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Morningstar DBRS assigned AAA ratings w “stable” outlook
to Fannie Mae & Freddie Mac on Thursday.
The rating service noted that the ratings were directly linked to the “long-term
local currency issuer rating” the firm currently has assigned to the U.S....
Sales of existing homes declined by 4.3% on a monthly basis in March, according to the
National Association of Realtors. “Though rebounding from cyclical lows, home sales are
stuck because interest rates have not made any major moves,” said Lawrence Yun,
chief economist at NAR.
Interest rates on mortgages have increased in April, hitting an average of 7.10% this week,
according to Freddie Mac...
$Boooom ! - Freddie Mac wants a new role financing
Homeowners sitting on equity. One banking group isn’t happy.
if Banks don't like it - $IT'S a $GENIUS MOVE !! 
($Very $Smart $Move - $ALREADY SOLID $PRODUCING $LOANS)
Published: April 17, 2024 at 5:30 p.m. ET - By Joy Wiltermuth
The housing giant could make a $850 billion splash in the market for
second-lien mortgages under a new proposal
A Wall Street lobbying group thinks Freddie Mac’s proposal is mission creep and wants
second-lien mortgages to stay in the domain of private credit. GETTY
-8.97%
Housing giant Freddie Mac wants the green light to expand its already dominant footprint
in the estimated $44.8 trillion U.S. housing market. But not everyone is on board.
Federal regulators want feedback on Freddie’s new proposal to allow it to start buying up
second-lien mortgages, a popular product among cash-strapped U.S. homeowners looking
to tap the equity in their properties, especially after mortgage rates shot up in the wake
of the pandemic.
Read: Homeowners scrambling for cash breathe new life into second-lien mortgage market
The aim is for Freddie to start buying fixed-rate second liens potentially by this summer, giving
borrowers a way to tap an estimated $32 trillion of equity built up in U.S. homes in recent years.
If approved, it would open the door for more borrowers to extract cash from their homes, without
having to refinance at current 30-year fixed mortgage rates of about 7.2%.
But a major financial-industry lobbying group said Wednesday that the second-lien market should
remain in the hands of private credit, not a partially government-backed entity.
“In the current market, closed-end second mortgages have been, and continue to be, successfully
originated and funded by private capital,” said Michael Bright, chief executive of the Structured
Finance Association, in a statement. “It is quite unclear what role the government-sponsored
enterprises have in funding these mortgage products, or how that fits into Freddie Mac’s overall
government-chartered mission objective.”
Freddie Mac FMCC, -5.38%, Fannie Mae FNMA, -8.97% and other government-sponsored
housing agencies already have a roughly $9.1 trillion stake in the estimated $13 trillion
U.S. residential-mortgage market.
While they don’t make loans, they buy up 30-year fixed-rate mortgages that conform to higher
lending standards put in place after the late-2000s subprime-mortgage crisis.
These lower-risk loans often end up bundled into bond deals with government guarantees that
primarily are owned by the Federal Reserve and banks, among other investors. Because of
these guarantees, investors consider the bonds to be a Treasury surrogate.
A hitch to Freddie’s proposal would be that it only buys second liens on homes where it already
financed the first mortgage.
Importantly, the proposal aims to limit how much homeowners can borrow in total against their
homes. Freddie said it plans to keep a borrower’s loan-to-value ratio at less than 80% when
looking at both first and second-lien mortgages on a home, keeping an equity cushion in place
in times of stress.
Servicing of the loans also would be overseen by Freddie, which means homeowners could
have access to payment pauses implemented by the government — such as the ones rolled
out during the COVID-19 pandemic, or in cases where homes are hit by hurricanes or other
natural disasters.
The SFA — which represents bond investors, issuers and Wall Street banks — called the
proposal “an unnecessary government encroachment into a sector that has been operating
successfully without government involvement.”
But Freddie’s charter, in place for decades, already indicates that it is authorized to purchase,
service, sell and deal in subordinate second liens.
BofA Global researchers estimated Wednesday that Freddie could end up owning around
$850 billion in second liens, given the huge swath of first-lien mortgages it already financed
at rates below 4%, and based on a combined loan-to-value ratio of 75%.
Fannie Mae, which hasn’t announced a similar program, could see volume of $1 trillion in
second liens when looking at the same parameters.
For context, the BofA Global researchers expect Wall Street to package up to a total of
about $11 billion in home-equity lines of credit and second liens into bond deals this year,
up from only $4.5 billion in 2023.
The U.S. housing market has been largely frozen since the Federal Reserve began
raising interest rates in 2022 to fight high inflation, a battle it continues to wage to this day.
The plotters react to the Legal definition "MAY" posted yesterday in the comment I'm replying to, and they tumbled the stock prices.
This word is very important because the FHFA's Wall Street law firm, bases all the defense on this word, stating that it's "permissive, rather than mandatory".
It's clear that it means to have permission to do something. An authority. A power.
