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I’ve read that also you are correct!
The warrants are like $0.00001 or something stupid small. But again the Gov has to purchase the shares at that price! They own on paper a contract to BUY at that price!!
If they don’t put the GSE into BK and make a new company IPO and re-list onto a major exchange, then the warrants expire or they expire in 2028 which ever comes first !
So basically your saying that the Government has stolen private property for its own gain and dreamed up HERA to swindle shareholders and SCOTUS is in on it !
Sounds about right for this Banana republic
75k great buy under a dollar!!! Your 500,000 must be getting close! Once she hits $3.50 + I’m selling my Fannie commons to buy more land east county San Diego. Prices are starting to move again!!
Yes they do, I agree with you ! Freddie even said they had funds set aside for a possible ligation lose mid year last year!
Even though the NWS has stopped on paper the PSA is increasing for FREE! The Governments work around is for the FHFA to charge Fannie and Freddie a higher fee in 2024 to pay for there pet projects!
What’s stopping the FHFA and any administration from increasing it to any amount they want? That’s the NWS in the real world. Status Quo keep it as is and we will bleed them dry!!
That was so 2023! We are in 2024 now mate try to keep up! $1:00 + year !
Anything is possible with this clown show of an Administration!
There has not been any movement on GSE reform since taking office. Sandra hasn’t done nothing but collect a paycheck. It amazes me how disgraceful and dysfunctional the Government is! They are for the people so why after 15 years we are still at this point and the amount of money they have stolen from shareholders!
SM better be apart of the Trump administration if Trump gets re-elected with even the slightest remote chance of GSE reform.
But I take this opportunity to keep building my common position every month. At these prices it’s a steel to make quick money on a bounce back to $3 +
If there was ( shock horror) any reform between now and Nov 2024 I’d be surprised! It’s election year Biden/ Obama had his chance. They were to busy finishing up what they started on his 2nd term to worry about GSE reform. Why would any administration leave the possibility of $120 billion on the table for the next administration when they could have done good work with more affordable housing and an election carrot for BIDENS team??? Seems very strange.
6 Months? Gezz thats a long time, and then kick the can down the road for another 6 months on appeals etc delays etc. No wonder the final judgement is post 4 months and counting both sides can keep kicking down the road for as long as they want. There’s no reason delaying final judgement what business is it of the federal Gov what happens to the funds and how they are located. Shouldn’t that been in the class action brief for class holders to read ???
Update on GSE’s court Cases
Thanks Familyman
Updated for January 2024$FNMAS $FMCKJ $FNMA $FMCC@FannieMae @FreddieMac @FHFA @USTreasury pic.twitter.com/06YcxB0PPB
— familymang (@familymang1) January 4, 2024
AHHHHHHH The Globalist plan to control all world housing! So there’s the reason for the stickup of Fannie and Freddie back in 2008. Funny how Blackrock was formed in 2008, Bitcoin was formed in 2008, market crash happened in 2008, Fannie and Freddie conservatorship in 2008!!!
It was a stick up to bail out Wall Street banks friends of Bush and others and made Fannie and Freddy pull the losses on there books! Then Obama sore they were about to make huge returns in 2013 and onwards so he introduced the NWS to pay for Obamacare!
Now the Wall-street banks are making hand over first up until 2020 then interest rates started climbing banks got stuck with all these low interest loans and have cut back on home loans by some 87% leaving the only to companies left in town the GSE’s owner by the Government!!!
Talk about Nationalism of two private held companies the Government didn’t pay for !!!
Sounds about right !! BUT will the Federalists let them released !!! You know Black rock is buying up as many homes as possible! There UN & WEF !
But this is 2024 an election year and I’m pretty sure both sides will want to promise all the lucky charms!!!
What does this mean for Fannie and Freddie? Could be more of the same or we could get released but who knows !!
Good article , thanks !
Fannie Mae Earnings Primer: Value Investors Stay Away
Dec. 31, 2023 11:51 PM ETFederal National Mortgage Association (FNMA) Stock10 Comments
Gary J. Gordon profile picture
Gary J. Gordon
2.76K Followers
Summary
Fannie Mae is currently selling at $1.07 with a $6 billion market cap, despite earning around $17 billion this year.
Fannie Mae operates in the home mortgage credit guarantee, multifamily housing credit guarantee, and mortgage and securities investing businesses.
The future of Fannie Mae's legal status and ownership remains uncertain, making it difficult to accurately value the stock.
