something me and you share , fun.
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yeah , A/S is 5 bils shares ....you should be very careful !
Hope I can collect all cheap shares before Judges decisions! Good work ....thank you ! If some one or Institutions brings it down to 1.50$ or 1$ ....my lottery shares look more beautiful! lol
FNMA active board #court case#http://www.valuewalk.com/2015/11/fannie-mae-civil-rights-advocates-urge-obama-to-release/
collecting cheap FnF shares! Iol
Leading Civil Rights Advocates Urge Obama To “Recap And Release,” While Stegman Stands Firm by Amanda Maher
It’s becoming increasingly clear that housing finance reform isn’t going to happen any time soon. With the U.S. Treasury sweeping all of the Fannie Mae and Freddie Mac profits, investors are growing inpatient. With FHFA making piecemeal, and often unilateral, changes, housing advocates are growing inpatient.
Last week, Obama advisor Michael Stegman told a group of mortgage bankers that the administration plans to keep GSEs under government conservatorship instead of releasing and recapitalizing as investors and housing advocates alike have urged.
“The Obama administration wants to transition to a better system, one that provides broad access to housing supported by a sound and robust mortgage market, without exposing taxpayers to another rescue,” wrote Antonio Wise, advisor to Treasury Secretary Jacob Lew, at the time.
In response, the National Community Reinvestment Coalition (NCRC), National Association for the Advancement of Colored People (NAACP) and the League of United Latin American Citizens (LULAC) wrote a letter to President Obama on Thursday expressing their deep concern for the lack of reform to date, and urging, instead, for the “recap and release” of Fannie Mae and Freddie Mac.
http://www.valuewalk.com/2015/11/fannie-mae-civil-rights-advocates-urge-obama-to-release/
Today, attorneys presented oral arguments in the appeal of U.S. District Judge Royce Lamberth’s September 2014 dismissal of investors’ claims that the Sweep violated the Housing and Economic Recovery Act. Lamberth threw out the suit on the grounds that HERA gave the government wide discretion in its role as conservator of Fannie and Freddie. What has become increasingly evident is the absurdity of thinking that the statute’s authority was so broad as to allow the government to do the opposite of what the law was enacted to accomplish – which is what the government seems to be arguing.
“We are confident that the government’s attempt to nationalize and loot the profits of Fannie Mae and Freddie Mac will not withstand judicial scrutiny,” said David H. Thompson, managing partner at Cooper & Kirk, who is among the attorneys who presented oral arguments today before a three-judge panel.
Earlier this week, documents unsealed in another shareholder suit over the Sweep exposed the fact that a central rationale put forward by the Government – that the Sweep was imperative to protect taxpayers from additional losses – is pure fiction. In fact, those documents show that government officials were well aware of the fact that Fannie and Freddie were about to return to robust profitability on the eve of the Sweep.
“The documents unsealed this week in the Court of Federal Claims contradict government testimony that the Third Amendment Sweep of 100% of the profits of the GSEs was a necessary response to the companies imminent ‘death spiral,’” said Investors Unite Executive Director Tim Pagliara.“The Government’s breath taking level of greed is a clear violation of law and an unconstitutional taking of private property.”http://investorsunite.org/governments-case-sweep-shaky-ground-beyond-crumbling-wall-secrecy/
Let start from begin : "How Fannie met Freddie: The True Hollywood Story of Fannie Mae and Freddie Mac.:"
The birth of Fannie Mae came at a time that was riddled with bank failures. During the 1930s bank after bank failed on bad loans and foreclosures skyrocketed. As documented by painful stories of people losing their homes during the Great Depression, this was the climate that bred Fannie Mae. The essence of Fannie Mae was to provide a larger incentive for homeownership. Keep in mind that in 1940 the homeownership rate was 44 percent. Measure that up with the peak of 69 percent in 2004.
As it turned out, the idea of a longer term fixed mortgage took hold and Fannie Mae served its purpose of providing liquidity for the next 30 long years. In fact, Fannie Mae held monopoly status on the secondary mortgage market all the way up until 1968. In 1968 Fannie Mae was converted into a private corporation. This is where I think much confusion lies in whether these are government agencies or private enterprises. Well, for 30 long years Fannie Mae was a government agency.
Fannie Mae’s primary method of making money is by charging a guarantee fee on loans it securitizes into MBS bonds. Investors assume that Fannie Mae takes on the risk and they get to keep this fee. The underlying assumption, at least from investors in these bonds, is that the principal and interest on the mortgages will be paid regardless of whether the actual homeowner pays.
