The new PSPA will allow Freddie Mac and Fannie Mae to continue retaining earnings until they reach the regulatory minimum capital — almost $283 billion combined.
In a note to investors, Compass Point analyst Isaac Boltansky estimated that, with combined annual profits of about $21.4 billion, it will take 11 years for Fannie and Freddie to reach FHFA’s capital targets…
Rather than ending the net worth sweep outright and agreeing to write off some of its preferred shares, Treasury is essentially simply allowing Fannie Mae and Freddie Mac to continue their practice of retaining earnings.
Fannie and Freddie will no longer purchase loans that go into forbearance before delivery. They have, however, begun charging a 50-bps adverse market fee for essentially all refis.