Fannie Mae To Pay Some $400 Million In Fines To SEC
Alex Wong
What to do with Fannie Mae (OTCQB:FNMA) stock? At present, FNMA is selling at $1.07, or a $6 billion market cap. Yet the company is on track to earn something like $17 billion this year. The problem of course is that a federal government bailout of Fannie Mae in 2008 transferred the great bulk of the benefits of ownership from the equity owners and to the government. And despite a huge earnings recovery by Fannie and lots of legal and political wrangling, not much has changed to today.
Discussing how Fannie’s legal status might change is pretty much pure speculation. I’ll briefly add my two cents below. Rather, overlooked are discussions of how Fannie Mae performs as a business. That’s the purpose of this piece. I have some expertise here, having covered Fannie Mae as a stock analyst for 20 years, up until its seizure.
The Fannie Mae basics
Fannie Mae is a government-sponsored enterprise (GSE). The Federal National Mortgage Association Charter Act requires Fannie Mae to:
“Provide ongoing assistance to the secondary market for residential mortgages by increasing the liquidity of mortgage investments… “The GSE Act requires that we serve very low-, low-, and moderate-income families.” (Fannie Mae 2022 annual report)
The main benefit of the GSE charter for investors is that Fannie Mae securities – both its mortgage-backed securities (MBS) and its debt – have the implied guarantee of the U.S. government. As a result, Fannie Mae’s securities yields are well below private sector competitors. For example, Fannie Mae mortgages were nearly 20 bp cheaper on average than jumbo mortgages over the past five years. And its debt typically trades at 35 bp over similar-maturity Treasuries, while even AAA corporates averaged 120 bp over Treasuries for the past five years. These lower yields are huge operating advantages.
Fannie Mae meets its charter requirements by operating three businesses:
1. Home mortgage credit guarantees.
2. Multifamily housing credit guarantees.
3. Mortgage and securities investing.
The home mortgage credit guarantee business
An easy way to understand this business is to track a home mortgage’s chronology.
A mortgage lender originates a fixed rate mortgage loan, underwriting it to Fannie Mae’s detailed lending standards.
If the borrower doesn’t put down at least a 20% downpayment, he/she is required to buy private mortgage insurance (PMI). The insurance protects Fannie Mae – if the borrower defaults, the PMI company pays Fannie a claim equal to about 25% of the mortgage size.
Because banks and mortgage bankers can’t safely hold fixed rate mortgages due to their significant interest rate risk (see First Republic Bank’s recent failure), they look to sell them to investors.
After pooling says $100 million of fixed rate mortgages, the lender requests a credit guaranty on the pool from Fannie Mae. The guaranteed loan pool is now a Fannie Mae mortgage-backed security (MBS). Fannie takes all of the default risk of these loans unless the lender did not correctly follow Fannie Mae’s underwriting guidelines, in which case the lender must repurchase the loan.
Fannie Mae then reinsures some (currently 35%) of the mortgages with investors and others to reduce its credit risk.
As of November 30, 2023, Fannie Mae insured $4.1 trillion of mortgages. It has two primary competitors in the guarantee business. One is peer GSE Freddie Mac ($3.4 trillion insured). The other is Ginnie Mae, a federal government agency, with a little over $2 trillion insured. Together they insure about 75% of all U.S. mortgage debt.
Home mortgage credit insurance financials:
Guarantee fees average 47 bp at present.
Fannie passes 10 bp of the fee along to the federal government as part of the conservatorship deal.
Reinsurance costs Fannie 3½ bp.
Operating expenses cost another 7 bp or so.
Loan charge-offs due to home foreclosures are currently about 2 bp.
That leaves about 25 bp of the 47 bp of revenues as profit at present or about $8 billion in after-tax profits.
The multifamily housing credit insurance business.
This business is identical to Fannie Mae’s home mortgage business, with the obvious difference that Fannie is guaranteeing business, not consumer loans; an apartment building owner is the borrower. The economics are also similar. At year-end 2023 Fannie Mae insured about $470 billion of multifamily loans and earned about $2.5 billion after-tax.
The mortgage and securities investment business.
At one time, earning interest income from owning mortgages and securities was a major business for Fannie Mae. For example, in 2005, Fannie owned over $800 billion in mortgages and earned half of its income from this business. Fannie Mae did well in this business because of its super-cheap debt.
