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Yep. Pretty much. Now we don't know for sure if Freddie will take those DTAs this quarter, but all recent reports indicate it will likely happen.
Depending on the continued profitability, I really think they could cut a final check in December (Q3 earnings) that will make dividends paid equal to treasury draws. If not, no later than spring 2014.
It is speculated that Freddie will also realize their deferred tax assets in Q2 (much like Fannie did in Q1) to the tune of $30B. After all Q2 data is reported, I'm guessing the total difference between bailout funds and what has bee repaid will only be ~15B for both GSEs. This number is easily attainable to pay dividends equal to the total withdraw by years end, IMO.
Guys, here is proof that FnF are not going anywhere anytime soon.
"Freddie Mac has ambitious plans for the product and hopes to issue multiple deals this year, according to a pre-marketing announcement. It plans to become a programmatic issuer of the structure by 2014.
It is also widely expected that Fannie Mae, the larger mortgage GSE, will come out with a similar and coordinated product very shortly."
http://www.cnbc.com/id/100852736
I love it. Instead of FMIC, why not let Fannie and Freddie recruit and raise the private capital needed to back mortgages. They could then charge some nominal fee for seeking the capital and still make bank while keeping the loans off of their books and 'reducing their footprint in the marketplace'.
News. Freddie Mac to debut risk-sharing Mortgage-backed Securities
http://www.cnbc.com/id/100852736
Article states that Freddie is about to test a program that reaches out to the private sector for MBS purchasing. One line that I like:
"It is also widely expected that Fannie Mae, the larger mortgage GSE, will come out with a similar and coordinated product very shortly."
Apparently they tried this once before and it failed miserably because of a lack of private sector support. In my opinion, they are setting up these programs to make it seem like they are working with the private sector for guaranteeing MBS. They will also say 'told you so!' when it fails miserably again, reinforcing FnF's need in the marketplace. It also hints that they are not going away ANYTIME soon.
Potentially very big news!
Right. As conservators of FnF, the primary responsibility of the FHFA is to restore them to solvency. That's it. All of the political talk is framework for future mortgage finance reform, which is another issue entirely, albeit an important one.
Any company that makes multi-billions of dollars of profit per year is in fact solvent. I don't think any real pressure to release FnF from cship will happen until they've paid dividends that equal their prior Treasury draws (likely to happen by year's end). Then that ignites the media frenzy.
Bottom line, we get another small pop in the next few days, trade sideways for a month, then buckle in for another big pop. Take your profits because it won't settle at those highs.
Exactly, it's the very reason the banks use FnF to begin with--to eliminate the debt on their books.
This description of FnF's role is classic:
"How they do this is simple: After a bank decides to make a mortgage loan, Fannie Mae buys the loan from that bank. This is what actually makes it possible for middle-class people to afford homes — without Fannie, retail banks would have to hold the mortgages they’ve written on their books, so they’d be extremely vulnerable to relatively small, local shocks to the economy. Under these conditions, many banks would decide simply to avoid the mortgage market altogether, making it incredibly hard for middle-class people to get approved for a loan. So Fannie’s role here is 100% good stuff; the problems in the housing market started when privately held companies got heavily into this business and decided there was money to be made by doing away with “lending standards” and letting Goldman Sachs slice up the resulting destined-to-fail loans, mash all the bits together, and sell the resulting shit sandwiches to everyone’s pension funds."
http://wonkette.com/515864/failed-socialist-debacle-fannie-mae-to-contribute-59-4-billion-cash-dividend-to-us-treasury
Interesting, I just listened to the senate hearing video.
In no way did Watt mention shuttering Fannie and Freddie completely. He did mention that new mortgage reform needs to happen to take the taxpayers off the hook in case of a housing catastrophe, and that he's open to discussion about how to approach it. He applauded the efforts of Warner-Corker to get the discussion moving but not once did he say he agreed with it.
In summary, that reuters article is horseshit.
Video link for Mel Watt's Senate hearing.