But it doesn't mean that it can be excused from complying. That is, it's imperative once the capital has been generated, in order to (may) put FnF in a sound and solvent condition (FHFA-C's Power). That is, to restore regulatory capital levels, and since day one.
$426B of core capital is held in escrow, including the $125B corresponding to the offset attached to the $125B SPS LP increased for free (another capital distribution restricted)
"May" in the FHFA-C's Power is also interrelated to the FHFA-C's Incidental Power, about activities in the best interests of the FHFA, and it can be used this comment by Freddie Mac as explanatory note. It can be included the expenses to build the CSP, etc.
All the legal proceedings have been built around this, and it has ended up with the fiction of implied contract (the dividend was impeccably suspended, as per the Restriction on Capital Distributions) and false damages (one-day share price drop) in the Lamberth court, which, by the way, the motion for JMOL was fraudulently filed as a backdoor appeal, to show strength, and the real appeal will be filed when due, because it wasn't related to the evidence argued during the trial and a jury issue, required in a motion for JMOL, but this private sector law firm brought up again the issue of whether a claim travels with the shares. Judge Lamberth already said that it's correct, but now, it comes the appeal many years later, so it's reduced to those that can demonstrate that they held stocks on the day of the 3rd amendment. Basically, only Berkowitz and other plaintiffs get damages with money taken from FnF (back dividends), another capital distribution restricted by the way.
Judge Lamberth knew that the FHFA couldn't file 55 pages in a motion for JMOL Rule 50 (b), if the one Rule 50 (a) was an oral motion. This is why he didn't respond to the question whether it can file 55 pages and let the FHFA file a shadow appeal.
Evidence that everything has been rigged by the parties and the judge, since day one. Create expectations is always their modus operandi to act freely and draw more people into their cause, but seeking a different outcome.
The FHFA Directors and their Wall Street law firm will receive always the same response:
NO!
$1TRILLION SUIT LOOMS@FHFA says "may" is permissive rather than obligatory https://t.co/1RroDt7vgr
— Conservatives against Trump (@CarlosVignote) June 4, 2017
NO! https://t.co/G8pNhEgzIs#Fanniegate
You don't know illiquid until you sit on very valuable CH 11 PFD/Hybrid securities with guarantees for years as little by little every distribution to creditors finds excess of every creditors claim per tranche.
2008 is a 15+ year process that benefits from a slow unwinding, opportunities in buying on OTC what accredited only IPO participants dump, and knowing just what the heck you are buying.
Similar principals make GSE common stock the 8th wonder of the world in that how could it be so overlooked when we can just use our PC/phones to learn how they work, how they're finances are, and how they are exiting conservatorship -> most importantly why they are meant to become private sector companies with public listed shares and the environment they are coming into being so much more profitable and simpler than the one they left in 2008.
Many things about 2008 remain out there, illiquid for the majority of valuable investments in the open market - but FNMA and FMCC are the exception. If these two are illiquid I find it funny in the past 6 months the volume has broken the top 50 lists with tight spreads of one cent more than a dozen times up there with all the NYSE and NASDAQ listed company's common stock.
Illiquid. That's funny. Can't remember the last time I saw a FNMA or FMCC spread over a penny.
Important news if you realize selling MBS and buying mortgages off only a handful of banks/non-bank lenders by comparison to pre-conservatorship is Fannie's most important operation and also where the big revenue (that we one day will see dividends and spot price movement from) is generated: https://finance.yahoo.com/news/fannie-mae-mortgage-scoring-system-161232345.html
From Yahoo Finance! by Bloomberg LP Fannie Mae’s New Mortgage-Scoring System Aims to Lift MBS Demand
Just another big yet quiet step towards the end of this "temporary" conservatorship. Imagine if MBS products became offered using the connectivity of the internet we have in 2024 to retail for easy cash monthly disbursements for holders - unlike 2008 when the internet was simply not ready for that, nor software platforms running on the web.
We are conditioned since COVID especially to retail invest in just about anything imo. More competition is good for Fannie Mae selling MBS because you add the retail investor, the 401K portfolios of the employed worker, to the normal big institutionally filled MBS market in another US housing/home financing boom cycle and you make Fannie Mae ridiculously wealthy in the process and banks will benefit from this in big ways. One such way is offloading their risk faster for profits, offering lower rates on their mortgages, and offering mortgages to more diverse and larger populations of willing home buyers. It does work that way. Fannie and Freddie don't need the FED to buy their MBS anymore than the World needs to buy any more US Tbill debt. Time to invest in profitable, liquid, dividend paying instruments. New home demand remains high in many sections of the US despite "FFR % remaining high and 7% being the boogeyman all over the internet and press" -- that narrative is bogus. DR Horton just had a Q1 in Texas where despite high mortgage % rate they couldn't build fast enough to satisfy the demand and will continue building to keep demand for NEW houses satisfied. People pay too much attention to mortgage rates being tied to the FFR. Rates will lower when you free the GSEs to the public and do things that speed up the efficiency in buying loans off lending banks, banks profiting, bundles of responsibly originated mortgages being sold to investors - and increasing the amount of investors that can access MBS also allows the velocity of lending, bank profits and offloading risk + Fannies capacity to pack and sell these into MBS for larger sized populations with high demand is how the private sector doesn't need government to help it function. We can simply see Fannie and Freddie succeed if they give access to their MBS in ways like this news article proclaims to large populations using the connectivity we now have and also let the market demand that will rise with retail access to traditionally just institutions accessing MBS secondary markets make Fannie and Freddie wealthy enough to buy mortgages off mostly bank lenders in large quantities, faster speeds, making banks larger profits due to the velocity of sales. The rates banks will lend at will fall as they wish to lend to populations that need more affordable terms and also for the wealth and the building of new homes will flourish.