But Fannie’s regulator decided that mortgage investing was too risky for taxpayers, and Fannie has shrunk its mortgage assets over many years, to only $50 billion today. It also holds $100-150 billion of short-term high-quality investment securities. These assets give Fannie the ability, if the country’s debt markets seize up, to sell them and buy mortgage assets when other investors won’t. Fannie therefore can fulfill its mission of supporting the housing market by “increasing the liquidity of mortgage investments”.
This table shows a recent history of Fannie’s portfolio interest income, plus a history of the main two drivers of that income:
Investment portfolio statistics
Fannie Mae financial reports, FRED
Sources: Fannie Mae financial reports, FRED (fed funds)
Fannie’s short-term securities are financed primarily by long-term fixed rate debt and by equity. The result of this funding structure is that Fannie’s interest income rises when short-term interest rates rise and falls when interest rates decline. And mortgage loans have higher yields than securities, so their dramatic decline has caused a downward trend in interest income.
Fannie Mae’s earnings drivers
Now that we know what Fannie Mae does for a living, we can identify the factors that drive its earnings. There are four:
The Fannie Mae MBS growth rate
Home mortgage default costs
The rate of decline of home mortgages owned
The fed funds rate
Let’s forecast them.
Forecast: The Fannie Mae MBS growth rate
Here is a recent history of Fannie’s MBS portfolio growth, compared to U.S. home mortgage debt growth:
Home mortgage and Fannie Mae MBS growth rates
Fannie Mae, Federal Reserve
Sources: Fannie Mae, the Federal Reserve
The chart shows that Fannie Mae’s MBS growth is a function of (A) U.S. mortgage debt growth, and (B) Fannie’s market share.
National mortgage debt growth averaged 2½% a year over this time period but was obviously pretty volatile. The key long-term driver of home mortgage debt growth should be household incomes, which grew by 4½%. Going forward, I expect mortgage debt growth to average about 4%.
Fannie Mae’s market share grew for many years after the ’08 Great Financial Crisis but dipped in recent years. The early ‘00s decade housing bubble was fueled by private (not GSE or Ginnie Mae) credit, in particular risky subprime and other non-prime loans. As private lenders stopped making those loans, and those paid down or defaulted, Fannie and its peers steadily took share. Fannie’s share rose from 25% in ’08 to a peak of 33% in early ’21. Since then, the squeeze on housing affordability (high home prices, high mortgage rates) caused non-GSE products like adjustable-rate loans to grow more popular, lowering Fannie’s market share a bit.
Net/net, I expect Fannie Mae’s MBS credit guarantee business to trend up from 1% growth at present to 4% long-term.
Forecast: Home mortgage default costs
This is the big one. As primarily a home mortgage credit guarantor, credit losses incurred are the big swing item for Fannie’s earnings.
I focus on cash default costs, not accounting adjustments. Before discussing the credit outlook, a very quick accounting note. Fannie Mae recognizes credit losses in its income statement in two different ways:
Cash losses from mortgage defaults as they occur.
Accounting losses or gains as Fannie Mae (and any other bearer of lending credit risk) adjusts a loan loss reserve to recognize today what management estimates might be future cash losses. These are non-cash adjustments that in practice create huge swings in reported earnings. For example, in 2008, Fannie Mae took a $21 billion hit to reported earnings to recognize future expected losses. And in 2014 Fannie reversed $7 billion of those reserves, adding to reported earnings.
I ignore the non-cash loss reserve additions and subtractions. Here is a history of Fannie’s cash loan charge-offs:
Loan charge-off history
Fannie Mae financial reports
Source: Fannie Mae financial reports
Why the surge in charge-offs 15 years ago, and why the minimal losses today? Two factors – (A) Loan underwriting standards, and (B) Housing market supply and demand.
Loan underwriting standards. Here is a history of the availability of mortgage credit:
Mortgage lending standard index history
Mortgage Bankers Association
Source: Mortgage Bankers Association
You can clearly see the loosening of home mortgage loan lending standards in the early ‘00s, and the tightening of those standards by 2009 that has persisted to this day.
Fannie Mae in large part followed the same path, as this comparison of some key lending standards between ’06 and today highlights:
Fannie Mae loan quality statistics, '06 and today
Fannie Mae financial reports
Source: Fannie Mae financial reports
Housing supply/demand. The “law” of supply and demand says that an excess of supply causes lower prices, while a shortage of supply causes higher prices. This law works for housing. Housing supply and demand are well measured by the number of vacant housing units (single-family homes and apartments). The historic average vacancy rate is 3.5%. Here is a difference in the excess or shortage of housing units versus that average:
Housing excess/shortage history
The Census Bureau
Source: The Census Bureau
The chart clearly shows the excess housing that helped drive down home prices during ’07-’11, and the housing shortage that helped cause soaring home prices over the past few years.
