Oct. 10, 2014, 8:04 AM
- Bill Ackman has added to his 10% stake in Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) since the stocks got clobbered by a federal court ruling last week.
- The stocks have trimmed losses after dropping almost 50% when Judge Royce Lamberth threw out lawsuits by Fairholme Capital and Perry Capital, who claimed Washington improperly seized their property by changing the terms of its agreement with them.
Oct. 3, 2014, 1:09 PM
- "The district court's decision overlooks important points of law and improperly resolved key questions of fact based on the government's cherry-picked record," says Perry Capital attorney Ted Olson. "The merits of this case deserve to be heard in court."
- Previously: Carney: Don't buy the dip in Frannie
- Fannie Mae (OTCQB:FNMA +20.2%), Freddie Mac (OTCQB:FMCC +20.3%)
Oct. 2, 2014, 9:59 AM
- The 52-page ruling from U.S. District Judge Royce Lamberth "meticulously demolishes" every argument made by investors claiming Treasury and the FHFA acted illegally when altering Fannie Mae's (OTCQB:FNMA -10%) and Freddie Mac's (OTCQB:FMCC -7.3%) bailout agreement in 2012.
- The new agreement, says Lamberth, is clearly within the bounds of authority Congress granted in 2008 when passing a law overhauling oversight of the GSEs.
- Yes, Lamberth's ruling doesn't directly affect the dozens of other pending lawsuits, but now plaintiff's attorneys will have to start out explaining how Lamberth got things wrong.
- Previously: Fannie and Freddie plunge after investor lawsuit dismissed
Oct. 1, 2014, 9:46 AM| 15 Comments
Oct. 1, 2014, 4:41 AM
- A group of Wall Street investors lost their legal challenges yesterday over the treatment of Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) shareholders after their bailout in 2008.
- The investors sued for breach of contract over allegedly promised dividends and liquidation preferences, and what they called an illegal “taking” of their profits by the U.S. Treasury.
- The lawsuits are among the first of almost 20 related cases to be decided.
Sep. 24, 2014, 3:03 PM| 1 Comment
Aug. 29, 2014, 2:01 AM
- Bank of America (NYSE:BAC) has asked Judge Jed Rakoff to dismiss the jury verdict which found its Countrywide unit guilty of past mortgage fraud that resulted in a $1.3B penalty.
- Known as the "hustle" case, the lawsuit accuses BofA of selling toxic mortgages to Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC), although the bank argues that the evidence at the trial does not support the claims.
- The motion comes just one week after BofA agreed to a record $16.7B settlement with the U.S. government to settle charges over its role in mortgages leading up to the financial crisis.
Aug. 28, 2014, 10:55 AM
- “We are focused on making responsible real estate decisions to ensure the wise use of resources," says a Fannie Mae (OTCQB:FNMA -0.3%) spokesperson of the company's plans to sell it's sprawling headquarters as part of a consolidation of its 5 D.C. offices into a single leased office building.
- Previously: Fannie Mae eyeing return to the Big Board?
Aug. 27, 2014, 10:27 AM| 10 Comments
Aug. 18, 2014, 1:23 PM
- Assume, says John Carney, Bill Ackman and other investment managers win their legal battle against the government over Fannie Mae (OTCQB:FNMA -1%) and Freddie Mac (OTCQB:FMCC -0.8%). At that point, we go back to the bailout agreements under which both would still be obligated to pay a 10% dividend. Also, both would need to pay a commitment fee of, say, one-half to one percent, an amount they would struggle to be able to afford.
- The result is the two would have an even tougher time building a capital buffer, meaning a time frame of years before their earnings power could accrue to holders of either the preferred or common stock.
- Previously: Carney: Fannie and Freddie investors should surrender
Aug. 15, 2014, 3:58 AM
- Bill Ackman's Pershing Square has sued the U.S. government, claiming that its stripping of Fannie Mae's (OTCQB:FNMA) and Freddie Mac's (OTCQB:FMCC) profit illegally short changes investors in the mortgage companies' common stock.
- Hedge funds have previously sued the government over the two, although most of those lawsuits focused on the companies' preferred stock.
