Fannie Mae-No Politics (FNMA)

[streamer04]

This is a quote from "neo" on the google groups board. This guy absolutely nails it in my opinion.

"Looks to me as if the plan is a ploy to bait hedgies in preferred shares to drop their suits - use all the court losses & the lack of remaining suits as ammo to raid the common shares & write legislation which benefits banks at the expense of FnF & common shareholders... time will tell

The Courts have failed in the big picture goal...knowledgeable brave judges could have forced legislators to do put things right in most repects, but their lack of financial expertise and willingness to call out corruption will be devastating to commomers if warrants go through & pieces of company are legislated away"

[Donotunderstand]

??

continue to pay a ton for NWS but not the small amount to ...?

how is that logical?

?

[yambike]

"GSE jumpstart reauthorization act of 2017"

-Contemplates continued NWS to 2019.
-Also tells FHFA to no longer contribute to housing trust fund. Watt used this argument as a pretext for some capital retention.

Being a novice in regards to congressional procedures, I was wondering, is this a separate motion or can this be attached to the something else like the tax bill or debt raise?

Bradford was celebrating expiration of jumpstart before it happened. Another "moved the couch" moment. Premature celebration.

[Donotunderstand]

I think you posted that a year ago

[Latergater]

https://twitter.com/donotlose/status/938581593756782593

[kip128932156]

Another try to jumpstart bill 2019.. smh.
https://mobile.twitter.com/RobTVDC/status/938770149901029377/photo/1?ref_src=twsrc%5Etfw&ref_url=https%3A%2F%2Fhowardonmortgagefinance.com%2F2017%2F11%2F30%2Fthe-economics-of-reform%2F

[Red Captain]

Ah so this explains the issue.

Thank you for posting this. If you could link the source even better!

[IL Padrino]

Ummmm,
What kind of nonsense is that???? Difficult???? What in the world have they been doing the last 8 years?

It seems to me they want to keep punting the political football at each other in order to keep the dividend payments going. Reform, as we all know, has been slowly happening little by little. The GSEs have fixed a lot of the loopholes that allowed subprime lending debacles and have reigned that in.

[Red Captain]

Sure the market overeacts, but this imbalance is extremely strange.

I mean the pref are still up some 25%, and yet common is down a penny or two at the time of writing.

What in your opinion is causing this yuge(tm) discrepancy?

[cfljmljfl]

There is a takings ..... taking profits to pay affordable housing . How the floss that legal ?

[matmlg]

The senators haven't even seen the average joke plan.

[streamer04]

my friend, you are living in deep denial if you think the pfds are a bad deal.

[stockprofitter]

Lol.

[Latergater]

“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. Investors in the companies include several prominent hedge funds.” Common will go up from here. Just a question as to how high. Not pre conservatorship levels though and definitely not 1,000.

[JosephS]

Are the prices on the pref up today? What happened?

Are the 3 common pumpers still calling 1000?

Not a recco

[HoldenWalker99]

Corker's incentive - pride and $$$.

Mnuchin told him that he'd act administratively to restore GSEs which would make Corker look like an idiot. Knowing this and that wind down/replacement was difficult politically, Corker switched his tune... and likely investing millions in GSE preferred shares while doing so.

Wake up. It's crystal clear.

[Clutch29]

Good signs today and alot goin on in the hearings that feel really positive

[HoldenWalker99]

Preferred pump and dump... except I'll be dumping near $25 and $50 par value.

[CatBirdSeat]

Yes! This is what a preferred share pump and dump looks like.

[camaro4me]

It's okay, this is what rotation looks like on otc. You're witnessing history here.

[navycmdr]

GSE LEMMINGS doing what they do - OVER REACTING ...

FEAR & GREED

LOOK at the BIG PICTURE - not the misperceptions of the LEMMINGS

FACT - the GSEs ARE NOT GOING ANYWHERE

NO PLAN has been Adopted ... DETAILS HAVE NOT BEEN DECIDED

BIG PICTURE - they are finally GOING to GET GSEs OUT of GOVT CONTROL

what is the common FACT ? ... the GSEs ARE HERE TO STAY !

RECAP and RELEASE !

imo- BOTH Common and PREFERRED will BENEFIT HUGE

arguing about which is better is irrelevant & A WASTE of TIME

[Latergater]

Stop! Pure fiction thag this point. The senators are not discussing the average joe plan.

[QueenVic]

https://finance.yahoo.com/news/rates-rise-across-board-150000606.html

[JosephS]

Yeah. We are all just fumbling around in the dark. Maybe I will bump into Cindy Crawford, though..

[stink stack]

I didn't hold this for six years to sell now! All or nothing! BOOM!!!

[stink stack]

Watch them dump the commons to scare out the weak feeble hands.

[stockprofitter]

COMMON Gap Filled

[wil318466]

Fine, I'll say it. Gap gap gap gap gap gap gap.

