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Dec. 29, 2015, 6:32 AM
- The federal government is trying to get taxpayers off the hook for billions of dollars of potential losses if another mortgage crisis arrives - and in the process, it's quietly giving birth to a new asset class.
- Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) next year plan to ramp up sales of new types of securities (called Connecticut Avenue Securities and Structured Agency Credit Risk) that in effect transfer potential losses in a housing downturn to private investors.
- The sales are especially notable because issuances of private-label MBSs, which also give private investors mortgage exposure, are still moribund.
Dec. 18, 2015, 12:43 PM
- The spending package passed today includes a provision prohibiting Treasury from selling its stakes in Fannie Mae (OTCQB:FNMA -5%) or Freddie Mac (OTCQB:FMCC -3.4%) until at least Jan. 1, and ensures Congress - not the executive branch - will be in control of any wind-down process.
- "The administration has been very supportive of Congress taking the lead on housing finance reform," says Sen. Bob Corker, who authored the Jumpstart GSE Reform Act.
- Both Fannie and Freddie are near 52-week lows.
Nov. 25, 2015, 2:45 PM
- The FHFA won't hike the limits in most markets on mortgages backed by Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) beyond $417K - it's the 11th consecutive year that number has been in place.
- Primo areas like San Jose, San Francisco, and New York will keep their limit of $625K, while 39 other counties will see increases of $5.75K-$34.5K.
- It might be good news for roughed-up Redwood Trust (RWT +2.1%), which packages non-conforming mortgages. Through the end of September, jumbo mortgages made up nearly 19% of the market, according to Inside Mortgage Finance - up from a low of 5.5% in 2009 and the highest market share since 2006.
- The news is also something builders in high-cost areas are going to have to deal with. Moving a community just a little bit can have quite the effect - in San Bernardino County, the $417K cap is in place, but in neighboring L.A. County, the limit moves to $625K.
Nov. 5, 2015, 7:53 AM
- Fannie Mae (OTCQB:FNMA): Q3 Net income of $2.2B.
- Revenue of $5.85B (-2.5% Y/Y)
Oct. 19, 2015, 3:29 PM
- "The right answer is not to 'recap and release' as some say," said Treasury Secretary Jack Lew. "Recap and release" is the idea the government would allow Fannie Mae (OTCQB:FNMA -6.4%) and Freddie Mac (OTCQB:FMCC -6.1%) to retain their earnings (rather than sending the money to the Treasury), eventually building up enough capital to return in full to the private sector.
- "The notion that the slate is clean is just not correct," says Lew, rejecting the idea the government has been paid back and more its $188B in bailout funds. Taxpayers, he says, are still on the hook for all the risk assumed by the GSEs.
Oct. 7, 2015, 3:53 PM
- "People should just short it, because it's major BS," says Senator Bob Corker, of the hedge fund-propagated rumor that the White House is interested in privatizing Fannie Mae (OTCQB:FNMA -0.8%) and Freddie Mac (OTCQB:FMCC -1.3%). "It's just talking your own book."
- Corker failed to advance legislation to wind down the GSEs, and is now working a new bill preventing Treasury from selling any of its preferred equity in Frannie without congressional approval.
Sep. 16, 2015, 2:47 AM
- The Senate has approved legislation that will likely suspend current compensation for heads of Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) following the disclosure of massive pay raises for the officials.
- On July 1, the two government-controlled entities disclosed that Fannie CEO Timothy Mayopoulos and Freddie head Donald Layton would earn $4M annually, up from their previous salaries of $600K.
- If the House passes the compensation legislation, it will be sent to President Obama to become law.
- Previously: Fannie and Freddie chiefs get $3.4M raises (Jul. 01 2015)
Aug. 31, 2015, 2:36 PM
- The "thin reed" upon which speculation of movement towards a settlement rests, writes John Carney, is a request by lawyers from the Office of White House Counsel for access to heavily redacted documents. While the government didn't explain the reasons for the motion, the involvement of this set of lawyers (instead of the DOJ attorneys working the case) has lead some to believe the Administration wants to settle.
- If the White House wanted to settle, says Carney, DOJ lawyers would almost certainly handle the negotiations, meaning no need to bring in another set of attorneys. Instead, continues Carney, it's standard procedure for White House lawyers to review information in litigation referencing the White House.
- Carney: "The government has scored victories at almost every turn in the Fannie-Freddie litigation, giving it little motivation to seek a truce now."
