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Freddie's 10Q today on Lamberth's trial: "However, it is reasonably possible that the
Plaintiffs could prevail in this matter and, if so, we may incur a loss up to $832 million plus pre-judgment interest as discussed above. We estimate that prejudgment
interest, if awarded, would be calculated at a rate of 6%."
BTW Freddie, WE'RE JUST GETTING STARTED ON THIS ONE: (Todays 10Q):
"Some of these cases also have challenged the constitutionality of the structure of FHFA. A number of cases have been dismissed (some of which have been appealed), and others remain pending."
It's important to the integrity of the financial intermediaries functioning properly not to have a federal agency regulator incentivize lower credit scores and saving for down payments, ESPECIALLY BY CHARGING those American Families who saved and paid their obligations on time.
Sandra L Thompson should know better.
Are you saying everyone deserves 'Participation Trophy's?
We tried that in 2008-9, didn't we?
The Legislative Branch can pass a new law or modify an existing law if people are upset by a Judicial Branch ruling.
3 is a Magic Number:
American businesses and the Americans that participate in ownership of them (either directly or indirectly, through retirement benefit plans, for example) have become subservient to the whims and desires of federal agency regulators who often find obscure and broad based statutes and interpret them in ways far and removed from the intent of the statute and are largely not reviewable by the federal courts, because of the Chevron Defence Doctrine.
Whether it's this administrations $400B federal student loan relief federal agency action or the previous administrations Eviction moratorium or wall funding, it's unconstitutional and should be cut off by the Judicial Branch.
CEO of Freddie Mac today: "Since 2019, US Homeowners have added $12T to their families balance sheet."
"We believe that housing is still short millions of homes."
https://www.freddiemac.com/investors
Freddie Mac Reports Net Income of $2.0 Billion for First Quarter 2023
• Net income of $2.0 billion, a decrease of 47% year-over-year,
primarily driven by lower net revenues and a credit reserve
build in the current period compared to a credit reserve release
in the prior year period
• Net revenues of $4.8 billion, a decrease of 17% year-over-year,
as higher net interest income was offset by a decline in non-
interest income
• Provision for credit losses of $0.4 billion in the first quarter of
2023, compared to a benefit for credit losses of $0.8 billion in
the first quarter of 2022
• New business activity of $59 billion, down 72% year-over-year,
as both home purchase activity and refinance activity slowed
due to higher mortgage interest rates
• Mortgage portfolio of $3.0 trillion, up 4% year-over-year and
flat quarter-over-quarter, as portfolio growth has moderated in
recent periods due to the slowdown in new business activity
• Serious delinquency rate of 0.62%, down from 0.92% at March
31, 2022, primarily driven by the decline of loans in forbearance
• Completed approximately 24,000 loan workouts
• 62% of mortgage portfolio covered by credit enhancements
• New business activity of $6 billion, down 60% year-over-year,
as higher mortgage interest rates and greater market
uncertainty have reduced demand for multifamily mortgage
financing
• Mortgage portfolio of $426 billion, up 3% year-over-year and
down 1% quarter-over-quarter, primarily due to the slowdown
in new business activity
• Delinquency rate of 0.13%, up from 0.08% at March 31, 2022
• 93% of mortgage portfolio covered by credit enhancements
“Freddie Mac’s solid
performance in the first
quarter helped promote
sustainable
homeownership and
rental opportunities
across the nation. In an
uncertain economic
environment, we remain
focused on our mission
and will continue to serve
as a stabilizing force for
the housing finance
system.”
Michael J. DeVito
Chief Executive Officer
Net Worth -
$39.1 Billion
FHFA's New Mortgage Fee Rule hits Main St:
Calcutt looks like they are considering ALJ federal agency overreach, FHFA has no ALJ's.
Are you thinking that unconfirmed Acting Director(s) at the FHFA could not have Constitutionally permissible power to act under the Seperation of Powers Doctrine and therefore the challenged agency action is void?
Thanks! Here's the Amicus Brief from NCLA in Calcutta:
https://nclalegal.org/amicus-brief-calcutt-v-fdic/
"AMICUS BRIEF SUMMARY
Congress has long protected federal agency Administrative Law Judges (ALJs) from removal, thus depriving Americans of their constitutional freedom to live under a government in which executive power is accountable to them through the President. NCLA filed an amicus curiae brief in a case addressing whether certain Federal Deposit Insurance Corporation (FDIC) officers, including the agency’s ALJs, are protected by multiple layers of tenure protection in violation of the “Take Care” clause of the Constitution. NCLA asks the Sixth Circuit Court of Appeals to grant the petition for rehearing in Calcutt v. FDIC."
What was the issue in ROP again and what is the status?