Net/net, the loan standard and housing vacancy data show that Fannie Mae’s surge in loan charge-offs after ’07 was the result of a “Perfect Storm” – very risky lending standards meeting over-built housing. Today is “The Perfect Calm” – very conservative lending standards meeting under-built housing. Meaning the great likelihood of very low charge-offs for the foreseeable future.
Forecasts: The rate of decline of home mortgages owned and the fed funds rate.
As I discussed above, these are the two drivers of Fannie Mae’s interest income. I will make this quick. First, my guess is that Fannie Mae is near the end of its two-decade shrinkage of its home mortgage portfolio. The company should want to retain the ability to hold mortgages that aren’t easily securitized, but whose terms help it meet its mission of helping lower income households achieve homeownership.
Second, we all know the fed funds story. The Federal Reserve has stated that the next move for the fed funds rate is down.
Net/net, Fannie Mae’s interest income should drift lower for the next few years.
My thoughts on Fannie Mae’s ownership issues.
I hold four views:
1. Fannie Mae will retain its GSE status. I say that because doing so benefits three very large political lobbies. One is homeowners, who get cheaper mortgages. A second is the housing industry, from lenders to realtors to homebuilders, all of whom value lower mortgage rates and the liquidity that keeps mortgage money flowing even in high-stress economic scenarios. A third is investors, who value the GSE guarantee against loan defaults.
2. Fannie Mae’s will retain its business model. Could the private sector take over Fannie Mae’s credit guarantee function? Yes. But the private sector has shown no interest in doing so in the 15 years since conservatorship.
3. It is unlikely that conservatorship will end until Fannie Mae is reasonably well capitalized. Fannie said in its Q-3 10-Q that its total risk-based regulatory capital requirement is $187 billion. Its current capital is $74 billion, and more than all of that is preferred stock; common equity is ($47) billion. Fannie needs another roughly $125 billion of capital, which will take 6+ years of earnings retention.
4. The government wins nearly all legal battles. The federal government has been sued by lots of GSE investors trying to re-assert private sector ownership rights. Little progress has been made. Congress is unlikely to step in to support the wise-guy hedge funds and other investors pursuing the lawsuits.
Valuing the stock.
As I said above, Fannie Mae should earn about $17 billion this year. My discussion of Fannie’s fundamentals suggests slow growth, say 3-5%. A related GSE I write a lot about is Farmer Mac (AGM). Farmer Mac has a much smaller share of its market, and therefore much better growth prospects than Fannie. Further, Farmer Mac pays dividends, while Fannie Mae cannot because of the conservatorship status. Farmer Mac’s stock is trading at a 12 multiple. A lower multiple is therefore appropriate for Fannie; 9 feels about right. That suggests a $150 billion market cap.
That wasn’t so hard. But making a per share valuation estimate is. There are about 1 billion common shares outstanding. But the federal government has a $180 billion claim on Fannie Mae through preferred share ownership. How that converts to common is unknown.
So what is a fair value per share? Got me. And be quite suspicious of anyone who thinks they know that answer.
The bottom line.
Fannie Mae is a very profitable operating business, but the ownership unknowns make it impossible to value the stock with any degree of confidence.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
The Government stole from private shareholders rigged the system but the Courts said yer that’s fine it’s in the law BUT a jury found it to be NO SO! The corrupt government has been caught Red Handled by the people !
SIGN THE FINAL JUDGEMENT AND GET ON WITH IT WOULD YOU JUDGE LAMBERT
FHFA breached "the implied covenant of good faith and fair dealing" by implementing the 3rd Amendment. The breach will cost the Taxpayers $96,474 per day, as long as the 3rd Amendment is not canceled @DeloitteUS @PwCUS @POTUS @SecYellen @FHFA pic.twitter.com/eu3IL5wsjX
— Ano (@Ano3020100) December 29, 2023
Why? Does this story go against your hope that commons are 100% not going to be diluted???
Every possible angel must be presented no rock left unturned until the companies are released ! No one knows nothing whats the Government or knows how these two will be released !!!
Yep I agree! It’s war on freedoms with the WEF and UN taking over every part of our lives to push this fake climate change. You see it now on everything. A small fee. Even on Freddie and Fannie loans ( environmental fee) WTF
So he’s saying SPSA will paid classes as paid off! JPS get par or a negotiated 20% of par. But he says commons get diluted by 90% ??? I hope not !!
https://www.valuewalk.com/fannie-mae-freddie-mac-exit-conservatorship/
What will happen to the shares?
