Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
All good, I interpreted outstanding as delinquent. The numbers are good.
Treasury btw can go f themselves by not dropping rates.
Fmcc
Patrice Ficklin, @CFPB's head of fair lending, to leave for @FannieMae https://t.co/G1x7TqlYuE
— National Mortgage News (@NatMortgageNews) July 2, 2024
Kelly v US, / Wazee v. FHFA $FNMA #FANNIEGATE https://t.co/6BOztauHm2 pic.twitter.com/JPuMfqTuQU
— Fanniegate Hero (@DoNotLose) July 2, 2024
...like clockwork ⏰
Two hours ago from the Fed which coincides with our drop; markets (FnF investors too) want to see lower rates first.
Evidence please
(Beyond that 1 letter we received), need newer evidence on this surety
do it before he gets in office? do after they stuff ballots and Biden with Drugs to keep him standing, then they can look good? those are just a couple. All you need is a Treasurer to pull the cord.
Mostly all buys today so far. if volume does not continue, the MM drip with small volumes will guide the price
I agree it will be high on his list, but what will the libs do to disrupt him again this time?
Covid 19 (again, meaning yes they did it the first time)
monkey pox
cat man do nothing fever
LOL
If he gets in, GSEs will be his top 10 priority, and long as does not screw up and bring SM back, its a done deal. Otting needs to be put in as Director of FHFA, a Treasurer who back release in place instead of current wasteland of Secretaries, then it happens the first year in office. I am absolutely unequivocally sure of it.
Does that mean Biden can ask Kamala Harris to ignore whatever be the mandate and void it in Jan and reinstall Biden ? :) :) :)
I don't care who wins except for my GSE holdings purposes but just interpretation your law
Anyone have an idea of when the Berkley Insurance Co settlement will be paid?
If Trump get immunity by SCOUS F&F and preferred will sky rocket to North tomorrow and will make the end of current regime won't be long. Thank you current regime for the last 3.5 years such as high inflation, immigrant and border crisis, homeless. Billion of Billion for the war in Ukraine which destroy all the beautiful city and landmark not counting how many Ukrainian life lost. WWIII around the corner with nuclear instead of conventional war. Also what kind of drugs is using for Brandon to keep him like the walking dead without support from the staffs or his own wife????? Dems keep denied and denied because all they care about their own agenda instead MAGA. Shame and shame on them.. War profiteering scumbag had many innocents life blood on the hands by their own devils. In the end all your $$$ and power can't bring with them on the judgement days. Brandon should be heading to the sunset and enjoy of golden age instead to be the puppet for the one behind the curtain pull the string.
https://www.politico.com/news/2024/06/28/trump-biden-debate-attacks-00165874
thanks for sharing, Navy!
Fannie Mae: An Indirect Bet On Trump Polling Numbers
Jun. 30, 2024 3:29 AM ET - Harrison Schwartz - 15.59K Followers
.......... Summary ..........
--- Fannie Mae's value has rocketed higher following the Trump-Biden debate, implying it is an indirect bet on a Trump win.
--- Historically, Trump is far more likely to end FNMA's conservatorship than the Biden administration.
--- There are no guarantees that Trump will successfully end the conservatorship, having not done so in his last term. Further, FNMA's fundamental risks would not necessarily decline in this scenario.
--- Fannie Mae's book value should be below its market value by 2027-2028 at its current income level, given it continues to retain its profits.
--- Although home prices seem likely to decline, Fannie Mae's exposure is limited because very few people are obtaining mortgages at today's extremely low affordability levels.
The Federal National Mortgage Association, or "Fannie Mae" (OTCQB:FNMA), has avoided significant headlines in recent years. The government-sponsored enterprise remains in conservatorship under the Federal government roughly sixteen years after its failure. Fannie Mae and its peer, Freddie Mac (OTCQB:FMCC), are the primary mortgage insurance providers to qualified or "agency-backed" mortgages, backing around 70% of US mortgages. Most mortgages are pooled into mortgage-backed securities or "MBS," such as those seen in the ETF (MBB).