In 1970 to expand the secondary mortgage market and end Fannie Mae’s monopoly on the secondary mortgage market, Congress chartered Freddie Mac as a private corporation to provide competition. Freddie Mac’s primary revenue stream and business model is nearly identical to that of Fannie Mae. Both GSE’s are only allowed to purchase conforming loans which is a reason why the current legislation battle and lifting of caps has been such a big issue over the past few years. During the boom, that is where other institutions jumped in with non-conforming loans such as Pay Option ARMs and jumbo loans that did not find a market and created a speculative fever. In fact, during the past decade Fannie Mae and Freddie Mac started losing a significant share of the mortgage market.
http://www.doctorhousingbubble.com/how-fannie-met-freddie-the-true-hollywood-story-of-fannie-mae-and-freddie-mac/
It is true the GSEs, as a result of their indispensable role in buying up and packaging loans for resale to create liquidity, were major players in the mortgage market. However, this actually turned out to be a good thing. On a blended basis, serious delinquencies in the market overall were just over six percent of the country’s mortgages at the time. In essence, it was the banks that underwrote mortgages they never should have been offered in the first place. That is why they were fined by the Justice Department.
In his commentary of the movie, Wallison explains how misguided actions by Congress and Administrations beginning in the 1990s muddled the missions of Fannie and Freddie. On this, there is some common ground in our perspectives. As I warned in my 2001 paper, “Housing in the New Millennium: A Home Without Equity Is Just a Rental with Debt,” and also pointed out in a recent paper, the savings and loans crisis of the late 1980s prompted the creation of a split-regulatory framework and dual mission for the GSEs. The situation was compounded when international regulatory changes brought more capital and more leveraged risk into the mortgage marketplace through changes in treatment of private label mortgage-backed securities. By 2007, a murky mission for the GSEs and their exposure to private-market arbitrage did indeed put them on unsteady footing. However, the conclusion one should draw from this chain of events is that Fannie and Freddie reflected a breakdown in the system but did not cause the breakdown. This, by the way, was the conclusion of the National Commission on Causes of Financial and Economic Crisis, on which Wallison served. “We conclude that these two entities contributed to the crisis, but were not a primary cause. Importantly, GSE mortgage securities essentially maintained their value throughout the crisis and did not contribute to the significant financial firm losses that were central to the financial crisis,” the majority of bipartisan commissioners wrote. Granted, Wallison dissented so he deserves some credit for consistency. However, subsequent developments raise new concerns that should cause anyone to rethink what to do going forward.
The Big Short and the Bigger Myth About Fannie and Freddie
http://www.insidesources.com/the-big-short-and-the-bigger-myth-about-fannie-and-freddie/
The two federally chartered but privately owned GSEs, which guarantee 80 percent of American mortgages, were created because Washington wanted to engineer -- what could go wrong? -- more homeownership than market forces would produce. What could go wrong did, and in 2008 the two GSEs floundered. In September 2008, the government rescued them with $187.5 billion and placed them in conservatorship, which is supposed to be temporary and rehabilitative. A conserved entity should be returned to normal business in private ownership.
Fannie and Freddie have recuperated profitably. They also have been nationalized.
The government’s original rescue terms were for Fannie and Freddie to pay a stiff dividend on the bailout funds -- 10 percent, amounting to $4.7 billion per quarter. Then, however, the Treasury Department was told of the GSEs’ strong recoveries. According to documents recently unsealed, on Aug. 9, 2012, Treasury was told that the GSEs’ prospects were for strong profitability, requiring no further government assistance. Eight days later, Treasury negotiated with the GSEs’ conservator, the Federal Housing Finance Agency (FHFA), for an astounding revision (called “the third amendment”) of policy: Instead of the agreed-upon dividend, and already enjoying a right to 80 percent of the GSEs’ profits, the government would get 100 percent forever, far exceeding the size of the original bailout.
So, the government (Treasury) negotiated with itself (FHFA) to achieve a windfall for itself. And the conservator abandoned its duty to safeguard the assets of the entities in conservatorship.
http://www.delawareonline.com/story/opinion/columnists/2016/05/03/misadventures-fannie-and-freddie/83876844/
Fannie and Freddie shares, which had been trading at about $1.50, started trading as high as $3 based on rumors that the documents revealed inconsistencies in government officials’ statements. The hedge funds are asking for the return of as much as $100 billion in profits and an end to the Treasury-imposed profit sweep. In her comments, Sweeney has shown sympathy with their argument that the government can’t hold them indefinitely in a legal limbo in which they have no claims to assets of the company they ostensibly own.
When these cases were filed, many legal observers thought they were a long shot, even frivolous. But from their procedural rulings and comments from the bench, said David Zaring, a professor of legal studies at the Wharton School of Business, both judges have indicated they are at least open to the plaintiffs’ legal theories and willing to hold the government accountable for what it did during the financial crisis.