All it would take is the Pa. State Attorney General filing an Injunction asking to Stay the implementation of the New Mortgage Fee Structure under the MQD.
Todays NYT, on what could be the beginning of the end for abusive and coercive governmental overreach by federal agencies:
"WASHINGTON -- The Supreme Court agreed on Monday to take up a case that could make it easier to curtail the power of administrative agencies, a long-running goal of the conservative legal movement that could have far-reaching implications for how American society imposes rules on businesses.
In a terse order, the court said it would hear a case that seeks to limit or overturn a unanimous 1984 precedent, Chevron v. Natural Resources Defense Council. According to the decision, if part of the law Congress wrote empowering a regulatory agency is ambiguous but the agency's interpretation is reasonable, judges should defer to it.
At issue in the case, Loper Bright Enterprises v. Raimondo, is a rule that requires fishing vessels to pay for monitors who ensure that they comply with regulations meant to prevent overfishing. The National Marine Fisheries Service established the rule, and a group of companies has challenged whether the agency had the authority to do so.
When the Supreme Court decides on the case, most likely in its next term, the outcome could have implications that go beyond fisheries.
If the court overturns or sharply limits the Chevron precedent, it would become easier for business owners to challenge regulations across the economy. Those include rules aimed at ensuring that the air and water are clean; that food, drugs, cars and consumer products are safe; and that financial firms do not take on too much risk."
Here's one more piece from Bloomberg Law to enlighten you of some of the federal government overreach that occurs with the ALJ structure in federal agencies:
https://news.bloomberglaw.com/us-law-week/the-supreme-court-puts-in-house-tribunals-on-the-chopping-block
The companies have been Nationalized by 'our dear leaders' in the federal government.
On the next Annual Report they should put a Smiling Jim Parrot on the front cover, with the Quote: "We will SALT THE EARTH WITH THE SHAREHOLDERS CARCASSES!"
"They'll NEVER go PRETEND PRIVATE AGAIN!"
Uncle Suggy, my kinda guy !
I believe that they both along with so many others of that era recognized these inalienable rights that should be off limits to governmental overreach in our American Republic.
The FHFA doesn't have ALJ'S.
Administrative Law Judges in other federal agencies allow those federal agencies that have that structure in their enabling legislation to actually Judge their own decisions made by the Executive Branch within their particular federal agency (usually by the Head or overseeing Board of the federal agency).
When a federal agency accuses you or your business of allegedly improper conduct, typically you must get a final judgment from that particular federal agencies Administrative Law Judge(s) prior to filing in your local federal circuit court.
This is what happened in the Michelle Cochran case, a single mother CPA whom the SEC tried to pull her license to practice (and hence her and her families livelihood).
Do you really think that a single mother CPA can mount a million dollar+ worth of legal fees to fight what she felt was an injustice by the SEC, to challenge the SEC's revocation of her CPA license?
Luckily she found a nonprofit advocacy group that was able to stand up for her and her family:
Here's a picture of the young CPA with her attorneys holding up their hands:
https://nclalegal.org/cochran-v-sec/
One of the main problems the Shareholders face is that our own federal government continues to hide behind the veil of the National Security and Executive Privilege Exceptions to Discovery.
Normally in Civil Litigation, the cards are laid out in front of both sides.
Lack of disclosure about what the decision makers in DC were thinking coupled with a generalized bias by federal judges to give Deference and some modicum of respect to the Executive Branch of government has been the Achilles heel in our court cases so far.
But some of the more astute federal Judges see and understand exactly what's going on here, but typically are in the dissent so far, with the exception of the 5th Circuit.
https://www.scotusblog.com/2023/05/supreme-court-will-consider-major-case-on-power-of-federal-regulatory-agencies/
Guido, time to reconsider the Chevron Doctrine at the US Supreme Court?
From Amy Howe:
"Nearly 40 years ago, in Chevron v. Natural Resources Defense Council, the Supreme Court ruled that courts should defer to a federal agency’s interpretation of an ambiguous statute as long as that interpretation is reasonable. On Monday, the Supreme Court agreed to reconsider its ruling in Chevron."
"Some members of the court’s conservative majority have been critical of the Chevron doctrine in recent years. Justice Clarence Thomas has been among the doctrine’s most vocal critics, arguing in a concurring opinion in 2015 that Chevron deference “wrests from Courts the ultimate interpretative authority ‘to say what the law is,’ and hands it over to” the executive branch. He has been joined by Justice Neil Gorsuch, who in a dissent from the denial of review last fall argued that the court “should acknowledge forthrightly that Chevron did not undo, and could not have undone, the judicial duty to provide an independent judgment of the law’s meaning in the cases that come before the Nation’s courts.”
