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you are not alone my friend. 99% of the people that play penny and sub penny stocks lose...I have myself...still have several sub penny stocks that remind me of my younger aggressive (and ignorant) days in the market...lol. some things to think about...learn some investing rules...rules that cater to YOU. they don't all apply to everyone...it depends on your goals...risk/reward willingness...and amount of money you have to play with. I use a few simple rules for my long term div stocks. keep in mind that there is, and will always be someone out there that absolutely HATES the stocks you might like. They will have nothing good to say about it...and on the flip side...you have those that love the same ones. I always follow up what anyone says with my own DD to satisfy myself. I always try to include links to the info I post as a credibility factor. Anyone can post garbage and opinions...
Learn the rule of 72...and the rule of 115. I use them for projecting my div stock values years out.
when picking a div stock...especially one that has a high yield...say above 7%...check how they have paid divs over the last 2-3 -5 years....have they been consistant...were some of the dives "special" one time payouts.
compare to see how their SP/div has moved over that same timeframe.
look at management..do they appear to be competent and growing the company.....all this info is free on the web. I use yahoo finance and quotemedia.com to do a lot of simple DD...I also read Ihub boards to find info to further research and DD...there are a ton of good DD sites...so use what you feel comfortable with. Read SEC filings on the companies as well...as you get more involved...you will get more involved. You learn how to DD a company fairly quickly and make a decision to buy...walk away...or continue to DD that stock.I NEVER take for granted what is posted on a message board. I ALWAYS DD any info I find interesting.
things to remember.
1. PATIENCE and GREED are the most difficult parts of investing...too much...too little...thats why you DD stocks....helps to control your impulses.
1. NO ONE invests in the stock market with the intent to lose money...just doesn't happen.
2. NO ONE other than yourself really gives a crap if YOU make money in the market. It's nice to see someone make money...but it does nothing for YOUR pocket book.
3. DD is relevant to a person as it fits within their personal comfort zone for investing. Just because a company is doing well, doesn't mean it's a good investment for everyone.
too many people try to time the market...and you just can't do it. It isn't possible to predict what millions of other investors are thinking. I typically graph a stock in excel and watch it for a while to see how it trends...add a few notes here and there on the up/down blips...then continue my DD until I feel comfortable with a buy/no buy decision for that stock....at that point, SP isn't that big of a concern if I am happy with the stock and where it appears to be heading. I am a big proponent of dividends...been in this stock and many other div stocks for a lot of years...they don't typically appreciate in SP value as quickly as a lot of other stocks...but on the flip side...they don't tank as quickly either. they just keep plugging along paying me that 10% - 12% - 14% div every month/quarter.
you might want to wait a few days...to see how the market continues to react to the possibility of a rate hike....I'm sure you noticed how the market got hammered friday...it could carry on a few more days. I have some nickels waiting in the wings to invest, but with so many idiots dumping and running at the moment...it may be prudent to wait a week or so to see some stability return. AND...ya just might get in a few % cheaper.just something to consider.
they REDUCED the number of shares with the reverse split. Logic is...they want to look more attractive to institutional investors to hopefully get big investors that will stabilize the SP and portray themselves as a solid investment....the more money big deep pockets have in a company...the better the company looks for the most part. Also...the less shares in the float...the bigger the div...as long as they continue to make money...in theory.
not sitting on freebies yet...but soon...I think another few years of divs and I will be. my DCA after subtracting the divs is just over 4 bucks now. But...I put that money right back in div stocks so I'm quite happy with the results thus far.
yuppers...I really like this play. been in it for years and got lucky and bought quite a nice chunk back when they were having all the SEC filing issues....down in the 2 buck range if I remember right. Been quite a nice div generator for us.
A ton of lawsuits out now....possibly they will toss the commons a bone or two.
nice climb the past month or so...hopefully it will move up into the mid to high 50's before turkey day.
for FNMA
08/24/2016 4:17 PM EDT 1.91 8000 OTO
08/24/2016 4:16 PM EDT 1.91 312000 OTO
08/24/2016 4:01 PM EDT 1.91 10000 OTO
for FMCC
08/24/2016 4:18 PM EDT 1.78 6000 OTO
08/24/2016 4:18 PM EDT 1.78 294000 OTO
08/24/2016 4:01 PM EDT 1.75 10000 OTO
08/24/2016 4:00 PM EDT 1.77 23900 OTO
08/24/2016 4:00 PM EDT 1.77 10000 OTO
Without Freddie and Fannie, could 30-year mortgage be a thing of the past?
By Nicholas Nehamas
http://www.miamiherald.com/news/business/real-estate-news/article93888877.html
Miamian Bruce Berkowitz has taken on a fight few would dare: He’s suing Uncle Sam.
Berkowitz — whose mutual fund Fairholme Fund owns 14 percent of Fannie Mae and Freddie Mac preferred stock — is among a group of investors suing the U.S. government over the two government-backed mortgage insurance giants. They claim the U.S. Treasury Department illegally confiscated the companies’ earnings after their bailout, gutting the firms when it was supposed to rehabilitate them and setting a dangerous precedent for shareholders’ rights.
The contest has turned into a war, with salvos fired in a half-dozen states where Fairholme and other plaintiffs have filed suit. One critical case will come to a head in August when a federal appeals court in Washington, D.C., is expected to rule.
At first glance, the lawsuits sound like an esoteric battle of accountants, policy wonks and politicians. But the stakes could be as close to home as a three-bedroom, two-bath house in the suburbs and the typical 401K retirement account.
Here’s why: Investors like Berkowitz say the Obama administration’s big-picture plan to wind down Fannie and Freddie poses grave dangers to home buyers and the real estate market — and sets up a potential windfall for the nation’s largest financial institutions. Without Freddie and Fannie, they argue, the fixed-rate 30-year mortgage that makes home ownership affordable for middle-class Americans could get significantly more expensive or even disappear. That would make it difficult for first-time and other buyers to afford a home. It could also crater the equity many people have invested in their homes.
It’s very unclear we could come up with a better model that would provide the same benefits we’re currently providing. Guy Cecala, mortgage industry expert
For its part, the White House has argued reform is needed to protect taxpayers against the systemic economic risk posed by Freddie and Fannie. Banks and private companies — not government-backed firms — should shoulder more of the risk of the mortgage market, and going back to the pre-crisis way of business could lead to another meltdown, say officials and some analysts. Eliminating Fannie and Freddie won’t disrupt the housing finance system in the United States, which is one of the only countries in the world to offer fixed-rate 30-year mortgages, they argue.
But the administration can’t act without comprehensive legislation from Congress, a mighty task for a lightning-rod issue like Fannie and Freddie — meaning change will wait until after the election.
If the investors win in court, and Congress stays gridlocked, it could force the next president to release Freddie and Fannie from Treasury’s grip and continue operating as they were originally designed, experts say.
Some housing industry watchers believe Berkowitz and fellow investors have a point, despite financial motivations.
“The first thing to note about Fairholme is that any position they have, whether it’s right or wrong, even if it’s very right, is suspect in many people’s eyes because they are viewed as a hedge fund looking to capitalize on the situation, and the last thing on their mind is the housing finance system in the United States,” said Guy Cecala, the CEO and publisher of Inside Mortgage Finance, a popular weekly newsletter on the mortgage industry. “That puts them in a bit of a tough situation to advocate anything.”
(Fairholme is actually a mutual fund with an average investment of $30,000, meaning many of its backers are middle-class investors, according to the firm. Hedge funds — which typically accept sophisticated, high-net worth investors — suing the government include Pershing Square Capital Management, run by Bill Ackman, and New York-based Perry Capital.)
But the critical question remains. “What would happen to American consumers if Fannie and Freddie were wound down?” Cecala said. “It’s very unclear we could come up with a better model that would provide the same benefits we’re currently providing, such as the 30-year-fixed rate mortgage and relatively low mortgage rates.”
Pillars of the housing market
Fannie Mae and Freddie Mac are deeply unpopular for their perceived role in the financial crisis. But they perform a key function: seeding the residential mortgage market with capital by buying up mortgages issued by banks and private lenders. Fannie was established by Congress in the aftermath of the Great Depression to encourage lenders to originate stable, long-term mortgages, instead of more profitable, short-term loans. Freddie was created decades later to compete with Fannie.
The two companies are privately owned and publicly traded but backed by the government, an unusual position in corporate America. They are the best known of a half-dozen types of government-sponsored enterprises, or GSEs, created by Congress to reduce borrowing costs for farmers, homeowners and community development.
