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Some thoughts from Taxpayer's perspective:
Can a common man (taxpayer) sue the US Treasury for lending money to FnF without stating how the loan principal would be paid back?
According to some Senators (particularly Mr. Corker), he claimed in the year 2013 that FnF were worthless in 2008, when US Treasury bailed them out with Conservatorship agreement.
We should ask him (and others with similar opinion) to explain why US Treasury agreed to accept warrants of a worthless entity in 2008. Instead, they (UST) should have spelled out the repayment mechanism for its principal amounts (taxpayer's funds) from FnF.
The third amendment does not try to recover money (principal amount) of the loaned funds, instead depends on the 'profits of FnF' for dividends. This is not in the best interest of the US taxpayers. For Taxpayers, it is clear that US Treasury entered into an agreement without protecting the interest of the US taxpayers and therefore the agreement that lent the money should be voided ab-initio or modified with an amendment to the terms RETROACTIVELY and consider anything received so far as return of principal.
Also, this type of agreement (sweeping 100% of the profits from any private shareholder owned corporation) is nothing but a theft of the personal or private property and that should be stopped. Spelling out a repayment schedule of the principal should have been the focus of the UST than the unpredictable dividends from FnF. The victims (FnF shareholders) should be compensated for this theft.
I am willing to be part of the suit as a US Taxpayer as I am concerned about recovering the principal amount lent to FnF 6 years ago.
Thoughts?
I am holding several preferreds (both Fannie and Freddie) and few commons of both.
My plan is to wait for restoration of Divys and then for every div we get, keep buying commons with those funds. Maybe we will miss some uptrend, but it will be less risker when Jrs start getting their divys.
Good to see nice run-up in the last 2 days.
I feel that due to higher dividend rate, the FNMAS could go up to 27-29 range.
Regarding the exercise of warrants, I do have a document (from authentic source, I believe FHFA or Treasury) which states that these will not be exercised. I will post it online once I find it. I changed my laptops and am unable to find some docs.
Waiting for your posts...Crawford2012...
I was referring to not having any meaningful comments based on the discussion, not the 'noise'.
ED mentioned about 'post conservatorship' but did not mention whether FnF would exit conservatorship or when.
Why is everyone so quiet? After such a big up and down movement, what do you all think?
All preferreds are up, but commons are down today. Did anyone say anything about it in today's meeting at DC?
Can someone post link (or steps to navigate) to the google group?
Thank you.
+ve on Stocks
Yes, I do have over 800K in FnF, but it's all in Roth and can't be touched or used. So, seeking advice on joining the group. Not planning to hire own attorney.
I am more concerned about the adverse effects of the lawsuits on earning my daily wages. I an a freelancer but occasionally do work as a contractor on Federal government projects through large corporations.
Also, I bought all of these post conservatorship. So, I have gains in my account (not lost anything except divys and redemption/face value. I guess, I can only claim the difference - what I paid and the RV plus any lost divys.
When lawyer asked me 'how much have you lost', I couldn't give him a specific number. All losses are notional and not real.
Excellent finding on the Section 2(1)/2(a).
I am planning to join the AEI class action lawsuit. I just have to accept the contract (no fees owed to the law firm).
Does joining this lawsuit directly would have any adverse impact on future job opportunities or contract opportunities with Federal Government? Any other negatives of joining?
Also read the recently published loophole on how FnF can pay before quarter end so that it gets applied to principal. With that context, the conservator failed in performing his fiduciary duties as a Conservator and offered close to $60B in interest payments without reducing principal.
Thanks in advance.
Holding long and strong, close to 4M in RV, mostly in 50FV issues of both FnF.
Anyone wants to join in a lawsuit?
Thinking of suing for RV on the similar lines as one with today's news.
If 10-15 of us agree, the costs will be shared, and total claim amount will increase.
Anyone interested?
Thanks in advance.
Also if government think the shares are worthless, someone should ask Ed D to cancel the worthless 79.9% shares owned by Treasury.
Taint,
Go to google and search the WSJ article heading and click on the first link. You should be able to read the article.