Do you know what George Mason was famous for? He insisted THE BILL OF RIGHTS be included in the US Constitution:
George Mason
Born: December 11, 1725, Virginia
Died: October 7, 1792, Gunston Hall, Fairfax County, Virginia
Estate: Gunston Hall, Fairfax County, Virginia
Occupation: Landowner, politician
Known For: Virginia Declaration of Rights (1776); Virginia Constitution; opposition to a US Constitution lacking a bill of rights
It will be interesting to see if one or more of the hundreds of thousands of effected mortgagors bring Litigation challenging this controversial federal agency action by the FHFA.
The Chevron Doctrine has stopped a lot of cases dead in their tracks! Giving so much Deference to Unelected Bureaucrats to interpret their own broad and sweeping powers granted by their enabling legislation and not subject to judicial branch review seems extraordinary.
If the underlying premise is that these Unelected Bureaucrats are 'experts' in their fields and somehow neutral when it comes to politics, that's incorrect.
Sandra's LLPA is a good example.
Interesting thanks! Why are Patriots green and yellow?
This seems like a good recommended reading list on the MQD:
https://www.yalejreg.com/nc/the-major-questions-doctrine-reading-list-by-beau-j-baumann/
The idea of hard working Americans who sacrificed to obtain high credit scores and saved for higher down payments subsidizing lower down payment and lower credit score hard working Americans seems not to sit well with quite a few Americans, don't you think?
Do you think that someone like Sandra L Thompson, with 30 years as a banking regulator, really thinks that's a good idea or was she pressured or forced to by the current administration to subsidize the current administrations targeted voting base?
Nats, I always like telling recent law school grads about their humble beginnings in a converted department store, but they know the story.
American University Law School (Robert Byrd attended) was housed in a converted department store for awhile, I believe as well.
The GMU Antonin Scalia Law School has come along way, they are getting federal clerkships and having some of the Supremes teach there is something any law student should look forward too.
The NYT yesterday did a deep dive looking for dirt with an intensive investigation and apparently found nothing.
But one thing seems clear regardless of the school and that is that the Administrative State is increasingly under scrutiny and the August 17, 2012, Net Worth Sweep, seems like Exhibit A of abusive and coercive governmental overreach.
What do you think?
Mark Calabria was. In todays NYT, there's a hit piece on GMU's Antonin Scalia Law School, I believe 3 USSCT Justices teach there (it's a short drive from Constitution Avenue in DC).
Ed Koch (a Libertarian) has always been a yuge benefactor of GMU.
When I graduated with an undergraduate degree in Finance from GMU, I was the student representative to the Board of Visitors, and I was at a GMU Finance Committee meeting with George Johnson, the President of GMU and others from the board and in walks Professor James Buchanan, who had won the Nobel Prize in Economics that morning. With the press in tow, he sat down right next to me as the press peppered him with questions.
I believe Ed Koch was instrumental in funding Professor James Buchanan's Economics Department.
https://foursquare.com/v/james-buchanan-hall/4b83df3cf964a5208e1431e3
Of course the left is still opposed:
https://unkochmycampus.salsalabs.org/renamebuchananhall/index.html
I think the 'financial establishment' is beginning to realize that having the government run the GSES comes with substantial costs, not only to all Americans utilizing the Secondary Mortgage Market but to their business models as well.
Throw in the gut wrenching swings from the two major political parties in the policy and regulatory environment and maybe the stability of private corporations was not so bad after all.
Jim Parrot is likely trying to 'remain relevant' to the current administration. I think he was passed over by the current administration unlike many others from the Obama administration.
Clarence, this could be a nice resource to utilize, are you familiar with this resource?:
https://administrativestate.gmu.edu/
That's the main reason why LBJ took Fannie Mae off the Feds Balance Sheet to begin with and privatized Fannie Mae in 1968. 2 years later Freddie Mac was created to compete with Fannie Mae.
It's about $7T+ today in MBS that the Feds would have to EXPLICITLY GUARANTEE. The Implicit Federal Guarantee with Private Capital in a 1st Loss Position works, why not reduce the Capital Ratio and Recap and Release?
Isn't that what HERA says to do?
The MBA's position hasn't changed according to their Website: "MBA supports comprehensive legislative reforms that would fix the structural flaws of the GSEs' pre-crisis business models while preserving what works in the market today."
Latest from TH: "But when FHFA then says Fannie and Freddie must raise the LLPAs on loans to higher-income, better credit-score borrowers to (slightly) lower the fees on affordable housing loans, well, THAT’s a problem. No. The problem is making Fannie and Freddie’s sole business non-economic in the first place. And if the LLPA looniness gets more people to focus on that– including in the Biden administration–that will be a good thing."
