Fairholme Capital Management said on Monday that its clients owns $2.4 billion par value of Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) preferred stock. The clients include Mutual fund shareholders of the Fairholme Fund (FAIRX) and The Fairholme allocation Fund (FAAFX).
Fairholme said in a statement that it is ready to help with a restructuring that accelerates the return of meaningful investment to the secondary mortgage market.
Fairholme stated that Privately-owned Fannie Mae and Freddie Mac are critical to nation's economic security, lowering the cost and increasing the availability of homeownership.
According to Fairholme, Fannie Mae and Freddie Mac currently purchase or insure 6 out of every 10 homes mortgages in America. Today, they are stronger than ever- enabling the United States Treasury to rapidly recoup its temporary emergency investments in both entities.
"The time to restructure Fannie Mae and Freddie Mac is upon us. Sustaining our nation's economic recovery requires it," Fairholme said.
On Monday, shares of Freddie increased almost 21% to close at $2.45. Common shares of Fannie rose more than 20% to close at $2.53.
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