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.
Their new Senate majority, albeit a slim one, should make it easier for Democrats to pass key budget priorities. But what does it mean for Fannie and Freddie?