“I think people’s views have changed,” Carl Tobias, a professor at the University of Richmond Law School, said of the AIG case. Greenberg’s lawyers, he said, “were able to present evidence and persuade the judge that there were some serious issues here. It’s possible the judge could rule in their favor in some way.”https://www.washingtonpost.com/business/we-bailed-you-out-and-now-you-want-what/2015/06/05/95ba1be0-0a27-11e5-95fd-d580f1c5d44e_story.html
The Unconstitutional Takeover of Fannie and Freddie
http://www.redstate.com/tex_whitley/2013/12/05/the-unconstitutional-takeover-of-fannie-and-freddie/
Freddie and Fannie: Unconstitutional
Bailouts of the failing Freddie Mac and Fannie Mae are not only unwarranted and unwise – but the existence of both these quasi-government/private organizations is unconstitutional from the very beginning.
When looking at the constitutionality of government programs, it’s not necessary to be a law student, or an “expert” of any kind. The founding fathers wrote the Constitution in plain English – so that ordinary people would be able to understand the law…that governs the government.
http://tenthamendmentcenter.com/2008/07/15/freddie-and-fannie-unconstitutional/
Plaintiffs allege that prior to the 2008 takeover, the government adjusted the companies’ lending standards and capital restraints to encourage the companies to purchase a greater number of risky subprime securities. While this ultimately led to significant weaknesses in the companies’ portfolios, Plaintiffs contend that the companies nonetheless remained adequately capitalized and financially sound, and did not need the conservatorships. According to Plaintiffs, the government improperly bullied the companies’ boards into acquiescing in the takeover.
Plaintiffs also claim that the government took control of the mortgage companies not because of their financial condition, but in order to pump liquidity into the nation’s mortgage market and to force the companies to hold the nation’s toxic debt. They also claim that the government destroyed shareholder value through stock agreements through which the Treasury Department would receive from each mortgage company: $1 billion in senior preferred stock, preferences for the senior preferred stock, warrants to acquire 79.9% of each company’s common stock for $0.00001 per share, and 100% of the companies’ quarterly profits, starting January 2013.
Plaintiffs contend that the government takeover was, in fact, “beneficial to the economic welfare of the nation.” However, they claim that the government’s public policy goals were not sufficient grounds to divest the companies’ shareholders of their shareholder rights or render their stock worthless. Thus, the suit claims, the takeover was a misappropriation of private property in violation of the Constitution’s due process and takings clauses.
http://blogs.orrick.com/securities-litigation/2013/06/18/fannie-and-freddie-shareholders-to-us-2008-government-takeover-of-mortgage-giants-good-for-the-country-not-so-much-for-us/
Government Hints Fannie/Freddie Would Need Another Bailout If Conditions Deteriorate
Bill Ackman — who may or may not have manipulated some stocks — is confident that the “truth will prevail” as it relates to Fannie and Freddie, and the truth will supposedly show that the government is engaged in an unconstitutional confiscation of money that rightfully belong to shareholders. This stems from the Treasury’s 2012 move to sweep 100% of the companies’ profits. That arrangement replaced the old, some say inefficient, arrangement whereby Fannie and Freddie owed the Treasury a dividend on the government’s preferred shares but didn’t make enough money to cover it so, not wanting to lose out, the Treasury would then take the logical step of loaning the GSEs the money they needed to make the payment.
As the Treasury correctly noted when it changed the rules, this practice was rather circular and probably made very little sense (and that’s coming from the people who issue US government debt who most certainly know something about ridiculous circular funding schemes that make no sense): ....
http://www.zerohedge.com/news/2015-03-19/fanniefreddie-would-need-another-bailout-if-conditions-deteriorate
Finally, the government claims that the shareholders of Fannie and Freddie have assumed the risk that they will be looted. After all, an extensive body of law, much of which comes out of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), takes the highly contentious line that all banks know that they cannot challenge government regulations because they have willingly entered into a highly regulated area. Consequently, they do not have the requisite “investment-backed expectations” that they will be free of government regulation.
But this lawsuit is not a case where the government has acted pursuant to its general powers to regulate thrift institutions. Those cases are worlds apart from the present for two reasons. First, the source of the shareholders’ disaffection here is the purchase agreement of the senior preferred stock, and not any form of general government regulation of banks that have otherwise failed. Second, those cases do not contain the obvious element of self-dealing which pervades the Third Amendment.
Notwithstanding the government’s efforts to sugarcoat the obvious, this deal remains one of the most lopsided and unfair transactions in the annals of United States history—which says a lot about the sad state of public law and finance today.
http://www.hoover.org/research/unconstitutional-bonanza
Taking Stock: Shareholder Lawsuits No Barrier to GSE Dissolution
Ongoing Litigation
The legality of FHFA’s action as conservator is now being challenged in court by stockholders, with almost 20 lawsuits having been filed. Some commentators have expressed doubt as to the merit of many of the lawsuits, many of which simply second-guess FHFA’s initial judgment call about Fannie and Freddie’s financial condition six years after the fact.[4]
Other claims, however, particularly those concerning the “earnings sweep” imposed in 2012 may be tougher to dismiss. Perhaps the leading challenge, filed by Fairholme Capital Management, a hedge fund with a sizable investment in the GSEs, argues that this was not only a breach of FHFA’s fiduciary duty to shareholders but also an unconstitutional taking of private property. The earnings sweep has left the stock of Fannie Mae effectively worthless, Fairholme points out, leaving the GSEs with no way to ever pay down their debt to taxpayers or to end the conservatorship. Shareholders were cut off not only from any say in the management of the corporations but from any possible return on their investment.
