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Tuesday, July 9, 2013
Accusation Made by Perry Capital
Perry Capital, which has invested in the mortgage companies, accused the Treasury, Federal National Mortgage Association (OTCBB:FNMA) and Federal Home Loan Mortgage Corp (OTCBB:FMCC) that the Treasury is not following the rules regarding its control of the companies, in 2012, according to which the profits are to be given back to the U.S. government in the form of a dividend, says a report from Financial Times.
Fannie Mae and Freddie Mac have derived the benefit from improving housing market and paid $66 billion to the U.S. Treasury. The U.S. government is estimating that both companies will pay $238 billion in revenues related to dividends over the next 10 years.
“It is critically important to our economy and for the future of housing finance in the United States that investors have confidence that the rule of law – not populism or politics – will guide government policy over securities,” Perry Capital said in a statement.
Parry Capital further said that it is in favor of the measures which are been taken to revive Fannie Mae and Freddie Mac, but also feels that these institutions should make policy decisions while abiding to all the contractual rights and applicable law.
Perry Capital has filed suit in the District Court of Columbia and Federal Housing Finance Agency. The regulating authority of Fannie Mae and Freddie Mac is recognized as the defendant along with Treasury.
Filing a complaint against both companies by Perry Capital shows that the shareholders are not satisfied with the companies. Shareholders assume that Fannie Mae and Freddie Mac are not giving them the due benefit of the recovery they are making in the wake of housing revives.
Bill to Liquidate
Towards the end of June, the Corker-Warner Bill came into the limelight, which if introduced will replace Fannie Mae Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) with a new government agency.
According to the bill, Fannie Mae and Freddie Mac should be liquidated within five years. Both Fannie Mae and Freddie Mac at present provide a 100 percent guarantee on payment of principal and interest on mortgages.
Federal Housing Finance Agency raised concerns over Fannie Mae and Freddie Mac, in the earnings segment, in its 2012 report presented to Congress.