Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Hey Cub your numbers aren't accurate. There I said it just because somebody was going to even though your post was filled with reminders that they are strictly for illustrative purposes.
Go FnF!
And thanks. it's an informative post.
Sometimes I can not control my own fannie. I certainly can not control anybody elses.
Go FnF!
Through all of your different names and faces you have been posting it for years Nitwit.
Go FnF!
Oh, Nitwit is the only other name I remember. I am not calling you a nitwit. I see how it could appear that way if it is not you.
I guess if he does speak about administrative reform it will be like an E.F. Hutton comercial.
Go FnF!
Yes. Lost in my rambling was my point that Otting is being allowed to continue speaking where as munchkin, before, was not. At least that is how it appears to me.
Go FnF!
Yes it is cryptic/suspicious/vague/etc. Think about this. When the munchkin publicly slipped up he quickly walked back his statements. I think he was letting the cat out of the bag too early. Now Otting seems to have license to make public statements concerning administrative action. Nobody is pressuring him to walk back any of his public statements. Mnuchin jumped the gun. Otting is on time.
I hope I am being clear. In my opinion the behind the scenes negotiations are now complete and things will move fast. What things? Duh I don't know nuthin. Neither does anybody else on this board. I continue reading the tea leaves. The future is unclear but not nearly as murky as at any time in the past. Lots of good ideas and speculation have been expressed and we will not have to wait much longer. Like everybody else, just my opinion.
Look how I ramble on.
Go FnF!
To my recollection Bradford quite frequently publicly states his position at the end of his articles. He does explain exactly why he owns preferred shares. Basicly he states in his articles that he does not have the stomach for common shares. Which is understandable. My belly flops frequently on the FnF roller coaster.
Go FnF!
This is just the beginning of the media spin. Nothing will stop or even slow it down. Trump does what he wants to do right in the face of and in opposition to the media. The administration will have their own spin about saving the 30 mortgage. Lots of attention from the media about Trump helping his hedge fund buddies will entice more retail and raise the share price. This is of course just my opinion. Remember how any media attention (good or bad attention) for Trump was good for him when he campaigned? I think the same will be true for FnF in the near future.
Go FnF!
"It's night and day" "we think the signs are there for anyone to see"
Go FnF!
The video clip of him saying it is never going away! That is irrefutable.
Go FnF!
You should hold. You need to make back the money that you lost for your family. I hope you didn't short again. Arnold seems to be the successful decision maker. Let him handle your affairs. This is kind of fun.
Go FnF!
Priced in? Oh! I better sell. Thanks for letting us all know! So helpful! So sincere!
Go FnF!
I have no doubt that Trump knows the real story after consulting with John Paulson and Mnuchin. He must be working the best deal for him to shine when he campaigns.
Go FnF!
I would want to be in before the weekend. Can you imagine the angst of waiting for Monday?
In a nut shell that is the multi billion dollar question!
Release Or Reform? Douglas Holtz-Eakin
Eakinomics: The Future of the GSEs, Release or Reform?
Recall the housing government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. At their heart was a simple business: buy mortgages from banks and other originators and package them into mortgage-backed securities (MBS); i.e., securities in which investors got their returns from the mortgage payments of the underlying homeowners. This provided the banks value by taking the mortgage off their balance sheet and replacing it with cash that they could deploy to the next lucrative opportunity. It gave the investors value by providing diversification across mortgages, regions, and income groups. One could make a little money doing this. The GSEs made even more money by adding another service: selling the investors a guarantee that they would make up for any underlying missed payments by the homeowners. This is risky, of course, but the GSEs could hold capital against the prospect of any losses and make good on the guarantee.
But here is where things got interesting. Because of their government origins, the GSEs were festooned with special features — presidential appointments to the board, a line of credit at the Treasury, exemption from SEC securities registration requirements, and so forth. This gave the impression that the GSEs were part of the government, an impression that the GSEs were happy to have continue, so that they would have government backing if they ever got in trouble. The GSE business model took full advantage of this by holding very, very little actual capital against the risks they held, and borrowing cheaply (since they seemed to be practically Treasuries). The highly leveraged structure raised their riskiness further.
Then the GSE doubled down on this by holding large portfolios of their own MBS. Notice that if the underlying mortgages went bad, the GSEs got hit twice. First, they would have to come up with the cash to cover the guarantees. Second, they would not get income from their portfolios to cover the costs of the borrowing they did to purchase the MBS. But that would never happen, right?