At that point, the securities could be called and replaced with preferred shares that have a much lower coupon or possibly be convertible. If that happens, the value of the preferred shares will increase well before the dividend is paid. Bove expects a 100% price appreciation, and if they hold for three years, "well more than that."
On the other hand, he believes the common shares could be diluted by 90% to 100%. He also expects Fannie's and Freddie's earnings power to be "meaningfully compromised," resulting in a decline in the common shares' price.
Centry21 realtor is a Buffet company as well and they handle loans to trailer park house and prefab homes as well as alot of central Florida homes.
Who is this clown who thinks his articles are worth $230 the guys dreaming !!! Anyone with a brain can read and understang 10Q and why and where the GSE’s are right now.
https://www.insidemortgagefinance.com/articles/229344-gse-3q23-earnings?v=preview
I don’t think BRICS is part of the OWO or WEF. That would have great fire power to release the GSE’s as people and companies like Larry Fink and Black rock own alot of fannie and freddie or will do if Dems release them.
FANNIES GOT THE LEGS TO CONTINUE
Shorts running for the hillshttps://www.otcshortreport.com/company/FNMA
FREDDIE GOT THE LEGS TO CONTINUE !!!!
Shorts are running to the hills !
https://www.otcshortreport.com/company/FMCC
As FMCC sits at upper Boll band of $0.79
Had to come sooner or later! Pull back reload flake out weak hands!
IT’s a Trump Trade come Nov 2024! Could the Trump administration really set in motion the release of the GSE’s
$FNMAS $FMCKJ pic.twitter.com/qtypttUysL
— familymang (@familymang1) December 27, 2023
“BOOM” Looks like this is setting up for a huge BULL RUN ! Shorts for Freddie have pulled back since Friday!
https://www.otcshortreport.com/company/FMCC
Even stranger is shorts still seem to be adding while Fannie moves up! Is this a sign of shorting 1 stock for a flip to Freddie for extra $$ when final judgement is awarded??? If I had that kinda money lying around I’d pull it off too! What a play that would make!
https://www.otcshortreport.com/company/FNMA
Noticed FNMCO hasn’t gone pasted $7200?? Strange would think it would hit $10k by now?
Passed History of share price based on ?
Market Cap
Outstanding share count 2007
Outstanding share count after warrants used 5.5 Billion 2024
Earnings per year
Since 2007 the market cap and earnings have tripled so any news of release and an extra 4 billion common shares wouldn’t mean the share price would be so low under $10.
2007 was the top of the market
https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/ir/pdf/quarterly-annual-results/2007/2007_10K_investor_summary.pdf
https://www.fanniemae.com/media/28201/display
2022 earnings
https://www.fanniemae.com/media/46286/display#:~:text=%2412.9%20billion%20annual%20net%20income,a%20housing%20market%20in%20transition.
I agree !
But don’t agree the Gov should have anymore money they have stolen enough! But this is the Government and they are above the law!
Quote:
100B comes from either SPO or WTS
I want the WTS used - BUT ONLY WITH the death of 200B of LP/SP
End Quote:
Agree! If news of that happening the value would be around $15 to $35 with the extra 4 billion common shares but any news of the Gov freeing them would send this north of $50 maybe more because the long term value of the companies are a lot more based on pass history of share price.
That’s good news!
But that’s the first time I’ve seen the $150 Billion number in that report.
Key things to consider are:
Biden Admin want $120 billion cash for there housing pet projects ??
Where would the Biden Admin get that kinda money without asking Congress??
How close is the GSE’s Cap reserves from that $150 Billion????
Housing market booming once again and is this a sign of strong earnings for the GSE’s to exit ??
Good guess but what are you basing this on?
Things to consider:
Most traders are busy with Christmas.
Most traders of off work spending time with family and not trading.
Most traders see the massive short volume and might take profits before end of year.
It’s always lite trading during the Christmas break.
Many board members guess price and volume with no real facts or proof.
If you had a Crystal Ball then I’d believe you. Do you??
I think a lottery ticket has better odds
Anyway it’s fun to dream. I dream commons go to $5 before end of year and JPS divs get turned back on!
I think I’ll just buy a lottery ticket tomorrow. I think it has better odds !!
Merry Christmas be safe.
SO 2026 OR $150 BILLION WHATEVER COMES FIRST ???