What could replace Freddie Mac and Fannie Mae?
By law, the GSEs can only buy loans that conform to certain size limits. That’s because their political mandate is to help the middle class. In most of the continental United States, the limit is $417,000 for one home.
Now the banks want a piece of their business. And the White House and many members of Congress, who agree on so little, seem to think it’s a good idea.
“Working together we need to build a more durable and fair system that promotes the American dream of homeownership, while preventing the nightmare of another crisis,” the White House said in a 2013 statement.
The administration’s position remains unchanged. It says it is committed to affordable mortgage rates, widespread homeownership and a more stable foundation for the housing market.
“Taxpayers remain on the hook for losses at Fannie and Freddie, and the best way to responsibly end conservatorship of the GSEs is through comprehensive housing finance reform legislation,” a Treasury spokesman told the Miami Herald in a statement.
If Fannie and Freddie didn’t exist, there wouldn’t be a 30-year mortgage, there would be a more profitable, five-year, adjustable-rate product. Bruce Berkowitz, investor
The plaintiffs disagree.
“I think the banks see a way to grab lots of profits,” Berkowitz said. “If Fannie and Freddie didn’t exist, there wouldn’t be a 30-year mortgage, there would be a more profitable, five-year, adjustable-rate product. You can’t blame banks for wanting that.”
It’s an odd alliance: ultra-wealthy investors saying they’re sticking up for the little guy against the big banks.
In Berkowitz’s view, Freddie and Fannie should function like public utilities, with shareholders receiving a moderate rates of return capped by an independent commission. It’s an idea that’s been floated by analysts but hasn’t picked up much traction with lawmakers.
“People in the United States should expect affordable mortgages like they expect the lights to turn on,” Berkowitz said. “It’s one of the cornerstones of the great American dream.”
The shareholders, of course, have billions of dollars at stake. Just as Freddie and Fannie returned to profitability in 2012, the U.S. Treasury Department announced it would sweep profits — now totaling roughly $250 billion — from bailed-out Freddie and Fannie toward the government’s own bottom-line in the form of quarterly dividends, but without counting the payments against the debt the companies owe. The government says it’s operating under the rules of a 2008 bailout law that placed the GSEs under the supervision of the Federal Housing Finance Agency.
The fight could be worth $33 billion — roughly the value of the preferred shares held by private investors.
The investors, who snapped up the stocks when they plummeted after the financial crisis, believe Treasury and FHFA unfairly wiped out their share of the profits and nationalized the companies. That means a government conservatorship that was supposed to be temporary has now dragged on for eight years, even though Freddie and Fannie are now profitable. Instead of rehabilitating the firms, the arrangement has reduced capital, bringing it to zero in 2018. The suits claim the decision to drain Freddie and Fannie of capital violated the law that placed into conservatorship.
And the plaintiffs point out Treasury eventually released bailed-out auto companies and financial institutions back to shareholders. But not Freddie and Fannie.
$250 billion Dividends paid by Fannie and Freddie to the federal government
“We’re not fighting for a better deal or more money,” Berkowitz said. “We’re fighting for the principle that you can’t unilaterally change a contractual deal, even if you’re the government.”
It’s not just big investors who have money on the table. Thousands of Americans also own shares of Freddie and Fannie through retirement funds — some without even knowing it. One Kentucky judge, for instance, recused himself from hearing an investor lawsuit because he didn’t realize his wife owned shares. (The exact number of shareholders isn’t known because regulators ordered Freddie and Fannie to delist from the New York Stock Exchange in 2010. The shares have hovered between $1 and $2.50 over the last year.)
A decision in Treasury’s favor could set a precedent that other companies could also be nationalized, said David Thompson, an attorney for Fairholme.
“If left unchecked by the courts, the government’s seizure of these two companies establishes a dangerous precedent – all investors and utilities and financial institutions would run the risk that the government could nationalize such companies with impunity,” Thompson said.
Interactive tool: Where can you afford to buy a home?
Whether the government has the power to strip profits from Freddie and Fannie is at the heart of the lawsuits, which have been filed in federal courts around the country. (A related suit filed in Miami accuses Fannie’s auditing firm of making the company’s financial statements look worse than they really were in order to justify a federal takeover.)
One sign of the eventual outcome could come in August, when a federal appeals court in Washington is set to rule on whether the government overstepped its bounds in the case of Perry Capital vs Jacob J. Lew. A lower court judge earlier dismissed the investors’ claims.
Treasury has argued the case is without merit and that the profit sweep was allowed by the 2008 bailout law.
The Fairholme case was filed separately in the U.S. Court of Federal Claims and has produced thousands of pages of never-before-seen government documents — recently released by judicial order — that outline plans to take the companies over and eliminate them. When the bailout was announced, Treasury officials did not publicly say they planned to prevent shareholders from regaining control of Freddie and Fannie. But internal documents — which the government fought to keep private, even invoking presidential privilege to shield 45 of them from public view — show the move to swallow Fannie and Freddie’s profits was always meant to keep the companies captive.
In one email from 2012, Jim Parrott, then a top White House housing official, wrote the companies would not be able to “repay their debt and escape as it were.”
In another, he said: “We’ve closed off [the] possibility that [Fannie and Freddie] ever go (pretend) private again.”
What Freddie and Fannie do
To understand their the role in the economy, you have to understand what the companies do — and many Americans don’t.
First and foremost, Freddie and Fannie don’t issue mortgages. Instead, they buy up loans from banks and private lenders that meet certain credit and underwriting standards, then package them together — a process known as securitization — and sell them to investors. By buying up loans, the companies provide the capital that keeps the wheels of the mortgage market spinning.
While they functioned smoothly for many decades, Freddie and Fannie ran into trouble during the real estate bubble of the early 2000s, lowering their credit standards and emulating the fast-and-loose lending tactics of Wall Street competitors. That helps explain why the companies became unpopular with many Americans — and have been blamed by Republican leaders and some Democrats for helping create the financial crisis.
In 2008, the U.S. Treasury Department seized the under-capitalized companies. Banks weren’t lending and officials feared if Fannie and Freddie failed, the nation’s entire housing market would collapse.
$187.5 billion Bailout Freddie and Fannie received from Treasury
Like hundreds of financial institutions — including Citibank and American Express — and major car companies, Fannie and Freddie received taxpayer bailouts. In exchange for $187.5 billion, the government received special preferred stock in the two companies. The government also placed Freddie and Fannie in conservatorship while officials figured out what to do with them.
But political gridlock in Washington killed reform. For now, the companies remain in a zombie-like limbo, unlike General Motors and insurance giant AIG, which were set loose once they had recovered.
It’s worth noting that the loans Freddie and Fannie backed during the bubble proved far healthier than private mortgages handed out with far lower qualifications. Between 2001 and 2008, the GSEs had 90-day delinquency rates of 6 percent, compared to 27 percent for private loans, according to government statistics. And Fannie and Freddie have since recovered, generating net income of $17.4 billion in 2015 alone and helping the housing market return to stability.
Just before the companies became profitable again in 2012, Treasury announced changes to the bailout agreement. Instead, of paying a 10 percent quarterly dividend, as had been originally stated, Freddie and Fannie would now be forced to pay all their profits to the government. The move became known as the “net worth sweep.”
Liberal Democrats have been critical of the move.
“Right now Fannie and Freddie are basically being used as a piggy bank for the United States Treasury, and I believe at some point they will lose the lawsuit that’s been brought by investors and they will owe somebody an awful lot of money because there’s no justification for us taking it at this point in time,” Congressman Michael Capuano, D-Mass., said in comments carried by Politico.
The cost to buyers
What’s really at risk, say some experts, is American home ownership.
Fixed-rate 30-year mortgages are by far the most popular loan product available to consumers. Roughly four-in-five owner-occupied homes — about 80 percent — are financed with fixed-rate 30-year mortgages, according to the Urban Institute. Fixed-rate 15-year mortgages and adjustable-rate mortgages make up most of the rest of the market.
While the Obama administration wants private firms to step into the secondary mortgage market and create more mortgage-backed securities, they currently do a fraction of the business of Freddie and Fannie. Fannie and Freddie mortgage-backed securities are worth about $5.7 trillion, dwarfing the private-label security market of $500 billion, the Urban Institute found.
“Despite all the criticism, I don’t think anybody would say Freddie and Fannie are doing a bad job now,” Cecala said. “In fact, most people would say they’re doing a great job.”