Of course, the housing bubble broke in the-mid 2000s, defaults were rampant, and the GSEs were taken over by the government — put into conservatorship — in 2008 as the Treasury forked out hundreds of billions of dollars to fill the financial gap generated by the ill-conceived business model. They remain in conservatorship today.
Now, once again, there are rumblings that change is in the wind. Politico reports “Joseph Otting, acting director of the Federal Housing Finance Agency, told employees last week that the administration would not wait on Congress, where attempts to overhaul the housing finance system have repeatedly faltered in the years since Fannie and Freddie were rescued during the financial crisis, according to a recording of his remarks obtained by POLITICO. ‘In the next two to four weeks you’re going to be able to see some communication that comes out of the White House and Treasury that really sets a direction for what the future of housing will be in the U.S. and what the FHFA’s part of that will be,’ Otting said at a Jan. 17 staff meeting.”
Taken at face value, this is puzzling at best and shocking at worst. The administration cannot change the underlying legal structure of the GSEs; only Congress can do so. So any “plan” would be a de facto decision to re-embrace the business model that led to failure in the first place. Not a good idea. Of course, during conservatorship the portfolios have been run down and are no longer the risk they once were. The Federal Housing Finance Authority (FHFA) — the GSEs’ regulator — could ensure that they not reappear in the future. But the GSEs would still require capital to back any guarantee losses and their capital reserves have been run down as well. Either the Treasury thinks that it can inject hundreds of billions of additional capital — at the taxpayers’ expense — or it thinks it will be a promising business venture for Wall Street to do so. Both seem dubious; the former is politically untenable and the latter assumes that the GSEs are not instantly designated as Systemically Important Financial Institutions (SIFIs) by the Financial Stability Oversight Council (FSOC). They would simply have to be, putting the GSEs into a stronger Federal Reserve regulatory regime with substantial additional capital requirements. This should be the road not taken.
The alternative is congressional reforms. The Wall Street Journal reports “Lawmakers from both parties plan to take a fresh crack at getting Fannie Mae and Freddie Mac, two companies that underpin nearly half of U.S. mortgages, out of government control.” “‘All the policy puzzle pieces are out there, what is lacking is the political will to put them together,’ Rep. Patrick McHenry (R., N.C.) said in an interview, adding, ‘Divided government is the best time for us to legislate.’” This is the sensible policy path: decide what the government role in mortgage finance should be and reconfigure the GSEs via Congress to fit into that new schema. If that good policy is now good politics, the moment is right for Congress to move on GSE reform.
https://www.americanactionforum.org/daily-dish/the-future-of-the-gses-release-or-reform/
That Maxine is a cruel taskmaster!
Are there top democrats overseeing the FHFA?
Dems press agency head for White House plan on Fannie, Freddie
By KATY O'DONNELL
01/25/2019 01:01 PM EST
The top Democrats overseeing the Federal Housing Finance Agency called on Acting Director Joseph Otting to explain his recent remarks on the Trump administration’s plans to end government control of Fannie Mae and Freddie Mac.
Otting told FHFA staff on Jan. 17 that the White House would announce a plan within “two to four weeks” to wind down conservatorship of the two companies at the center of the U.S. mortgage market, according to a recording obtained by POLITICO, which reported the remarks on Thursday.
Story Continued Below
House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) and Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) requested “a copy or detailed description of the mission that Treasury and the White House have outlined to which you referred,” in a letter to Otting today, giving him a week to comply.
“To date, we have not seen a comprehensive statement from the White House and Treasury Department under the Trump Administration providing their views on regulation of the housing finance system,” they wrote.
Otting told staff the administration takes the view that the FHFA “director and the secretary of Treasury have tremendous authority and that they would act, I think, independent of legislation if they thought it was the right thing to do.” He also said he would kick things off while Mark Calabria, President Donald Trump’s nominee to assume the director position full time, awaits a Senate hearing and confirmation.
His comments, Waters and Brown wrote, “call into question the independence of the FHFA under your leadership. So, too, does your decision to direct the FHFA to change its position in a case currently pending before the Fifth Circuit Court of Appeals.”
