F2 Common Sense

@HorsemanCountry @RiparianMan88 @BillAckman @BillAckman I hope you’re aware of the massive opportunity for F2 to issue new preferred shares. Maybe that has something to do with the simple up-list recommendation! 🤔

@HorsemanCountry @RiparianMan88 @BillAckman As crazy as it sounds, it makes sense for Fannie Mae to hold $51B preferred shares! (That’s the Adj. Total Capital requirement minus CET1, both with buffers) Another $44B for Freddie Mac! $95B total new ‘JPS’! Who in their right mind would issue common stock?? $FNMA $FMCC

$FNMA $FMCC A few weeks back, but worth another listen. In addition to @BillAckman reiterating his plan for Fannie Mae & Freddie Mac moving forward, he also invented the PELOC! Preferred Equity Line Of Credit! "I think the senior preferred should stay outstanding, like a line of credit. But it has to be paid for. I don’t think it will ever get drawn. But just that incremental…or that important government backstock beyond the fortress balance sheet that they need to hold will make all the mortgage players very comfortable."

@HorsemanCountry @RiparianMan88 @BillAckman @rule_of_law_guy This would be a wonderful topic for a Substack post! I’d enjoy reading your thoughts on this^^^

@AZbroker @DunavantSh58880 Historically true! They set up a multi-billion $ market for CRT, so they priced generously for banks initially. But now, CRT is literally an alternative to raising capital *given adequate returns going forward*. $FNMA is SO close to cap req, it might make sense for now!

@F2commonSense @DunavantSh58880 CRT is absolute waste. It’s a giveaway of assets to banker class.

$fnma $fmcc

@World_21m @Bow47064648John Pulte gets some hate because he’s not operating on the timeline of some randos with X accounts. In reality, he appears to be doing a fantastic job. President Trump has said it himself. They are moving in the right direction! Timing will be important! $FNMA $FMCC

@World_21m @Bow47064648John I expect the announcement before 7/4… of 2027 But seriously though, recently Pulte has been on every flight, every rally, every weekend trip. Housing is obviously important, but I doubt they’d be spending so much time together if they weren’t working on something $FNMA $FMCC

🚨 A big week for $FNMA coming. I’m expecting the BIG TRUTH SOCAIL post in the next 1-3 weeks and def before 7/4 on Fannie Mae and Freddie Mac. Buckle up.

@RiparianMan88 This table from page 43 of the Fannie Mae Q1 2026 10Q filing shows the calculations about as simply as they can be shown. I just took all the numbers and added the $121B of senior preferred ‘stated value’, which they had subtracted. If there was no deficit, I put N/A

@F2commonSense I dont understand you CET1 Deficit calculation - I get 142 - 21 or $ 21 bn. If the JPS are converted the deficit would only be $ 2 bn allowing full Dividends?

$FMNA $FMCC Fannie Mae is getting very close to hitting all of its minimum capital requirements! It is $13B away as of March 31st and earning ~$4B a quarter! Here is what the capital requirements would look like **IF SPS were deemed repaid or converted** (my changes in blue):

@pratjoey @T_Castelluccio In retrospect, Powell was probably TOO mortgage friendly, to the point where we are still discussing the lock-in effect. Mortgages were below the avg inflation rate for last 6 years! Sounds like Warsh is looking to sell those MBS quickly (QT), and may lower rates to offset (QE)

@T_Castelluccio @F2commonSense Pure extraction. I think the Warsh and Bessent combo is positive.

