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Feds didn't put FRE on the books !
So the shareholders still own the company
Mortgage Bailout Lowers Rates
By AMY HOAK
September 14, 2008
The government takeover of mortgage giants Fannie Mae and Freddie Mac has pushed mortgage rates lower, a boon for some home buyers and for homeowners seeking to refinance, but it is not automatically going to make home loans easier to obtain.
In the wake of the takeover, interest rates on 30-year fixed-rate mortgages dropped substantially, falling under 6% for the first time since May, according to Freddie Mac's weekly rate survey. The national average for the 30-year fixed-rate loan was 5.93% for the week ended Thursday, down from 6.35% the prior week and 6.31% a year ago.
Still, coming up with a bigger down payment has been a barrier for some first-time home buyers, while others have struggled with tighter underwriting that lenders have put in place in response to the weakened housing market.
"The credit-standards pendulum has been swinging to the conservative side, and it could swing toward the middle," says Dan Cutaia, president of Fairway Independent Mortgage, based in Sun Prairie, Wis.
But any loosening of underwriting standards could be relatively small, and it's unlikely that no-down-payment or no-documentation mortgages -- staples of the housing boom earlier this decade -- will make a return in the near term, Mr. Cutaia says.
After all, Uncle Sam had to step in and take control because of the problems created by having bad loans on the books and the agency now running the two mortgage giants certainly is not going to risk making more bad loans, says Greg McBride, senior financial analyst at Bankrate.com.
Rates Fall
The government's move helps to stabilize the shaky mortgage market and take out some of the unknowns, removing some of the fears of mortgage investors, says Bob Moulton, president of Manhasset, N.Y.-based Americana Mortgage Group. Without worries about Fannie and Freddie, more people were willing to invest in mortgage bonds, creating downward pressure on loan rates.
The lower rates could hold for a while, some mortgage professionals say -- a welcome respite compared with the mid-6% range the 30-year mortgage hit at various times this year.
Another area where the government bailout could help homeowners: So-called conforming jumbo mortgages could become more obtainable and affordable, says Gibran Nicholas, chief executive of the CMPS Institute, a training, certification and membership program for those who provide mortgage and real-estate equity advice. These are mortgages at the top of the conforming limit, as high as $729,000 in high-cost areas including California.
Recent legislation created this new breed of mortgage when conforming loan limits -- the top mortgage amounts Fannie and Freddie were allowed to finance -- were raised in an effort to make bigger loans more affordable.
A break on conforming mortgage rates could, in turn, help bring some stability to the housing market if buyers decide to take advantage of them, says Lawrence Yun, chief economist of the National Association of Realtors. "There is generally one quarter lag time between when rates fall and when home sales pick up," he says, adding that home sales might improve in the fourth quarter.
Coupled with lower home prices and a temporary $7,500 tax credit for first-time home buyers, there could also be more activity from those who don't currently own a home, says Jim Sahnger, a mortgage planner with Palm Beach Financial Network.
Refinancing 'Boomlet'
A rate drop could also spur somewhat of a "refi boomlet," in the next several months, Mr. Cutaia says.
Some of the people seeking to refinance are those with adjustable-rate loans that have already or will soon reset to higher rates, says Greg Willis, president of retail lending for Ace Mortgage Funding in Indianapolis.
Still, people who are underwater on their loans -- owing more on their homes than they're currently worth -- probably aren't going to get any additional relief due to this recent Fannie and Freddie development, says Jared Bernstein, senior economist at the Economic Policy Institute.
"There are significant numbers of people out there who still have homes worth less than their mortgages and it doesn't change that game," Mr. Bernstein says
PAULSON AND COMPANY.... I bet are buying.
If the perferred is going up, would the common follow?