Fannie Mae is on the hook if mortgage borrowers fail to pay their loans. Thus, theoretically, mortgage-backed securities have limited credit risk, given that Fannie Mae should protect against losses. Historically, that would not be true if not for the government bailout in 2008, as Fannie Mae (and its peer) lacked the funds to meet the immense obligations created during the 2008 foreclosure crisis.
The company has not been tested to the same degree since then. Although delinquencies rose in 2020, these were classified as "forbearance," stemming from the temporary issues created during the large but short-lasting unemployment spike during lockdowns. In my view, if not for the immense QE-driven decline in mortgage rates in 2020 and the stimulus efforts, we would not have seen the recovery in real estate.
Of course, we could argue that the housing market's "recovery" since 2020 has created a renewed housing bubble. Home valuations are at record highs. Now that mortgage rates are far higher, affordability is extremely low. Home sales are also at, and often below, the levels seen during 2008. The market has had added support from rising rents and low inventories, though these two beneficial factors are fading, increasing the potential for a decline in home prices over the coming year or two. As such, we must reconsider the risk profile facing Fannie Mae to determine if its long era of conservatorship has improved its stability.
Further, we must consider the election, as it is generally viewed that a Trump administration would end its conservatorship. Hence, the stock is positively correlated to Trump's poll numbers. The company was close to restructuring and privatization toward the end of his term, but that was upended by the economic shock caused by lockdowns. As such, I'd argue that macroeconomic factors play a more significant role in FNMA's value regardless of who wins in November.
Fannie Mae's Capitalization is Improving
Investors in mortgage-backed securities indirectly pay a small fee to Fannie Mae to provide insurance risk coverage, ranging from 25 to 50 bps. Typically, the number of mortgages in default that require Fannie Mae coverage is relatively low and predictable. Thus, the company usually earns a solid profit margin on its revenue. In a normal (non-recessionary) period, its profitability is primarily driven by its operating overhead costs, which have been sustained at ~10% in recent
years. See below:
Fannie Mae is earning significant profits today because very few mortgage owners are in default. The 2010s decade saw very low mortgage rates and fair housing prices. Those who borrowed in this period often had lower payments than their incomes, giving them low default risks. Fannie Mae cannot pay its income out to investors, per its conservatorship rules, but it has used this income to improve its balance sheet. Still, its net book value for common stock investors is quite negative. See below:
The company's shareholder equity was near zero from 2010 to 2020, as it was still not seeing great solvency improvement as it recouped its immense losses from the decade prior. Thus, there is a large time lag between the company's solvency and the solvency of homeowners. Today, it is benefiting from the strong solvency conditions of those who borrowed during the 2010s. Depending on what occurs in the property market, it may be years before current borrowing conditions impact its solvency.
Fannie Mae's equity is much healthier today, but its equity for common stockholders remains very negative, amounting to a book value per share of -$50. In other words, should the company liquidate all its assets, liabilities, and preferred equity, it would have no money for common shareholders in FNMA. Thus, FNMA is similar to a stock option or warrant on the company's overall equity. Its fundamental value may rise dramatically above its current value only if its common equity rises by another ~$58B.
FNMA's market value is $8.2B, so a $66B increase to its common equity (through retained earnings) must be discounted to its book value. The company's annual income has been around $15B to $20B in recent years, and all else being equal, it should rise with today's larger mortgage sizes (given home prices), so its book value should be very attractive within three to four years.
If we could assume that there was zero risk to the housing market, FNMA would likely be undervalued today since its net income is generally 2X its market value. However, if a slight shock exists in the property market, this value trade is upended. Fannie Mae's solvency has markedly improved, but its total liabilities to assets remain at 98%. See below:
So, if Fannie Mae takes a 2% loss on its assets, its shareholder equity (including preferreds) would be back at zero. From 2008 to 2012, Fannie Mae's book value fell by ~$150B. It had around $880B in assets in 2008, meaning it took a ~17% loss due to that mortgage crisis. So, even if we see a similar issue around a sixth as large, there is decent potential that FNMA's equity would be back at zero.
