Fannie Mae-No Politics (FNMA)

[HappyAlways]

Let’s Privatize All the Profits and Socialize All the Losses - by Senator Hensarling

I find it difficult to understand the low standard of the Congressman. We need to share the true information to the public.

1. Fannie and Freddie did not cause the housing crisis. Bad mortgage loans with 30% default rate from TBTF banks was the main cause. Fannie and Freddie were required by government policy to accept a fixed % of high risk subprime loans. The TBTF banks simply took advantage of the bad policy. [BTW, Low-income Family Support is a good policy at first. But, they simply pushed it too far a few years later.]
2. The GSE model is proven for decades and extremely cost efficient (0.125% overhead by my estimation). Replacing them will imply 1-1.5% higher mortgage interest rate to millions of US households and no more 30-year fixed rate mortgage loans.
3. The GSEs did not need the bailout. The bailout in 2008 was a buy-time to bailout the TBTF banks. George Bush told the public in 2008 that 'there is no bailout. The temp measure is to calm some nerves. Fannie & Freddie are private companies and will be returned to their shareholders".
4. The GSEs are counter-cyclical.
5. Many people and retirement funds invest in Fannie & Freddie at $60~$80 for a stable income. You can't call them greedy.
6. Net Worth Sweep is clearly an illegal taking of private property and unconstitutional. Do we still respect private property right ?

Some may intend to kick Fannie & Freddie out and eat their lunch free, now that all the risks are gone for the next 10 years ? It is simply too high risk to allow the TBTF banks to participate in the secondary mortgage market, and it is unfair to the smaller mortgage lenders. ICBA should watch out. IMO & GLTA.

[FreeFNMA]

It’s his last ditch effort. If this doesn’t pass trump can act unilateral

[FreeFNMA]

It’s his last ditch effort. If this doesn’t pass trump can act unilateral

[JosephS]

I am only long preferred. Not looking for common tomorrow. Might think about buying pref at the open or just sleep in a bit.

On vacation. Seems like this stock always goes up a lot when I am on vacation....

[JosephS]

Tonight, we want warrants? Ok....

Do we now want Moelis? Hmmmm.....

[WHIZDAD]

I totally agree. I think this is all just smoke and mirrors. They know time has run out and they are doing one last bluff to keep the wolves at bay. They have tried this stunt before and virtually nothing happened. Same is true now. They hope Mel and Mnuchin wont do anything if there is enough SMOKE. Both should move to LA ;)

[kthomp19]

Where did you get this one from?

If Common shares have no legal protection against being diluted into oblivion, then why would any one invest in commons?

Upside and the right to vote, the latter of which doesn't apply to FnF right now.

I could be wrong about the legality for what it's worth. I'm just reasoning based on the fact that we don't hear noise about common shareholder lawsuits any time a company does an equity raise that dilutes existing shareholders, a quite common (!) occurrence.

[Release us]

In my opinion, Corker Warner and Hensarling are not going to have any say on the matter. They have yet to get any plan out of committee and this one will be no different. They would also have to have the blessing of the administration......... They have had years, and we have nothing.

I think once Jumpstart expires Jan 2 2018 FHFA and Treasury will take the bull by the horns. The capital buffer has to be addressed before the end of March and once they stick their toe in the water it will be fixed administratively.

[Dg1964]

Two lame duck legislators want to influence housing reform after repeated failed attempts. Isn’t this pattern familiar? They know Mel Watt has been speaking with the White House about retaining capital and now they want to try and revive failed attempts to deflect from the possibility of an administrative solution.
With tax reform splitting the parties further apart- I don’t see how any DEMS are going to want to give Hensarling or Corker any victory lap. This will either be decided administratively or linger in Conservatorship until another financial crisis occurs or a Court will hand a positive decision to the plaintiffs.

[bcde]

Rek,

I did not see your response to my previous post about FHFA/TSy claiming that Conservators's decisions/acts (SPSPA and NWS) were non governmental.