DOES THAT MEAN IF TRUMP WINS 2024 THEY ARE GOING TO RESTART ENDING THE GOV STEEL ???
https://knowledge.wharton.upenn.edu/podcast/knowledge-at-wharton-podcast/privatizing-fannie-mae-and-freddie-mac/
Yes sell the Gov’s shares and warrants to the highest bidder.
https://www.pbs.org/newshour/economy/trump-officials-defend-plan-to-end-control-of-fannie-and-freddie
https://home.treasury.gov/system/files/136/Treasury-Housing-Finance-Reform-Plan.pdf
IT’S BEEN A LONG 3 YEARS HOPEFULY IN 2024 WE HAVE GOOD NEWS BUT UNDER BIDEN FANNIE AND FREDDIE ARE NOT GOING ANYWHERE SOON!!
https://www.ebiconsulting.com/resources_news/bidens-plans-for-fannie-mae-and-freddie-mac/
With sources indicating that Biden would be unlikely to continue the push towards ending the conservatorship, especially with the predominant focus on handling the ongoing coronavirus pandemic, Fannie Mae and Freddie Mac will likely remain under government control.
https://furmancenter.org/thestoop/entry/when-will-government-control-of-fannie-mae-and-freddie-mac-end-part-2
The result of these realities is that recapitalizing will most likely occur through retained earnings over the course of the next four to five years, putting the GSEs on track to begin winding down conservatorship no earlier than about 2026. If more than $150 billion is required, or if there are other significant steps required outside of recapitalization, the timeframe could be pushed out further. This conclusion has been unwelcomed by many people involved in GSE matters who wanted it to happen far more quickly.8 But so far, it has held up rather well.
THOSE CHEATING LYING GREDDY MONEY GRABBING GOV GOONS !!
To actually fully wrap up and conclude the rescue of the two GSEs, Treasury will then need to sell its shares to the public marketplace. (This is called a “secondary” offering, as it is one shareholder selling to others; it does not directly impact the actual balance sheet of the issuer of the shares.) As described above, the size of the positions to be sold by Treasury are so huge versus even the largest IPO ever done that this will not take place overnight. A reasonable minimum estimate, which is highly dependent upon equity market and mortgage market conditions at the time, is at least three years - but potentially much longer.12
OH REALLY WE HAVEN’T HEARD A PEEP OUTTA THIS GOON
FHFA Director Thompson has stated that this is among her priorities. Here are, in my view, the four most important actions to take:
GETTING GREEDY AGAIN
[9] It is theoretically possible Treasury could just waive its right to exercise the warrants. But I do not believe it is a real possibility - to do so would be an immense give-away of taxpayer money, and thus politically highly controversial as a result.
[10] The current outstanding amount is $222 Billion.
[11] That precedent is the government rescue of AIG, where Treasury ended up, immediately post conversion, owning over 90% of the shares.
[12] If Treasury tries to sell too quickly, the result is that the shares of the GSEs would become very depressed, which could flow into making the operations of the two companies significantly more difficult.
[13] It is not as simple as Treasury owning less than 50% of the shares of each GSE, as it would still be by far the largest shareholder at such a point. So, it is somewhat a judgment call as to what percentage would result in Treasury control, in practical terms, ceasing. Only at very small percentages, or down to fully zero, would it be certain Treasury was no longer in control. However, Treasury would still be providing financial support to the two companies via the PSPA agreements, which would give it certain rights over the two companies, although nothing like operating control.
[14] If conservatorship, and its companion PSPA, last past 20 years, the PSPA will likely need to be amended in certain ways to accommodate it evidently lasting longer than the drafters of the PSPA ever contemplated.
THEY PAID THE GOV BACK YOU CAN’T ISSUE DIVIDENDS UNDER CONSERVER SHIP AS PER HERA
[17] From 2008 through late 2012, via a 10% coupon on the amounts utilized; from 2012 to 2019, via large dividend payments that swept almost all the earnings of the GSEs to Treasury; and since 2019, via Treasury receiving quarterly more shares of preferred stock in the two companies with a face amount basically equal to their earnings for the quarter.
SEE TOLD YOU THEY HAD REPAID THERE LOAN
https://www.icba.org/newsroom/blogs/main-street-matters/2023/09/06/after-15-years-the-federal-government-should-end-its-conservatorship-of-fannie-mae-and-freddie-mac
The Return to Profitability
In late 2012, both companies returned to profitability, and in 2013 they began to repay their debt to the Treasury. By 2017, the GSEs had completely repaid all the aid they received plus a 10 percent dividend.
