Federal Home Loan Mortgage Corp FMCC

Supreme court ruling on 12/09/2020

[Silereagle]

Here Are Both Sides Of The Collins Lawsuit Over Fannie Mae, Freddie Mac ByMichelle JonesofValueWalk Wednesday, September 23, 2020 8:33 PM EDT The case also argues that the FHFA isunconstitutionaland that the net worth sweep must be eliminated. The net worth sweep has caused all of the GSEs' profits to be swept into the U.S. Treasury, keeping preferred shareholders from receiving their dividends. Compelling arguments Bove believes the arguments in the Collins case lawsuit involving Fannie Mae and Freddie Mac are so compelling that if the government has not already begun negotiations with plaintiffs, it will soon. He believes the plaintiffs will win all or most of their claims, which means the preferred shares of Fannie and Freddie are undervalued. Par value for the preferred shares is $25, and they're currently trading at a fraction of that. Bove has long argued that the preferred shares are the only ones worth buying because they should be worth their par value. Their valuation will depend on the many lawsuits that have been filed over Fannie Mae and Freddie Mac, of which the Collins case is a significant one, especially since it is going before the Supreme Court. The Collins case will probably have sweeping impacts on the other legislation that has been filed over the GSEs. The hope is that it will eliminate the net worth sweep. The government is losing Tim Pagliara of CapWealth Advisors spoke to ValueWalk recently about Fannie Mae and Freddie Mac and the lawsuits that have been filed over them. He said some "hardcore litigation" has been filed, and the government is losing. He added that the situation is "very, very embarrassing" for the government. The Collins case is a review of the Fifth Circuit Appeals Court's ruling that the FHFA administrator's position is unconstitutional, but that's not the only pending litigation involving the GSEs. He called the lawsuit that was filed over the contractual rights of thepreferred shareholdersthe "big elephant in the rule," adding that the government can't do what it was doing by taking the GSEs' profits in perpetuity.