The FHFA this month said it would no longer defend the constitutionality of the agency’s structure in the case, which was brought by shareholders of Fannie and Freddie challenging Treasury’s 2012 decision to sweep all of the companies’ profits into Treasury coffers. At issue is that the FHFA director can only be removed for cause.
“I think whoever’s the president should have the right to determine who should occupy this role,” Otting told staff last week in explaining the about-face. “So it’s really as simple as that, it’s just that technical feature.”
https://www.politico.com/story/2019/01/25/waters-brown-otting-fannie-freddie-1117283
The Honorable Joseph Otting
Comptroller of the Currency
Office of the Comptroller of the Currency
400 7th St. SW
Washington, DC 20219
Dear Comptroller Otting,
As Chair and Ranking Member of the Committees with jurisdiction over the Federal Housing Finance Agency (FHFA), we note that President Trump announced his intention to designate you to serve as Acting Director of FHFA, and that you began your tenure at FHFA on January 7, 2019. The Housing and Economic Recovery Act (HERA) of 2008[1] provides that the President may select one of the FHFA Deputy Directors to designate as FHFA Acting Director. We are concerned that President Trump has chosen not to select an Acting Director using the process Congress outlined in HERA.[2] However, since you have assumed this role, we are writing to seek information about your planned tenure there. In your appearances before the House Financial Services Committee and Senate Banking, Housing, and Urban Affairs Committee, while you have provided your views on bank regulation as Comptroller of the Currency, we have not had an opportunity to explore your views on the housing finance system and the policies you hope to pursue at FHFA.
As you know, Congress has given the FHFA Director responsibility to ensure that Fannie Mae, Freddie Mac, and the Federal Home Loan Banks (FHLBs) carry out their statutory missions and comply with all legal requirements. This includes oversight of the safety and soundness of each entity’s operations and their contributions to a liquid national housing finance market, including for low- and moderate-income households.[3] Each part of this charge is critical to the continued stability of our housing finance system.
The Enterprises’ activities are especially impactful in traditionally underserved parts of the market, including low- and moderate-income households, rural areas, affordable rental housing, and manufactured housing. In the two most recently enacted bills to strengthen oversight of the Enterprises, Congress expressed bipartisan support for the Enterprises’ continued and expanded role in serving underserved markets. To ensure that the Enterprises fulfilled this duty, Congress directed their regulator, FHFA, to monitor and enforce the Enterprises’ activity across each of these market segments.
In addition to these responsibilities, you recently indicated that FHFA may pursue new policies under your leadership. In an interview on January 10, 2019, you stated that there was “a clear mission that’s outlined by the Treasury and the White House, what they want to accomplish” at FHFA and indicated that you would pursue that mission in your new role.[4] It has also been reported that you told FHFA employees that you would soon announce a plan to move Fannie Mae and Freddie Mac out of conservatorship.[5] To date, we have not seen a comprehensive statement from the White House and Treasury Department under the Trump Administration providing their views on regulation of the housing finance system. Additionally, your comments call into question the independence of the FHFA under your leadership. So, too, does your decision to direct the FHFA to change its position in a case currently pending before the Fifth Circuit Court of Appeals.[6]
To facilitate our Committees’ oversight of FHFA and the Enterprises and to ensure that any action taken by the Agency will continue to meet Congress’s direction, we request that you provide our Committees a copy or detailed description of the mission that Treasury and the White House have outlined to which you referred no later than February 1, 2019.
We look forward to hearing more about your goals at the FHFA and what steps you will take to ensure that the Enterprises continue their work to facilitate a liquid national mortgage market and access to affordable rental housing under your leadership.
Sincerely,
MAXINE WATERS
Chairwoman
House Committee on Financial Services
SHERROD BROWN
Ranking Member
Senate Committee on Banking, Housing, and Urban Affairs
On Second Thought…Deep Skepticism at the 5th Circuit About the Net Worth Sweep
January 24, 2019
The government would have us believe the Federal Housing Finance Agency (FHFA) is unconstitutional in its structure but its actions are within the law. But U.S. 5th Circuit judges are wondering anew how it could possibly have been okay for FHFA, as Fannie and Freddie’s conservator, to drain the GSEs of their capital when the law mandates just the opposite.