FRE & FNM PREFERED,ARE THE HIGHEST GAINERS ON FRIDAY !!!!!!! http://finance.yahoo.com/gainers?e=us
S&P RAISES RECOMMENDATION ON SHARES OF FANNIE MAE TO HOLD FROM SELL (FNM; 0.75):
While we expect any future capital injections by the Treasury Department will be highly dilutive to current shareholders, we do not see the Treasury needing to inject additional capital into FNM through the rest of 2008, and we believe this lack of action could be viewed positively by investors. As of the end of the second quarter, FNM had $47.0 billion in core capital. Also, we think the shares could appreciate from historically low levels if we see any stabilization in the housing market. We are raising our target price from $0.50 to $1, or less than 0.1 times book value. -K. Cole-CFA
Brute , COVER now !!!! take the money for the table !!!!!!
Good news starts !!!!! good post Drluck thanks !!!
S&P RAISES RECOMMENDATION ON SHARES OF FANNIE MAE TO HOLD FROM SELL (FNM; 0.75):
While we expect any future capital injections by the Treasury Department will be highly dilutive to current shareholders, we do not see the Treasury needing to inject additional capital into FNM through the rest of 2008, and we believe this lack of action could be viewed positively by investors. As of the end of the second quarter, FNM had $47.0 billion in core capital. Also, we think the shares could appreciate from historically low levels if we see any stabilization in the housing market. We are raising our target price from $0.50 to $1, or less than 0.1 times book value. -K. Cole-CFA
LAST MINUTE !!!!! U.S. Reaffirms Backing Of Fannie, Freddie Stock
By MAYA JACKSON RANDALL
September 12, 2008
WASHINGTON -- The Treasury Department reiterated that the U.S. government stands firmly behind the preferred-stock purchase agreement it entered into as part of its takeover of Fannie Mae and Freddie Mac.
The statement was included in a fact sheet on the stock-purchase agreement, and suggests it would be nearly impossible for Congress or executive branch to modify the agreement in the future.
The agreement was unveiled Sunday to protect current and future investors in debt and mortgage-backed securities issued by the two mortgage-finance companies. Under the agreement, Treasury can inject up to $200 billion in the two companies. In return, it received $1 billion in preferred stock from each company, along with warrants to purchase almost 80% of each firm's common stock. The Treasury hasn't paid out anything to the firms, but would inject capital into the companies as needed to keep them solvent.
The two-page fact sheet aims to ease concerns among investors that the government's pledge may not survive a potential court challenge or changes by a future Congress.
It also sought to clear up confusion among investors and analysts over how the Treasury would inject capital into the firms after its authority to buy shares in the companies expires in December 2009.
The Treasury said it wouldn't need to purchase any new shares in the companies in order to inject capital in them. If it injected capital, the firms would increase the value of shares Treasury already owns.
The Treasury emphasized that the agreement is "a binding legal obligation" and any potential congressional action in the future aimed at abrogating it would be "inconsistent with the U.S. government's long-standing history of honoring its obligations."
Such action would "also give rise to government liability to parties suing to enforce their rights under the agreement," the Treasury said.
Meanwhile, the Treasury made clear that the stock-purchase agreement protects debt and mortgage-backed securities issued or maturing after 2009. It also said that the ratings companies have reaffirmed the U.S.'s ratings status.
--Jessica
U.S. Reaffirms Backing
Of Fannie, Freddie Stock
By MAYA JACKSON RANDALL
September 12, 2008
WASHINGTON -- The Treasury Department reiterated that the U.S. government stands firmly behind the preferred-stock purchase agreement it entered into as part of its takeover of Fannie Mae and Freddie Mac.
The statement was included in a fact sheet on the stock-purchase agreement, and suggests it would be nearly impossible for Congress or executive branch to modify the agreement in the future.
The agreement was unveiled Sunday to protect current and future investors in debt and mortgage-backed securities issued by the two mortgage-finance companies. Under the agreement, Treasury can inject up to $200 billion in the two companies. In return, it received $1 billion in preferred stock from each company, along with warrants to purchase almost 80% of each firm's common stock. The Treasury hasn't paid out anything to the firms, but would inject capital into the companies as needed to keep them solvent.
The two-page fact sheet aims to ease concerns among investors that the government's pledge may not survive a potential court challenge or changes by a future Congress.
It also sought to clear up confusion among investors and analysts over how the Treasury would inject capital into the firms after its authority to buy shares in the companies expires in December 2009.
