The U.S. Department of the Treasury and the Federal Housing Finance Agency announced yesterday an agreement to amend the preferred stock purchase agreements between Treasury and each of Fannie Mae (FNMA) and Freddie Mac (FMCC) “to help ensure that the eventual release of the GSEs from conservatorship will be orderly and to reflect certain existing practices.” Among other things, the agreement restores Treasury’s previous right to consent to a release of the government-sponsored enterprises from conservatorship. In addition, under a separate side letter from FHFA to Treasury, FHFA will solicit public input, before releasing a GSE from conservatorship, regarding the potential impacts on the housing market and the GSEs. Shares of Fannie Mae are up 17% to $4.04 in morning trading while Freddie Mac is up 17% to $3.94.
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