That overarching question is probably why they agreed to a petition by plaintiffs and defendants for an en banc hearing to reconsider the case. Questions raised at that hearing this week could be good news for shareholders who have been stalwart in arguing that the 2012 Net Worth Sweep of Fannie and Freddie’s revenues was illegal.
In July 2018, in the case of Collins v. Mnuchin, a 5th Circuit panel ruled that FHFA was essentially too independent since the President had limited authority to remove the director. For very different reasons, shareholders and the government successfully petitioned to make their cases before all of the judges on the 5th Circuit, or en banc.
Shareholders contend that the actions taken by a government agency determined to be illegally constituted are invalid. The government, which just recently abandoned its defense of FHFA’s structure, continues to insist the agency and Treasury officials were well within the law in implementing the Net Worth Sweep, regardless.
In an audio recording, judges homed in on the government’s position that the Net Worth Sweep was necessary to shield taxpayers from having to rescue the GSEs from a financial “death spiral.” While courts in a half dozen other shareholder lawsuits arising from the Sweep have given the government wide latitude in exercising its authority as conservator under the Housing and Economic Recovery Act of 2008 (HERA), the 5th Circuit’s Judge Edith Jones, in particular, revealed refreshing skepticism.
A veteran of banking insolvency proceedings going back 30 years, Jones noted that HERA matches existing laws on conservatorships almost word for word. She said she could think of no case “…where a conservator effectively took all the net capital out of one of the lending institutions it was reporting to conserve, and gave it to the government.”
Another judge asked a government attorney, “But how does siphoning the companies’ net worth quarter after quarter in perpetuity, achieve the statutory command of putting them “in a sound and solvent’ condition?” For this judge “soundness is soundness.”
To be sure, it is ill-advised to predict how 16 judges will rule in the coming months on whether or not FHFA’s unconstitutional structure negates the Sweep. But Jones and other judges asked thoughtful questions that go to the legality of actions the FHFA took rather than the constitutionality of restraints on the president’s power to fire FHFA’s director. That is important. In addition, the 5th Circuit judges now have a more complete understanding of how the Sweep was designed and implemented since other federal courts rejected the government’s claims of executive privilege and forced once-concealed documents to be made public. These documents are laden with evasion and dishonesty.
Now that there is general agreement the FHFA needs to be structured so it's more fully accountable to the elected branches of government, let’s hope the 5th Circuit will also make it more accountable for its actions that voided the rights of shareholders. The Sweep made little sense in 2012 and has been exposed many times since as a blatant case of unelected bureaucrats doing what they wanted. That is a bigger affront to the rule of law.
Investor Unite email
Not too risky for them. I would like to see some positive news that makes them pay. Then they would short from $3.50 or wherever we pop to.
Go FnF!
I do feel better, much better now that we are making real progress. I still have a while to hold my fannie.
Go FnF!
MMs and their collaborators will not stop. When we uplist it ends. Until then price doesn't matter. $2.00 or $20.00 will be shorted by the crooks. If you are long none of it matters as it is short term. If you are flipping you get what you get.
Go FnF!
Please elaborate. J.K.
Go FnF!
Looking forward to a nooner!
Not for me. Years of anticipation came with years of anxiety and hand wringing and repeated disappointment and frustration and anger and heartburn and xanax and ...
The recent progress is much better for my mental and physical health!
Go FnF!
He pledged significant headway on an overhaul within “six to 18 months.”
He referred to Treasury Secretary Steven Mnuchin’s past statements that he wants to wind down the government's control under his tenure — “and I will tell you that is a commitment,” Otting said.
You can not short a stock that is not purchased. Investors simply will not buy it.
If you are trying to say that you would buy some of those new shares please clarify.
Go FnF!
'Within Weeks' - Fannie/Freddie Plan To Exit Conservatorship https://seekingalpha.com/article/4235222?source=ansh $FNMA, $FMCC
Summary
FHFA Director Otting has told employees that the regulator will announce a plan within weeks to take the government-sponsored enterprises out of conservatorship.
The next net worth sweep payment is the end of March.
Fannie Mae usually reports earnings in mid-February.
John Paulson weighed in on the GSEs this past week.
Oral arguments in the Collins case were the best yet.
Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) are two companies that have been giving all of their money to the government since 2008. Their regulator the Federal Housing Finance Agency says it will announce a plan within weeks to take them out of conservatorship. They cannot continue to give all of their money to the government if they are to get out of conservatorship. The PSPA (Preferred Stock Purchase Agreement) will have to be amended. The net worth sweep will have to be paused or changed to permit capital retention. The companies operate with negligible capital. In order to exit conservatorship they will need to meet TBD capital requirements. Last year, FHFA proposed 2.55-3.24% capital requirements which aligned with the plan put together on behalf of Trump insiders John Paulson and Steven Schwarzman.
Investment Thesis: The government remains in complete control of outcome. It has now been two weeks since Otting has been the acting director of FHFA and now the regulator will announce a plan to end the conservatorship. This will now happen before Calabria gets through the nomination process. Fannie and Freddie will be tasked with submitting to FHFA capital restoration plans. The amount of capital to be raised will be determined by a final capital rule that is currently not in place. The premise of the capital rule is to force Fannie and Freddie to retain and hold so much capital that the bailout in 2008 would have not been necessary even with the government's accounting manipulations. That's a tall order to fill. Existing shareholders can choose to own commons or preferred. I own preferred because I am confident in their upside. Common are forecast to have more upside in some scenarios and potential downside in others. I'm not sure if it is legally possible for the government to settle the lawsuits and convert part of the junior preferred to common before exercising the warrants, but then again, I wouldn't have thought that the net worth sweep was legally possible at the time it was introduced in 2012.
Otting Is Off To The Races
By my estimations, Fannie Mae and Freddie Mac earn a combined $15B/annum of normalized earnings. As such, at a 15x multiple (generous), the most amount of money they could raise with these expectations is $225B. The people I talk to say that Fannie and Freddie are over-reserved for future losses as well so earnings going forward will be significantly higher.
The updated Moelis plan raises $167B of new capital for Fannie and Freddie. They're forecasting higher earnings ($20B) at a 10x future pro forma multiple (2022E). They also forecast an increase of guarantee fees. If there is one thing that FHFA conservatorships are good for, it's retroactively justifying higher guarantee fees. These things are all important if you're trying to value common. According to the plan, commons could be worth over $10. If you own preferred, you basically are looking at the possibility to own some common converting at par value at the IPO price.
Some preferred shareholders seem to think that if you sit on the preferred through the conversion and hold on for a few years, the common could then appreciate significantly making you as much as 3x par value in the next 5 years.
John Paulson Weighs In
Trump insider and backer of the Moelis plan got interviewed and talked about Fannie and Freddie around minute 54 of the interview. He talks about how the government has been more than paid back and how equity holders have gotten screwed. He points out that the government has 80% warrant coverage so any gains made by private investors in the common shares are going to be a small fraction (20%) of the gains that the government gets. He says that preferred shareholders have missed all their dividends and doesn't think that they'll ever see them because the shares are non-cumulative.
5th Circuit GSE En Banc Oral Arguments
Oral arguments were held on the collins case. They can be downloaded and listened to in audio form here. This is one of the best oral arguments that I've heard yet. Just getting into en banc is a challenge:
?
A judge on the fifth circuit court with experience from the 1980s S&L crisis wasn't buying the government's story and definition of conservator. The judges seem to define "sound" in the context of safe and sound as "capital" meaning that the enterprises would be directed by FHFA as conservator in ways that would lead them to be adequately capitalized. As such, the net worth sweep which prevents this would fall outside the powers of conservator. Prior CFO of Fannie Mae Tim Howard says this about the claims overall:
?
Tim Howard summarizes his reasoning behind why he thinks the APA claims will win:
These oral arguments are by far the most promising legal event to date. Note that the plaintiffs argue that the case doesn't need to be remanded to lower court. This could get really interesting from a legal point of view but I expect that Otting takes action "within weeks." Generally speaking an en banc ruling would take 60-90 days at the earliest. That said, the way oral arguments transpired should give any investor here a bit more hope in a positive outcome.
Summary and Conclusion
I own 4050 FMCCH, 7562 FMCCI, 8606 FMCCL, 400 FMCCN, 12533 FMCCP, 1210 FMCCS, 4622 FMCCT, 9085 FMCKP, 200 FNMAM, 10454 FNMFN and 5 FNMFO. I think that if I was a better asset allocator I would have a small common position as well, perhaps up to 10%. That said, given my position size and leverage, and the fact that I have difficulty sleeping if I feel weird about my allocations, I currently do not own common. If you are concerned about my recent decreases in share counts, don't be. This is still a 95% portfolio position for me, which by most people's standards makes me a crazy person.