The government has defended itself by arguing, among other things, that given the dire straits the GSEs were in when the conservatorship began, shareholders should not have had an expectation of recouping any of their investment. But that hardly justifies a taking of whatever remaining value existed. Moreover, if it were so clear that there was no chance of recovery, then FHFA should have moved the firms into receivership and liquidation rather than a conservatorship for the supposed benefit of the shareholders.[5]
Politically, the shareholders’ property claims are certainly not popular. After all, they (or their predecessors) benefitted enormously over the years from Fannie and Freddie’s government-sponsored status and from the bailout itself. But this is far more than a legal technicality. Protection of property rights is not only a fundamental principle of government but may also be key to establishing a market-based housing finance system. Ignoring property rights, argues University of Chicago law professor Richard Epstein, a consultant for Fairholme, works against efforts to
http://www.heritage.org/research/reports/2014/05/taking-stock-shareholder-lawsuits-no-barrier-to-gse-dissolution
The Government Takeover of Fannie Mae and Freddie Mac:
Upending Capital Markets with Lax Business and Constitutional
Standards
http://econ.as.nyu.edu/docs/IO/32460/Epstein.pdf
The situation is thus win/win, for the lender gets a risk-adjusted rate of
return on its assets, while the borrower gets a larger equity cushion for its position.
By way of simple example, suppose that before the new money is contributed to the
firm, its value is $90, and the value of the liens against the property totals $100. At
that point there is at least a $10 shortfall in the event of immediate liquidation. If
now new money equal to $30 comes into the firm, whose value then moves from
$90 to $140, the existing lienholders are in a better position than before because
there is now the higher probability of recovering their advances with assets worth
$140 and total liens of $130, such that a $10 cushion replaces a $10 shortfall. No
separate cash payment is therefore required whenever the cash contributed
increases the value of the now subordinate liens, or for that matter subordinate
equity positions.
FMCC could send letter to court !
Corker said protect taxpayers but he forgot mils dollars in Tax ? what the BS guy became a congressman , and tell ppl short GSEs stock ....that maybe his real job!http://www.wsj.com/articles/sen-bob-corker-failed-to-properly-disclose-millions-of-dollars-in-income-1450051046
http://www.marketwatch.com/story/sen-bob-corker-says-investors-should-short-fannie-and-freddie-2015-10-07
Corker gave Ackman a good chance to said it "Gov. only own 80% of FnF" .....!
very good ...old News sometime ring all the bells
I can see delist is coming !
Today, Congress approved a $1.1 trillion budget deal that prevents a governmental shutdown and funds federal agencies through next fall. Included in the bill is the Jumpstart GSE Reform Act, co-authored by controversial senator Bob Corker (R-Tenn.).
Key provisions of Jumpstart include granting Congress – not the executive branch – the authority over housing finance reform. Another prevents the Treasury from selling its preferred shares in Fannie Mae and Freddie Mac until at least January 1, 2018.
David Stevens, President of the Mortgage Bankers Association, says relegating housing finance reform to Congress “reinforces the desire by many policymakers, supported by most housing stakeholders, to enact structural GSE reform before Fannie Mae and Freddie Mac can be released from conservatorship.” But as we’ve seen, Congress has shown no real willingness or ability to move reform forward. That means for the foreseeable future, the GSEs will be locked into conservatorship.
At least some progress had been made when the Treasury and the Federal Housing Finance Agency, the GSEs regulator, had more control. Jumpstart hamstrings those efforts by requiring Congressional approval.http://www.valuewalk.com/2015/12/fannie-mae-budget-deal/
On the other hand, the U.S. government owns about 80% of the company, and history has shown that the government will wield that power without concern for the other 20% of shareholders.
Nothing captures this dichotomy better than the actual dividend payments themselves. Since 2012, the two GSEs have paid well over $200 billion in dividends to the Treasury, exceeding the $187 billion needed to bail them out in the first place. And yet, the 100% dividend requirement remains in place.
Several bills have been introduced in Congress over the past few years that could shape the future form of both Fannie and Freddie. Some bills sought to make it illegal for the firms' dividends to be paid to the Treasury. Most of the others, however, called for them to be dismantled altogether, one way or another.
There's no way to predict how the politics will play out, and that's why I view both Freddie and Fannie as speculative bets at best. Yes, both stand to make billions. And, yes, their stock prices today dramatically undervalue their economic potential. However, the political and legal risks are simply too uncertain.
