Based on current earnings, it will take until 4Q20 or 1Q21 for Fannie to accumulate its statutory minimum capital requirement. For Freddie, the wait will be a little longer — until the 2Q21.

Even though the two companies have paid Treasury about $250 billion over seven years, most of that was interest. They may still owe nearly $118 billion in principal.

A lawsuit claimed Fannie is “governmental body” because it was created by Congress and is currently under conservatorship.

FHFA Director Mark Calabria hopes to hire an advisor by next month. He said Fannie and Freddie will need to hire advisors too to help through the recap-and-release process or any possible public offering.

The auction includes six pools, ranging in size from $394.5 million to $665.2 million. The loans are serviced by Wells Fargo.

Fannie and Freddie will be able to retain all their second-quarter profits, rather than forward them to Treasury. Combined, the GSEs will add $5.2 billion to their net worth this month.

SOFR-linked debt is vulnerable to much higher rate volatility than those referencing LIBOR. This risk was highlighted last month when surging repo rates sent SOFR briefly to a record 5.25%.

The shareholders want the SCOTUS to reverse the sweep. They argue that if the FHFA is unconstitutional, then all of its actions were illegal.

After a billion-dollar event, lenders are significantly more likely to increase the share of mortgages they securitize.

FHFA’s Calabria said capital rules for Fannie and Freddie don’t take place in a vacuum; they influence other financial decisions as well.