Feb. 27, 2014, 8:45 AM
- As of Dec. 31, aggregate cash dividends to Treasury of $71.345B exceed cumulative cash draws of $71.336B. Based on Dec. 31 net worth of $12.8B, Freddie's Q1 dividend payment will be $10.4B, bringing total paid to $81.8B. Unfortunately (for now) for holders of the common, dividend payments do not reduce Treasury's preferred stock holdings, which remain at $72.3B.
- Press release, Q4 results
- FMCC +0.9% premarket
Feb. 27, 2014, 8:22 AM
Feb. 26, 2014, 2:49 PM
- It doesn't take much to get these names moving, and Fannie Mae (FNMA +10.1%) and Freddie Mac (FMCC +10.3%) rocket higher, with Dick Bove appearing on Fox Business saying both are $18 stocks appearing to be today's catalyst.
- Bove has been bullish on the companies for awhile, but the $18 price target is a new item.
- Last week: Fannie reports big profit; Treasury paid back and more
Jan. 26, 2014, 1:51 AM
- The Department of Justice and the Commodity Futures Trading Commission have investigated Bank of America (BAC) for possible improper trading by carrying out futures trades for its own purposes before executing large orders for clients.
- The probes were disclosed in June, but have only just been reported. They appear to shed light on an FBI bulletin in which the agency said it suspects traders at two unnamed banks of conspiring to manipulate rates on major orders from Fannie Mae (FNMA) and Freddie Mac (FMCC), and of front running the government-sponsored enterprises (GSEs) in the markets for interest-rate swaps.
Jan. 16, 2014, 3:32 AM
- The number of foreclosure filings dropped to the lowest level since 2007 last year, declining 26% to 1.36M properties, RealtyTrac says. The figure is less than half of the peak of 2.9M properties in 2010.
- States with the highest foreclosure rates in 2013 were Florida, Nevada, Illinois, Maryland and Ohio.
- The number of foreclosure processes started plunged 33% to 747,728, the lowest since RealtyTrac began tracking the data in 2006. Bank repossessions plummeted 31% to 462,970 properties, the least since 2007. (PR)
- Relevant tickers: PHM, MHO, TOL, KBH, RYL, HOV, SPF, FNMA, FMCC
- ETFs: ITB, XHB, MBB, MBG, VMBS, CMBS, COBO
Jan. 14, 2014, 5:02 AM
- The FBI suspects traders at two unnamed banks of conspiring to manipulate rates on major orders from Fannie Mae (FNMA) and Freddie Mac (FMCC) or of front running the government-sponsored enterprises (GSE) in the markets for interest-rate swaps.
- Front running is using advanced knowledge of an order to make a transaction first.
- Senior management at the banks "planned and encouraged this behavior because it led to higher revenue for their respective parent banks," an FBI bulletin says.
- However, the agency isn't confident it can prosecute, because the transactions involved appear to be legitimate.
Jan. 2, 2014, 1:05 PM
- Six major banks settled mortgage related lawsuits (and one - Wells - settled without being sued) with Fannie (FNMA -1.5%) and Freddie (FMCC -2.8%) last year, allowing the GSEs to collect a total of $7.9B, according to their regulator, the FHFA.
- Twelve lawsuits are outstanding and the next case scheduled for court isMerrill Lynch in June, though analysts expect this and the others to be settled before a judge or jury hears them. Of the remaining suits, Bank of America faces the largest potential tab - the FHFA wants at least $6B to settle (with suits against the bank itself and Countrywide joining Merrill).
Dec. 21, 2013, 9:16 PM
- Mel Watt wastes little time putting his stamp on housing policy, saying he will delay the increase in mortgage fees announced earlier this month by the FHFA - the regulatory agency overseeing Fannie Mae (FNMA) and Freddie Mac (FMCC). Watt was confirmed to lead the FHFA on December 10 and is set to be sworn in on January 6.
- The move to boost fees - which would have led to significantly higher rates and/or points to those with anything but perfect credit and 20% to put down - was part of a plan by outgoing chief Ed DeMarco to allow room for money from private investors into the mortgage market. Needless to say, it had come under strong attack from those whose bread is buttered by the current regime. "The timing of it is impeccably bad," said Lew Ranieri. "All this will do is tighten credit. You're just making housing less affordable."
- "What our industry keeps pushing for is let's do things at a slow pace to make sure there's not some unintended consequence," said KB Home (KBH) CEO Jeff Mezger on the company's earnings call (transcript) this week (before Watt nixed the fee increase). "If you're a 750 FICO, this [extra fee] is 1/8 of a percentage point, so it's not a big deal. You get down to a 650 or a 670 or 680 - which historically is a good buyer - and your interest rate could go up 1%."
- "There's a new head of FHFA coming in," continued Mezger. "They'll have the ability to go adjust and monitor things." Indeed.
- Related ETFs: XHB, ITB
Dec. 17, 2013, 1:17 PM
- A continuing absence of refinancing activity could have mortgage origination volumes off as much as 30% in 2014, say KBW's Bose George and Jade Rahmani, even as purchase volumes rise more than 10%. Their forecast of $1.15T in total activity next year is $50B less than the MBA's estimate, and against about $1.8T in 2013.