Not sure if anybody's posted it yet, but here you go:
http://www.banking.senate.gov/public/index.cfm?FuseAction=Hearings.LiveStream&Hearing_id=2945bb90-054f-474b-9fa5-aa2b5571e4b0
Is there a link somewhere to listen to the hearing or a transcript of the discussion?
I don't really trust anyone's relay of the events on here, especially with all of the personal agendas out there.
What did he have to say? Unfortunately I couldn't listen...
If the govt was smart, they would sell all of their senior preferred shares when the price was high. I anticipate by year's end that FnF will have repaid dividends that equal the amount they withdrew from the treasury.
Therefore, govt gets their money back in the form of dividends and then sells their SP shares to make one hell of a profit.
It may dilute our common shares a bit, but at least relinquishes control to shareholders allowing for growth and rebuilding.
IMO.
Careful. He still has to make a good impression at the Senate hearing and get enough votes. Depending on his view of housing reform, that could prove difficult.
I hope your'e right though!
I just don't see how this new mortgage structure is going to work. What happens when that 10% of private money collapses in the next recession? It's all going back on the government, except this time it goes on their books and the debt becomes insanely high (trillions added!). At least now with FnF, housing is government regulated but the business remains separate from the federal budget.
The FHFA cannot and should not support this bill, even if by some miracle it was ever passed.
As conservators of FnF, the FHFA has one duty, that is to return these companies to solvency. They act in the best interest of FnF, regardless of national economy, federal budget, housing market, some politicians' next election votes, etc.
In my opinion, they took a big hit with that 3rd SPSA amendment, allowing the dividend sweep (but they had to prevent future treasury draws during periods of negative profit). I think they know they've been screwed over once, and now they're clearly calling for the end of cship.
They have cautiously applauded the work of Warner and Corker to get discussion about GSE reform moving but have basically said it will not happen in the manner as currently drafted.
http://fhfa.gov/webfiles/25331/FHFAStatementonCorkerWarnerBillFinal.pdf
Yep. Bollies are pinching. It's going one way or another...
We should go green later.
Look at the rest of the housing/mortgage sector:
Green!
Yes, I'm not sure Watt is the best candidate for shareholders. But I do think that there will be a push to release FnF from the conservatorships once the a dividend has been paid that equals the draws on the Treasury. I do think that's doable by end of year.
In the meantime, this thing will consolidate for several weeks to a month and then take off for another stellar run on earnings. It will then be beaten back down to a higher low, just as has happened with the last two spikes. Just time it right and take profits. Rinse and repeat.
Just because Watt has a confirmation hearing in the coming week, does not in any way guarantee that he will be voted in by the Senate (he needs 60 votes I believe). The GOP largely doesn't want him to hold the FHFA director position.
In fact, Watt is strongly in favor of providing current loan holders with more relaxed refinancing options, as well as forgive some outstanding housing debts. By doing so, in my opinion, he is partly undoing some of the hard work FnF have done to decrease the government's bond buying risk.
As far as shareholder interests are concerned, it seems like DeMarco at least has a plan for exiting the conservatorship, while Watt's mission is unclear at this point.
Of course, all IMO...
If you look at the last spike in late March, it dipped then went sideways on low volume for about ~25 trading sessions before making the big run up. I think we're going to see the same trend (low volume, not much movement in either direction) for the next month. Then upwards!
Here's a great idea. Let's wind-down something that's generating huge profits and replace it with something else that does EXACTLY the same thing, at the duration and expense of the taxpayer. Maybe they'll call the new entity Freddie Mae to be creative!
Nice work John. Look how eerily similar the chart pattern is on this gap-down/consolidation as compared to what happened in March/April. If the chart is at all predictable, we can expect about 14 sessions of sideways action prior to the run upwards. Puts us around July 9th or so...about a month ahead of earnings. Maybe a slow climb to the end of July and then breakout?
Edit: looking at it closer, more like 24 days of sideways action on low volume, putting us to Jul 24th. About 2 weeks prior to earnings.
