this rats again…….

    ooooh don’t forget GINNIE MAE IS IN CHARGE of all securitiztion under FHA, VA etc etc….

    is that correct mrs debt collectors MIDLAND and MIDFIRST ?

    i hope you don’t have these fraudclosing….you will see nothing but fake papers…..

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