- For the mortgage sector: Decline earnings from originators and title insurers, stability for the servicers, and increasing earnings for the insurers.
- The mortgage insurers - RDN, MTG, ORI, ESNT, NMIH, GNW - will benefit not only from the rise in purchase activity, but from an FHA continuing to cede more market share to the private players.
- The team is also bullish on owners of MSRs like Home Loan Servicing Solutions (HLSS) and New Residential (NRZ -0.3%), but neutral on Ocwen (OCN +0.7%) after a big run this year.
- KBW also continues to believe the common stock of Fannie (FNMA -0.4%) and Freddie (FMCC +0.8%) is worthless and reform of the GSEs isn't coming until at least 2015.
Dec. 16, 2013, 4:25 PM
- In good news for securitizers of private-label MBS like Redwood Trust (RWT +1.1%) and PennyMac Financial Services (PFSI +1.4%), the FHFA sets in motion a 4% reduction in conforming loan limits to a new ceiling of about $400K for most of the U.S., while higher-cost areas would see a new limit of $600K.
- The goal is to cut the presence of Fannie (FNMA -0.7%) and Freddie (FMCC -2.3%) in the mortgage market, a gap private firms would love to fill. Critics will say the cuts could harm the housing recovery. The period for public comment on the proposal ends on March 20. If it moves forward, changes could take place by October 1.
Dec. 10, 2013, 12:37 PM
Dec. 6, 2013, 9:17 AM
- The agreement resolves substantially all indemnification and repurchase obligations on 900K loans originated and sold by PNC to Freddie Mac (FMCC) between 2000 and 2008. PNC will pay Freddie $89M (less credits of $8M).
- This follows an agreement in principal between PNC and Fannie Mae. Both deals require final approvals from the FHFA.
- Press release
Dec. 2, 2013, 12:22 PM
- "In the long history of bailout deals, no heist of the U.S. taxpayer would approach this one in cynicism and chutzpah," writes Jonathan Laing of Bruce Berkowitz's buyout plan for Fannie (FNMA +5.7%) and Freddie (FMCC +5%). One analyst calls it a "three-card monte" scheme in which the preferred holders want taxpayers to pay them off at par, or turn over the keys to the companies wildly valuable operations for little more than a $17B rights offering.
- Yes, Treasury will have realized $187B in dividends from the GSEs by year end - equal to the amount of the bailout - but that's "merely fair recompense for the enormous risks taxpayers took." Also, more than $80B of the $187B is the write-up of deferred tax assets - it will only be realized if the companies operate profitably for many years, says Laing.
Dec. 2, 2013, 8:00 AM
- The $404M settlement (less credits of $13M for repurchases already made) is over reps and warranties on 716K single-family mortgages originated (between 2000-2009) by Bank of America (BAC) and sold to Freddie Mac (FMCC).
- Any payment made by BofA is fully covered by the bank's existing reserves. With this deal, says the bank, BofA has resolved all outstanding potential rep and warranty claims by the GSEs on loans sold by both it and Countrywide from 2000-2009.
- BAC +0.1% premarket.
- Press release
Nov. 25, 2013, 9:36 AM
- After paid claim credits and other adjustments, Fifth Third (FITB) will pay $25M in cash to Freddie Mac (FMCC) to resolve certain repurchase claims on mortgages originated and sold prior to Jan. 1, 2009. The bank's rep and warranty reserves are "fully sufficient" to cover the payment amount.
- Press release
Nov. 22, 2013, 2:43 PM
- "When you talk to anybody in Washington, there is an almost universal view that Fannie (FNMA -3.1%) and Freddie (FMCC -1.5%) should be a part of the past, that it is a broken model, and also that private investors in Fannie and Freddie shouldn’t realize any returns from those investments," says PIne River's Colin Teiccholtz, scratching his head over anyone owning stock in the two as a play on them being privatized.
- "We've looked at it," says Avenue Capital's Marc Lasry. "I think you’re making a bet that you’re going to be able to force the government to do something.”
- It's "a puzzle to me," says an investor in Bill Ackman's Pershing Square. "If you think the Target board is hard to convince of a policy change, you have got to believe you’re really taking on a tall job to try and influence the government."
- Taking a break from talking Herbalife, Ackman - who recently disclosed near-10% stakes in the common of both Fannie and Freddie - says he's not supportive of Bruce Berkowitz's recap plan (which would be of benefit to preferred owners like Berokowitz, but not so much for owners of the common)
- MBS trader Deepak Narula calls the common stock of Frannie an option which should rise any time chatter about privatization picks up. "Whether the option is worth anything in the short run is immaterial.”
FMCC vs. ETF Alternatives
Freddie Mac was chartered by Congress in 1970 with a public mission to stabilize the nation's residential mortgage markets and expand opportunities for homeownership and affordable rental housing. The company's statutory mission is to provide liquidity, stability and affordability to the U.S.... More
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