• Yesterday, 9:16 AM
    • The FHFA gets another precedent in support of its case as the U.S. District Court for the Northern District of Iowa dismisses an investor lawsuit.
    • The Housing and Economic Recovery Act doesn't force the FHFA to preserve and conserve the assets of Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC), nor return them to private ownership, according to the ruling.
    • Source: Bloomberg
    Yesterday, 9:16 AM | 45 Comments
  • Wed, Mar. 22, 1:56 PM
    • The Senate Banking Committee is only now starting even the most basic work on GSE reform, and the House Financial Services Committee has other priorities like renewing the flood insurance program and rolling back Dodd-Frank.
    • Focus is shifting to what Treasury Sec. Mnuchin and FHA chief Mel Watt might do about the profit sweep. Might they think about using this extra time to let Fannie Mae (OTCQB:FNMA -3.6%) and Freddie Mac (OTCQB:FMCC -2.4%) begin rebuilding capital? Beyond a $10B dividend payment due March 31, it's unclear.
    Wed, Mar. 22, 1:56 PM | 121 Comments
  • Fri, Mar. 10, 7:46 AM
    • Fannie Mae (OTCQB:FNMA) in January raised a few eyebrows among community organizer types when it guaranteed a $1B loan to single-family rental giant Invitation Homes (NYSE:INVH). According to Bloomberg, Freddie Mac (OTCQB:FMCC) may also get into the business of insuring mortgages backed by single-family rentals on an institutional scale.
    • The GSEs had tried to get into this business as early as 2012, but FHFA officials worried their participation would shut down private participation in the market. Instead they continued with their previous operation of backing loans to individual landlords without very many properties to finance.
    Fri, Mar. 10, 7:46 AM | 62 Comments
  • Mon, Feb. 27, 10:26 AM
    • Appearing on CNBC following this weekend's release of Berkshire Hathaway's annual report, Warren Buffett calls regularly available, government-guaranteed 30-year mortgages "enormously important," but adds that Fannie Mae (OTCQB:FNMA -4.4%) and Freddie Mac (OTCQB:FMCC -4.3%) are not necessarily needed for this.
    • Where we got into trouble, he says, is the private-public partnership of the GSEs. "Serving two masters [Wall Street and D.C.] is tough," says Buffett.
    Mon, Feb. 27, 10:26 AM | 148 Comments
  • Wed, Feb. 22, 5:09 PM
    • "We firmly believe that the rights of preferred shareholders in these two enormously profitable, publicly traded companies will be upheld one way or another,” says Fairholme CIO Bruce Berkowitz, one of the major holders of preferred shares in Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC).
    • After yesterday's plunge, shares in FNMA bounced 10% today, and FMCC 11.7%.
    Wed, Feb. 22, 5:09 PM | 115 Comments
  • Tue, Feb. 21, 3:29 PM
    • While today's appeals court ruling most likely means Fannie Mae (OTCQB:FNMA -29.2%) and Freddie Mac (OTCQB:FMCC -31.3%) shareholders aren't going to get satisfaction in the court system, there's still Treasury Secretary Steven Mnuchin and his desire for changes at the GSEs, says Bank of America's Ralph Axel.
    • It's unclear what Mnuchin means when he says that, but it's possible he's talking about the net worth sweep.
    • The timeline for Mnuchin dealing with this is unclear, but Axel suspects sooner rather than later.
    • Source: Bloomberg
    • Previously: Frannie now down nearly 40% following court decision (Feb. 21)
    • Previously: Fannie, Freddie profit sweep affirmed in appeal (Feb. 21)
    Tue, Feb. 21, 3:29 PM | 141 Comments
  • Tue, Feb. 21, 11:46 AM
    • It's looking like it could be game over for the common shareholders of Fannie Mae (OTCQB:FNMA -37.9%) and Freddie Mac (OTCQB:FMCC -36.8%) after a federal appeals court affirmed Treasury's net worth sweep.
    • Bulls will now look to new Treasury Secretary Steven Mnuchin for salvation.
    • Complete ruling here
    Tue, Feb. 21, 11:46 AM | 147 Comments
  • Tue, Feb. 21, 11:11 AM
    • According to Bloomberg's Elliott Stein, a D.C. Circuit court appears to have rejected most Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) shareholder claims, except contract-based arguments regarding liquidation preferences and dividend rights, both of which have been remanded to district court for further hearings.
    • Higher earlier in the session, FNMA has fallen as much as 8.4% and FMCC 6.5%.
    Tue, Feb. 21, 11:11 AM | 132 Comments
  • Fri, Feb. 17, 7:40 AM
    • Fannie Mae (OTCQB:FNMA): Q4 net income of $5.04B.
