From Bruce Berkowitz

Last week we witnessed further progress with respect to our investments in Fannie Mae and Freddie Mac.

The United States Judicial Panel on Multidistrict Litigation denied the government’s attempt to consolidate individual lawsuits from around the country. Cases brought in Delaware, Kentucky, Illinois, and Iowa will now proceed in their respective districts.

The Court of Federal Claims continues to shine a bright light on the defendants’ misdeeds by unsealing dozens of incriminating government documents, and the Court is now focused on the remaining stash of 12,000 documents that the government has refused to turn over and that we believe will further prove our claims.

Our Congress is waking up to the disingenuous behavior of the current Administration toward Fannie Mae and Freddie Mac and its negative effects on all constituents. On June 1, 32 Congressional Democrats sent a letter to Federal Housing Finance Agency (“FHFA”) Director Mel Watt and Treasury Secretary Jacob Lew expressing their “concerns about your agencies’ policy of requiring Freddie Mac and Fannie Mae to operate without adequate capital,” and emphasizing that the Housing and Economic Recovery Act of 2008 (“HERA”) “includes a number of provisions expressing Congress’ intent that the GSEs be operated in a safe and sound manner … The fact that the GSEs are currently in conservatorship, and that Congress has not enacted further legislation post-HERA, does not justify an agreement between FHFA and the U.S. Treasury to ignore HERA’s mandate.”

The court of public opinion is beginning to understand Fannie Mae and Freddie Mac’s outstanding performance during both good and bad economic times – when the companies are allowed to function without political interference.

It is outrageous that two profitable shareholder-owned companies remain captive in the longest government conservatorship in history, one in which the government has usurped over $250 billion from the conservatees and threatens to destroy what many believe is the most productive credit market in the world. You can’t make this up.

In the coming weeks, we anticipate further legal developments in the D.C. Court of Appeals and U.S. District Court for the Eastern District of Kentucky, among others.

We also expect Fannie Mae and Freddie Mac to continue their progress in sensibly serving residential mortgage markets and homeowners.

The facts, law, and common sense dictate that we will win this fight.

Kind regards,

Investor Relations

To view the Order Denying Transfer linked above, please use the following website address: http://www.fairholmefundsinc.com/Documents/Order20160602.pdf

To view the Letter from Congressional Democrats linked above, please use the following website address: http://www.fairholmefundsinc.com/Documents/Letter20160601.pdf\

Fannie Mae & Freddie Mac