The Treasury said it wouldn't need to purchase any new shares in the companies in order to inject capital in them. If it injected capital, the firms would increase the value of shares Treasury already owns.
The Treasury emphasized that the agreement is "a binding legal obligation" and any potential congressional action in the future aimed at abrogating it would be "inconsistent with the U.S. government's long-standing history of honoring its obligations."
Such action would "also give rise to government liability to parties suing to enforce their rights under the agreement," the Treasury said.
Meanwhile, the Treasury made clear that the stock-purchase agreement protects debt and mortgage-backed securities issued or maturing after 2009. It also said that the ratings companies have reaffirmed the U.S.'s ratings status.
--Jessica
The Treasury said it wouldn't need to purchase any new shares in the companies in order to inject capital in them. If it injected capital, the firms would increase the value of shares Treasury already owns.
Democrats urge Fannie, Freddie halt foreclosures
09/11 02:38 PM
WASHINGTON, Sept 11 (Reuters) - U.S. Senate Democrats on Thursday urged Fannie Mae (FNM:$0.7794,$0.0394,5.32%) and Freddie Mac (FRE:$0.61,00$-0.05,00-7.58%) to halt all pending foreclosure proceedings on mortgages they hold for at least 90 days.
In a letter to the mortgage finance companies and their regulator, Federal Housing Finance Agency Director James Lockhart, four members of the Senate Banking Committee said the loan modifications could help both homeowners and the companies. The U.S. government took both troubled companies into conservatorship over the weekend.
The senators also asked the companies to revisit their policies and practices governing modifications involving mortgage-backed securities issued by the agencies.
The letter was sent by Charles Schumer of New York, Robert Menendez of New Jersey, Sherrod Brown of Ohio, and Robert Casey of Pennsylvania.
"As you are well aware, the housing crisis continues to devastate too many American families," the senators wrote.
The Federal Deposit Insurance Corp found that a foreclosed mortgage pays 30 cents on the dollar in the current environment while a modified mortgage pays nearly 90 cents, the senators said.
"Clearly, modifying at-risk mortgages maximizes the value of these assets," they said.
The FDIC took control of IndyMac <IDMC.PK> on July 11 and is modifying troubled mortgages held by the California lender in a bid to make the assets more attractive to potential buyers.
The federal insurer said it hoped to send about 29,000 mortgage modification proposals. The modified loans will be available to most borrowers with a first mortgage either owned by, or securitized and serviced by, IndyMac, the FDIC said.
The modifications will be available to borrowers who are seriously delinquent or in default, and apply only to a borrower's primary residence. Modified loans will be permanently capped at an interest rate of about 6.5 percent, the FDIC said. (Reporting by John Poirier; Editing by Leslie Adler)
647 million shares available. + $1 Billion Injection = $1.54/pps 11-Sep-08 07:11 pm If the treasury is to pin any money into the GSE's it has to be for an established par value above what they referenced that they have authority to do so at the rate of .0001 cent per share. Otherwise if they do inject money into the GSE's and hold them afloat until the market rebounds,.... and it will rebound sooner or later..., then how else will the treasury get their money back for their compensation of the injection and save the taxpayers anything at all??
someone is buying up millions upon million of the shares at these low low prices, and I dare say, its not the retail investor... get real.
Now Paulson is quoted as saying that the share price may well come back soon.
Get the picture on this folks? Better buy in on the low end here or you will never get this chance ever again.
Looks to me like I am just averaging down, instead of losing out. Good luck to all of you...
U.S. Treasury moves to calm Japanese investors
Nikkei: U.S. authorities seek to prevent unloading of Fannie, Freddie bonds
By MarketWatch
Last update: 6:26 p.m. EDT Sept. 11, 2008Comments: 10SAN FRANCISCO (MarketWatch) -- Seeking to head off any unloading of Fannie Mae and Freddie Mac bonds by Japanese investors, the U.S. Treasury Department is taking the unusual step of directly contacting
STOP NAKED SHORT PAULSON STOP IT !!!!!!!
Good news for US ? .... House panel to hear from Bernanke on GSEs Sept. 25
really stupid compare FRE with Enron . !!!!!
