Fine Print: GSEs Can Sell Assets Without Treasury Approval

Buried in the fine print of the Treasury Department’s revised bailout deal with the GSEs is a clause that allows Fannie Mae and Freddie Mac to sell up to $250 million of assets in one fell swoop without prior approval from the agency.

The only stipulation is that the GSEs receive what Treasury calls “fair market value.”

Consultants and investors that are involved in the sale of nonperforming mortgages hope that by yearend they will have the chance to bid on certain delinquent loans being offered by Fannie Mae. (The GSE is in the process of hiring a loan sale advisor.)

As for the cap on unapproved sales, it’s unclear whether such transactions will need the approval of the Federal Housing Finance Agency. At deadline, a FHFA spokeswoman had not returned a telephone call on the matter.

In mid-August Treasury unveiled a new plan to speed up the dissolution of Fannie Mae and Freddie Mac, saying the two can no longer retain profits and must reduce their massive portfolio holdings at an annual rate of 15%.

Part of that asset reduction is expected to include the sale of nonperforming mortgages.