- Pershing is accusing the government's "brazen" practice since 2012 of funneling virtually all profit from Fannie and Freddie to the U.S. Treasury Department.
- Previously: Ackman reportedly leading another suit over GSEs
Aug. 14, 2014, 3:50 PM
- The GSEs have their tails in the air on a report shareholders - led by Bill Ackman's Pershing Square - plan tomorrow to file the latest in a string of lawsuits against the government for requisitioning the profits of the two, reports The Street's Dan Freed.
- Pershing Square is by far the largest non-government owner of common stock of Fannie Mae (OTCQB:FNMA +3.8%) and Freddie Mac (OTCQB:FMCC +4.5%), and numerous individual investors will join the suit. Another large holder - Bruce Berkowitz's Fairholme Capital - has much of its stake tied up in the preferred shares of the companies.
Aug. 11, 2014, 3:37 PM
- Private investors argue the government's share of Fannie Mae (OTCQB:FNMA -1.2%) and Freddie Mac (OTCQB:FMCC -1.2%) profits should be limited to the 10% dividend on its preferred stake in the GSEs. The difference between this amount and the so-called sweep amounted to tens of billions last year - hence the attention and the suits, writes John Carney.
- With tax benefits and legal settlements winding down, Frannie reported far smaller profits in Q2, making the difference between the sweep and the 10% dividend negligible. In the case of Freddie, in fact, it could be argued the sweep is less than what it would have paid on the 10% dividend plus some sort of commitment fee on its credit line.
- The difference is wider at Fannie Mae, but "sweep or no sweep, there is close to nothing left over for investors in either Fannie or Freddie," says Carney.
Jul. 11, 2014, 7:15 AM
- A check of the mortgage insurers the morning after the FHFA released the proposed Private Mortgage Insurer Eligibility Requirements (PMIERs) finds Radian (RDN) lower by 2.8%, MGIC (MTG) by 2.6%, and no action in Genworth (GNW), Essent Group (ESNT), and NMI Holdings (NMIH). The revised PMIERs would require higher capital standards on the mortgage insurers Fannie Mae (FNMA) and Freddie Mac (FMCC) do business with.
- The new rules are open for comment until September 8, and Radian expects to give the FHFA an earful, including noting the new capital requirements "are more onerous than the company's historical default experience suggests would be needed to withstand a severe stress event." The proposed PMIERs, says Radian, are also not consistent with the FHFA's goal of expanding access to mortgage credit by boosting the role of private capital in the mortgage market.
- Radian also notes it is likely to be January 2017 before compliance with any new rules would be required.
Jul. 1, 2014, 10:39 AM
- Noting some nonbank servicers use short-term funding to buy MSRs which may only pay off after a lot of long-term work the Office of Inspector General says the practice can jeopardize not just the companies' operations, but also Fannie Mae (FNMA) and Freddie Mac (FMCC) which guarantee the loans.
- The report notes nonbank servicers held 17% of he MSR market at the end of 2013, up from 9% a year earlier, and the boosted share is testing their ability to handle the loans. No particular servicer is named in the report, but those in the industry include Ocwen (OCN -1.9%), Nationstar (NSM -2.6%), Walter Investment (WAC -0.8%), New Residential (NRZ +0.3%), Home Loan Serviing (HLSS +0.9%), and PennyMac Financial Services (PFSI +0.5%).
- The report cites one example in which the GSEs found a servicer didn't have sufficient infrastructure to manage its MSRs and also breached minimum capital requirements.
- NY's Ben Lawsky, of course, has put the kibbosh on transfers of servicing rights from the banks to the nonbank players until his concerns over servicing practices are satisfied.
Jun. 20, 2014, 2:00 AM
- Royal Bank of Scotland (RBS) will pay $99.5M to settle a lawsuit which accused the bank of selling sour mortgages to Freddie Mac (FMCC). The case is one of two lawsuits filed by the Federal Housing Finance Agency against RBS.
- This also marks the 15th mortgage security settlement since 2011 won by the FHFA, on behalf of Fannie Mae (FNMA) and Freddie Mac.
FNMA vs. ETF Alternatives
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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