Otting has to juggle the capital rule, figuring out what to do with the PSPA, capital restoration plans and more. He is two weeks into his new job and this isn't his only job.
The next major date is really the next net worth sweep. Will Otting make adjustments to the PSPA before the government takes the net worth sweep or will Otting amend the PSPA to permit the possibility of a capital restoration plan? I think it's reasonable to expect that the PSPA gets amended in the coming weeks in order to pave the way for a capital restoration plan and preventing the net worth sweep in March. The preferreds I expect would trade between 50 and 75 cents on the dollar at that point. Right now they are at a little under 40 cents on the dollar.
I think the biggest move for common would be when the net worth sweep ends if the preferred are not converted to common at that time. Based on John Paulson's commentary, it seems that he only is contemplating post warrant conversions. That's good for common shareholders.
Disclosure: I am/we are long FMCCH, FMCCI, FMCCL, FMCCN, FMCCP, FMCCS, FMCCT, FMCKP, FNMAM, FNMFN, FNMFO.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
After you saw common shareholders get wiped out because of government corruption would feel safe investing in that company knowing it could happen to you at the next economic downturn and the first thing you would hear is your head hitting the floor?
Go FnF!
And what are the extra billions of dollars past the 10% moment collected by treasury for?
Go FnF
ruleoflawguy
JANUARY 23, 2019 AT 6:15 PM
interesting argument. Judge Edith Jones dominated most of the questioning (unmistakeable Texan accent), and she seemed clearly to favor Ps argument. But it is hard to assess how the other 15 judges will react given their relative silence. At one point Judge Willets I believe asked P counsel for precedent of retroactive relief in a constitutional for cause removal case, and P counsel pointed to Bowsher (which was comparable to for cause removal inasmuch as the wrong branch, congress, had the removal power). I thought this was important. treasury counsel did his best to color the APA use of “shall” for invalidating unlawful agency action, seeking to preserve equitable freedom for the court to refrain from revoking NWS. There was no follow up from judges, so hard to tell whether they thought his arguments had merit (I thought they did not).
it is interesting to note that Judge Jones repeatedly suggested that the reason why the other circuits found the way they did on the APA claim was that they let fhfa/treasury control the factual narrative. not so with the collins complaint, which had the benefit of the fairholme discovery. Judge Jones stopped fhfa/treasury counsel when they were speaking as to historical acts which were not in the complaint as support for the NWS. you simply never saw that in the other circuit arguments.
rolg
I like it. If the administration sees the writing on the wall they can get ahead of what is coming and claim that they reformed the twins where Congress failed and before judicial system forces action.
Go FnF!
We follow FnF closely but most folks do not even know about the en banc today. We shall see if news networks pick it up.
Go FnF!
Realtors® to Host Federal Policy Forum on GSEs, Housing Finance Reform
PRESS RELEASE PR Newswire
Jan. 23, 2019, 12:24 PM
WASHINGTON, Jan. 23, 2019/PRNewswire/ -- With federal control of Fannie Mae and Freddie Mac now in its 11th year, and as reports of the Trump administration to overhaul the GSEs have begun to surface, the National Association of Realtors® will host its inaugural Policy Forum, focused on comprehensive Housing Finance Reform Policy, on Thursday, February 7. The Forum, which will be held in Washington's Grand Hyatt Hotel, will include multiple panel discussions covering various aspects and angles of GSE reform. Expected participants include the Honorable Barney Frank, former Chairman of the House Financial Services Committee, the Honorable Jeb Hensarling, former Chairman of the House Financial Services Committee and Andrew Olmem, Deputy Director of the National Economic Council, along with other policymakers with influence in this sphere.
?
The forum's panels will focus on industry efforts to advance housing finance reform, critical lessons learned from the housing crisis and innovative solutions for the future role of the GSEs.
WHAT:
NAR Policy Forum on Housing Finance Reform
WHEN:
February 7, 2019; 9AM – 2PM
WHERE:
Grand Hyatt Hotel, Constitution Ballroom, 1000 H St NW, Washington, D.C.
