Fannie Mae preferred shares can be a bit confusing, but I'm here to break it down in simple terms. Fannie Mae preferred shares are a type of security issued by Fannie Mae to raise capital.
They are considered a senior obligation, meaning they have a higher claim on assets than common stockholders in the event of liquidation. This gives them a lower risk profile compared to common stock.
Preferred shareholders receive a fixed dividend payment, which is a percentage of the face value of the share. This payment is usually made quarterly or annually, and it's a key benefit of owning preferred shares.
Fannie Mae uses the proceeds from preferred share sales to fund its business operations and investments. This helps the company grow and expand its services to the mortgage market.
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Fannie Mae Preferred Shares
Fannie Mae's preferred shares have a long history, with various series issued over the years. There are at least 17 different series of preferred shares, including 5.25% Non-Cumulative Preferred Stock, Series D, and 7.625% Non-Cumulative Preferred Stock, Series R.
Some of these shares have specific characteristics, such as the 5.375% Non-Cumulative Preferred Stock, Series I, which is convertible. Others, like the 8.25% Non-Cumulative Preferred Stock, Series T, have a fixed rate.
Preferred Stocks of FMCC
FMCC, also known as Fannie Mae, has issued several preferred stocks over the years.
FMCC's preferred stocks include Variable-Rate And 6% Preferred Stock Offering, Variable-Rate And 5.81% Preferred Stock Offering, and Variable-Rate Preferred Stock Offering.
These offerings were made on May 23, 2001, March 20, 2001, and January 23, 2001, respectively.
FMCC's preferred stocks have different characteristics, such as Variable-Rate and fixed interest rates.
The Variable-Rate And 6% Preferred Stock Offering, for example, was made on May 23, 2001, and is denoted by the symbol FMCCJ.
Here is a list of some of the preferred stocks issued by FMCC:
These are just a few examples of the preferred stocks issued by FMCC.
Holders to Sue Fannie Mae
A California law firm will sue Fannie Mae on behalf of holders of its preferred shares, citing misrepresentation about the safety of the investment.
The lawsuit will be filed in federal court in New York.
Preferred shareholders were told to buy the shares because they were "safe" and backed by the full faith and credit of the US government, but it's not clear if this was explicitly stated.
The US government did create GSEs like Fannie Mae for the benefit of homebuyers and the economy, but it's not clear how non-shareholder taxpayers benefited directly.
As a preferred shareholder, you should know that investments like Fannie Mae shares come with risk, and you can't expect to make more than bank rates without taking on some risk.
If you're a Fannie Mae preferred shareholder who feels misled, you may want to consider contacting a securities attorney or business attorney for advice.
You can't sue Fannie Mae for market risk, but you might be able to sue your broker if they misrepresented the safety of the investment.
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Frequently Asked Questions
What is the difference between preferred and ordinary shares?
Preferred shares have priority over ordinary shares in receiving dividends and liquidation payments, giving them a higher claim on company income. This means preferred shareholders are paid before ordinary shareholders in case of a company's financial struggles.
What is the downside of preferred stock?
Preferred stock has two main downsides: it ranks lower than bonds in seniority, making it less secure in the event of bankruptcy, and it can be less liquid than other investments. This means preferred shareholders may not get paid before bondholders and may have a harder time selling their shares quickly.
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