IS THE GOV JUST GOING TO SIT BACK AND WAIT FOR THE DIVIDNED TAP TO TURN BACK ON???
Moreover, the government had discovered that the GSEs were a great source of cash for various initiatives that could not get funded through the normal appropriations process. In fact, when the FHFA and Treasury realized the GSEs would soon return to profitability in 2012, they changed the terms of the GSEs’ bailout agreement to require them to sweep all excess earnings to the Treasury, effectively preventing the rebuilding of equity capital.
This contract is still in place and has only temporarily been paused until the GSEs are fully recapitalized. Once that occurs, the net-worth sweep resumes in perpetuity.
BYE BYE KAREN AKA ( GOV)
At the Hotel California, you can check out anytime you like, but you can never leave. FHFA and Treasury need to follow HERA, resolve the Treasury’s ownership, call it paid in full (which it is), and release the GSEs from conservatorship. If not, they too will never leave.
SO IT WAS GREEDY G BUSH AFTER THEM FOR HIS BANK BUDDIES AND HIS FAMILY. REMEMBER THE BUSHS WERE IN BANKING BEFORE COMING TO AMERICA THEY FUNDED GERMANY AND HILTER!
https://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_and_Freddie_Mac
In 2003, the Bush Administration sought to create a new agency, replacing the Office of Federal Housing Enterprise Oversight, to oversee Fannie Mae and Freddie Mac.
Financial condition of Fannie and Freddie prior to takeover
Over 98% of Fannie's loans were paying timely during 2008.[56] Both Fannie and Freddie had positive net worth as of the date of the takeover, meaning the value of their assets exceeded their liabilities. However, Fannie's total assets to capital (leverage ratio) was about 20:1, while Freddie's was about 70:1.[57][58] These numbers increase significantly if one includes all the mortgage-backed assets they guaranteed. These ratios are considerably higher than investment banks, which leverage around 30:1.[59][60]
However, there was concern[according to whom?] that the GSEs' liquidity was insufficient to handle growing delinquency rates, such that although viable in September 2008, the scale of loss in the future would be sufficient that insolvency would occur and that knowledge of this future failure would induce immediate or near-immediate failure due to buyers refusing to buy debt. Both GSEs roll over large amounts of debt on a quarterly basis and failure to sell debt would lead to failure due to lack of liquidity. A slower form of failure would be the issuing of debt at high cost (to compensate buyers for risk), which would greatly diminish the earning power of both GSEs, rendering them unable to earn the money they would need to handle expected future losses. Both GSEs counted large amounts of deferred tax assets towards their regulatory capital, which were considered by some[who?] to be of "low quality" and not truly available capital. The deferred tax assets would only have value if the companies were profitable and could use the assets to offset future taxes. Both companies had experienced significant losses and were likely to face more over the next year or longer.[61]
MOVE WHITE HOUSE DOGGY ACCOUNTING
https://www.whitehouse.gov/wp-content/uploads/2021/05/gov_fy22.pdf
GOOD CHANCE OF A PULL BACK
https://www.otcshortreport.com/company/FNMA
So this is what BRADFORD WAS TALKING ABOUT ??????
Because the GSEs are, in CBO’s view, effectively federal entities, the budgetary cost of the policy option would be the estimated market value of the increase in the government’s exposure to losses on the GSEs’ mortgage guarantees and investments. The Administration treats the GSEs differently—as private companies that are outside the government. Consequently, its deficit projections reflect the cash transactions between the Treasury and the GSEs, whereas CBO treats such transactions as governmental transfers that have no net impact on the deficit. Under the Administration’s budgetary treatment, the policy option would have a budgetary cost that was significantly larger than CBO’s estimate, roughly $85 billion over 10 years.
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bradford86 Re: LuLeVan post# 776022 Tuesday, November 28, 2023 5:19:58 AM
Post# 776024 of 779165
That is my understanding. What is interesting is that the cbo report — they monetize the face value of the
spspa, not the liquidation preference— in their recap and release scenario.
So in theory continued retained earnings does not materially increase how much the government will be
cashing in on the spspa becauwe they may use face value and not liquidation preference in recap and release vs receivership.
I am not sure how this works out but noticed this this past month reviewing all the numbers in anticipation
of some sort of potential admin action. Diane Yentel was back in the white House yesterday.
Affordable housing is an admin priority. There is a path here. I think we will see shortly if they will intend to use it.