80 percent Share of mortgages that are 30-year, fixed-rate loans
Local homeowners, developers and Realtors say the 30-year mortgage is key to the real estate industry — and they’re worried changes to the system could make it less available. Fixed-rate 30-year mortgages are less profitable for banks than short-term loans, said Phil Stein, an attorney at Bilzin Sumberg who represents financial services companies.
Before the Great Depression, those shorter-term loans were all that a home buyer could get. Accordingly, many American homeowners lost their properties because their loans came due during the turmoil and lenders wouldn’t refinance. But Freddie and Fannie create a safety net for lenders. Most countries don’t have Freddie and Fannie-type institutions subsidizing mortgages, making the U.S.’s housing financing system a rarity.
Oswaldo Gutierrez and his parents are one family who thank a 30-year mortgage for their home.
They paid $70,500 for a townhouse between Doral and Sweetwater in 1987, six years after Gutierrez came to Miami from his native Nicaragua.
The three-bedroom, two-and-a-half bathroom home is his piece of the American dream. But he said his family couldn’t have afforded it without the 10 percent down payment and low monthly mortgage rates provided by a 30-year mortgage.
“It would have been too much money up front and the mortgage payments would have been much higher than what we could have made back then,” said Gutierrez, who works in the hotel industry.
Space is tight but it’s ours. Oswaldo Gutierrez, homeowner
Before his family bought, he said, “we were renting and moving every year because the rent kept going up up.”
Now Gutierrez lives in the home with his parents, his wife and their three children.
“Space is tight but it’s ours,” he said. The family refinanced around 2000 and last December made their final mortgage payment. “You feel proud,” he said. “It’s an accomplishment after 30 years of paying. You always say it’s your home, but the banks owns it. It’s not yours yet.”
Higher consumer costs?
Buyers like Gutierrez could be in trouble if 30-year mortgages become the exception rather than the rule. John Harris, chief wealth adviser for Coral Gables Trust, said investors believe mortgage rates could go up around 3 percent in a privatized market.
“That cost would be passed to the consumer,” Harris said.
Property values would suffer too if buyers’ purchasing power diminished, said Silvano Gonzalez, a Miami-Dade Realtor.
“It would be almost impossible for [buyers] to afford prices today” without a 30-year mortgage, Gonzalez said. “Most people are trying to buy the maximum they can afford.”
It would be almost impossible for [buyers] to afford prices today. Silvano Gonzalez, Realtor
If buyers dry up, residential prices could fall across the board, crippling the finances of people who’ve sunk their equity into homes.
While mortgages are much more easily available for single-family houses and town homes, some South Florida condo developers have used loan programs to sell units.
At Le Parc, a 128-unit tower in Brickell completed last year, developers won Fannie Mae approval for their project. That meant private lenders could issue mortgages to Le Parc buyers knowing that Fannie Mae would then buy the loans. Primary residents are eligible for 3 percent down loans, second-home buyers for 10 percent down loans and investors for 15 percent down loans.
Raimundo Onetto of Alta Developers said the approval is making it easier for buyers to close and for brokers to market unsold units.
“It helped close out the project,” Onetto said.
Read more here: http://www.miamiherald.com/news/business/real-estate-news/article93888877.html#storylink=cpy
What could replace Freddie Mac and Fannie Mae?
By Nicholas Nehamas
http://www.miamiherald.com/news/business/biz-monday/article93893417.html
What would a future without Fannie Mae and Freddie Mac look like? Almost 80 years after Fannie’s creation, that question is being pondered in offices ranging from Miami construction trailers to the White House.
The two government-backed mortgage giants have become twin pillars of the U.S. housing market. By buying up mortgages from banks and private lenders, they provide liquidity that keeps lenders lending. The fixed-rate 30-year mortgage, which most countries don’t offer and which allows many Americans to afford homes, exists largely because of their subsidies.
But their life span may be limited as the U.S. government and private investors — including Miami’s Fairholme Funds — battle over their future. A key ruling in a lawsuit over whether the government has the right to wind down the twins may come as early as this month.
The government’s position: A future housing crisis could leave taxpayers vulnerable. While the two companies are privately owned and publicly traded, they are government-sponsored enterprises, or GSEs, backed by the government.
We do not have enough capital today. Timothy Mayopoulos, Fannie Mae CEO
The government argument is based on the Freddie-Fannie collapse during the last housing bust, when the U.S. Treasury Department stepped in with a $187.5 billion bailout. While the companies are once again making money, the federal government shows no desire to return them to independent control, freeing them from a conservatorship that began in 2008.
In response, shareholders have launched a series of ongoing lawsuits, spurred by a 2012 announcement by the U.S. Treasury Department that it would take Fannie and Freddie’s profits for itself. Treasury has said its extraordinary commitment to the GSEs entitle it to repayment and that it is acting within the 2008 bailout law.
But the shareholders argue the government’s profit sweep violated their rights and nationalized the companies.
The stalemate has left the companies in a zombie state, drained of their capital by the government and lacking the resources to back anything but the safest mortgages.
“We do not have enough capital today,” said Timothy Mayopoulos, CEO of Fannie Mae, in a speech earlier this year. “While every other financial institution has been increasing its capital...ours will decrease to zero by 2018,” thanks to rules issued by Treasury in 2012.
As journalist Bethany McLean wrote in her 2015 book, “Shaky Ground,” Freddie and Fannie are “the last major financial institutions to remain in post-crisis uncertainty. . . . They have managed to achieve a worst-of-both worlds status: too political to be financially secure, but too financially insecure to accomplish their political mission.”
Meanwhile, the American Dream could be slipping away. In the second quarter of 2016, the U.S. homeownership rate fell to its lowest in 50 years — 62.9 percent, according to U.S. Census figures. Minorities, in particular, have struggled. The black homeownership rate stands at 41.7 percent. For Hispanics, it’s 45.1 percent.
A hodgepodge of solutions
Everyone agrees something has to be done — and that it’s crucial to preserve affordable mortgages. But few agree on how to do it.
The Obama administration advocates winding down the companies, and has called for comprehensive housing finance reform, which would involve a complete overhaul of the current system.
Congressional gridlock all but guarantees that resolution will fall under the next president’s watch. A variety of reform bills have been proposed in Washington, D.C., where they’ve languished.
More right-leaning proposals would eliminate Freddie and Fannie entirely and replace them with the private market.
$187.5 billion Size of 2008 bailout for Freddie and Fannie
On the other end of the pendulum, many of the Fannie-Freddie investors support a program of “recap and release” that would send the companies back to business as usual, but with protections meant to avoid the excesses that contributed to their struggles. (Those no-nos would include creating large internal investment portfolios that could sour during a crisis and lowering credit standards so that buyers without sufficient savings could buy homes.)
That kind of solution is opposed by the administration. Antonio Weiss, a Treasury official, called such an approach “misguided” in a Bloomberg column.
But Phil Stein, an attorney at Miami’s Bilzin Sumberg who represents financial service companies and lenders, said Freddie and Fannie serve a valuable purpose as currently constructed.
“Although credit may be loosening somewhat, there has been a real hesitation on the part of major banks to dive back in with gusto to lending with borrowers,” Stein said. “The fact that Fannie and Freddie are around and reasonably healthy and buying a lot of mortgages provides some cash flow to those reluctant banks and makes them somewhat more willing to open up the spigot and deal with borrowers.”
His view: “In the absence of Freddie and Fannie, the private lenders in what is still a volatile market would revert to their positions of being reluctant to make a lot of new loans.”
If they threaten liquidity, reforms to America’s housing finance system could pose a threat to the real estate industry, say some developers. And with Miami’s heavy economic dependence on real estate and construction, a threat to the industry is a threat to local financial well-being.
Pino currently is building 250 single-family homes in West Miami-Dade priced between $450,000 and $600,000. They’re at the high end of what’s attainable for a successful upper-middle-class family. (In Miami-Dade and most other counties, Fannie and Freddie only guarantee loans up to $417,000.)
Even so, almost no one is paying cash. Pino said 90 percent of his buyers use fixed-rate 30-year mortgages to close.
He’s heard the chatter about Freddie and Fannie — but doesn’t believe lawmakers would go through with reforms that could make lending more expensive.
It would kill the market. Sergio Pino, developer
“It would kill the market,” Pino said. “It would put a lot of people out of the opportunity to buy a home.”
Other real estate industry players agree that the GSEs play a crucial role.
In Broward County, developers have obtained initial Fannie Mae approval for the Metropica condo project. That means lenders can offer mortgages to buyers of Metropica condos knowing that Fannie Mae will insure the loans.