In my view, the most prudent, best option for long-term investors is to simply sit tight and wait for the political and legal drama to settle. When the decision is once again about investing, and not Uncle Sam, then revisit the companies on terms we can more easily predict.http://www.fool.com/investing/general/2015/08/09/2-things-you-must-know-before-investing-in-fannie.aspx
FNMA active broad #10 ...LoL
The South Carolina Republican is planning to propose legislation by the end of the year that would consider the mortgage giants’ debt to be repaid and release them from conservatorship after they build up capital cushions of 5 percent, according to three people familiar with the bill who asked not to be identified because the details aren’t public. The bill would face a high hurdle to getting passed since it probably won’t receive enough support in the House.
The companies may be required to put $1 billion apiece annually in the low-income housing fund, the people said. That’s in an effort to try to win bipartisan support, such as from Keith Ellison, a Minnesota Democrat.
Ellison said in a Twitter post Thursday that he isn’t a current supporter of the Mulvaney bill. Brett Morrow, a spokesman for Ellison, declined to comment for this story.
Fannie Mae and Freddie Mac investors such as hedge fund manager Bill Ackman of Pershing Square Capital Management and Bruce Berkowitz of Fairholme Capital Management are challenging an arrangement in which the Treasury Department takes all of the entities’ profits above a minimum net worth threshold. If the mortgage giants were released under the Mulvaney bill, investors could finally share in the companies’ profits.
The mortgage companies have operated under federal conservatorship since they were seized during the financial crisis in 2008. The payments to Treasury aren’t counted as a repayment for the bailout, but as a return on the U.S. investment, leaving Fannie Mae and Freddie Mac with no way out of government control.http://www.bloomberg.com/news/articles/2015-11-05/hedge-funds-get-boost-on-mulvaney-bill-to-free-fannie-freddie
Congressional leaders reached an agreement on a final spending bill late Wednesday that includes language effectively assuring Fannie Mae and Freddie Mac will not be released from government conservatorship for two years absent reforms by Congress.
The omnibus bill, which is expected to be voted on later this week and will fund the government through the next fiscal year that ends in September 2016, includes a provision that would prevent the administration from selling off the government’s stake in Fannie and Freddie for two years without Congressional approval. That would ensure that the government-sponsored enterprises (GSEs) will remain in conservatorship pending Congressional reforms to the housing-finance system.
That bill was first introduced as the Jumpstart GSE Reform Act by Sen. Bob Corker, R-Tenn. The bill originally contained language that prevented Congress from using the GSE’s guarantee fees, or g-fees, for purposes unrelated to insuring against mortgage default risk, but that provision was left out of the omnibus bill, according to reports.
The mortgage and banking industry has been divided on the issue of recap and release. The Mortgage Bankers Association (MBA) strongly supported both provisions in the bill, and opposes recap and release without substantive reforms.
"This provision protects the GSEs from potential immediate disruption that could result from a new administration in 2017, regardless of which party wins the White House," MBA President David Stevens said in a news release.
"It also reinforces the desire by many policymakers, supported by most housing stakeholders, to enact structural GSE reform before Fannie Mae and Freddie Mac can be released from conservatorship."
Stevens also said that he was disappointed that the language preventing g-fee raids was left out of the bill.
"This is a critical issue for potential homeowners and the housing market and one on which we will continue fighting," Stevens said.
The Community Mortgage Lenders of America (CMLA) and the Community Home Lenders Association (CHLA) that represent small and midsize lenders, however, said that Corker’s bill will hamstring efforts to quickly reform the GSEs and release them from government control.
“The name ‘jumpstart’ is confusing because the effect of it is to hamstring the ability of Treasury and [Federal Housing Finance Agency] to continue GSE reforms,” said Scott Olson, CHLA’s executive director. “In terms of the prospects for congressional approval, I think they seem kind of dim right now. It doesn’t make sense to hamstring the regulators’ abilities to take constructive steps to improve access to credit.”
CMLA and CHLA indicated, however, that they were pleased that the omnibus bill doesn’t include language that prevents an amendment to the preferred-stock purchase agreement that would allow for Fannie and Freddie to retain earnings. Currently, those earnings are swept up by the Treasury Department, depleting the GSEs capital reserves.
“There are important constructive steps that we need to take that would be allowed under the language,” Olson said. “One is to amend the sweep agreement to make it more flexible, so they don’t need a draw [on Treasury later on]. Two, the FHFA should develop a recapitalization plan or options and send them to Congress, so at least we have a better sense of what our options are.” http://www.scotsmanguide.com/News/2015/12/Spending-bill-gives-Congress-the-keys-to-GSEs--conservatorship/
The Obama administration invoked executive privilege, attorney-client and deliberative process over these documents and insisted that their release would negatively impact global financial markets. But in finally unsealing some of these materials last week, a federal judge named Margaret Sweeney said the government's sole motivation was avoiding embarrassment.
