The hedge fund billionaire predicts Treasury will write off its senior preferred shares in the GSEs and exercise its warrants for 80% of their common stock.
The MBA noted that buyouts are capital intensive and can create liquidity stress for nonbanks, which don’t have large balance sheets to hold nonperforming loans for an extended period.
Much of the decline was the result of a change in how Freddie Mac classifies loans subject to a repurchase claim for which the seller has provided a remedy.