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https://www.cbo.gov/publication/52089
So the GSE’S are on the hook for $187 Billon.
SO ON THAT $187 LOAN THEY PAID. As of the end of September 2016, the GSEs had paid about $250 billion in dividends to the Treasury.
so they still need to pay Treasury another, Under current law, CBO projects, they would pay an additional $180 billion from 2017 through 2026.
So your saying 2026 is the year they break even with the Loan Shark Government. BUT !! Still owe the $187 Billion ORIGANL loan!
So on a loan of $187 Billion it’s going to cost them $187 + $250 + $180 = $617 Billion + the $100 Billion in warrants total = 717 Billion on a $187 Billion loan !!! DAM GREEDY GOVERNMENT, PEOPLE NEED TO GO TO JAIL FOR THIEF !!
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Between November 2008 and March 2012, the Treasury purchased $187 billion of senior preferred stock from the two GSEs to cover their losses and ensure that they could continue to operate in the secondary market. The GSEs returned to profitability in 2012 as the economy and housing markets stabilized, and, consequently, they have not needed to draw on additional federal funds since then. As of September 30, 2016, $258 billion of Treasury assistance remains available under the agreements to purchase additional senior preferred stock. That undrawn amount serves as an effective capital cushion and ensures that, under most circumstances, the GSEs would be able to pay investors who held their debt and mortgage-backed securities. Without that backstop, the value of the GSEs’ equity and debt (including the government’s holdings of senior preferred stock) would be much lower.
Under the current terms of the agreements, when Fannie Mae’s or Freddie Mac’s net worth exceeds a specified threshold (set to decline to zero in 2018), the GSE must pay dividends to the Treasury in the amount of that surplus. Essentially, the current agreements require the GSEs to pay all of their profits to the Treasury. As of the end of September 2016, the GSEs had paid about $250 billion in dividends to the Treasury. Under current law, CBO projects, they would pay an additional $180 billion from 2017 through 2026.
GREEDY CHEATING LYING BASTXXD’S GOVERNMENT STEELING THE LOT……………………………………………………………………………………….What Policy Option Did CBO Analyze?
The policy option that CBO analyzed would not restructure the housing finance market; rather, it would allow the GSEs to retain some of their profits and thus increase their capital. Because several bills have been introduced in the Congress with different approaches to building the GSEs’ capital, CBO analyzed an illustrative option rather than a specific legislative proposal. Under the illustrative option, each GSE would be allowed to retain an average of $5 billion of its profits annually and would thus increase its capital by up to $50 billion over 10 years. The government’s commitment to purchase more senior preferred stock from Fannie Mae and Freddie Mac if necessary to ensure that they maintain a positive net worth would remain in place. In addition, the GSEs would invest the profits that they retained under the option in Treasury securities, and returns on those securities would raise the GSEs’ income. Through its holdings of senior preferred stock, the government would continue to have a claim to the GSEs’ net worth ahead of other stockholders.
So there retained earnings are for buying back the SPSA ??????
the GSEs would invest the profits that they retained under the option in Treasury securities, and returns on those securities would raise the GSEs’ income. THAT’S TRIPLE DIPPING !!!!!!!!
Some JPS boards are closed and move over to this board. Most who post on here own common and JPS and Freddie shares.
Don’t be discouraged for owning what you feel is best for you ! This board is for all Fannie and Freddie shareholders!
I own both Common ( Fannie & Freddie) but 59% of my portfolio is JPS. I don’t have a problem with anyone who thinks I’m crazy owning commons or JPS. I know what I own and wish the best for everyone be it common or JPS that we make a ton of money on our investments!
Merry Christmas!
One must wonder with such a large short volume on Friday a pull back is coming !!
https://www.otcshortreport.com/company/FNMA
PULL BACK IS COMING !
https://www.otcshortreport.com/company/FNMA
The Collins case has fizzled out but SCOTUS made clear to the lawyers you brought the wrong case before us! So was it there objective to get the NWS legal in the end that was there end game !!!
A court order super-seeds the provisions with HERA if it is found to be against the law. To determine if this will stand then SCOTUS would have to take up the case for final judgement. The fact that the Gov isn’t appealing explains why in fact they know they are done and broke the law!
WOOOHOO MORE TIME TO LOAD THIS WEEK AND NEXT WEEK 4 MORE WEEKS !! I’ll take that !!! There will be a pull back tomorrow for end of year money off the table every day trader was hoping for a quick xams cash well they are going to have to wait.!!