TIME TO BUY !!!!!! LOOOOOKKKK !!!!!!
FNM UP !!! rumors about paulson halted short in FNM and FRE on MONDAY !!!!!!! GO PAULSON GO !!!!!!
FNM UP 7% good news ?
FNM UP 5% ....FRE follow !!!
AGRESSIVE COVER SOON in FRE and FNM
20,000 at 0.635 ! good !
FEEC Chart ........ http://investorshub.advfn.com/boards/read_msg.aspx?message_id=29920523
The San Francisco Conference will also bring investment and business opportunities to participants, by featuring 15 promising U.S. and Canada listed Chinese companies which include Silvercorp Metals, Inc. (TSX:SVM), Continental Minerals (TSXV:KMK), China Technology Development Group (Nasdaq:CTDC) and Far East Energy Corp. (OTCBB:FEEC), and 15 fast growing private companies from China with interest to enter the U.S. capital market
GOLDEN CROSS soon good !
INSIDERS Buying ....... http://finance.yahoo.com/q/it?s=FEEC.OB
FEEC insiders buying good .
FEEC Joint Venture with PETROCHINA .
FEEC anounnce Joint Venture with PETROCHINA soon . !!
ready to AMEX FEEC !!!!!
3 times his normal volume today.
AMEX AMEX AMEX AMEX !!!!!!!!!
Discover China Opportunities at Global Chinese
2008 Spring China Growth Conference Hosted by Adam Friedman Associates, in Partnership with Friedland Events, LLC
Discover China Opportunities at Global Chinese Financial Forum is proud to announce the 5th annual Global Chinese Financial Forum - San Francisco Conference 2008 (China Opportunities) that will be held on June 13th 2008 at the Downtown Hilton.
As the only conference in San Francisco that focuses on China Investment in the US Capital Market, the GCFF - San Francisco Conference 2008 will be heavily focused on educating invited delegates on the China economy and investment environment such as the topic of Qualified Domestic Institutional Investors (QDII) and Qualified Foreign Institutional Investors (QFII) which will be invaluable to financial professionals wishing to enter the Chinese market. Among the speakers, Dr. Liyong Yu, Investment Manager at PICC Asset Management Company Ltd. (a top-tier asset management firm in China) will be speaking on the QDII and QFII topic.
The San Francisco Conference will also bring investment and business opportunities to participants, by featuring 15 promising U.S. and Canada listed Chinese companies which include Silvercorp Metals, Inc. (TSX:SVM), Continental Minerals (TSXV:KMK), China Technology Development Group (Nasdaq:CTDC) and Far East Energy Corp. (OTCBB:FEEC), and 15 fast growing private companies from China with interest to enter the U.S. capital market.
As stated by Fornia Lau, manager of business development for ChineseWorldNet.com Inc., "With the prevailing growth of the potential of Chinese enterprises and operations, many American financial institutions and professionals are hungry for the knowledge and expertise that the GCFF - San Francisco Conference 2008 will be able to give them. This is the perfect opportunity to take the first steps on the new and exciting horizon that China is."
This event is by special invitation only therefore please visit www.gcff.ca or call (604) 488-8878 for delegate registration.
ChineseWorldNet would also like to welcome the GCFF Global Corporate Sponsors this year which include Fraser Milner Casgrain LLP, Hodgson Russ LLP, KPMG LLP, and the TSX Group. Special thanks to other sponsors as well for their continued support throughout the year.
In addition, ChineseWorldNet was also pleased to co-host the recently held China Markets Seminar in association with KPMG's Emerging Markets Practice and CIBC World Markets, which came to a successful conclusion on April 28th. This exclusive seminar discussed the evolution of the Chinese market, and investment opportunities both inbound and outbound from China. Distinguished speakers include Jeff Rubin (Chief Economist and Chief Strategist, CIBC World Markets), and executives from China Merchant Securities Co. Ltd. (HK) consisting of He Zhong (Deputy General Manager, Head of Research), and Ray Feng (Deputy General Manager, Head of Asset Management).
Why are institutional investors rushing to buy into foreign companies with CBM production-sharing contracts in China?
