If we were to draw additional funds from Treasury under the agreement in respect of a future period, the amount of remaining funding under the agreement would be reduced by the amount of our draw. After we receive these funds, the maximum amount of remaining funding under the agreement will be $113.9 billion. Because we had a net worth deficit of $ 3.7 billion as of Decem, no dividend will be payable to Treasury for the first quarter of 2018, and we expect the Director of FHFA will submit a request to Treasury on our behalf for $3.7 billion to eliminate our net worth deficit. Under the terms of the senior preferred stock, if we do not have a positive net worth or if our net worth does not exceed the applicable capital reserve amount as of the end of a fiscal quarter, then no dividend amount will accrue or be payable for the applicable dividend period. See “Risk Factors” for a discussion of the risks associated with the limitations on our ability to rebuild our capital reserves, including factors that could result in a net loss or net worth deficit in a future quarter. If we have another net worth deficit in a future quarter, we will be required to draw additional funds from Treasury under the senior preferred stock purchase agreement to avoid being placed into receivership. If this were to occur, it would result in a net worth deficit for that quarter. However, any net loss we experience in the future could be greater than the amount of our capital reserves. Once we are able to rebuild our capital reserves to $3.0 billion, they will provide a buffer in the event of a net loss in a future quarter. Pursuant to the December 2017 letter agreement described in “Treasury Draws and Dividend Payments” below, we are now permitted to retain up to $3.0 billion in future earnings as capital reserves. Because we had a net worth deficit as of December 31, 2017, we have no remaining capital reserves as of that date. The potential for significant volatility in our financial results could result in a net loss in a future quarter. For additional information on the conservatorship, the uncertainty of our future, our agreements with Treasury, and recent actions and statements relating to housing finance reform by the Administration, Congress and FHFA, see “Conservatorship and Treasury Agreements,” “Legislation and Regulation” and “Risk Factors.” Our agreements with Treasury also include covenants that significantly restrict our business activities. As a result of our agreements with the U.S. Department of the Treasury (“Treasury”) and directives from our conservator, we are not permitted to retain more than $3.0 billion in capital reserves or to pay dividends or other distributions to stockholders other than Treasury. Congress continues to consider options for reform of the housing finance system, including Fannie Mae. We do not know when or how the conservatorship will terminate, what further changes to our business will be made during or following conservatorship, what form we will have and what ownership interest, if any, our current common and preferred stockholders will hold in us after the conservatorship is terminated or whether we will continue to exist following conservatorship. If the borrower receives a gift from an acceptable donor who has lived with the borrower for the last 12 months, the gift is considered the borrower’s own funds and may be used to satisfy the minimum borrower contribution requirement as long as both individuals will use the home being purchased as their principal residence.įor minimum borrower contribution requirements for transactions that contain grant funds, employer assistance, and Community Seconds, refer to B3-4.3-06, Grants and Lender Contributions B3-4.3-08, Employer Assistance and B5-5.1-02, Community Seconds Loan Eligibility.įor additional information, see B3-4.3-04, Personal Gifts.Our conservatorship has no specified termination date. See B5-6-02, HomeReady Mortgage Underwriting Methods and Requirements, for HomeReady mortgage minimum borrower contribution and down payment requirements. 1 After the minimum borrower contribution has been met, gifts can be used to supplement the down payment, closing costs, and reserves. The borrower must make a 5% minimum borrower contribution from his or her own funds. All funds needed to complete the transaction can come from a gift.Ī minimum borrower contribution from the borrower's own funds is not required. All funds needed to complete the transaction can come from a gift. Minimum Borrower Contribution Requirement from Borrower’s Own FundsĪ minimum borrower contribution from the borrower’s own funds is not required. The following table describes the minimum borrower contribution requirements for transactions that contain gifts. Minimum Borrower Contribution Requirements
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