Home Prices Will Fall, But Fannie's Risk Is Low
The housing market today is similar to that of 2008 in many respects. However, the key difference is that most outstanding mortgages were made at far more affordable rates and prices. From 2020 to 2022, the company saw its assets rise by a staggering ~$750B, but that figure has stagnated since then since very few people are willing to buy homes at today's affordability level.
Theoretically, this limits Fannie Mae's exposure significantly because current borrowers are at much greater default risk than those of the 2012-2022 period, given affordability. We can see this statistic from today's low mortgage debt service payments to disposable income ratio:
This figure is more important for Fannie Mae than others. In 2006-2008, there was a housing valuation bubble, and many people were buying into that bubble. Today, there is, in my view, a potentially larger housing bubble, but far fewer people are exposed to it. Indeed, if we look at mortgage debtors at large, their ability to pay their debt has never been better.
It is the new borrowers that Fannie Mae needs to worry about. Home sales prices to income are relatively high today as affordability is low. Home sales are back at extreme lows after the housing shock and 2020. See below:
Notably, the US median home price to income ratio is around 7.7X today, well above the 6.7X peak in 2006. The metric above compares the price of homes sold to disposable incomes (which are lower), so it is a higher ratio. Further, the metric above has declined because smaller-priced homes are moving much better today than larger, more expensive ones; the actual overall home price-to-income ratio has not declined since 2022, as home values continue to march to all-time highs.
Realistically, large homes are probably significantly overvalued today. Technically, their values have not declined significantly, but they're also not moving. This is seen as older Americans are typically not selling their usually larger homes, defying the historical pattern. Suppose this changed and more looked to downsize. In that case, I believe there would be significant negative price discovery in larger homes because they're currently highly unaffordable to those who require a large mortgage.
This is a significant risk to the housing market but is likely not a risk to Fannie Mae. Most owners of large homes are older and, therefore, have lower mortgage debt insured by Fannie. Further, that demographic likely purchased their homes at a much lower price, so a decline in valuation would only limit appreciation gains, not resulting in negative equity.
Arguably, home prices have not declined because inventories have been low. Rental vacancy levels have also been low, stemming from decreased building activity in the 2010s. This is starting to change, as building activity rose significantly from 2019 to 2022 and is now reversing. Inventories and rental vacancies are also increasing, signaling a shift back toward a "buyers' market." See below:
Overall, I think there are many tell-tale signs that US home prices are in the process of peaking and should decline. Theoretically, a substantial decline of around 50% is needed for affordability to return to historically normal levels. Realistically, home prices should not fall by 50% outside of a severe economic crisis. Instead, I expect prices will stagnate or decline while inflation will increase, creating a ~50% decline compared to a decade or more in the future. Thus, it will likely be that people will begin to see housing as a poor investment, but I only expect those who purchased from 2022 onward to be at risk of negative equity (the chief risk for Fannie Mae).
Fannie Mae's Political Exposure is Large
FNMA's value has spiked by 25% over the past week, with most gains occurring after the recent Trump-Biden debate. It is not my aim to present a political bias here, but it is a fact that Trump is far more interested in releasing Fannie Mae than Biden. In 2021, the Biden administration utilized a Supreme Court ruling to fire the Trump-appointed FHFA chief interested in ending its conservatorship.
Since the debate, betting odds of Trump returning to office rose from ~52% to ~59%, while Biden's fell from 45% to 36%. FNMA's value has spiked accordingly, adding to its 230% YoY gain, which largely stems from the positive longer-term trend in Trump's odds compared to Biden's. Still, there remains considerable potential that Democrats do win, which would likely delay Fannie Mae's restructuring. Further, Trump did not end this issue during his term, so there is no guarantee that he will in a potential future term.