Why Ackmans plan of 'relisting the GSEs makes most sense now' I'll start with that i dont agree with Ackman on big aspects of what happens when the GSEs release and how its done. and Where i 'dont agree' is because I dont know: -I dont know how the admin 'amends the sr pref shares'. Bill wants they to write them off. and only uses warrants. I think its MOST LIKELY the admin 'can convert those shares to common or gets something' + warrants=admin owning 90-95% equity in cos.(not just 80% of warrants) BUT What needs to be done: -issue an amendment to Sr Pref. (this takes no time at all, and Will set in stone the capital structure) -once thats done they simply can relist on NYSE. All The narrative of road shows, ipos is pointless. Treasury can use a 'mark to market valuation' , and sell anytime they want. Pulte missed the boat on an actual raise. with other companies soaking up all the liquidity, and now the war raised rates, making it unlikely to run a IPO style release. -Spcx is IPOing on june 12th, and will soak up $75B(capital raise), at a $1.75 TRILLION valuation. -Anthropic is looking to ipo in october. -amonst many other AI cos looking at taking public. But- An Amendment simply acknowledging future capital structure + Relist =all that needs to happen. And US Treasury can mark their assets to 'market valuation'. IF the Treasury doesnt actually flood the mkt with its offering, the 'mark to market' valuation will be far higher.(because thats what happens with a small float). And They will be able to acknowledge hundreds of billions. *Adding this: someone needs to get in front of bessent, and just say: 'lets fix the sr pref, the rest falls in line' Because the endless gridlock of acting like its some gargantuan task is clearly too much for them

@HorsemanCountry @StopTheStealF2 @realDonaldTrump I have been somewhat skeptical that Warsh was really needed. I think the falling interest rates will help the release narrative for sure. It would be interesting for the Fed to work with F2 on selling its MBS, potentially even to F2. Then I had forgotten about the commitment fee:

$FNMA $FMCC Today was huge. Compare the remarks of @realDonaldTrump today with those of Kevin Warsh last July. To be clear, it's not about Warsh being a puppet. He’ll operate independently. It’s about Trump choosing a Fed Chair who is in fundamental alignment with his economic views. That's why Fannie Mae & Freddie Mac shareholders are bullish. That's why I believe Warsh is the lynchpin in the F2 path forward. And that’s why DJT and his dream team will ultimately restore the American Dream. The challenge is fluid and nuanced. Trump has a needle to thread, but he’ll get the job done. As the ultimate deal maker, he'll maneuver in a way that benefits everyone involved...shareholders, homebuyers, and (yes) the U.S. government. Cue the peanut gallery of gloomers, doomers, policy wonks, legislation bros, and armchair quarterbacks who "know better”. You’ll eat your words. Trump gonna Trump. GLTA.

Basically just add $121B to each of the original numbers to get the new numbers, nothing crazy, but nice to see in the table. Getting close!

@T_Castelluccio @pratjoey A good point, the TCCA fee is 10 BPS, $3.4B in 2025, significant. Here is most of what Fannie Mae’s 10K says about the commitment fee. Maybe they DID need Warsh in place after all. I think lots of people disagree with the TCCA fee. The T stands for ‘temporary’, but…

@F2commonSense @pratjoey Commitment fee makes sense. it will be modest imo. broadly speaking i think we already pay more than a commitment fee, with the sr pref obviously, but also the TCCA fee

@T_Castelluccio @pratjoey Some have discussed a commitment fee going forward. Looking backward, F2 has overplayed the SPS by (I think Ackman said) $25B, if you assume the overpayments payed down the principle. That should be more than enough, no SPS convert needed, that would be an abstract method anyway

@pratjoey LOC remains, but that’s another reason I say they will expect to be compensated with convert or some kind of compensation otherwise- which is why I say 90-95% If ackman wants to call it an “accounting repayment” or a “write down” it’s the same thing from treasury’s perspective

Here’s the original from their Q1 2026 10Q filing:

I think Trump, Bessent, Pulte, and Lutnick will all see the merit of deeming SPS repaid. It is the right thing to do. Any political criticism is easily countered with showing the easily $300B+ that the government will make and insulting Obama’s socialist NWS theft /7

The F2 release is very much alive and there are more catalysts approaching. MBS portfolio cap being reached, a need for non-congressionally apportioned funding for programs during a potentially split congress in 2027, a golden IPO window, Basel III adjustments, etc. /6

I wouldn’t be surprised if the F2 release was delayed until next year, I also wouldn’t be surprised if it was announced next month. I think the ‘policy tool’ delay argument is weak. F2 and shareholders will want to continue the MBS retention up to the max allowed $FNMA $FMCC /1