“It makes the units more accessible for domestic buyers,” said Joseph Kavana, one of the developers. “They know that they can buy a $500,000 unit for $80,000 down. For those buyers it’s an incredible advantage. . . . It helps homeowners and it helps the project.”
Longtime developer Armando Codina, whose current projects include the mixed-use Downtown Doral, takes a slightly different view.
“If there were no mortgages or a five-year mortgage with a floating rate, that would hurt the industry. . . . [But] it doesn’t have to be a 30-year mortgage.
“Thirty-year fixed rate mortgages have been good for buyers and the home-building industry, but that may very well have to change. The rate risk associated with 30-year fixed mortgages is not only large, but also impossible to truly measure, and therefore not sustainable. In my opinion, Freddie and Fannie need to be retooled and updated.”
Codina noted that we now have technology that would enable Freddie, Fannie and other lenders to separate the credit risk from the interest risk, thereby potentially mitigating rate risk.
“What’s most important to buyers is an affordable monthly payment. Today, when few buyers live in the same home for 30 years, a shorter-term mortgage — for 10 or 15 years — make more sense.”
Codina suggests shorter-term loans that still have a 30-year amortization and a fixed monthly payment for a set number of years before the rate could rise; all loans could be paid off early without incurring a penalty.
For example, it might be a 10-year mortgage whose monthly payments would be calculated at the same rate as a 30-year loan for the first five years before the rate could increased. If the homeowner chose to pay off the loan early — for instance, if the home were sold — they would not incur a financial penalty.
Buyers would then have more equity in their homes, while private financial institutions would have an incentive to lend — something that’s missing with today’s historically low mortgage rates of 3.25 percent . But lending standards — creditworthiness — would need to remain high.
“Right now money center banks are making tremendous profits with little or no risk.”
Boosted by high demand for homes, Freddie and Fannie have returned to profitability. Since receiving their $187.5 billion bailout, the GSEs have paid the treasury department roughly $250 billion in dividends.
But some analysts argue that despite an uptick in market conditions, Freddie and Fannie will always leave taxpayers on the hook in an economic crisis.
Another idea for reform backed by former White House official Jim Parrott and several prominent economists would eliminate the GSEs and create a new government mortgage corporation. The new company would act as a lender of last resort, ceding most of its market share to banks and financial institutions, and receiving an explicit guarantee from the government.
In such an arrangement, the argument goes, private firms would bear most of the risk and taxpayers would only have to step in during a major economic crisis.
It is all too easy to take false comfort in the current status quo in the mortgage market. Jim Parrott, former White House advisor
“It is all too easy to take false comfort in the current status quo in the mortgage market,” Parrott and his co-authors wrote in an Urban Institute paper. “Home sales and house prices continue to trend upward in most of the country, and lenders have a market into which to sell their loans. But the housing finance system we have today is unhealthy and unsustainable; mortgage credit remains overly tight, taxpayers remain at risk, and the system lingers in a dysfunctional limbo. If we do not take seriously the need for reform until there is a crisis, we will be forced to undertake a remarkably complex and important effort when we are least equipped to handle it.”
Bipartisan bills — including a proposal from Sens. Mark Warner, D-Va., and Bob Corker, R-Tenn., and another from Sen. Mike Crapo, R-Idaho, and then-Sen. Tim Johnson, D-S.D. — trend in that direction. But they haven’t gone anywhere. Fannie and Freddie are complicated beasts — and politically they can be toxic.
Even some people who’ve been helped by the 30-year mortgage don’t see value in the companies.
In 1984, Robert Black, a research meteorologist, took advantage of the low rates offered by a 30-year mortgage and a Miami-Dade County program for first-time home buyers to purchase a $75,000 home in South Miami. He put 10 percent down.
“It was pretty close to the American dream home,” he said. “I wanted a two-car garage and we couldn’t afford it at the time.”
He and his wife still live there. It’s where his children grew up.
But while he recognizes the need to help out first-time home buyers, he’s not a fan of government involvement in the private market.
“I don’t think it’s that bad a deal if Freddie and Fannie go the way of the dinosaurs, as long as other programs that help out first-time buyers still remain,” Black said. “Government influence into the marketplace always produces distortion because they’re going to favor their cronies. . . . There should be a private-market solution.”
$250 billion Dividends paid by GSEs to U.S. Treasury Department
Analyst and author Josh Rosner sees a different path forward. He thinks the housing market is so important to social welfare and the economy that it should be regulated as a public utility, like gas, water and electricity. Freddie and Fannie would remain privately owned and publicly traded. But their rates would be set by an independent board. Such a change would require an act of Congress.
“If you were to set up a public utility commission, you would take the politics out of it,” Rosner said. “There’s a recognition of the social need for housing mortgage loans to be able to be made in good times and bad. . . . If you are taking the strategy of the administration, essentially what you’re going to do is give the secondary mortgage market to the primary big market players, especially the four big banks, which is going to recreate the risk we had before the crisis.”
Great Depression roots
A history refresher can help in understanding Fannie and Freddie.
Congress created Fannie (properly the Federal National Mortgage Association) in 1938 to stabilize the housing market during the Great Depression.
When the economy suffers, lenders don’t dole out cash. Before the Great Depression, home buyers had to use short-term, five- or 10-year loans with high down payments, risking their equity in the event of economic turmoil. Many lost their homes when their mortgages came due during the Depression because lenders wouldn’t refinance.
But Fannie’s willingness to buy up mortgages meant banks could keep lending. The government wanted to ensure that people could still buy homes or refinance even in bad times. By creating a national mortgage market, it also smoothed out regional variations in lending.
Fannie Mae was created during the Great Depression to help owners keep their homes and to encourage banks to lend during tough times.
Freddie (the Federal Home Loan Mortgage Corporation) was created in 1970 to compete with Fannie, which had been re-legislated into a publicly traded, privately owned company two years earlier. Because of their size, they essentially have a duopoly on the secondary mortgage market. Although Freddie and Fannie became publicly traded, they were implicitly backed by taxpayers, earning them the official title “government-sponsored enterprises,” or GSEs, and helping them lower their own borrowing costs.
An implicit guarantee means that it is assumed, but not required, that the government would bail out the companies. Such an assumed guarantee lowers borrowing costs, giving Freddie and Fannie an advantage over private competitors.
Some analysts believe that an explicit, cut-and-dry guarantee — a firm commitment from the government for a bailout — would work better. A paper by economists at the Federal Reserve Board argued that an explicit guarantee would allow the government to price the cost of its backing, prevent market distortions and protect taxpayers.
Whatever way the GSEs are backed, their presence ensures the viability of the fixed-rate 30-year mortgage. Without that, many fear, banks will give up long-term, fixed-rate loans that risk the profits resulting from an interest-rate hike, and focus instead on shorter-term, adjustable-rate loans that bring guaranteed profits.
Because Fannie and Freddie package up, or securitize, large batches of loans and then sell them to investors, the banks’ profits are guaranteed. The GSEs have come to dominate this secondary mortgage market, responsible today for $5.7 trillion of mortgage-backed securities — roughly two-thirds of the market. Private-label securities account for just $500 billion.
The proposals to wind down Freddie and Fannie depend on the private sector increasing its market share in a big way. Whether non-government lenders would do so remains a question.
But, said David Stevens, president and CEO of the Mortgage Bankers Association, “there has to be structural reform before the market can function. . . . And we have to guarantee that the 30-year mortgage continues to exist.”
There has to be structural reform before the market can function. David Stevens, Mortgage Bankers Association
Stevens said uncertainty surrounding Freddie and Fannie, as well as high regulatory costs, mean private companies won’t get into the mortgage securities business as it stands. “There’s no trust in the market and no liquidity,” he said.
Any reform will be a long, hard slog, according to Stevens. But whatever system emerges must ensure a level playing field for small community banks, credit unions and independent mortgage providers, he said.
“Before the GSEs failed, they would give special sweetheart discounts to the biggest banks in exchange for market share,” he said. “Small firms couldn’t compete. That really contributed to a large concentration of risk in a small number of institutions.”
Even with a level playing field, firms would have to be willing to take a lower rate of return on 30-year mortgages than they might achieve with shorter-term loans.
“There’s just no money in it,” said John Warren, CEO of South Carolina-based Lima One Capital, which has an office in Miramar. The company lends to investors, including high-rate, short-term loans for home flippers, but not owner-occupiers.