The political issue seems to have had a significant impact on FNMA's volatility lately. That said, I don't think it's essential in the long run. Fundamentally, FNMA's equity value will rise if mortgages don't go belly-up. Yes, FNMA could have dividend potential under Trump, but I think it would be fine if it retained its income and improved its solvency further before paying dividends. Of course, an end to conservatorship would give FNMA other benefits, such as more capital access that may benefit it, so a Republican win is bullish for FNMA.
The Bottom Line
Fannie Mae's risk-reward profile today is tricky. I'd argue the US housing market is weak. Further, based on an argument I've presented regarding bonds, unemployment will likely rise over the coming year in a recession. For this reason, I think investors should be cautious about buying housing-related stocks, particularly homebuilders.
However, Fannie Mae's risk is significantly mitigated because most homeowners today are not in the high-risk cohort created in 2022. It would take a massive decline in home prices for the median homeowner today to have negative equity.
Still, even if a small portion of Fannie Mae's exposure is to those new buyers since 2022, that could be enough to create significant issues for the company, particularly if it coincides with an unemployment driven recession. Its solvency is much better than it was, but it is still not necessarily adequate.
On the other hand, FNMA's valuation is extremely low compared to its potential EPS if released from conservatorship. My view on FNMA is very speculative, but I am bullish on it since I think its financial risk exposure to mortgages is low. The odds of Trump winning are decent, albeit far from guaranteed, at ~60%. That is not a political opinion but a view based on the betting market odds (which may be more accurate than polling data).
That said, FNMA faces significant risk. It is very volatile and has a negative common book value. I expect it may decline during a housing market shock and recession over the next year or two, so my bullish outlook is long-term. Unless the recession is severe, I'd see declines in FNMA's value as a buying opportunity. Lastly, the long-term risk to FNMA is likely new homebuyers from 2022 onward. If the housing bubble continues, FNMA may end up in a 2008 repeat as it's exposed to a more significant portion of high-risk loans.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
This article was written by - Harrison Schwartz - 15.59K Followers
Keep dreaming ding dong… the bar is so low for 45 if he doesn’t poop his pants onstage you think he won…
He will be sentenced on July 12th and in his next criminal trial in 82 days…
I really do need to just let go of these old paper reports - maybe start a bonfire 🔥 pic.twitter.com/YnKbxdGFJK
— Mark Calabria (@MarkCalabria) June 29, 2024
From fnma board…”
stockanalyze
Re: Barron4664 post# 796819
Saturday, 06/29/2024 9:49:54 PM
catman was the architect of hera
catman hid stress test
catman put in absurd capital levels
catman lied to everyone that he was working on releasing them
catman lied that conservatorship will end in 2024 despite knowing of his absurd capital levels and putting that letter agreement in place before he left with every penny still owed to treasury.”
Can someone x or tweet this post at Calabria daily and many many times until he stops making comments about the gse’s
Thank you !
We will
They will steal more from the gse’s
No one is stopping them
who is gonna pay for all this, the idiot is going deeper in debt by 1T every six months?
from FNMA board...
"Re: None
Friday, June 28, 2024 6:06:07 PM
Post# of 796782 Go
whitehouse #
THE BIDEN-HARRIS ADMINISTRATION PLANS TO LOWER HOUSING COSTS BY:
• Building 2 million new homes because housing is more affordable when supply increases
• Providing $10,000 in mortgage relief for first-time homebuyers and $25,000 in down payment assistance for first-generation homebuyers
• Expanding rental assistance
WHITEHOUSE.GOV"
going to need more than 2 million new homes. what's to stop black rock and amazon from buying these up as rentals also?
need to get these corporations and mega landlords out of single family home ownership.
DUH
they will be saying
"why are common shares worth more than jps?"