I am curious know your thinking.

[bcde]

"Sued for what? Common shares have no legal protection against being diluted into oblivion. "

kthomp19,

Where did you get this one from?

If Common shares have no legal protection against being diluted into oblivion, then why would any one invest in commons?

This is what WS banksters try to do with the companies facing liquidity problems.

[tutt1126]

Warning! This article is old if you're looking for the recent article, then this post is not you .

https://www.washingtonpost.com/politics/trump-mortgage-failed-heres-what-that-says-about-the-gop-front-runner/2016/02/28/f8701880-d00f-11e5-88cd-753e80cd29ad_story.html?utm_term=.f0b36adda23e

[ease2002]

So you’re in a room with Trump cabinet members, Mnuchin, etc, and tell Warner-Corker its time to play ball. Trump cabinet members say, “Even if you could pass your original legislation, Pres Trump will veto it anyway. Play ball, fix the system, and let the companies live on with greater competition.” Fine by me as the sp will go up 5 to 10 times where it is now.

[Letgoofmyfannie]

GSEs Should Be Released

Corker n Warner said GSEs can be replaced
Hensarling sez we don’t need GSEs at all
But without Secondary Mortgage Buying
US Housing Prices are bound to fall

I see home ownership falling
From the West way over to the East
Every day every day GSEs are not released.

Down on Pennsylvania Avenue Jack Lew says he’s not to blame
Says he got the sweep from Geithner and Hanky Panky
But he collects shareholder profits just the same

I see shareholders vindicated
From the West way down to the East
It’s the right thing to do now, GSEs should be released.


We just had a contentious election
The candidates were focused on calling names
Now its time for the winner to turn attention
To a positive solution without blame

I see home ownership rising
From those with Most down to the Least
Any day now any day now GSEs should be released

Any day now any day now GSEs should be released
Any day now any day now GSEs should be released

[yambike]

"WARRANTS ARE ILLEGAL AS PER CONFIRMED BY WRITING FROM SEC" - StockProfitter

If commons go to zero, warrants are worthless. Gov't won't be able to exercize them, thereby circumventing this SEC "rule" that stock profitter claims he is in pocession of.

You were right!? Not sounding so smart, are ya?

Warrants are our friend. You best hope govt wants to cash in on them.

[ease2002]

31 million short interest as of nov 15th. How do you continue to short FnF when they will continue? I’d probably give up my short positions right about now. A little short squeeze at the open tomorrow would be nice. Warner-Corker have made a very large course correction.

[action8101]

Yup

[kilshaw]

'some' & 'when' the operative words in that tweet. If @SenBobCorker is involved, rest assured that the plan is effing garbage.

[action8101]

So fun watching fools make a bad decision based off one article. How many times have we seen this before...

[Steelhead9]

"Made whole" is a relative term. If you bought at .28 per share, you're already okay.

The stock ha lived between $00.26 and $86.00. The fact that Hansarling, Corker and Crapo are the names who seem to be leading this effort makes me VERY uneasy though, VERY uneasy!

[tuzedaze]

Bloomberg

https://www.bloomberg.com/amp/news/articles/2017-12-07/lawmakers-plans-to-overhaul-fannie-and-freddie-come-into-focus?__twitter_impression=true

[tutt1126]

Quote
"
As a presidential candidate a decade later, Trump says he would use the skills that made him successful in real estate to fix Washington. His decision to embrace the mortgage business illustrates the potential dangers of a business philosophy that has relied in part on a willingness to put aside the advice of experts and take risks."

[ease2002]

It looks like alot of folks posting may not be long and want to buy in tomorrow. If you read the Bloomberg article you will see that the senators, the trumpet administration, and prominent stakeholders including hedge fund owners which also includes Ackman who is a common shareholder are all at the table. The new senate plan has FnF plus more competitors in the market. These companies will have to pass stress tests and certainly will be tradeable.

Good luck at the open. At least a corner has been turned.

