From other sites
at CNBC.com (Wed, 10:38AM)
at CNBC.com (Mon, 11:29AM)
The Wall Street Journal: As TARP era winds down, U.S.’s financial-crisis bailout scorecard nears completionat MarketWatch.com (Dec 20, 2014)
at CNBC.com (Dec 14, 2014)
at CNBC.com (Dec 12, 2014)
at CNBC.com (Dec 10, 2014)
at Zacks.com (Dec 9, 2014)
at CNBC.com (Dec 8, 2014)
at CNBC.com (Dec 8, 2014)
at Investor's Business Daily (Dec 4, 2014)
Fannie And Freddie: Current Plans Could Affect Iowa Pensions
- IPERS holds $1 billion in GSE Mortgage Securities.
- Some GSE reform plans would "bifurcate" the securities market.
- Treasury and FHFA actions call their motives into question.
- Documents produced in discovery by the Defendant are now being used by the Plaintiff against the defendant. This suggests that discovery is unearthing valuable documents for the Plaintiff.
- If 100% of the profits of Fannie and Freddie continue go to the US Treasury in perpetuity, bankruptcies and receiverships can be less lucrative for creditors than conservatorships.
- Although the Iowa case isn't looking good and Judge Royce Lamberth set a precedent, the end-game and over half of my portfolio is to be long Fannie and Freddie.
- The government's proposed defense is more logical and understandable than the Plaintiff and this perpetuates an untenable situation, namely conservatorship.
Fannie And Freddie: Everyone Says Read The Statute
- Judge Pratt asks whether he should just "Read the Statute."
- The Plaintiffs say this is music to their ears.
- Former HERA technical advisor says statute is not being followed.
Director Watt Begins To Exercise His Administrative Authority
- Director Watt exercised his power under HERA.
- Increased spending and looser mortgage standards require capital.
- Expect FHFA to announce an end to the Net Worth Sweep.
Fannie And Freddie Shareholders Follow Director Watt To Miami
- FHFA came to Miami to promote HARP.
- Investors in Fannie and Freddie also came to Miami.
- Significant value can be gained by releasing the GSEs from conservatorship.
- The government is following the rule of law if you look at things this way. By 2017, a takings will occur if things do not change.
- The third amendment net worth sweep ensures that the government is paid back principle plus interest the fastest.
- The sweep is still an agreement to change the terms of a loan, not a new security. The original loan payback ceiling of principle plus interest still exists.
- Things will change or there will be a fourth amendment. The way things are going, a fourth amendment will come and the Enterprises will rebuild private capital starting in 2017.
Fannie And Freddie: Director Watt Should Exercise His Executive Powers
- Director Watt can use his executive powers to end the Net Worth Sweep.
- Director Watt does not report to the U.S. Treasury.
- Ending the Net Worth Sweep will eventually end the conservatorship.
Fannie Mae: Let's Not End The Conservatorship Just Yet
- With the pending change in Congressional leadership, some politicians and pundits have begun a push to end FHFA’s conservatorship of Fannie.
- Returning Fannie to the shareholders by ending the conservatorship has a strong intuitive appeal.
- Ending the conservatorship without first resolving the value destroying elements of the Restated PSPA, will only help the Government by delaying resolution of the shareholder suits.
Fannie And Freddie: FHFA Action Could Permanently Strengthen The Housing Market
- FHFA action is a win-win for taxpayers, homeowners, and shareholders.
- Analysts target $18 to $50 for post-conservatorship share values.
- Treasury could receive a windfall from recapitalized GSEs.
- Since the Lamberth dismissal, the short interest in Fannie Mae and Freddie Mac has been skyrocketing.
- Investors short stock when they have strong conviction that the stock is overvalued and will fall.
- Combined the short interest is now over $140M, up from $40M a month before, increasing by roughly $100M.
Fannie And Freddie: Financial Disclosures Needed On Guarantee Fee Assets
- The total value of guarantee fee assets should be hedged.
- The total value of guarantee fee exposure should be disclosed.
- Mortgage servicing rights (MSRs) are comparable to guarantee fees.
- MSRs are carried at fair value under GAAP.
- Bob Corker would rather be run over by a train than speak with shareholders.
Fannie Mae: The Rafter/Pershing Square Voluntary Dismissal Has No Bearing On The Perry Capital Appeal
- On October 31, 2014, the Rafter, Rattien and Pershing Square plaintiffs voluntarily dismissed litigation against the government regarding Fannie Mae.
- The Rafter litigation had two counts: A takings claim and a derivative shareholder claim.
- Neither claim has any bearing on the Perry Capital Appeal.
Fannie Mae: A Primer To Senior Preferred Shares And Warrants
- The Fannie Mae conservatorship, and Treasury’s Senior Preferred Shares and Warrant, are governed by seven documents.
- These documents are a credit to the legal scriveners’ art, making the moderately complex obscure to the lay reader.
- This article will translate from the legalese the provisions that holders of Fannie stock will want to know.
- Civil rights groups ask FHFA to preserve Fannie and Freddie.
- The American Dream of Homeownership must be preserved for the middle class and minorities.
- Fannie and Freddie must be allowed to rebuild capital.