Perry Capital LLC led the financing. With about US$14 billion under management, the US$78 million, which the New York-based investment firm raised in late May, was a drop in the proverbial bucket.
A few days later, Morgan Stanley Asia stepped in with five institutional investors announcing the completion of a convertible bond financing for the same company.
In an early June news release, Zhongyu Gas Holdings was delighted to ‘highlight the participation of a number of large institutional investors' in the company's recent financings. The company also noted that Perry Capital has now invested in more than five percent of this CBM gas company. They also pointed out, “Perry Capital has made investments globally in the energy sector, including companies with CBM operations.”
About the same time, one of the CBM companies we've been following, subsequent to an IPO on London's AIM exchange announced it had raised US$50 million through an unnamed institutional investor. Green Dragon Gas Ltd issued a zero-coupon convertible note, which matures in May 2009, and is convertible at US$5.56/share. UBS and Quam Capital acted as facilitators in this financing.
Green Dragon's chief executive Randeep Grewal explained this would help the company ‘accelerate its growth plans for this year.' Based upon the company's coalbed methane drilling success, completed earlier this year, Green Dragon was selected as a featured CBM company in StockInterview's “Investing in China's Energy Crisis.”
As of March 31st, Far East Energy Corp (OTC BB: FEEC) reported that institutions held 13 percent of the company's float. Mutual funds include Heartland Value Fund, Dreyfus Premier Greater China Fund and The China Fund.
Canada's leading natural resource investment firm, Sprott Asset Management – with amazing investing success stories in uranium and molybdenum mining stocks – invested in Pacific Asia China Energy (TSX: PCE), which is not only developing its CBM project in China, but also includes a drilling company subsidiary to help degasify China's coal mines.
Why are institutional investors rushing to buy into foreign companies with CBM production-sharing contracts in China?
China has mobilized a national campaign to utilize CBM gas in every way possible in order to clean up its act – with regards to both air pollution and oil/coal dependence. Since mid 2006, the National Development and Reform Commission (NDRC) has hammered away to prioritize CBM gas in the energy mix.
In an April 2007 memorandum, China's Ministry of Finance began circulating to the country's provinces, autonomous regions and municipalities under the Central Government's control for opinions on subsidizing the development and utilization of CBM gas. Translated into English, the introduction announced:
“At present, the market of CBM development and utilization is not mature with high cost of development and utilization and bottleneck in technology. The Ministry of Finance decided to allocate appropriate subsidies to CBM civil gas in accordance with the spirit of ‘Special Meeting Summary for Study of Comprehensive Treatment and Utilization of Coal Mine Gas' (Guoyue (2007) No. 19) by the State Council General Office so as to encourage CBM development and utilization.”
This also includes the companies moving their coalbed methane projects forward. The memorandum also stated, “The enterprise which engages in CBM development is eligible to enjoy the financial subsidy…”
Government subsidies are the vehicles which cause energy-related projects to soar. The recently re-emerging U.S. nuclear renaissance can trace its beginnings to congressional subsidies. So can the revival of renewable energy sources, such as windmill power.
After the U.S. energy crisis of the 1970s, government subsidies launched the U.S. development of coalbed methane resources in Alabama, New Mexico and Wyoming. Coalbed methane gas now provides about 8 percent of the total U.S. natural gas production.
China is aiming for 10 percent of the country's natural gas consumption by 2011 – just from coalbed methane gas.
But there are transition problems which require resolution to achieve this goal.
Just for the natural gas distribution business in China, Hong Kong and Chinese companies are now on track to raise about $500 billion in capital. Privately held Sino Cheers, which is registered in Hong Kong, hopes to construct an 800-ton/day LNG plant in Shanxi. The company has adequate capital and technology, but can not acquire enough CBM or natural gas to proceed.
This comes at a time when China is zealously trying to reduce energy consumption per unit of gross domestic product. Because of China's reliance upon coal-fired plants, and its double-digit GDP growth, the country reportedly produced 6,200 metric tons of CO2 in 2006, overcoming the Unites States as the world's largest producer of carbon dioxide.
