The government-sponsored enterprises’ shareholders are hoping the Fifth Circuit’s decision holding the FHFA structure unconstitutional means the so-called net worth sweep may be invalidated.
"We're in active discussions with the FHFA about removing the net worth sweeps. That would allow a significant amount of capital to be accumulated," says Treasury Secretary Steven Mnuchin.
The latest reorganization plan hinged on the pre-sale of key Ditech assets, with New Residential Investment purchasing its origination and servicing business for $1.1 billion.
As conservator of Fannie and Freddie, the FHFA failed to perform its duty to take actions "necessary to put the regulated entity in a sound and slovent condition" and to "preserve and conserve" its assets.