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Fannie Mae announced Monday it hired Morgan Stanley & Co. as its financial advisor to assist in developing and implementing a plan for recapitalization and “responsibly” ending conservatorship.
A statement from the GSE said while Morgan Stanley will work closely with Fannie Mae, the Federal Housing Finance Agency (FHFA) and the U.S. Department of the Treasury to consider business and capital structures, market impacts, timing, and capital raising alternatives.
“Today’s announcement marks another important step toward a responsible exit from conservatorship, and we look forward to working with FHFA, Treasury, and Morgan Stanley to chart a strong course forward for Fannie Mae,” said Hugh R. Frater, CEO, Fannie Mae. “As we continue to stand behind our partners and support homeowners and renters through today's challenges, we remain focused on ensuring our company is best prepared to serve the market’s future needs.”
Fannie Mae added that selecting a financial advisor is an “important milestone” to meeting Fannie Mae’s 2020 FHFA scorecard objective to prepare a transition plan to exit conservatorship.
The GSE said that J.P. Morgan will provide strategic counsel and perform a range of tasks to "help facilitate Freddie Mac's exit" from conservatorship.
“J.P. Morgan is pleased to be selected as Freddie Mac’s underwriting advisor,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase. “We look forward to working side-by-side with Freddie Mac on this historic assignment in the months ahead.”
The GSE announced last month that it would begin the process of selecting a financial advisor.
“While we are fulfilling our mission and helping to keep people in their homes during this national emergency, we also remain committed to ensuring a responsible exit from conservatorship,” said Frater. “Today’s announcement is a significant step on that path, and we look forward to making a timely selection in the competitive process.”
Engaging a financial advisor is an important milestone in meeting Fannie Mae’s 2020 FHFA scorecard objective to prepare a responsible transition plan for a potential exit from conservatorship. The support of private capital will contribute to increasing the resiliency of the housing finance system.
FHFA Director Dr. Mark Calabria told FOX Business late last year that Fannie Mae and Freddie Mac are building the capital necessary to get out of conservatorship, but there is still a little way to go.
"I believe that under the statute I am required to fix [Fannie and Freddie]," Calabria said.
"Fannie and Freddie are less leveraged than when I started," Calabria added. "We're going in the right direction."