"Instead of harm to the Nation resulting from disclosure, the only 'harm' presented is the potential for criticism," Sweeney wrote. "The court will not condone the misuse of a protective order as a shield to insulate public officials from criticism in the way they execute their public duties."*
So what's so embarrassing? Mainly, it's a sordid history of the government's seizure of mortgage giants Fannie Mae and Freddie Mac, also known as the government-sponsored enterprises, or GSEs.
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Read more: http://www.rollingstone.com/politics/news/why-is-the-obama-administration-trying-to-keep-11-000-documents-sealed-20160418#ixzz4794zIXNO
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For Immediate Release We are a group of concerned taxpayers, students, families, shareholders and citizens who are dedicated to establishing fairness in America’s housing market. The combination of congressional and US Treasury pandering is poised to undermine homeownership, rip-off taxpayers, and gift billions of dollars to financial institutions. At stake is not only the future of mortgage giants Fannie Mae and Freddie Mac, but the real interests of American taxpayers, homeowners and stakeholders. For the past five years, the US Treasury has imposed uniquely onerous terms on Fannie Mae and Freddie Mac in an effort to hollow them out. Now, the Senate Bill 563 calls for Fannie and Freddie's demise; only to replace them with an ill defined, untested insurance scheme, which places the large banks in control – leaving homeowners at risk and taxpayers on the hook for future catastrophic losses. Before the advent of Fannie Mae in 1937, home loans were harder to get and more vulnerable to busts. Fannie Mae, and later Freddie Mac, made the home loan market more resilient by pooling risk and attracting a wide range of investors. They provided what banks could not: continuous access to affordable, 30 year fixed rate loans with no prepayment penalty. For almost five decades, they helped establish a culture of middle-class home ownership, which is regarded as a bedrock of American values. In other words, in the absence of Fannie Mae and Freddie Mac, the mortgage market would invariably be smaller, less liquid, and more volatile. (see this video for general stats, and this video for multifamily stats) Those who seek to end Fannie and Freddie insist that the GSEs were the primary villains of the financial crisis. They argue that the government’s catastrophic guarantee is misplaced, and that our housing market would be much safer if placed solely in the hands of the big banks. Each of these contentions is mendacious. Fannie and Freddie are commonly portrayed as the villains that perpetrated the 2008 financial crisis, when in reality they were the playing field. With the big banks in the skill positions, mortgage lenders on the line and politicians coaching from the sidelines, the real villains were the absence of credible rules and umpires to enforce them. The big banks and mortgage lenders didn’t have any skin in the game nor were they called out for illegal motion; they simply passed the sub-standard loans down the field. Eventually, these bad loans piled up as widespread defaults and catastrophic losses for Freddie and Fannie. Rather than blame each other for devastating record of losses, the key players and coaches direct their fingers down at the playing field demanding a new venue. As structural support to our $15 trillion home loan market, a taxpayer backstop has proven to be critical. Absent this taxpayer promise, to step in during times of extreme crisis, untold trillions of dollars would never come to the housing market, mortgage rates would be far higher, our economy crippled and housing prices far lower. The Senate Bill 563 proposes that we transfer the taxpayer backstop from Fannie and Freddie to the big banks. Once the plug is pulled on Fannie and Freddie, the valuable American mortgage market will be the private property of a few influential banks. The next time we have a housing crisis, the taxpayers will have no choice but to directly bail these big banks out. Under the Senate Bill 563, the big banks will do very well, even if homeowners and taxpayers don’t. Big banks are not particularly well suited to protect the interest of taxpayers or homeowners. That is not their business. It is to maximize opportunities and to score profits. Those who contend that the big banks will suddenly become good stewards of our housing market ignore the fact that they have already settled billions in claims for defrauding Fannie and Freddie. Before handing over the nation’s house keys to the big banks, a brief review of the London Whale losses, the interest rate swap scandals and LIBOR manipulation scandal should give everyone pause. By placing Fannie and Freddie into Conservatorship, the US Treasury has largely done the big bank’s bidding. Fannie and Freddie were charged double the rate big banks paid for borrowing taxpayer funds. When the big banks could not unload their toxic loans quickly enough, the Treasury prodded Fannie and Freddie to purchase these junk assets. Under the creative fallacy that real estate prices were never going to recover, the US Treasury forced a write down of Fannie and Freddie assets, doubling their total taxpayer debt to $188 Billion. As the financial tsunami retreated, the big banks were encouraged to pay back their debts to the taxpayers, hire lobbyists, support political candidates, and generally get on with business. Not so Fannie Mae and Freddie Mac. These two entities are expressly prohibited by a US Treasury decree from repaying any of their debts or participating in any form of political lobbying or fundraising. The