- Nevertheless, Fannie (OTCQB:FNMA +5.3%) and Freddie (OTCQB:FMCC +5.5%) continue to rally.
Aug. 6, 2015, 7:53 AM
- Q2 comprehensive income of $4.359B compares to $1.796B in Q1 and $3.711B a year ago. After writing a check to Treasury for $4.395B, Fannie Mae (OTCQB:FNMA) will have paid the government $142.5B vs. draws of $117.1B.
- Back to operations, rising interest rates were behind the jump in earnings this quarter, as they produced gains for Fannie's risk management derivatives.
- Interest income of $5.677B rose from $5.067B in Q1 and $4.904B a year ago.
- Full report
- Previously: Fannie Mae reports Q2 results (Aug. 6)
Aug. 6, 2015, 7:39 AM
- Fannie Mae (OTCQB:FNMA): Q2 EPS of $0.05
- Revenue of $6.23B (+18.0% Y/Y)
Aug. 4, 2015, 11:12 AM
- Q2 comprehensive income of $3.9M vs. $746M in Q1. Net interest income of $4M vs. $3.6M. Derivative gains of $3.1B vs. a loss of $2.4B in Q1.
- The company will write a check to Treasury for $3.9B, bringing the total paid to $96.5B. The draw (not reduced by any payments made) remains at $71.3B.
- Single-family purchase volume of $101.2B up about $20B from Q1. Multifamily purchase volume of $13.1B up more than 30%.
- Full results
- Previously: Freddie Mac reports Q2 results (Aug. 4)
- OTCQB:FMCC +6%, Fannie Mae (OTCQB:FNMA +5.5%)
Jul. 17, 2015, 2:22 AM
- The Federal Housing Finance Agency discloses it paid two law firms over $373M since 2010 to pursue litigation against 16 banks over MBSs sold to Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) prior to the financial crisis.
- The figure paid to Quinn Emanuel Urquhart & Sullivan LLP and Kasowitz Benson Torres Friedman LLP amounts to less than 2% of the $18.7B obtained by the U.S. regulator through settlements and judgments.
Jul. 15, 2015, 8:56 AM
Jul. 6, 2015, 11:51 AM
- Acknowledging declines in both the Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) common and preferred since AIG's courtroom victory over the U.S., Fairholme Capital's Daniel Schmerin nevertheless calls the ruling helpful for GSE investors for pointing out the government can exceed its authority even in a time of financial crisis.
- "There is no question that Fannie's and Freddie's claims-paying ability was intact throughout all relevant times," says Schmerin. "[The government] required the companies to take excessive loan-loss provisions."
- " It is utterly surprising to any observer that our government, the federal government of the U.S. would engage in any action that so blatantly expropriated property and de facto nationalized the two largest financial institutions in the nation, and that they’ve done this under the guise of a conservatorship."
Jul. 1, 2015, 12:59 PM
- The salaries of Fannie Mae (OTCQB:FNMA +1.5%) CEO Timothy Mayopoulos and Freddie Mac (OTCQB:FMCC +0.5%) CEO Donald Layton have been capped at $600K over the past two years, but - over the objections of Congress and Treasury - FHFA Director Mel Watt has approved pay of $4M annually, effective today.
- In a statement, Watt cites retention needs, and Fannie's Mayopouloshas in the past raised his concerns over his pay with the company board and the FHFA.
Jun. 15, 2015, 3:48 PM
- "We think this knee-jerk reaction is short-sighted," says KBW's Brian Gardner, reacting to the jump in the stock prices of Fannie Mae (OTCQB:FNMA +2.6%) and Freddie Mac (OTCQB:FMCC +2.3%) following the government's loss in the AIG bailout case. Gardner reminds that the GSEs are federally-created entities operating under federal charters, giving the government stronger legal cover for its bailout.
- Compass Point's Isaac Boltansky notes the AIG case and GSE case are based on entirely different statutes, making the implications for the GSEs "limited at best."
- Previously: Judge rebukes government in AIG case (June 15)
- Previously: Fannie Mae and Freddie Mac on the move after Greenberg wins AIG suit (June 15)
Fannie Mae is a government-sponsored enterprise that was chartered by Congress in 1938 to support liquidity, stability and affordability in the secondary mortgage market, where existing mortgage-related assets are purchased and sold.
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