From 04/22: "If FHFA really wanted to “advance [Fannie and Freddie’s] mission of facilitating equitable and sustainable access to homeownership,”?? it wouldn’t be imposing the equivalent of price controls on their business, it would scrap the Calabria capital standard, and replace it with a true-risk based standard that lets the companies price their business themselves, on an economic basis."
Jim Parrot is all in on the Nationalization of the GSES: "They'll NEVER go PRETEND PRIVATE AGAIN!" "Salt the Earth with the Shareholders Carcasses."
https://www.urban.org/author/jim-parrott
Todays WSJ: "According to calculations by Evercore ISI, buyers with strong credit scores between 720 and 739 who make 15%-20% down payments will see their rates increase by 0.750%. Borrowers who put down 20%-25% will see rates increase by 0.500%.
The winners are borrowers with weak credit scores -- that is, riskier borrowers. Under current FHFA policy, a borrower with a weak credit score below 620, who is borrowing more than 95% of the value of their home, pays 3.750%. Under Ms. Thompson's new plan, those borrowers will see their fees decrease by 1.750%.
Ms. Thompson, who regulates Fannie Mae and Freddie Mac, says the federal mortgage guarantors "don't subsidize borrowers based on their credit scores." But the new FHFA numbers will reduce fees for all borrowers with credit scores below 680 and all borrowers who have a down payment of 5% or less.
These numbers matter because this is how the mortgage market prices risk. When the cost of loans is disconnected from the likelihood of default, bad things happen."
"The American Enterprise Institute looked at default rates of Fannie/Freddie owner-occupied 30-year fixed rate purchase loans acquired in 2006-2007 and found that among borrowers with credit scores between 720 and 769 and 20% down payments, the default rate was between 4.2% and 8.8%. Among borrowers with less than 4% down payments and credit scores between 620 and 639, the default rate was between 39.3% and 56.2%.
Ms. Thompson says the loan fee changes will support lower-income home buyers who "nonetheless have the financial capacity and creditworthiness to sustain a mortgage." But Ms. Thompson ignores that the FHFA has also slashed fees for borrowers who have small down payments and poor credit.
Lowering fees on higher-risk mortgages doesn't enhance Fannie and Freddie's "safety and soundness." Divorcing price from risk creates dysfunction in the mortgage market, sometimes in unpredictable ways, and taxpayers are on the hook. The fees may not even make housing more affordable because increasing demand without more supply will result in higher prices.
The rule is finally getting noticed in Congress, which may also have Ms. Thompson's attention. House Financial Services Committee Chair Patrick McHenry and Housing and Insurance subcommittee Chair Warren Davidson said this week they'll try to repeal the fee changes if they take effect as planned.
The FHFA is trying to make housing more affordable for some buyers by charging others more. Sounds like socializing credit risk to us."
Congress should appropriate the funding if they want to subsidize higher risk mortgagors. Neither one Unelected Bureaucrat named Sandra L Thompson nor the head of the Education Department should be deciding Major Questions of Economic and Political Importance.
Besides, Fannie Mae and Freddie Mac have already transferred HUNDREDS OF BILLIONS to the US Treasury (in return for NOTHING) and are in need of a serious Capital Rebuild.
Q: Why would Sandra L Thompson, with decades of banking regulatory experience agree to subsidize the targeted voting base of the current administration, at the expense of a much needed capital rebuild?
A: Because someone in JB's administration told her too.
Clarence, here's a pretty good article on Christina Martin's case heard on Wednesday:
https://abcnews.go.com/amp/US/supreme-court-takes-critics-call-predatory-tax-foreclosure/story?id=98833801
One of the issues that may come out is possible limitation(s) on the governments ability to act in a predatory way against equity owners.
Can you think of another governmental entity acting in a predatory way to take the Citizens profits? !
Does the mortgage subsidy to the current administrations targeted voting base violate the MQD?:
"Whether its student loan forgiveness or their mortgage rule, through the power of the pen, Biden and his executive agencies are attempting to bypass Congress and fundamentally change how our country operates," Bice said. "We should not punish individuals who have made sound financial decisions or have the government incentivize lowering credit scores."
The Pacific Legal Foundation Attorney, Christina Martin at yesterdays SCOTUS Oral arguments (3rd Paragraph of Opening Statement):
"The county apparently does not dispute
that Ms. Tyler had a property interest in her
former home or in its value. Instead, it
asserts that the government may redefine private
property by statute. The consequence of that
would be an unlimited power to define away
private property and to confiscate it to pay
debts, no matter how valuable the property or
how small the debt."
"And while the government can redefine
the boundaries of property rights with things
like statutes of limitations, what it can't do
is outright confiscate property. Just like the
Court held in Phillips, there was a deeply
rooted traditional right that while states had
carved out exceptions through rules like the
IOLTA programs, that, nevertheless, the
government would not be allowed to carve out
this self-dealing exception."