US Treasury has already collected $146 Billion from Fannie and Freddie and, by the first quarter of 2014, if not earlier, Fannie and Freddie are poised to return every penny they ever borrowed from fellow taxpayers. Yet, they remain uniquely trapped in the US Treasury's debtor's prison. Profitable companies, such as Fannie and Freddie, are not typically hollowed out. Thanks to a revival of real estate prices and improved underwriting fees, Fannie and Freddie’s net income is expected to reach a whopping $110B this year, a record, which to put in perspective, is greater than the expected combined earnings of both Exxon and Apple. Yet, nothing will go to Fannie and Freddie shareholders, or build up Fannie and Freddie's capital base. Instead, based on the clandestine, August 2012, Treasury decree, all earnings are now funneled directly to Treasury’s general fund. In stripping all cash out of Fannie and Freddie, taxpayers are being ripped off. When Fannie and Freddie were placed into conservatorship, the US treasury granted itself warrants for 79.9% of both Fannie and Freddie's common shares. These warrants represent payment to the taxpayer for backstopping Fannie and Freddie. Assuming that Fannie and Freddie are restored, rebuilt and return to their 2007 market valuation of $150 Billion, taxpayers would have a $120 Billion asset. Yet, thanks to the Treasury and the Senate Bill 563, US taxpayers lose all this value. The big banks get Fannie and Freddie’s franchise and invaluable government backstop, compliments of the American homeowners and taxpayers, absolutely free. Should the big banks want a piece of a reformed and rebuilt Fannie and Freddie, let them buy it from the taxpayers at a fair market price, not be gifted to them on the cheap through Congressional lobbying and influence peddling at the US Treasury. Rather than destroying Fannie Mae and Freddie Mac for the selfish interests of the few, they should be restored for the broad benefit of the great many. There are already a number of solid strategies developed by the GSEs. Other steps to achieving such basic fairness are straightforward. Designate all past and future payments from Fannie and Freddie to the US Treasury as repayment of debt to the American taxpayers; rebuild Fannie and Freddie's capital base by releasing them from conservatorship to allow them to accumulate private capital, enshrine responsible lending standards in their ......https://www.buildquorum.com/act/Restore-Fannie-Mae-Restore-Fairness-_A2
Fannie Mae FNMA.OB has reached a $170 million settlement of a lawsuit accusing it of misleading shareholders about its finances, risk management and mortgage exposure before it was seized by the U.S. government during the 2008 financial crisis.
The settlement, which requires court approval, was disclosed in a Friday filing with the U.S. District Court in Manhattan.
It resolves shareholder allegations that Fannie Mae defrauded shareholders and inflated its stock by issuing false and misleading statements about its internal controls, capitalization, accounting, and exposure to subprime and low-documentation "Alt-A" mortgages.
The settlement allocates $123.8 million to common stockholders and $46.2 million to preferred stockholders between Nov. 8, 2006 and Sept. 5, 2008.
Fannie Mae's market value peaked during that period at more than $60 billion. It is now $2.71 billion.
"We are pleased to put this matter behind us," Joseph Grassi, Fannie Mae's interim general counsel, said in a statement. "This is another sign of progress as Fannie Mae continues our focus on serving the market and helping lenders make mortgage credit available to qualified borrowers."
The government seized Fannie Mae and the smaller Freddie Mac FMCC.OB on Sept. 7, 2008, and put them into a conservatorship under the Federal Housing Finance Agency, where they remain.
Fannie Mae and Freddie Mac together drew about $187.5 billion of bailout funds, but have returned roughly $218.7 billion to taxpayers in the form of dividends.
The lead plaintiffs suing Fannie Mae are the Massachusetts Pension Reserves Investment Management Board, the State-Boston Retirement Board and the Tennessee Consolidated Retirement System, and are seeking class-action status.
They said the settlement averts potential "numerous and substantial risks" of continuing the lawsuit after similar litigation against Freddie Mac was dismissed last year.
"We're extremely pleased with the results, particularly in light of the dismissal of a similar lawsuit against Fannie Mae's sibling company, Freddie Mac," Daniel Greene, the chairman of State-Boston, said in a statement.
The law firms Labaton Sucharow and Berman DeValerio, which represent common stockholders, and Kaplan Fox & Kilsheimer, which represents preferred stockholders, plan to seek fees of as much as 20 percent of the settlement fund, court papers show.
A separate lawsuit over Fannie Mae's disclosures was brought in 2011 by the U.S. Securities and Exchange Commission against former Chief Executive Officer Daniel Mudd and former Chief Risk Officer Enrico Dallavecchia, and remains pending.
The SEC filed a similar lawsuit against former Freddie Mac officials, including onetime Chief Executive Officer Richard Syron.
The case is In re: Fannie Mae 2008 Securities Litigation, U.S. District Court, Southern District of New York, No. 08-07831.
(Reporting by Jonathan Stempel in New York; Editing by Chris Reese and Alan Crosby)http://www.reuters.com/article/us-fanniemae-settlement-idUSKCN0ID2EQ20141024
A Senate panel on Thursday approved legislation to wind down Fannie Mae and Freddie Mac and redesign the U.S. mortgage finance system, but sparse support among Democrats means the measure is unlikely to make it into law.