Said Warren: “ If you do away with Fannie and Freddie, you’re still going to have all the regulation.”
do you have a link to this infomation?
tia
Armour Residential REIT posts 2Q profit
[Associated Press]
August 2, 2016
VERO BEACH, Fla. (AP) _ Armour Residential REIT Inc. (ARR) on Tuesday reported second-quarter earnings of $21.2 million.
On a per-share basis, the Vero Beach, Florida-based company said it had profit of 47 cents. Earnings, adjusted for non-recurring costs, were 63 cents per share.
The results fell short of Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 70 cents per share.
The real estate investment trust posted revenue of $46.9 million in the period.
Armour Residential REIT shares have dropped slightly since the beginning of the year. In the final minutes of trading on Tuesday, shares hit $21.69, a fall of slightly more than 5 percent in the last 12 months.
I suspect Raffie is in need of a few dollars...there was no news about the transition from the last guy back to pinhead, so I would venture he is about ready to make his run at sucking in new bagholders.
Federal housing watchdog under fire for move to 'gut' office
http://www.foxnews.com/politics/2016/07/16/federal-housing-watchdog-under-fire-for-move-to-gut-office.html
By Jennifer G. Hickey Published July 16, 2016 FoxNews.com
Facebook37 Twitter321 livefyre Email Print
Fannie Mae headquarters is seen in this Feb. 21, 2014 file photo. (Reuters)
In a case of who's watching the watchdog, the inspector general's office for a top housing agency is facing tough questions from Congress over what ex-employees say are efforts to "gut" a key office and allegations of retaliation.
Since last October, Senate Judiciary Committee Chairman Charles Grassley has been scrutinizing the IG for the Federal Housing Finance Agency (FHFA), the watchdog responsible for overseeing the regulator of mortgage giants Fannie Mae and Freddie Mac.
Not getting very far, Grassley, R-Iowa, and Homeland Security Committee Chairman Ron Johnson, R-Wis., recently took the unusual step of seeking an early outside review.
Their focus is on changes made after Laura Wertheimer was sworn in as IG in September 2014 and slashed staffing in the Office of Audits, with the apparent goal of making it leaner and more efficient.
The office, however, is tasked with rooting out waste, fraud and abuse -- at the agency responsible for monitoring $5 trillion in housing investments following the 2008 federal takeover of Fannie and Freddie. One ex-employee described the downsizing as as a "systematic dismantling."
Buyouts were used to achieve the cuts, which brought the staff down from 36 full-time employees to just nine.
In a June 30 letter seeking an outside review to the Council of the Inspectors General on Integrity and Efficiency (CIGIE), Grassley and Johnson raised concerns about whether the office could do its job. They said they want to ensure the "office is properly fulfilling its role of providing accountability and transparency over government programs” and questioned the OIG's independence.
CIGIE is an independent entity that monitors the integrity of IG offices.
The letter also questioned the FHFA-OIG’s decision to hire outside attorneys and employees who allegedly lacked proper auditing and IG experience -- and allegations that threats of poor performance reviews and other retaliatory actions were used against staff following the reorganization.
In her written response, Wertheimer said the changes would enable the OIG to “deploy our resources strategically and realign our audit and evaluation plan to adapt to changing current risks.” She also claimed the Office of Audits was failing to produce when she entered the IG post.
Grassley, however, challenged the claims in a March 24 letter.
“According to your website, it appears that the lack of production from OA occurred after, not before, your tenure,” he wrote, adding that that “the precipitous decline in level of work product is troubling.”
Leonard DePasquale, chief counsel at the OIG, denied the office failed to produce, telling FoxNews.com that under Wertheimer’s tenure, OIG investigations have resulted in billions in fines and civil settlements.
“The record is there on the website. And to a person, she has gained the respect of her employees,” DePasquale said.
Former employees, however, tell a different story.
“What we saw starting to happen shortly after her arrival was a systematic dismantling of a cohesive and productive organization. There was cohesion in the office and no one was afraid to do their jobs,” said Randal Stewart, a former senior investigative evaluator with the IG’s office.
Stewart, who worked for more than 20 years in the inspector general community, chose to retire rather than contest an unfavorable performance review. Another former employee with 25 years of mortgage fraud auditing expertise backed Stewart’s account.
The employee, who asked for anonymity due to pending litigation, said it was clear within weeks of Wertheimer’s arrival that the goal was to “gut” the office. In short order, he said, career professionals were reassigned to less critical offices or were replaced by individuals who lacked sufficient background in government auditing and investigations.
“When any agency makes changes, there are going to be disgruntled employees. This is not a new story,” DePasquale countered.
FHFA-OIG spokeswoman Kristine Belisle maintained the committee was being misled by these former employees.
She pointed to claims that were made of nearly half a dozen audits being canceled after Wertheimer, a former law partner at Wilmer Cutler Pickering Hale and Dorr, arrived. She told FoxNews.com that career employees searched their official system and found Wertheimer canceled no audits.
“Her record stands in sharp contrast to that of her predecessor, who canceled nine audits, at a significant cost of time and money,” countered Belisle.
Grassley and Johnson wrote to the OIG in May raising additional concerns about the OIG’s hiring of at least two outside attorneys and why “the FHFA-OIG Office of Counsel [was] deemed insufficient to provide representation” in certain circumstances.
DePasquale told FoxNews.com that “two firms” had been retained for occasions when “specialized expertise” was needed on a limited basis. He declined to comment further, citing attorney-client privilege.
A source with knowledge of the inquiry confirmed the law firm of Zuckerman Spaeder had been retained.
Outside legal representation was the subject of a June 28 meeting between staff members at OIG and the respective committees, but FHFA-OIG did not come “prepared with approaches to satisfy” the senators’ questions, according to a committee source.
The key to this is whats in the PR
last sentence...first paragraph.
" The agreement may terminate at any time following October 21, 2016 if closing has not occurred by such date."
Unfortunately I have been a bagholder in pgpm for many years. I live in Dallas and am quite knowledgeable about Pinedo and his scams. Have tried many many times to meet with him...been to his boarded up office at Addison airport at least a dozen times. NEVER was a single person seen...let alone available to speak with.....NEVER responded to emails....NEVER responded to phone calls.
I would suggest reading some of the history posts about this scam.
a little extra.
Crescent Hill Capital Corp
located in Dallas Tx in the Crescent office building...how original.
surprise surprise surprise...
https://www.sec.gov/Archives/edgar/data/1338424/000139390514000352/xslF345X02/primary_doc.xml
http://whalewisdom.com/filer/crescent-hill-capital-corp
**********************
Alpha Petroleum LP - nothing on the internet about this company.
***********
American Capital Investment LLC
if it's the one in Phoenix...a low rent house in a low rent neighborhood. a company with hundreds of millions of dollars in assets most likely wouldn't have offices in such a place.
if it's the one in Miami...nice looking condo...but still
Raffie must be in need of some cash...this is a losing pump and dump thats been going for years.
you are correct sir..no reach around...no kiss..not even any K-Y
RUFUS PAUL HARRIS
Register Number: 61490-019
Age: 48
Race: White
Sex: Male
Located at: Oklahoma City FTC
Release Date: 06/07/2031
Citi to pay $7 million over incomplete brokerage data to SEC
https://finance.yahoo.com/news/citigroup-pay-7-million-over-inaccurate-reporting-trading-160759288--sector.html
Citigroup More Than Triples Its Dividend After Stress Test
Citigroup Inc. got a green light on the Federal Reserve’s stress test for the second year in a row and said it would buy back up to $8.6 billion in shares over the next year and sharply raise its quarterly dividend.
The Fed on Wednesday approved the New York bank’s capital plan after determining that Citigroup could keep lending in a severe economic downturn. The approval clears the way for the company to raise dividends, increase share buybacks, or both.
Citigroup said it would boost its quarterly dividend to 16 cents a share from 5 cents and would begin the stock buybacks in the third quarter.
The Fed’s approval gives breathing room to Citigroup CEO Michael Corbat. The bank had failed the test twice, including one time during his tenure as chief executive. One of Mr. Corbat’s mandates when he was installed in the job was to improve the bank’s relationship with regulators.
The Fed’s approval is also particularly important to the bank because many investors have been disappointed by its relatively low dividends and share price. The bank is expected to announce later Wednesday its plans for upcoming dividend and buybacks, both of which can increase a company’s share price.
The Fed calculated that at the low point of a hypothetical recession, Citigroup’s common equity Tier 1 ratio — which measures high-quality capital as a share of risk-weighted assets — would be 7.7%, above the 4.5% level the Fed views as a minimum. The new ratio, unlike the one reported last week by the Fed in a related test, takes into account the bank’s proposed capital plan.
