Demetrius Michael's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/94161/comments http://seekingalpha.com/article/85964-options-trader-monday-outlook?source=feed#comment-210883 210883 Mon, 21 Jul 2008 15:22:03 -0400 http://seekingalpha.com/article/84617-options-trader-friday-outlook?source=feed#comment-203066 203066

On Jul 11 10:35 AM jonathan wrote:

> I agree with Phil. Unless I have it wrong (could be), my understanding
> is that Fannie and Freddie do not have much in the way of REAL losses.
> They are a reporting an enormous amount of Mark-to-Market losses...i.e.
> if they sold their loan portfolio today no-one would want to buy
> it...but their business is not in selling loans it is in buying.
> Their whole purpose is to buy and hold mortgages. So it seems to
> me that the best (only?) way to fairly value them is on the credit
> risk. I.e. if they don't sell the loans the mark-to-market is an
> accounting-ism and as long as the loans are being paid back (or not)
> the value of the company is entirely a result of the cash flow of
> mortage payments. Yes, that payment flow will be missing some payments
> from defaulting owners but that is measurable in their default and
> foreclosure numbers.
>
> I don't own any as of this second but if I very well may by the end
> of the day. Obviously the speculative part of the portfolio :)]]> Fri, 11 Jul 2008 11:59:08 -0400

On Jul 11 10:35 AM jonathan wrote:

> I agree with Phil. Unless I have it wrong (could be), my understanding
> is that Fannie and Freddie do not have much in the way of REAL losses.
> They are a reporting an enormous amount of Mark-to-Market losses...i.e.
> if they sold their loan portfolio today no-one would want to buy
> it...but their business is not in selling loans it is in buying.
> Their whole purpose is to buy and hold mortgages. So it seems to
> me that the best (only?) way to fairly value them is on the credit
> risk. I.e. if they don't sell the loans the mark-to-market is an
> accounting-ism and as long as the loans are being paid back (or not)
> the value of the company is entirely a result of the cash flow of
> mortage payments. Yes, that payment flow will be missing some payments
> from defaulting owners but that is measurable in their default and
> foreclosure numbers.
>
> I don't own any as of this second but if I very well may by the end
> of the day. Obviously the speculative part of the portfolio :)]]>