[stocks2012]

Hey Navycmdr, any concern on your part that the common shares really isn’t getting much “love”?
Do you think the common is still on the path to prosperity?
Thanks in advance

[Clutch29]

On my board the eps regularly moves and it up from the all time low. It is at 145 up from 140.5 that held almost all last week also up

[TheDon3]

What incentive would Corker have to preserve the GSEs, much less help the preferred? He's retiring as well and not up for reelection lol. This is the same guy who said he wouldn't help hedge funds and his animosity to them was one of the reasons he wouldn't be in favor of recap and release.

There's no bill. Nothing's under discussion. Congress leaves in less than two weeks. I call BS.

Plus you're talking about a March deadline at most.

Preferred shares are also non cumulative meaning GSEs can pay out dividends when they choose too.
Preferred stock most of it is not transferable either.

Choose wisely.

[Donotunderstand]

So it appears

Some version of Moelis - yes Corker-Warner Moelis is the starting point

So it appears from reporting so far --- albeit by VERY limited sources

[Donotunderstand]

he is not wrong?

we can have a friendly difference

I think the creation of FNMA as a GOV agency was GREAT

[Letgoofmyfannie]

The boy who cried "wolf", I love that story. The best part is that the boy gets eaten by the wolf, haha!

[JosephS]

There are likely many opportunities to trade this, still.

Not a recco

[Clutch29]

Still not our day. Sad common owner rite now

[HoldenWalker99]

Hensarling is a constitutional conservative and doesn't believe that the government should be involved in housing finance. He's not wrong, but the government is involved and any changes would be way too disruptive. He's also not running for re-election so can say what he wants with no political ramifications

Corker-Warner/Moelis is the plan.

[yambike]

David Stevens retiring from MBA next year, Hensarling quitting Congress. Nice gig at MBA waiting. What a coincidence.

[stockprofitter]

WARNING - HUGE GAP ON ALL P SHARES BELOW

[Donotunderstand]

solid summary

commons will do better than 10 dollars soon - IMO

(I still expect that in moving pieces on a chess board - the GOV will use some of the warrant exercise money as a MATCH to ? to create a capital buffer at F and F fast --- this means much less dilution .... but yes the use of the warrants and say 6B shares at 10-30

[navycmdr]

Enjoy the GSE JOURNEY .... this is just another STEP in the MKT

finally ACCEPTING the OVERWHELMING FACT ....

that THE GSEs ARE NOT GOING ANYWHERE ...

[Donotunderstand]

And that is where Hensarling is at? That is what I thought I read ?

But is not Hensalring out the door this round?

[HoldenWalker99]

Corker-Warner is the plan (and it's Moelis-esque).

Mnuchin told them to come up with something to retain the GSEs (since no administration would want to disrupt the housing market before mid-terms).

Mnuchin would prefer it to come out of Congress and Corker-Warner is bipartisan. Need to retire preferred to get rid of lawsuits and to improve capital structure. Need to crush common shareholders to raise capital. Need to exercise warrants so Uncle Sam gets his money.

Everyone wins except shorts. Common shareholders win the least but many still make out ok if they bought post-conservatorship.

You can also bet that Corker-Warner loaded up on Fannie/Freddie preferred shares to profit off this (one last windfall for Corker).

DeMarco plan won't happen. Hensarling supports and he's not running for re-election. It's a dead end politically. Hensarling is positioning for his next job.

[Donotunderstand]

No idea why such guarantee should go via GNMA? (Is GNMA 100% a GOV agency?)

[HoldenWalker99]

Good luck, common shareholders.

All signs point to GSEs sticking around and preferred shareholders getting (close to) par value as I expected.

Now it's how badly the common shares get diluted. Warrants (government incentive to keep GSEs alive) and capital raise will come on the backs of common shareholders. It'll take years for common share to get to $10, but $5 seems possible in the short term.

Hopefully most people took the advice of preferred shareholders and weighted their portfolios accordingly.

[FreeFNMA]

Fannie-Freddie Would Be Lender-Owned in DeMarco’s Plan
By Joe Light
June 29, 2016, 7:00 AM CDT Updated on June 29, 2016, 11:38 AM CDT
Ex-FHFA director would put mortgage firms into receivership
Co-author worked on Senate proposal that was blocked in 2014
Fannie Mae and Freddie Mac would be put through receivership and turned into lender-owned insurers under a housing-finance overhaul plan co-authored by the companies’ former regulator.

[BaGr]

Pretty good amount of buying for the first 30 minutes but a lot of shares for sell at every penny. Also ARCA is a decent tell and they stayed on top of the ask.

[Donotunderstand]

Which Plan is the DeMarco Plan?

[BaGr]

Agree

[Bullz]

No kidding. I thought we’d be rockn it.