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Conservatorship, Senior Preferred Stock Purchase Agreement and Related Matters
3 Months Ended
Mar. 31, 2025
Conservatorship, Preferred Stock Agreements, And Related Parties [Abstract]  
Conservatorship, Senior Preferred Stock Agreements, And Related Parties Conservatorship, Senior Preferred Stock Purchase Agreement and Related Matters
Conservatorship
We are currently operating under conservatorship, with FHFA acting as conservator. The conservatorship and related matters significantly affect our management, business activities, financial condition and results of operations.
Senior Preferred Stock Purchase Agreement
FHFA, as conservator, entered into a senior preferred stock purchase agreement with Treasury on our behalf in September 2008. In connection with that agreement, we issued Treasury one million shares of Variable Liquidation Preference Senior Preferred Stock, Series 2008-2, which we refer to as the “senior preferred stock,” and a warrant to purchase shares equal to 79.9% of our common stock, on a fully diluted basis, for a nominal price of $0.00001. This agreement also provides funding to us under certain circumstances if we have a net worth deficit. Pursuant to the senior preferred stock purchase agreement, we have received a total of $119.8 billion from Treasury as of March 31, 2025, and the amount of remaining funding available to us under the agreement is $113.9 billion. We have not received any funding from Treasury under this commitment since the first quarter of 2018. We had a positive net worth of $98.3 billion as of March 31, 2025.
The dividend provisions of the senior preferred stock permit us to retain increases in our net worth until our net worth exceeds the amount of adjusted total capital necessary for us to meet the capital requirements and buffers under the enterprise regulatory capital framework established by FHFA. As a result of our conservatorship status and the terms of the senior preferred stock, no amounts would be available to distribute as dividends to common or preferred stockholders (other than to Treasury as the holder of the senior preferred stock).
The aggregate liquidation preference of the senior preferred stock increased to $216.2 billion as of March 31, 2025 from $212.0 billion as of December 31, 2024, due to the increase in our net worth in the fourth quarter of 2024. The aggregate liquidation preference of the senior preferred stock will further increase to $219.8 billion as of June 30, 2025, due to the increase in our net worth in the first quarter of 2025.
Impact of U.S. Government Support
We have been operating under the control of FHFA as conservator since 2008, which is a form of government support. We continue to rely on financial support from Treasury pursuant to our senior preferred stock purchase agreement to eliminate any net worth deficits we may experience in the future, which would otherwise trigger our being placed into receivership by FHFA. Treasury also has authority under the Charter Act to purchase up to $2.25 billion of the debt obligations that we issue. We believe that continued support from Treasury and our status as a government-sponsored enterprise are essential to maintaining our access to debt funding and maintaining the liquidity necessary to conduct our normal business activities. Therefore, changes or perceived changes in (i) our status as a government-sponsored enterprise, (ii) our support from Treasury and/or (iii) the creditworthiness of the U.S. government could have a material adverse impact on our access to debt funding or the cost of debt funding. These events would have a negative impact on our liquidity, financial condition, and results of operations. Our reliance on support from the U.S. government is critical to keeping us operating as a going concern.
Related Parties
Because Treasury holds a warrant to purchase shares of Fannie Mae common stock equal to 79.9% of the total number of shares of Fannie Mae common stock, we and Treasury are deemed related parties. As of March 31, 2025, Treasury held an investment in our senior preferred stock with an aggregate liquidation preference of $216.2 billion.
FHFA’s control of both Fannie Mae and Freddie Mac has caused Fannie Mae, FHFA and Freddie Mac to be deemed related parties. Additionally, Fannie Mae and Freddie Mac jointly own Common Securitization Solutions, LLC (“CSS”), a limited liability company created to operate a common securitization platform; as a result, CSS is deemed a related party. CSS operates as a separate company from us and Freddie Mac, with all funding and limited administrative support services and other resources provided to it by us and Freddie Mac.
The following table provides the income statement impact of our related party transactions for the periods presented in addition to the associated liability at period end. The associated liability represents amounts accrued with respect to the related party transactions that have not yet been paid to the applicable related parties. In addition to the impact described in the table below, our investment in CSS, which is accounted for using the equity method, is classified as Other assets” in our condensed consolidated balance sheets. We contributed $27 million and $22 million to CSS for the three months ended March 31, 2025 and 2024, respectively.
Related PartyActivityIncome Statement Classification
For the Three Months Ended March 31,
Other Liabilities
as of
20252024March 31, 2025December 31, 2024
(Dollars in millions)
TreasuryTax Cut Continuation Act of 2011 (“TCCA”) fees
Legislative assessments
$859 $860 $859 $861 
TreasuryTreasury’s Capital Magnet Fund
Legislative assessments
11 11 11 56
FHFAFHFA assessments
Legislative assessments
40 40  — 
CSS &
Freddie Mac
Net operating losses associated with our investment in CSS
Other income (expense), net
27 22  — 
In the ordinary course of business, Fannie Mae may purchase and sell securities issued by Treasury and Freddie Mac in the capital markets. Some of the structured securities we issue are backed in whole or in part by Freddie Mac securities. Fannie Mae and Freddie Mac each have agreed to indemnify the other party for losses caused by: its failure to meet its payment or other specified obligations under the trust agreements pursuant to which the underlying resecuritized securities were issued; its failure to meet its obligations under the customer services agreement; its violations of laws; or with respect to material misstatements or omissions in offering documents, ongoing disclosures and materials relating to the underlying resecuritized securities. We also make regular income tax payments to and receive tax refunds from the Internal Revenue Service (“IRS”), a bureau of Treasury.