[kip128932156]

Howard on Mortgage finance also say it is wait and see..
https://howardonmortgagefinance.com/2017/11/30/the-economics-of-reform/#comments

[streamer04]

I think the companies will survive, but not sure about common shareholders. The common usually gets thrown under the bus in such situations.

We might get some crumbs and leftovers. I bought in under .50 and thats the only reason I'm still holding. I consider it a lottery ticket and nothing more.

Good luck.

[jcromeenes]

I don't just want to be made whole. I want to make money. That's why I invested here in the first place.

[JosephS]

Whole is 1000! Gotta pay for emotional distress....

[car123]

F&F are preserved under current proposals from all sides. Will DT sign any law to wipe out comment and at the same time wipe out those ~100B warrants? I don't think so. So what is the worry?

As F&F are preserved, I think Preferred shares will down tomorrow same as today as it has less value than common. Those big guys know how to calculate once they feel the end picture.

IMO

[TheDon3]

This conflicts with Lorraines tweets about some shareholders who were wiped out being made whole eventually.

Wiped out shareholders generally refers to commons.

Both aren't reporters I'd trust lol.

[JosephS]

None of the details are out and nothing congress has proposed so far has even gotten close to passing.

This signals to me Mnuchin has made it clear that fnf survive.

[ease2002]

Well, they may recap and release after making the preferreds whole and buying them out. Who knows. Need more details from the plan but FnF are staying.

[TheDon3]

What's whole for commons?

If it's 75pps then I'll gladly take 20-30pps.

[navycmdr]

so many GSE experts !!!

forgive them for they KNOW NOT what they do

[streamer04]

my thoughts exactly.

The foundation for a lawsuit doesnt even exist.

[streamer04]

in my opinion, I think common will be lucky to get 6.00

Its becoming more and more clear that common will get the shaft.

[FreeFNMA]

hes talking about the par value on preferreds.....for instance FNMAT has a par of $25 per share.

[cooler_heads]

Not many commons are expecting to be made “whole”. At least the logical ones. I’ll take 1/2 whole, even 1/4 whole.

[ease2002]

I suppose it all comes down to each investors’ cost basis. If your cost basis is in the 40s or 50s, it doesn’t sound like the new Warner-Corker plan will get investors close to whole. I suspect if your cost basis is closer to 3 bucks, those investors will probably fair pretty well. Plus, FnF may be able to continue to earn profits going forward and who knows where that takes the share price.

[JosephS]

That is terrible! I sold my common and went all pref a week or two ago.

[primewa]

Don't listen to the crook liar F&F wound down.. If that the case then F&F already done long time ago.. Now F&F getting bigger and more better sharp than before...Keep your precious share the reward will come I hope... GLTA...

[Letgoofmyfannie]

Guardhouse lawyers, complaining about getting hung with a new rope.

[atlanta42]

Is this the senate's compromise with the moelis plan?

[atlanta42]

10 quadrillion per share under average atlanta42 plan

[jcromeenes]

I'd say that statement is as sketchy as Bob Corker.

[ease2002]

So when they say “make whole” do you believe that means make whole back to the $60 price that Fannie was trading at prior to the housing collapse in 2008?

[jcromeenes]

Well, this is rather ominous.... "Under the proposal, preferred shareholders of Fannie and Freddie could be made whole or close to it, depending on the final outlines of the transition, the people said. But common shareholders may not fare as well, they said. Whether and how shareholders get compensated in the transition to the new system is still an open question."

[kthomp19]

they'll be excited to get sued by common shareholders again

Sued for what? Common shares have no legal protection against being diluted into oblivion.

[WAM2]

Don’t forget that the government will most likely exercise the warrants. Common shares! They make several hundred billion of the commons are above $20. The government will never let that much money go!

[FreeFNMA]

yup, preferreds should explode tomorrow. I still think commons will be 10-15 a share after everthing is said and done

[streamer04]

$20,000 per share with the average joe plan.