REGISTER:
Contact Wes Shaw, 202-383-1193, or visit nar.realtor/events/nar-policy-forum
COST:
Free
Lunch and a cocktail hour following conclusion of the forum are all included with registration, which comes at no cost.
This event is open to members of the media. Please e-mail wshaw@realtors.org for more information.
The NAR Policy Forum will bring together hundreds of industry stakeholders, policymakers, academic experts, financial regulators, and more to discuss the challenges and opportunities facing the future of the housing finance system. The National Association of Realtors® have a vested interest in protecting the nation's housing market and continue to examine ways in which reform housing finance reform efforts would be most beneficial for broader credit access, while maintaining adequate consumer protections.
To reserve your spot, register today. Registration will remain open through January 25, 2019.
The National Association of Realtors® is America's largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.
View original content to download multimedia:https://www.prnewswire.com/news-releases/realtors-to-host-federal-policy-forum-on-gses-housing-finance-reform-300782990.html
SOURCE National Association of Realtors
https://markets.businessinsider.com/news/stocks/realtors-to-host-federal-policy-forum-on-gses-housing-finance-reform-1027890622
Waters Urged by GOP Lawmaker to Examine Brexit, Fannie-Freddie
Posted Jan. 23, 2019, 9:10 AM
By Elizabeth Dexheimer
McHenry sends recommendations to Waters for potential hearings
House financial services chair has pledged to work with GOP
The top Republican on the House Financial Services Committee wants the panel’s Democratic chair, Maxine Waters of California, to consider holding hearings on issues including Brexit, overhauling Fannie Mae and Freddie Mac and cybersecurity.
Rep. Patrick McHenry (R-N.C.), the ranking member of the panel, sent a letter to Waters Jan. 22 outlining his recommendations on issues Republicans would like to see the committee consider. Waters has previously pledged to work with GOP lawmakers to find areas of agreement.
Here are...
https://news.bloomberglaw.com/securities-law/waters-urged-by-gop-lawmaker-to-examine-brexit-fannie-freddie-1?utm_source=rss&utm_medium=SLNW&utm_campaign=00000168-7b3b-ddf7-a5ff-ff3f19860000
It held $2.41 for most of the day after that bounce. I put a buy order in 2 hours ago for $2.40. We should hold above that. That is how I keep the price up. It works well. I wish I would had sold my fluff at $2.90 yesterday. I tried to hold out till $3.00. Oops
Go FnF!
Housing Finance:
Prolonged Conservatorships of Fannie Mae and Freddie Mac Prompt Need for Reform
GAO-19-239, Published: Jan 18, 2019. Publicly Released: Jan 18, 2019.
Fast Facts
Fannie Mae and Freddie Mac issue mortgage-backed securities, which let lenders use investor cash for mortgage loans. When people default on the mortgages backing these securities—as many did in the 2007–2009 financial crisis—these issuers can take a hit.
So, in 2008, the federal government took control of Fannie Mae and Freddie Mac—leaving taxpayers on the hook for any potential losses.
This led to several housing finance reform proposals. Of the 14 proposals we reviewed, some lacked clear goals or didn't consider other federal players in the housing finance market—which we think Congress should consider including.
The federal government guaranteed $5 trillion in Fannie Mae and Freddie Mac mortgage-backed securities in 2017
?
View Highlights
Highlights
What GAO Found
Federal support of the housing finance market remains significant even though the market has largely recovered since the 2007–2009 financial crisis. While down from the peak in 2009, in 2017, the federal government directly or indirectly guaranteed about 70 percent of single-family mortgage originations.
The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac)—two government-sponsored enterprises (enterprises) that purchase and securitize mortgages into mortgage-backed securities (MBS)—securitized and guaranteed about 46 percent of mortgage originations in 2017.
In 2017, federal programs, such as those offered by the Federal Housing Administration (FHA), insured about 25 percent of mortgage originations.
Together, the enterprises and the Government National Mortgage Association (Ginnie Mae)—a federally owned corporation that guarantees MBS backed by federally insured mortgages—have issued or guaranteed 95 percent or more of all MBS issued annually since 2008 (see figure).