In response, China has begun a series of energy-slashing programs. One includes setting temperatures in public buildings at no higher than 79 degrees Fahrenheit. This comes at particularly bad time – earlier this week, electricity consumption from air conditioning use in Beijing was the highest in history and nearly matched the city's maximum capacity.
Another step is a program to switch over Beijing's electricity production to natural and CBM gas in time for the 2008 Olympiad. China's Central Government wants to dress up Beijing and end the stigma of being known as one of the most polluted cities in the world. Some suspect CBM gas may be used to light up the Olympic flame.
As a result, CBM, natural gas and LNG are very ‘hot' right now, according to one of our sources in China.
And speaking of hot, China is experiencing a blistering heat wave in June. Just as we find central Romania and the Balkans suffering an unusually hot month, temperatures in China's ‘hottest area, western Turpan in the country's Xinjiang region hit 112 degrees Fahrenheit this week. This could put China at the risk of rolling blackouts during the heated summer months.
This could force the Chinese to accelerate their crossover to increased natural gas consumption.
By comparison, natural gas prices in the U.S. have become a headache for the Industrial Energy Consumers of America (IECA). The trade organization represents major manufacturers relying upon natural gas and other energy sources, and it includes Abbot Laboratories, Coors Brewing, Dow Corning, Tyson Foods and U.S. Steel among its many members.
The ICEA president recently argued natural gas prices have ‘increased an incredible 156 percent since May 2000.' He believes natural gas prices could rise another 35 percent by January while gasoline prices could drop by 20 percent. The Federal Energy Regulatory Commission (FERC) announced in its Summer Energy Market Outlook that electricity prices could increase by 30 percent. ICEA blames natural gas and electricity price increases are rising because of the U.S. reliance upon gas-fired electric generation. Since 1996, electricity generation by natural gas has jumped by nearly 75 percent.
ICEA pointed out that while natural gas provides 20 percent of America's electricity, this fuel accounts for about 55 percent of the electric industry's fuel expense – US$50 billion out of $91 billion!
But the U.S. has also increased natural gas imports and is relying upon the Middle East for natural gas supplies – transported by LNG from Egypt, Oman and elsewhere. China's ravenous energy appetite has already struck Australia. As we recently reported, Alcoa (NYSE: AA) has complained of a natural gas shortage in Australia, where 13 percent of the world's alumina is produced in three western Australian refineries. Metals and chemical sectors rely upon natural gas during the manufacturing process. China sewed up a 25-year supply from one of Australia's largest natural gas reserves – the North West Shelf – in order to continue powering the country's industrial sector.
One report, which we obtained, indicates that Chinese coal mining companies and Coal Mining Bureaus are trying to circumvent involvement with China United Coalbed Methane (CUCBM0 in developing coalbed methane projects.
This strategy involves de-gasifying the methane from coal mines and selling the CBM gas directly to the local gas distribution companies. That is how energy-starved China has become.
For now, foreign institutional investors are feasting on the potential opportunities China's vast coal fields provide. The Central Government's insistence on intensifying degasification projects open doors for those with drill rigs.
Over the past year, we have observed the emergence of one company's subsidiary proceed with the launch of its degasification services. In mid February, the joint venture of Pacific Asia China Energy (PACE) and Australia's Mitchell Drilling signed the first coal mine degasification project with Shenhua Group's Baijigou coal mine in Ningxia province. According to PACE vice president Steven Khan told us that both Dymaxion® drill rigs are currently degasifying this coal mine. He pointed out, “The US$4.5 million contract is a major win for us. We now have a window of opportunity to become a leading degasification drilling company in addition to developing our CBM concessions. The challenge is to finance and build enough rigs to meet the task.”
We asked Khan for his reaction to the recent spate of institutional financings for CBM companies. “The capital raised and concurrent investment by Perry Capital into Zhongyu Gas for their CBM projects further demonstrates the enormous opportunities in CBM development in China.”
By James Finch
FEEC new PDF huge potential, ready to move to Amex?
http://www.fareastenergy.com/documents/Corp_Pres_2008_May_15.pdf
FEEC.ob JUMP to AMEX STRONG BUY !!!