The bank’s Tier 1 leverage ratio, which measures high-quality capital as a share of all assets, would be 6.1% in a hypothetical recession under the Fed’s estimates, above the 4% minimum.
The bank might have also been helped by taking a more conservative tack on its submission. Generally, the banks are more optimistic than the Fed is about how they would fare in a severe recession. But last week, on the first round of stress-test results, Citigroup estimated that its ratios would fall lower than the Fed did.
The latest stress-test result incorporates quantitative factors assessed in data released by the Fed last week. These included a simulation of how the bank’s capital buffers would hold up under a world-wide recession. The Fed’s “severely adverse” scenario of financial stress this year included a 10% U.S. unemployment rate, significant losses in corporate and commercial real estate lending portfolios, and negative rates on short-term U.S. Treasury securities.
This second part of the test also included a qualitative assessment by the Fed of a bank’s capital-planning process and internal controls. The Fed has the ability to object to a bank’s capital plan on either quantitative or qualitative grounds.
http://blogs.wsj.com/moneybeat/2016/06/29/round-ii-how-the-largest-u-s-banks-fared-on-the-feds-stress-test/?mod=yahoo_hs
agreed...it's most likely just a formal legal requirement that they send it out to all the bagholders.
Did anyone else receive a packet of forms for the warren bankruptcy?
Could be just a bunch of stuff thats sent to all the unfortunate bagholders of this disaster.
I received the following forms from my broker
1. Chapter 11 Bankruptcy Case Treatment
2. Proof of claim
Official form 410
3. Order Establishing Notice Procedures
4. Notice of Proof of Claim Bar Date
5. Notice of Chapter Bankruptcy Case
Official Form 309F
6.Notice of Interim Order Approving Restrictions on Certain Transfers
of Interest in the Debtors Estates.
Is It Time to Kill Fannie Mae? A $100 Billion Plan for the Mortgage
it sounds like they want to "create" an entity that does EXACTLY what fannie and freddie do now...what a bunch of F***tards
https://www.yahoo.com/finance/news/time-kill-fannie-mae-100-121500029.html
A plan to reform the mortgage finance industry by replacing Fannie Mae and Freddie Mac with a government-owned corporation offers insights into how presumptive Democratic presidential nominee Hillary Clinton might strengthen the housing market and guard against another financial crisis.
The latest proposal floated by a team of high-profile financial thinkers led by Gene Sperling, former director of the National Economic Council under both Presidents Bill Clinton and Barack Obama and an adviser to Hillary Clinton, would establish a corporation backed by more than $100 billion in investors’ money, according to Bloomberg News.
The first phase of the proposal -- written by Sperling, Jim Parrott, Mark Zandi, Barry Zigas and Lew Ranieri, the granddaddy of mortgage-backed securities -- released in March says: “We are nearly seven years into recovery from a once-in-a-lifetime financial crisis … While much work has been done to address the flaws of this critical part of the nation’s economy, a major step remains: reforming Fannie Mae and Freddie Mac. These two enormously important yet flawed institutions endure in conservatorship while their regulator, the Federal Housing Finance Agency, admirably helps them tread water while pleading for direction from a paralyzed Congress.”
Fannie and Freddie don’t write mortgages; they buy them from lenders, back them and bundle them as securities. Because they play such a crucial role in the U.S. housing market, the government bailed out both government-sponsored enterprises (GSEs) in the financial crisis of 2008 to the tune of about $100 billion each and put them under the control of the Federal Housing Finance Agency.
The main thrust of the plan from Sperling and his colleagues is to merge Fannie and Freddie into a new entity, a government-owned corporation called the National Mortgage Reinsurance Corp. (NMRC), and transfer most of the risk inherent in the current system to private investors.
The NMRC would do pretty much what Fannie and Freddie does now but it “would be required to transfer all non-catastrophic credit risk on the securities that it issues to a broad range of private entities. Its mortgage-backed securities would be backed by the full faith and credit of the U.S. government, for which it would charge an explicit guarantee fee … sufficient to cover any risk that the government takes.”
By selling fixed-dividend securities amounting to about 2.5 percent of some $5 trillion in mortgages, the NMRC would raise about $125 billion in capital, Bloomberg says, providing a safeguard against disruptions in the housing market. In addition, a new mortgage insurance fund would build an even higher financial wall to protect taxpayers in the event of a market downturn.
In order to be more flexible – read, avoid bureaucratic red tape -- the NMRC would be a government-owned corporation, not an agency, the proposal says. Besides selling mortgage securities to private investors and bearing the catastrophic risk of mortgage defaults “at a rate consistent with an economic crisis,” the NMRC would also ensure that “broad access to sustainable mortgage credit for creditworthy borrowers is available in all communities in all economic conditions.”
The proposal rejects the idea of making the NMRC a “privately owned mutual or utility,” saying that would create “a heavily regulated monopoly whose range of business activities, rate of return and market share would be closely prescribed by policymakers.”
A very good read
quite long, though it brings a lot of good points to consider, as well as some good questions that need answered.
http://www.bu.edu/bulawreview/files/2015/03/DAVIDOFF-SOLOMON-AND-ZARING.pdf
What does Executive privilege protect?
Executive privilege is the constitutional principle that permits the president and high-level executive branch officers to withhold information from Congress, the courts, and ultimately the public. This presidential power is controversial because it is nowhere mentioned in the U.S. Constitution. That fact has led some scholars (Berger 1974; Prakash, 1999) to suggest that executive privilege does not exist and that the congressional power of inquiry is absolute. There is no doubt that presidents and their staffs have secrecy needs and that these decision makers must be able to deliberate in private without fear that every utterance may be made public. But many observers question whether presidents have the right to withhold documents and testimony in the face of congressional investigations or judicial proceedings.
Executive privilege is an implied presidential power that is recognized by the courts, most famously in the U.S. v. Nixon (1974) Supreme Court case. There are generally four areas that an executive branch claim of privilege is based: 1) presidential communications privilege; 2) deliberative process privilege; 3) national security, foreign relations or military affairs, and 4) an ongoing law enforcement investigation. In the current controversy over congressional access to Department of Justice documents pertaining to the Fast & Furious scandal investigation, the president and Attorney General Eric Holder are relying on the deliberative process privilege and also the ongoing law enforcement investigation defense.
Not all presidents have used this power for the public good, but instead some have claimed executive privilege to try to conceal wrongdoing or politically embarrassing information. In the controversy over President Barack Obama’s claim of executive privilege over DOJ documents, critics suggest that his action constitutes such an improper use of that power. The president and his defenders argue that he is instead protecting a core presidential function by stopping Congress from intruding into areas where it does not belong.
- See more at: http://www.libertylawsite.org/2012/07/12/the-constitution-and-executive-privilege/#sthash.ZenR1fv9.dpuf
depends on the country...in the U.S. currently between $35 and $40 bucks on average.
Of course this will fluctuate as the price of oil increases/decreases due to employee costs....equipment cost demands...availability of workers/equipment...and so on.
This is all from the Form 8-K on 3-Jun-2016
The Restructuring Support Agreement includes an agreed timeline for the Chapter 11 Cases that, if met, would result in the Company confirming a Chapter 11 plan and emerging from bankruptcy within 130 days. The proposed terms of the DIP Credit Agreement and the proposed terms of the restructuring set forth in the Restructuring Support Agreement are to be effectuated through the Chapter 11 Cases and remain subject to Bankruptcy Court approval.
Item 1.03 Bankruptcy or Receivership.
On June 2, 2016, Warren Resources, Inc. (the "Company") and certain of its wholly owned subsidiaries (together with the Company, the "Debtors") filed voluntary petitions (the "Bankruptcy Petitions") for reorganization under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of Texas (the "Bankruptcy Court"). The Debtors have filed a motion with the Bankruptcy Court seeking to jointly administer all of the Debtors' Chapter 11 cases (the "Chapter 11 Cases") under the caption In re Warren Resources, Inc., et al., Case No. 16-32760. The Debtors will continue to operate their businesses as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The Company has filed a series of first day motions with the Court that will allow it to continue to conduct business without interruption. These motions are designed primarily to minimize the effect of bankruptcy on the Company's operations, customers and employees.
The Company expects to continue operations in the normal course during the pendency of the Chapter 11 Cases, and anticipates making royalty payments and payments to working interest owners when due, subject to Bankruptcy Court approval. Employees should expect no change in their daily responsibilities and to be paid in the ordinary course of business.
