According to 2008 HERA, Capital Distributions (like dividends) are restricted for Undercapitalized enterprises. But there are exceptions where they are authorized: if it's in connection with the "purchase of ownership interest" (the SPS are Equity) and it will "reduce the obligations" (the SPS are obligations). In July 2011, when it was clear that FnF would become profitable soon (the losses were driven by the provision set aside for loan modifications and their portfolios were almost fully reserved) and thus, the SPS would be paid back soon (I estimate they were paid back in 2013 for FMCC and 2014 in the case of FNMA), the FHFA, with the excuse of writing regulation to be more transparent about what is set forth in HERA, added one important exception more that would allow FnF to continue paying dividends to the Equity holders: "to meet their Risk-Based Capital levels", that is, for their recapitalization. The Administration's narrative ha