Fannie took it's DTAs last quarter ($50B+) and Freddie is supposed to take theirs this quarter (~ $30B). Maybe that's the difference?
Care to share the good news?
Yeah, too bad it was only written by the FHFA (you know, the guys who oversee Fannie/Freddie). If it was written by an iHubber, it would probably be more influential. :)
For all those wondering whether FnF will be wound-down or condensed into a new entity, please see this post:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=89112583
It looks as if FnF will not only be kept viable, they will actually fund and own the new entity that DeMarco has in his vision. Pretty difficult to fund something with companies that don't exist!
How does this move 0.11 on such small volume?
Even if there is an IPO from new said entity, looks like FnF will be around for quite some time.
March 4, 2013
“To move this project forward in 2013, we are announcing as part of the 2013 Scorecard that a new business entity will be established between Fannie Mae and Freddie Mac. We believe that setting up a new structure that is separate from the two companies is important for building a new secondary mortgage market infrastructure. Our objective, as we stated last year, is for the platform to be able to function like a market utility, as opposed to rebuilding the proprietary infrastructures of Fannie Mae and Freddie Mac. To make this clear, I expect that the new venture will be headed by a CEO and Chairman of the Board that are independent from Fannie Mae and Freddie Mac. It will also be physically located separate from Fannie Mae and Freddie Mac. Importantly, we plan on instituting a formal structure to allow for input from industry participants.
What I have just described is the governance and ownership structure for the near-term phase of the platform. It will be initially owned and funded by Fannie Mae and Freddie Mac, and its functions are designed to operate as a replacement for some of their legacy infrastructure. However, the overarching goal is to create something of value that could either be sold or used by policy makers as a foundational element of the mortgage market of the future. We are designing this to be flexible so that the long-term ownership structure can be adjusted to meet the goals and direction that policymakers may set forth for housing finance reform.”
--Edward DeMarco
http://www.fhfa.gov/webfiles/25024/EJDNABESpeech.pdf
NEWS: Schweikert proposes bill to limit abusive government taking of FnF profits.
http://schweikert.house.gov/press-releases/rep-schweikert-introduces-bill-to-jumpstart-gse-reform/
'Washington, D.C. – Today, Congressman David Schweikert (R-AZ), Chairman of the House Small Business Subcommittee on Investigations, Oversight and Regulations, introduced H.R. 2348, the Jumpstart GSE Reform Act, a companion piece to S. 563, introduced by Senator Bob Corker.
Addressing two major concerns in the housing reform debate, this bill prohibits the use of increased Fannie Mae or Freddie Mac guarantee fees (g-fees) for the purpose of deficit reduction except as it relates to GSE business functions.
It also provides oversight and accountability by ensuring congressional approval on any change in the conservatorship status of the GSEs, including a public offering. This provision is critical as the Senate and the House address housing reform.
“It has been five years since the housing crisis forced the GSEs into conservatorship. In that time, we have seen the market go from peak to valley.
“However, now that we once again see signs of life in home values, I am concerned that the Administration sees Fannie and Freddie as cash cows to pay for big government spending. We’ve seen this once before, and are now watching as the Treasury Departmentfreely spends GSE profits.
“At the same time, the American people need the reassurance that Congress will have the opportunity to reform the housing market and allow private capital to flow back into private label securitization. This bill ensures that,” said Rep. Schweikert.'
Yes. Very awesome when the FHFA finally formally recognizes the end of conservatorship. In my opinion, that political decision will only be catalyzed by Q2 earnings.
NEWS!!!: FHFA Annual Report to Congress, June 13, 2013. Some good news and heavy reading:
http://www.fhfa.gov/webfiles/25320/FHFA2012_AnnualReport.pdf
The FHFA's outlook on the future.
“Today, the government touches more than 9 out of every 10 mortgages. With this in mind, it is essential that FHFA help transition the mortgage market to a more secure, sustainable, and competitive model. The conservatorships of Fannie Mae and Freddie Mac were never intended to be long-term solutions.