I would argue the FED ending it's purchase of MBS is the best thing you could have happen. Anytime government meddles with a system that could run better in the right free market private sector scenario, it hinders its productional capacity, capabilities, and value. Shareholders will flock to buy FNMA and FMCC common stock as well because with no gov't control comes dividends to the shareholders and in the proposed scenario I forsee - those profits will be turning heads as the excess waterfall from MBS sales at both higher velocity and larger populations increasing demand and competition, increasing MBS price and profits from = $5 dividends from the release day 1 thru it's first privatized quarter and who knows how far? In fact if they get unusually large I would imagine stock splits are in order. This is a 4.28 Trillion Dollar company by Ent Value. If you sold all of it's assets and gave it to its outstanding shareholders including the warrants in that total that's a whopping 3,784 USD per share of common stock. Wanna bet this company can handle expansion? I would expect a 10:1 split or two along the privatized future?
Once government stops hindering what the market can handle, you have a few banks gobbling up MBS for the first time since 2021 in JPM WFC B of A reported in January 2024 - and banks also are going to enjoy getting insanely rich from the profits of lending faster than ever before and expanding to the extreme demand for new housing as they can keep nearly all of the liability off their books because many Americans and immigrants alike can pay off their mortgage payments when the govt and FED gtfo out of the way. What lowers mortgage rates is not the FFR, but the capital banks will have to expand their lending on friendly terms with lower credit requirements because do you really need a 680 FICO and a six figure job to get housing to afford a $350,000 home with 30 yr fixed rates and a 6% interest rate going lower as banks become super capitalized? No. Also homebuilding creates jobs for many different industries. It all works better in the end.
My two cents. I wouldn't worry so much about a PURPOSELY popped bubble when a weeks time removed GSEs from the private sector and Lehman was forced into CH 11 because of a dispute in asset and liabilities valuation on its book with JPM Chase from a Fall 2007 FASB implementation of Mark to Market accounting (FAS 157).
I advise you read on that. Also $1.32? Steal of the century. You know the Trump pump will be >$10 before the election. Just like the first run of 15 months in the green began in Jan 2023, the Trump pump will begin sooner than October and November - heck you might even get a shocking release from conservatorship before the election because it's not a Biden or Trump admin that dictates the time for the need of private GSEs. It's more of a Jamie Dimon type ring of bankers that will select the time for the govt to gtfo the way. You'll see.
That's how the world works. MBNA since the 1990's into the 2000's bought Joe Biden. Trump may not be bought by banks but he sure as heck is private sector, wall street and bank friendly. JPow, FHFA, Yellen. None of these people run the show. That's the truth. Lawsuits are involved sure, but that's also sometimes as much theater as it is procedural for the future. You do realize the USA is a country where the legal framework and evolution of it has to be based on precedent. We are coming to the end of a reorganization where quadrillions of pages of legal proceedings set precedent in and out of courts.
This bullish post is brought to you by someone who doesn't gaf what the "leaders" of this GSE community think. I'm just sharing info as I invest heavily as well. Take it as a peace offering for anyone who is looking for answers to how this all ends/begins and will make you $FNMA folks a really nice amount of capital gains if you're holding here.
/should've tweeted this. Bill Ackman has shit on the length of this post.
$5 by blueberry season.
8:0 jury verdict means something government is grasping at straw's let's see tomorrow if we bounce off of April 5 low of 1.29 🛹🌵🇺🇸
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| Moderators not one red cent ~NORC~ stockprofitter Ace Trader EternalPatience jeddiemack FOFreddie | |||
Fannie Mae (the Federal National Mortgage Association, or FNMA) is a government-sponsored enterprise (GSE) in the U.S. that was established in 1938. Its main purpose is to provide liquidity, stability, and affordability to the U.S. housing market. It does this by purchasing mortgages from lenders (like banks), packaging them into mortgage-backed securities (MBS), and selling those securities to investors. This process ensures that lenders have more capital to issue new home loans, helping more Americans get access to homeownership.
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