The Senate Banking Committee approved the bill by a 13-9 vote. Senate aides have said Senate Majority Leader Harry Reid was unlikely to bring the measure up on the Senate floor unless it received wide support among his fellow Democrats.
The vote is a major setback for the Obama administration, which helped craft the legislation and worked to build broad support for it, and it likely marks the final legislative action on housing finance reform this year.
“This bill represents our effort to draft the final chapter of financial reform by addressing the most significant unresolved issue from the financial crisis - the housing finance system,” said Democratic Committee Chairman Tim Johnson.
The bill would replace government-run Fannie Mae and Freddie Mac with a new industry-financed agency that would offer a government guarantee on mortgage bonds, but one that would only kick in after private interests shouldered big losses.
Fannie Mae and Freddie Mac, which buy mortgages from lenders and repackage them into securities they sell to investors with a guarantee, were seized by the government in 2008 as loan losses threatened their solvency. They were propped up with $187.5 billion in taxpayer aid, but have now paid more in dividends to the government than they received in support.http://www.huffingtonpost.com/2014/05/15/senate-housing-bill_n_5331128.html
The government sweep of profits from Fannie Mae and Freddie Mac was defended by the top Treasury Department housing official, who called again for Congress to replace the U.S.-owned mortgage-finance giants.
Michael Stegman, a senior adviser at Treasury, used his speech Thursday at a Goldman Sachs housing-finance conference in New York to respond to shareholders who have sued to stop the sweep and called for the companies to be allowed to build capital and be freed from U.S. conservatorship.
“Simply returning these entities to the way they were before is not practical nor is it a realistic consideration,” Stegman said.
Concerns about whether Fannie Mae and Freddie Mac may need more taxpayer support have mounted as their profits and capital cushions have shrunk in recent quarters. Stegman said taxpayers would face costs either by allowing them to recapitialize or with new draws from the Treasury. The companies, which have been under U.S. control since they were seized in 2008, got $187.5 billion in bailout funds before they became profitable again.
The financial arrangement that allows the companies to draw on Treasury funds if they require capital is “necessary to protect financial stability and to ensure the continued flow of mortgage credit,” Stegman said.
http://www.bloomberg.com/news/articles/2015-03-05/fannie-freddie-profit-sweep-defended-as-treasury-seeks-wind-down
"Housing finance market conditions are far from what could reasonably be considered satisfactory or normal," the FHFA said in a report released Tuesday outlining its priorities. The report said the agency expects Fannie and Freddie to assess "whether there are additional opportunities to reach underserved creditworthy borrowers."
Some policy makers have faulted ambiguous provisions around when banks must repurchase defaulted mortgages for creating credit standards that are unnecessarily restrictive. Fannie and Freddie, at the FHFA's direction, on Monday unveiled steps to give lenders a greater shield against so-called "put-backs."
Rather than contract their roles in the market, Mr. Watt will give the companies a different mandate to reduce risks shouldered by taxpayers. The changes suggest Mr. Watt may be more focused on preserving Fannie and Freddie as the backbone of the nation's mortgage market until Congress tells him to do otherwise.
Mr. Watt said the companies would refocus more narrowly an initiative started by Mr. DeMarco to create a common platform for mortgage securitization. Last year, the FHFA established a new company, jointly owned by Fannie and Freddie, to set up that platform. "Since any stumbles along the way could have ripple effects...there's a lot at stake in getting this right," Mr. Watt said on Tuesday.
http://ih.advfn.com/p.php?pid=nmona&article=62183291
The Return of Private Capital
http://www.fanniemae.com/resources/file/research/datanotes/pdf/housing-insights-101414.pdf
Fannie and Freddie Plaintiffs Eye FDIC Share Sales
"We have only recently come to understand ourselves that the FDIC in 2011 sold a very large stake of stock in the GSEs," Chuck Cooper, an attorney representing Fairholme Funds in its case against the U.S. government, told me Wednesday. Cooper said the sales, in light of circumstances surrounding them, raise "gravely important issues."
http://www.thestreet.com/story/12460420/1/fannie-and-freddie-plaintiffs-eye-fdic-share-sales.html
Obama Adviser Set to Dismiss Speculation of GSE Share Sale
http://www.bloomberg.com/news/articles/2015-10-16/obama-adviser-set-to-dismiss-rumors-of-fannie-freddie-share-sale
US Home Prices Rise at Solid Pace, Even With Flat Sales
http://www.nytimes.com/aponline/2016/04/26/us/politics/ap-us-home-prices.html?_r=0
To Recap Fannie Mae & Freddie Mac & End Conservatorship
http://www.valuewalk.com/2016/04/fannie-mae-freddie-mac-conservatorship/
yeah Power Hours ! buy before markets Close and wait!