Shhh..do not spread this workaound.
By agreeing to 100% of dividend payments without reducing the balance on Sr. Preferred, the Conservator has violated the goal of conversatorship.
What is a Conservator:
A Conservator is the person or entity appointed to oversee the affairs of a Company for the purpose of bringing the Company back to financial health.
What are the goals of this conservatorship?
The purpose of appointing the Conservator is to preserve and conserve the Company’s assets and property and to put the Company in a sound and solvent condition.
Payment of excessive interest does not put the company in a sound and solvent condition.
I have been invested in FnF for the past 3+ years and somewhere I have read that the Govt does not intend to exercise the warrants. Not sure where I read it, but I remember it very well. I do have that file, just unable to find the source right now.
The govement holds the warrants that grant them up to 79.9% commons. They currently hold NOTHING.
So, they cannot vote. First they have to excercise the warrants. Then they get Common shares. Common shareholder cannot vote for matters affecting Preferred shareholders's rights. The 2/3rd is for the respective class of preferreds.
CatBird,
Can you please let me know if NBG-PA still pays dividends? What are the div rates? How are they taxed in US? Thanks in advance.
Joe Stock,
I invested in FnF since 2009/2010 and have been adding until 2011. Currently hold total RV of 5 to 6 Mil. With recent increase in value, this now represents major portion (almost 80%) of my investment.
As these have appreciated in value, I am also thinking that I should sell part of these and just keep 2.5 to 3 Mil of FnF RV and invest (diversify) remaining funds in other preferreds yielding between 5-8% and some in commons stocks that are steady and either generate good div yield/appreciation or provide good covered call writing options.
Maybe the total income would be less than what I would get at 100% of RV once FnF Jr Pref div is restored, but certainly can avoid Aug 17th type situation due to political risk and still be a winner.
Another factor for my personal situation is that I converted all these FnF holdings from 401K account to Roth IRA in 2012. So, I owe 100K taxes on conversion this year. Don't want to pay the taxes now with personal funds and then repent later if they go down to zero.
Yes you can. Open a new account with zero dollar investment first and call that brokerage to guide you thru the process of transferring all shares from old to new account.
Ideally open same type of account. For example, Roth IRA to Roth IRA.
Page 11: DTA
Accordingly, although we have not completed the
analysis, we believe that, after considering all relevant factors, we may release the valuation allowance as early as the first quarter of 2013.
$58 Billions are coming soon...
I agree with you. It should be divy for the current quarter. So, price differential of few pennies is justified.
Thank you for bringing out the difference. This itself is a huge difference between Freddie and Fannie Preferreds. Freddie Preffereds should have premium pricing as holders are entitled to all past undeclard divys.
Update:
Taint, you are correct. The diff should be only for current qtr.
I love the discussion on the board. I read each and every message, but don't generally post.
Holding both Fannie and Freddie preferreds (4-5M RV) and commons.
For calculation of the Net Cost, has anyone considered the approx. 35 B used/to be used by the 2 months of payroll tax (Social Security) relief ?
I had FnF preferreds holding in my 401K. In January this year, I converted all of that into Roth. Did not sell anything. The total taxable value is around 230K. Did it as 2 step process 401k to Rollover IRA and on same day, Rollover IRA to Roth IRA. Did it online thru Fidelity. You can setup these accounts upfront and then transfer online.
I have to pay tax on conversion value (on date of conversion) or if they go down in value compared to my conversion date total value, I can re-do (recharactarize it back as IRA. I can decide that until April 15th next year.
Also, if I understand right, I can take out my investment 230K after 5 years without paying tax or penalty (I would have paid tax due to conversion to Roth). Thereafter if I get divys, they fall in the same account and go as tax free earnings. On its withdrawal there is no tax, the only catch is I will have to wait until 59 to take withdrawals, which is ok for me.
Hope this helps.
What do you think would be the potential impact on FnF Jr pref and commons stock price if Obama wins and replaces ED as stated in the FT article?
Thanks in advance.
Thanks for sharing the PDF document. Glad to see that it still states (though it is true) that these are shareholder owned companies.