LOL
they still won't get it though
Ps don’t understand why it’s going up, they never will, completely blind and bias with hate towards common shares. What until it’s $15 or $20, where it should be right now, what will they say then
After the performance yesterday evening , I must say I am feeling much better about my investment in FNF. :)
BOOM TIME!
Who in their right mind thinks administrative release is a good idea after last night? Chime in Bradford? lol
I've said it lots, this will not and should not be released by those in charge NOW. Next group wll be much better equiped, smarter.
Why is this not being stickied. Is it considered political?
I'm only one post on this FMCC board Trunkmonk, I had posted yesterday before I saw your post and could not throw the link your way. Hope you get this today. Pass it on. It's F&F non-moderated politics allowed. A handful of us are on there and then there are a few who are visitors now and then. The IHUB admin people pinned a post at the top of both FNMA and FMCC boards with this link also.
https://investorshub.advfn.com/Fannie-Freddie-Politics-Board-Poltics-Allowed-Non-Moderated-43002
Here ya go:
https://investorshub.advfn.com/boards/board.aspx?board_id=43002
(It's still plagued with TOS) 😵💫😴
Will the 8-0 jury trial ever get certified?
It’s like today’s generation that just ghosts you until you go away and give up because they just ignore a reply or an answer.
Does anyone know of there is a deadline for this and has the judge already ignored it and is just not going to do anything?
Are the lawyers that won this jury trial doing anything to get this certified or just playing golf and billing more hours?
Unreal how nothing ever gets done here
Don’t even know where it is.
Great way to build up stability, equity while sucking equity out to pay for inflation and survival under this asshole!!
Seriously folks... Go read the politics allowed board.
Let the Fraud begin! Banks loving this while Fannie takes the shit right up the Az!
https://www.foxbusiness.com/media/mortgage-giant-gets-green-light-from-biden-administration-risky-pilot-program
Shell men forgetting to change alias’s. Bwahaha
What does the FMCC article mention, sorry I'm not installing anything on my computer.
The North East got a ton of rain. I hope you didn't get washed out, lol.
FMCC
Big, Roman Candle Sticks, HA, HA Boom ! Absolutely clueless !
Finance System stories in the wild….. Air cover for incoming chaos….
The United States Federal Reserve has been allegedly hacked by a ransomware group called LockBit.
— Shadow of Ezra (@ShadowofEzra) June 24, 2024
The declaration was made through a post on the Dark Web.
The group claims to have extracted 33 terabytes of sensitive banking information.
The data reportedly includes… pic.twitter.com/xgdGjExTQd
How is that even possible lol
THIS IS BIG !!! Freddie now can issue HELOC and tap the 2nd mortgage market and could nearly double there foot print. That would mean a huge market cap for Freddie in the future which would mean a bigger dividend once released from Conservatorship.
https://www.mpamag.com/us/news/general/freddie-macs-second-mortgage-pilot-cleared-in-fhfas-new-review-process/494411
I see that whack-nut Real777mellon-head got his account suspended on X. Lol
Will Fannie Mae and Freddie Mac reach $5 between July 17 to August 1, 2024 ?
I know I wasn't a poster child for posting TOS etiquette. The GSE daily pref 5 cents malarkey got the the better of me. Those degenerates deserved it yet they continue to post unscathed. hmmm.
THanks
FMCC
As a Mod on both boards I can only see banned and temp bans and how long they are for. Posts restrictions I can't see anything.
Does anyone know how long the 1 post limit lasts on the fnma board… thanks
Looking forward to next week, there has got to be good news following Friday’s sell off
Followers
|
651
|
Posters
|
|
Posts (Today)
|
5
|
Posts (Total)
|
46066
|
Created
|
07/11/08
|
Type
|
Free
|
Moderators Ace Trader QueenVic EternalPatience |
Volume | |
Day Range: | |
Bid Price | |
Ask Price | |
Last Trade Time: |