Restructuring Support Agreement
In connection with its Chapter 11 filing, the Company announced today that it has reached an agreement (the "Restructuring Support Agreement"), executed on June 2, 2016, with the lenders under its existing first-lien credit agreement (the "Plan Sponsor") and the holders of a majority of its senior notes for a consensual restructuring of its balance sheet. Under the Restructuring Support Agreement:
? the lenders under the Company's first-lien credit agreement will become lenders under a new first-lien credit facility and will obtain 82.5% of the post-restructuring common equity of the Company (subject to dilution under a new management incentive program and the exercise of certain warrants, to the extent issued, as described in the bullet below);
? the lenders under the Company's second-lien credit facility, the holders of the Company's unsecured notes and, at the option of the Plan Sponsor, a holder of another claim (if allowed) will be entitled to share pro rata in 17.5% of the post-restructuring common equity of the Company; and
? the reorganized Company may, subject to the satisfaction of certain conditions, issue to the lenders under the Company's second-lien credit facility five-year warrants exercisable into up to 5% of the post-restructuring common equity of the Company (subject to dilution under a new management incentive plan).
The Restructuring Support Agreement contemplates the approval by the Bankruptcy Court of the DIP Credit Agreement described below under "-Debtor-in-Possession Financing." Upon the effectiveness of the plan of reorganization contemplated by the Restructuring Support Agreement, any outstanding principal amount of the DIP Credit Agreement may be, at the option of the Plan Sponsor, exchanged or rolled into the new first-lien credit facility.
The Restructuring Support Agreement includes an agreed timeline for the Chapter 11 Cases that, if met, would result in the Company confirming a Chapter 11 plan and emerging from bankruptcy within 130 days. The proposed terms of the DIP Credit Agreement and the proposed terms of the restructuring set forth in the Restructuring Support Agreement are to be effectuated through the Chapter 11 Cases and remain subject to Bankruptcy Court approval.
nice pop this morning after last weeks panic sell off...doing the lotto play now as I bought the crap outta this at 5.5 to 6.5 cents on friday.
they very well might...at minimum it looks like maximum dilution will happen. see below
Form 8-K for WARREN RESOURCES INC
3-Jun-2016
Entry into a Material Definitive Agreement, Bankruptcy or Receivership, Crea
Item 1.01 Entry into a Material Definitive Agreement
The information set forth below under Item 1.03 of this Current Report on Form 8-K regarding the Restructuring Support Agreement (as defined below) is incorporated herein by reference.
Item 1.03 Bankruptcy or Receivership.
On June 2, 2016, Warren Resources, Inc. (the "Company") and certain of its wholly owned subsidiaries (together with the Company, the "Debtors") filed voluntary petitions (the "Bankruptcy Petitions") for reorganization under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of Texas (the "Bankruptcy Court"). The Debtors have filed a motion with the Bankruptcy Court seeking to jointly administer all of the Debtors' Chapter 11 cases (the "Chapter 11 Cases") under the caption In re Warren Resources, Inc., et al., Case No. 16-32760. The Debtors will continue to operate their businesses as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The Company has filed a series of first day motions with the Court that will allow it to continue to conduct business without interruption. These motions are designed primarily to minimize the effect of bankruptcy on the Company's operations, customers and employees.
The Company expects to continue operations in the normal course during the pendency of the Chapter 11 Cases, and anticipates making royalty payments and payments to working interest owners when due, subject to Bankruptcy Court approval. Employees should expect no change in their daily responsibilities and to be paid in the ordinary course of business.
Restructuring Support Agreement
In connection with its Chapter 11 filing, the Company announced today that it has reached an agreement (the "Restructuring Support Agreement"), executed on June 2, 2016, with the lenders under its existing first-lien credit agreement (the "Plan Sponsor") and the holders of a majority of its senior notes for a consensual restructuring of its balance sheet. Under the Restructuring Support Agreement:
? the lenders under the Company's first-lien credit agreement will become lenders under a new first-lien credit facility and will obtain 82.5% of the post-restructuring common equity of the Company (subject to dilution under a new management incentive program and the exercise of certain warrants, to the extent issued, as described in the bullet below);
? the lenders under the Company's second-lien credit facility, the holders of the Company's unsecured notes and, at the option of the Plan Sponsor, a holder of another claim (if allowed) will be entitled to share pro rata in 17.5% of the post-restructuring common equity of the Company; and
? the reorganized Company may, subject to the satisfaction of certain conditions, issue to the lenders under the Company's second-lien credit facility five-year warrants exercisable into up to 5% of the post-restructuring common equity of the Company (subject to dilution under a new management incentive plan).
The Restructuring Support Agreement contemplates the approval by the Bankruptcy Court of the DIP Credit Agreement described below under "-Debtor-in-Possession Financing." Upon the effectiveness of the plan of reorganization contemplated by the Restructuring Support Agreement, any outstanding principal amount of the DIP Credit Agreement may be, at the option of the Plan Sponsor, exchanged or rolled into the new first-lien credit facility.
The Restructuring Support Agreement includes an agreed timeline for the Chapter 11 Cases that, if met, would result in the Company confirming a Chapter 11 plan and emerging from bankruptcy within 130 days. The proposed terms of the DIP Credit Agreement and the proposed terms of the restructuring set forth in the Restructuring Support Agreement are to be effectuated through the Chapter 11 Cases and remain subject to Bankruptcy Court approval.
. . .
Item 2.03 Creation of a Direct Financial Obligation or Obligation under an Off Balance Sheet Arrangement of a Registrant
The information set forth above in Item 1.03 of this Report regarding the DIP Credit Agreement is incorporated herein by reference.
Item 2.04 Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligations under an Off-Balance Sheet Arrangement
The commencement of the Chapter 11 Cases described in Item 1.03 above constitutes an event of default that accelerated the Company's obligations under the following debt instruments (the "Debt Instruments"):
? the Credit Agreement dated as of May 22, 2015, among Warren Resources, Inc., as Borrower, Wilmington Trust, National Association, as Administrative Agent, the lenders party thereto, with GSO Capital Partners LP, as Sole Lead Arranger and Sole Bookrunner, as amended;
? the Swap Intercreditor Agreement dated as of May 22, 2015 among Warren Resources, Inc. and certain of its subsidiaries, Cargill, Incorporated, as the Initial Secured Swap Counterparty, the Secured Swap Counterparties listed therein, Wilmington Trust, National Association, as administrative agent and each other Person that from time to time becomes a party thereto;
? the Intercreditor Agreement dated as of October 22, 2015, among Wilmington Trust, National Association as First Lien Credit Agreement Agent, each Other First Priority Lien Obligations Agent from time to time party thereto and Cortland Products Corp., as Second Lien Credit Agreement Agent;
? the Second Lien Credit Agreement, dated as of October 22, 2015, among Warren Resources, Inc., as Borrower, Cortland Products Corp., as Administrative Agent, and the lenders party thereto, as amended;
? the Indenture governing the 9.000% Senior Notes due 2022, dated as of August 11, 2014, among Warren Resources, Inc., as Issuer, the subsidiary guarantors parties thereto and U.S. Bank National Association, as Trustee;
? the Indenture, dated as of June 1, 1997, by and between Warren Resources, Inc., as Issuer, and Continental Stock Transfer & Trust Company, as Trustee; and
? the Indenture, dated as of February 1, 1998, by and between Warren Resources, Inc., as Issuer, and Continental Stock Transfer & Trust Company, as Trustee.
The Debt Instruments provide that as a result of the commencement of the Chapter 11 Cases the principal and accrued interest due thereunder shall be immediately due and payable. Any efforts to enforce such payment obligations under the Debt Instruments are automatically stayed as a result of the filing of the Chapter 11 Cases and the holders' rights of enforcement in respect of the Debt Instruments are subject to the applicable provisions of the Bankruptcy Code.
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing
On May 26, 2016, the Company received an Additional Staff Determination - Delinquency letter from the Listing Qualifications Department of The Nasdaq Stock Market (the "Staff"), notifying the Company that the Company's delay in filing its quarterly report on Form 10-Q serves as an additional basis for delisting the Company's securities from The Nasdaq Stock Market. The letter from the Staff notes that the Company may, pursuant to Nasdaq Listing Rule 5185(a)(1)(B), request an appeal to a Hearings Panel of the Staff within seven days of the letter, which would stay the delisting of the Company's securities for up to 15 days from the date of the request.