Fannie Mae: John Carney's Massachusetts Decision Supports The Shareholders
- John Carney has written in Investor Hub that the legal tide has shifted against Fannie shareholders with a new decision on October 21, 2014, dismissing litigation against FHFA under HERA.
- Reading the case, however, leads to the opposite conclusion.
- The new case is consistent with the precedent which will required that Judge Lamberth be reversed on appeal.
The Reason Fannie And Freddie Shares Are Rising Today
- Common Shares of Fannie and Freddie Rise After News of the Common Securitization Platform.
- Looser Lending Standards Announced by the Regulator Mean that Private Capital Needs to be Raised.
- FHFA has a Responsibility to Ensure Safety and Soundness of the System.
Fannie Mae: An Analysis Of The Cases And Statutes That Require Judge Lamberth To Be Reversed On Appeal
- On Sept. 30, 2014, Judge Lamberth dismissed the claims against Fannie Mae before him ruling that the Court didn’t have jurisdiction under HERA §4617(f) to hear the claims.
- This article reviews the statutes together with the facts and holdings of the cases Judge Lamberth cites.
- The cases Judge Lamberth cites require he be reversed on appeal.
Ackman Bets On $100+ For Fannie And Freddie - New All-Time Highs
- If Fannie Mae and Freddie Mac were not bailed out, their book value starts at $31/share.
- Treasury takeover forced Fannie and Freddie to pay interest on accounting losses that Treasury triggered that were not necessary as evidenced by reversals.
- Federal regulators directed Fannie Mae and Freddie Mac to start purchasing $40 billion a month of underperforming mortgage bonds to bail out America.
- Ackman says that he expects the share value to be $23-$47, but opportunity cost with preferreds and risk profile demonstrate otherwise.
Fri, Feb. 21, 8:42 AM
- Q4 net income of $6.5B brings full year net income to $84B, aided by the release of the valuation allowance on the DTAs.
- "While Fannie Mae (FNMA) expects to be profitable for the foreseeable future, the company does not expect to repeat its 2013 financial results, as those results were positively affected by the release of the company’s valuation allowance against its deferred tax assets, a significant increase in home prices during the year, and the large number of resolutions the company reached relating to representation and warranty matters and servicing matters."
- The company will pay Treasury $7.2B in dividends in March, bringing the total to $121.1B vs. draws of $116.1B.
- Full report
Fri, Feb. 21, 8:31 AM
Sun, Jan. 26, 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.
Thu, Jan. 16, 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
Tue, Jan. 14, 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.
Thu, Jan. 2, 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. 30, 2013, 12:02 PM
- Wells Fargo (WFC) is the latest to settle with one of the GSEs, agreeing to settle repurchase claims on mortgages sold to Fannie Mae (originated prior to 2009) for $591M. Wells will write a check to Fannie for $541M after adjustments for credits related to certain prior repurchases.
- Wells has fully reserved for the cost of the agreement.
- “We have closed out our legacy repurchase reviews with this agreement with Wells Fargo,” says Fannie Mae (FNMA +0.3%) CEO Timothy J. Mayopoulos. “This agreement represents a fitting conclusion to our year of hard work to put legacy issues in the rear view mirror and begin 2014 focused on improving the future of housing finance.”
- Press release
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. 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.
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.”
Nov. 20, 2013, 3:53 PM
- "I want to make clear our administration believes the risks are simply too great, that this would re-create the problems of the past," says the president's chief economic adviser Gene Sperling of any recapitalization plan for Fannie Mae (FNMA +7.5%) and Freddie Mac (FMCC +6.4%).
- Speaking at an industry conference in D.C., Sperling says the administration is interested in rebuilding a stronger mortgage market not dominated by two mammoth institutions, and Frannie - even if restructured - would retain a large advantage over newer entrants.
- Needless to say, Sperling's remarks come in wake of Bruce Berkowitz's buyout and recap proposal for the GSEs from last week.
Nov. 15, 2013, 3:28 PM
- Bruce Berkowitz's presentation of his plan to purchase and recapitalize the mortgage insurance business of Fannie Mae (FNMA +10.5%) and Freddie Mac (FMCC +8.6%) cleverly leads off with quotes from politicians - including the president and FHFA chief Ed DeMarco - calling for private capital to play a larger role in the mortgage market.
- Presentation slides here.
- Bloomberg's Matt Levine's review here.
- His plan actually makes pretty good sense, but with one catch: The conversion of preferred stock for equity in a new, debt-free company with $52B in assets represents somewhere in the area of a $20B-$30B windfall for those owning the preferred.
- The plan also talks about bringing competition to the business even as it creates a new cheaply-capitalized company $52B in size. Far smaller competitors can hardly hope to match.
- Earlier: Ackman joins the fray
Nov. 15, 2013, 9:03 AM
- Pershing Square discloses a 9.98% stake in the common stock of Fannie Mae (FNMA) and a 9.77% stake in the common of Freddie Mac (FMCC), and its intention to get involved in the reorganization discussions.
- "In light of the proposed Fairholme transaction on behalf of certain holders of preferred stock of the Issuer which was reported in the financial press, the Reporting Persons have determined that they may engage in discussions with management, the board, other stockholders of the Issuer, representatives of the Federal government, and other relevant parties ..."
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.
Other News & PR