It is vital to the lasting health of our country’s housing and financial markets that our elected leaders work to bring the conservatorships to a conclusion and define the government’s role and requirements for housing finance in the future. The steps we are taking to move forward on conservatorship strategic plan in 2013 should help to set the stage for whatever transition policymakers choose. Since Fannie Mae and Freddie Mac were placed into conservatorship, we have made major strides towards rehabilitating the mortgage market and keeping borrowers in their homes, but there is still much to be done.
The nation will need a healthy and efficient secondary mortgage market regardless of the final resolution of the conservatorships. That is why we continue to move forward with the framework we began in 2012—one that will work for the Enterprises now and in the future. We seek to establish a framework that can support the secondary mortgage market after conservatorship, with or without government involvement, and attract more private capital to the market.”
I see no mention of a wind-down. In fact, the FHFA talks extensively about building a secondary enterprise separate from Fannie/Freddie that would operate independently of them (but nothing of that secondary enterprise replacing them entirely).
*their :)
Nice link, thanks Maximkraft.
If you read the bill, it's pretty much meaningless. It simply states that the government can't keep using GSE-funds to support other federal programs (although it looks like supporting general congressional budget is OK--bullsh*t) and that the Senior Stock Preferred Agreement can't be used to liquidate shares etc. without Congressional and Presidential approval with some tenable plan to change GSE regulation. It doesn't really specify what needs changed, nor does it mention a wind-down.
Perhaps I'm wrong...?
This is nothing but consolidation mode. Look at the chart from March to May. FNMA spiked in March, followed by a very quick sell-off (within the same trading day) and then went sideways for over a month, until when it exploded in May to over $5. This is a similar sideways pattern except our baseline is much higher.
WIth the stagnant trading volume seen the last few sessions, I believe the MMs have to keep manipulating the price to keep liquidity in the stock (after all, this is their job). I think the low volume has to do with a) fear from all of the negative press and hesitance to buy and b) people holding their current position in hopes they get a huge payday in the coming months.
I'm long and won't be shaken of my shares. With all of the mounting evidence and (slightly?) positive economic outlook, it's suggestive that gains of shareholders of all varieties (commons, jr, and sr preferreds) will be realized.
Oh yeah, almost forgot..IMO.
I had started a petition awhile ago on ipetitions but whoever started this one has gone way further with it than mine. In an effort to make the link easier to distribute, I've forward my old domain to your petition.
http://www.freedomforfannie.com
It's a lot shorter and easier to remember than that long whitehouse.gov address.
The Stuggart exchange had HOD at 2.27 euro = 2.92 USD. If it mirrors that exchange at all, maybe the max it will get to today. LOD at stuggart was 2.32 USD.
No after hours trading on OTC.
Those t-trades that post after hours are out of sync trades from earlier in the day and have no direct bearing on current pps. I think I see where the confusion comes from though...
So if you believe the current pps is $3.67, a VERY late t-trade could come in now for 10000 shares at 2.20 and after hours trading would show pps as $2.20. One minute later, another out of sync t-trade could come in for 1 share at 4.10 and the after hours pps would be reported as 4.10.
"After hours" on OTC is merely the last out of sync trade that went through, regardless of size. Therefore it has no direct manipulation of the current price.
Somebody please sticky this...
I would be happy with a $2.97 close. Same price we closed at Friday when everybody was going apeshit. I don't see much that has changed, except profit takers and panic selling manipulated today's trading session. It was a healthy, overdue correction and hopefully a slower, more controlled climb to come...we will see.
C'mon Fannie. You've been used and abused today. Now time to do the "walk (up) of shame"...
FNMAS (preferreds) are green up ~3%. I bet commons trace back near $4 by EOD. Stabilized consolidation period now.
Weeee! Hop aboard the Fannie Mae Merry Mixer! Guaranteed to make you puke from euphoria or depression!