Item 7.01 Regulation FD Disclosure
On June 2, 2016, certain confidentiality agreements between Warren Resources, Inc. (the "Company") and certain of the holders of the Company's 9% Senior Notes due 2022 (the "Noteholders") expired. During the term of these confidentiality agreements, the Company presented a presentation, a summary budget of the Company and reserve data to the Noteholders. The presentation, summary budget and reserve data are included as Exhibits 99.1, 99.2 and 99.3 to this Current Report on Form 8-K and is incorporated by reference into this Item 7.01.
Item 8.01 Other Events
The Company cautions that trading in the Company's securities during the pendency of the Chapter 11 Cases is highly speculative and poses substantial risks. Trading prices for the Company's securities may bear little or no relationship to the actual recovery, if any, by holders of the Company's securities in the Chapter 11 Cases.
Forward-Looking Statements
This Current Report on Form 8-K and the accompanying exhibits contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The statements in this Report and the Exhibits that are not historical facts are forward-looking statements. Forward-looking statements are typically identified by use of terms such as "may," "will," "could," "should," "expect," "plan," "project," "intend," "anticipate," "believe," "estimate," "predict," "potential," "pursue," "target" or "continue," the negative of such terms or other comparable terminology, although some forward-looking statements may be expressed differently.
These forward-looking statements relate, in part, to the risks and uncertainties relating to the ability of the Company to continue as a going concern; the Debtors' ability to obtain approval by the Bankruptcy Court of the Restructuring Support Agreement and the DIP Motion and the plan of reorganization of the Company as proposed, including with respect to the plan of reorganization, the treatment of the claims of the Company's lenders and trade creditors, among others; the ability of the Debtors to develop and consummate one or more plans of reorganization with respect to the Chapter 11 Cases; the Court's rulings in the Chapter 11 Cases and the outcome of the Chapter 11 Cases in general; the length of time the Debtors will operate under the Chapter 11 Cases; risks associated with third-party motions in the Chapter 11 Cases, which may interfere with the Debtors' ability to develop and consummate one or more plans of reorganization once such plans are developed; the potential adverse effects of the Chapter 11 Cases on the Debtors' liquidity, results of operations or business prospects; the ability to execute the Company's business and restructuring plan; increased legal costs related to the Chapter 11 Cases and other litigation and the inherent risks involved in a bankruptcy process; the negotiation of the terms, conditions and other provisions of the DIP Facility with the prospective lenders; the anticipated closing of the DIP Credit Agreement; the need for Court orders approving the DIP Motion; the sufficiency of the liquidity purported to be made available by the DIP Credit Agreement; and the additional risks and uncertainties that are described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as amended, as well as in other reports filed from time to time by the Company with the Securities and Exchange Commission.
All forward-looking statements speak only as of the date of this Current Report on Form 8-K. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise, except as required by law. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits:
Exhibit
Number Description
10.1 Restructuring Support Agreement, dated June 2, 2016, by and among Warren Resources, Inc., certain of its subsidiaries, GSO Capital Partners LP on behalf of itself and on behalf of certain funds and accounts it manages, advises or sub-advises named as signatories therein, and each beneficial holder (or investment manager or advisor therefor) of the 9.0% Senior Notes due 2022 issued by Warren Resources, Inc. identified on the signature pages thereto.
99.1 Presentation dated March 2016
99.2 Summary Budget of Warren Resources, Inc.
99.3 Reserve data as of July 31, 2016
PDF 329 Filed: 5/31/2016, Entered: None
Joint MOTION for Extension of Time until 05/31/2016 to to File Joint Status Report , filed by USA.Response due by 6/17/2016. (Attachments: # 1 Exhibit)(Bezak, Reta) (Entered: 05/31/2016)
PDF 328 Filed: 5/25/2016, Entered: None Court Filing
ORDER granting in part and denying in part 327 Motion for Clarification. Signed by Judge Margaret M. Sweeney. (sp) (Entered: 05/25/2016)
PDF 327 Filed: 5/25/2016, Entered: None
MOTION for Clarification of 325 Order , filed by USA.Response due by 6/13/2016.(Bezak, Reta) (Entered: 05/25/2016)
Sealed 326 Filed: 5/20/2016, Entered: None Court Filing
**SEALED** ORDER denying 285 Motion Regarding Apparent Violation of Second Amended Protective Order. The parties shall file, by no later than Friday, May 27, 2016, a joint status report advising whether the order should remain sealed. Signed by Judge Margaret M. Sweeney. (sp) (Entered: 05/20/2016)
Here it is
Warren Resources files for Chapter 11 bankruptcy
Reuters
1 hour ago
WILMINGTON, Del., June 2 (Reuters) - Warren Resources Inc , an exploration and production company with operations in California and Pennsylvania, filed for bankruptcy protection on Thursday, according to a court filing.
The filing comes as a severe downturn in oil prices has forced scores of energy producers to file bankruptcy since the start of 2015. Up to a third of all producers may be at risk of bankruptcy if commodity prices remain weak, according to a study by consulting firm Deloitte.
Warren Resources skipped a $7.5 million interest payment due Feb. 1 on its senior notes and the company defaulted 30 days later.
The company listed assets of $230 million and debts of $545 million, as of Jan. 31, according to court documents.
Warren Resources has said that as part of its plan to manage cash, it cut back capital expenditures and was exploring sales of assets.
Warren Resources said in February that it received notification from Nasdaq that the market value of its publicly held shares was below the requirement for the market.
Its shares closed at about 9.5 cents on Thursday, down 27 percent. The shares had hit a 52-week high of 79 cents exactly one year ago.
(Reporting by Tom Hals in Wilmington, Delaware; Additional reporting by Jessica DiNapoli in New York; Editing by Leslie Adler)
took a massive dump at EOD...anyone see any news?
this is a great link...scroll down to view who has vested interests and motions filed by date.
http://www.plainsite.org/dockets/u007n92d/united-states-court-of-federal-claims/fairholme-funds-inc-et-al-v-usa/
Fannie Mae and Freddie Mac Unsealed
a lot of good reading in the pages below
http://www.nytimes.com/interactive/2016/05/22/business/document-Fannie-Mae-and-Freddie-Mac-Unsealed.html?rref=collection%2Ftimestopic%2FFederal%20National%20Mortgage%20Assn%20%28Fannie%20Mae%29&action=click&contentCollection=business®ion=stream&module=stream_unit&version=latest&contentPlacement=1&pgtype=collection&_r=0
I sure hope so...been taking a gamble and picked up quite a few in the 9 cent range the last few days....don't see any news though...
I wonder if they will get their debt restructured outside of a bankruptcy filing....I believe they were supposed to have a final decision by EOM...anyone know for sure?
Bill Ackman's 1st Quarter Letter to Shareholders
http://www.gurufocus.com/news/413006/bill-ackmans-1st-quarter-letter-to-shareholders
I only posted the part that concerns the GSE's
Fannie Mae (FNMA) / Freddie Mac (FMCC)
Fannie’s and Freddie’s underlying earnings continued to progress modestly in the core mortgage guarantee business as the guarantee fee rate increased and credit costs declined. In addition, the non-core investment portfolio continued to shrink, resulting in a less risky and more capital-light business model. While underlying earnings improved, reported earnings remained volatile due to non-cash, accounting-based derivative losses in the non-core investment portfolio. As a result
of the derivative losses and the Net Worth Sweep, the companies are at risk of requiring a capital draw from Treasury to maintain a positive net worth. As a result, there recently have been a number of proposals from policymakers, trade groups, and industry analysts that seek to have the GSEs retain capital so they are capitalized on a standalone basis.
In the Perry case in the D.C. Court of Appeals, new evidence came to light that shows Treasury entered into the Net Worth Sweep immediately after learning from Fannie Mae’s CFO that the company expected to soon realize ~$50 billion of profits from reversing a deferred tax allowance and expected to become sustainably profitable over time. We believe this new evidence further bolsters the Perry and Fairholme cases and our contention that the Net Worth Sweep is illegal.
GM still owes the "taxpayer" over 11 billion dollars. Last payment received from GM was an $8.33M Payback. May 22, 2015 Partial Repayment
General Motors
Detroit, Mich. | See all recipients in Michigan
This investment resulted in a loss to taxpayers. See below for details.
$50.7B
Disbursed
$38.6B
Returned
$694M
Revenue to Gov't
$11.4B
Net Outstanding
$50.7B
Committed
Freddie Mac will not need a draw from the Treasury even with the recorded loss. Imagine the financial shape the GSE's would be in if they weren't being defrauded by the govt. (Treasury)
http://www.dsnews.com/news/05-03-2016/freddie-mac-no-draw-on-treasury-for-now-but