    • Net interest income of $5.81B (+14.4% Y/Y) beats by $710M.
    • Press Release
    Fri, Feb. 17, 7:40 AM | 70 Comments
  • Fri, Feb. 10, 11:00 AM
    • via Bloomberg
    • Vice President Mike Pence is bringing in the Cato Institute's Mark Calabria as his chief economist.
    • In no surprise given his libertarian leanings, Calabria this week called for Treasury to limit debt issued by Fannie (OTCQB:FNMA +2.2%) and Freddie (OTCQB:FMCC +1.7%) as a way to slow MBS issuance by the two and begin a gradual transition to a private mortgage market.
    Fri, Feb. 10, 11:00 AM | 151 Comments
  • Wed, Feb. 8, 10:46 AM
    • At issue are the GSEs' deferred tax assets, and they could need "significant" writedowns should the corporate tax rate be cut from its current 35%, says Fitch.
    • A cut to 20%, says Fitch, would have Fannie Mae (OTCQB:FNMA -1.9%) writing down its DTA by $15B, and Freddie Mac (OTCQB:FMCC -1.2%) by $8B.
    • This could force a net worth deficit this year, and a need to draw funds from Treasury in 2018.
    • For now, Fitch isn't cutting ratings, noting it's "highly unlikely" total draws would start approaching their cap.
    Wed, Feb. 8, 10:46 AM | 70 Comments
  • Tue, Jan. 31, 11:11 AM
    • The Mortgage Bankers Association envisions Fannie Mae (OTCQB:FNMA +0.2%) and Freddie Mac (OTCQB:FMCC +0.2%) as privately-owned utilities with a government-regulated rate of return.
    • Instead of an implied government backstop of the two companies, there would be an explicit guarantee of the MBS sold to investors.
    • The plan also sees private competitors in the space and the designation of Fannie and Freddie as SIFIs.
    Tue, Jan. 31, 11:11 AM | 51 Comments
  • Tue, Jan. 24, 11:29 AM
    • JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC) and Credit Suisse (NYSE:CS) are among those giving price data to startup Vista Capital Advisors, which - working with Intercontinental Exchange (NYSE:ICE) - plans to create indexes of MBS which could be used as the basis for derivatives.
    • Source: Matt Scully at Bloomberg
    • In the pre-crisis era, derivatives based on the ABX indexes allowed massive bets on and against the U.S. housing market, eventually affording folks like John Paulson and his team even bigger Hamptons mansions, and causing the downfalls of shops like AIG which took the other side.
    • These new derivatives, however, would be tied to higher quality mortgages then the subprime types favored prior to the property blowup. The new paper will be linked to what's known as "credit-risk transfer" securities issued by Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC), which force losses on investors when borrowers default. Since 2013 when the GSEs began selling these, they've offloaded nearly $400B of risk to bond investors, theoretically lowering taxpayer risk.
    • Vista has some heavy hitters backing it, including Dimensional Fund co-founder David Booth and former Citigroup chairman John Reed. There's also the requisite Nobel Laureate - Robert Merton of Black-Scholes fame.
    Tue, Jan. 24, 11:29 AM | 25 Comments
  • Thu, Jan. 19, 1:29 PM
    Thu, Jan. 19, 1:29 PM | 161 Comments
  • Thu, Jan. 5, 2:08 PM
    • KBW's Bose George sees no consensus among Republicans about GSE reform, and thus expects the "stealth privatization" that's already happening (with risk sharing) as more likely than Congress passing legislation or unilateral action from the incoming administration.
    • Source: Bloomberg
    • Fannie Mae (OTCQB:FNMA -2.7%) and Freddie Mac (OTCQB:FMCC -2%) are lower on today's session, but still more than doubles since the election.
    Thu, Jan. 5, 2:08 PM | 68 Comments
  • Dec. 5, 2016, 12:27 PM
    • Yes, incoming Treasury Secretary Steven Mnuchin wants to get the GSEs out of the government's hands, but it's still not clear how any privatization would work, say KBW's Bose George and Eric Hagen.
    • Even in a best case scenario - with the stock being privatized with a 2.5% capital requirement - the capital need would "meaningfully dilute" the common shares' value, they say.
    • They still believe the most likely scenario is one in which the common has no value, and reiterate Underperform ratings and $1 price targets for both.
    • Fannie Mae (OTCQB:FNMA -6.4%) and Freddie Mac (OTCQB:FMCC -6%) are pulling back further from their monster post-election rally, now down about 25% in the last three sessions.
    Dec. 5, 2016, 12:27 PM | 102 Comments