However, recent market trends pose risks to these entities and the housing finance system. For example, mortgage lending standards have loosened slightly in recent years, which could increase the risk of borrower default—especially in a recession or downturn in the housing market—and losses to federal entities. Nonbanks have increased their presence in mortgage lending and servicing, which involves collecting monthly mortgage payments, among other duties. For instance, the share of nonbank originations of FHA-insured mortgages increased from 56 percent in fiscal year 2010 to 86 percent in 2017. The share of nonbank servicers of mortgages in enterprise MBS also grew from 25 percent in 2014 to 38 percent as of the third quarter of 2018. While nonbank lenders and servicers have helped provide access to mortgage credit, they are not subject to federal safety and soundness regulations.
Single-Family Mortgage-Backed Security Issuance, Federal and Private, 2003–2017, Adjusted for Inflation
?
Note: Fannie Mae and Freddie Mac purchase mortgages and issue and guarantee mortgage-backed securities (MBS). Ginnie Mae guarantees MBS backed by federally-insured mortgages. Private-label MBS do not have a government guarantee.
The Federal Housing Finance Agency (FHFA) has taken actions to lessen some of Fannie Mae and Freddie Mac's risk exposure. For example, under FHFA's direction, the enterprises have reduced the size of their riskier retained mortgage portfolios which hold assets that expose them to considerable interest rate and other risks from a combined $1.6 trillion in 2008 to $484 billion in 2017. Since 2013, the enterprises also have transferred increasing amounts of risk on their guaranteed MBS to private investors and insurers through credit risk transfer programs. However, federal fiscal exposure remains significant. The Department of the Treasury's remaining funding commitment through the senior preferred stock purchase agreements—which provide financial support to the enterprises—leaves taxpayers exposed to risk, especially in the event of adverse market or other conditions and given the recent growth in the enterprises' guarantee business. The value of outstanding MBS on which the enterprises guarantee principal and interest payments to investors grew from about $2.1 trillion in 2003 to about $4.8 trillion in 2017. The long duration of the conservatorships also raises uncertainty among market participants. Several experts and stakeholders GAO interviewed said that they have hesitated to make longer-term strategic plans and goals due to potential housing finance reforms that could markedly affect their industries. The figure below shows 2003–2017 trends in the enterprises' guarantee business and retained mortgage portfolios.
Enterprises' Outstanding Mortgage-Backed Securities and Retained Mortgage Portfolios, 2003–2017
?
Note: Dollar amounts represent unpaid principal balance at year-end. The enterprises hold some of their mortgage-backed securities in their own and each other's retained mortgage portfolios.
GAO reviewed 14 housing finance reform proposals from Congress, agencies, industry groups, and think tanks. The proposals generally fit into four different models: reconstituted enterprises, a multiple guarantor system with an explicit federal guarantee, a government corporation, and a completely privatized market without an explicit federal guarantee. The 14 proposals generally meet key elements of GAO's framework for assessing potential changes to the housing finance system, such as addressing fiscal exposure, protecting investors, and considering the implications of the transition to a new system. However, many proposals lack clearly defined and prioritized goals or do not address the role of other federal entities in the housing finance system, such as FHA and Ginnie Mae—two key elements in GAO's framework. By incorporating these elements, policymakers could facilitate a more focused and comprehensive transition to a new housing finance system and provide greater certainty to market participants.
Why GAO Did This Study
Since 2008, the federal government has greatly increased its role in financially supporting housing markets. In September 2008, FHFA placed Fannie Mae and Freddie Mac under conservatorship, which created an explicit fiscal exposure for the federal government. As of October 2018, the dollar amounts of their outstanding MBS have grown by more than $800 billion since the end of 2008.
Since 2013, GAO has designated the federal role in housing finance as a high-risk area. GAO examines (1) recent housing market developments, (2) risks and challenges posed by the current federal role, including ongoing conservatorship, and (3) housing finance reform proposals and their strengths and limitations.
To address these issues, GAO reviewed housing finance data; FHFA and enterprise reports; and 14 housing finance reform proposals introduced in Congress or proposed by industry stakeholders since 2014. GAO also convened panels with housing finance experts and stakeholders (including consumer advocates, mortgage originators, insurers, and investors), who developed reform proposals, testified before Congress, or participated in prior GAO studies.
What GAO Recommends
Congress should consider legislation for the future federal role in housing finance that addresses the structure of the enterprises, establishes clear and prioritized goals, and considers all relevant federal entities, such as FHA and Ginnie Mae.
https://www.gao.gov/mobile/products/GAO-19-239