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No there will ALWAYS be some demand for home purchases, hell I remember one mortgage from 1983 was 13+%, but inflation like now was pretty damn high.
You know the beauty of Fannie Mae and Freddie Mac is that we spoiled Americans have access to the 30 year fixed rate PREPAYABLE AT ANYTIME mortgage, so you can refi whenever rates drop.
Ask our northern neighbors in Canada (ehh?) if they can prepay their home mortgage ANYTIME WITHOUT PAYING A PREPAYMENT PENALTY !
Straight from a Dictator's Playbook: NO QUESTIONS TO SENIOR MANAGEMENT WILL BE ALLOWED AT THE EARNINGS RELEASES DURING THE DURATION OF THE CONSERVATORSHIP!
Nice!
Enough with the 14 year CONservatorship, Uncle Suggy, you are turning America into a Banana Republic!
From the Syllabus in Collins:"(a) The Recovery Act grants the FHFA expansive authority in its
role as a conservator and permits the Agency to act in what it deter-
mines is “in the best interests of the regulated entity or the Agency.”
§4617(b)(2)(J)(ii) (emphasis added). So when the FHFA acts as a con-
servator, it may aim to rehabilitate the regulated entity in a way that,
while not in the best interests of the regulated entity, is beneficial to
the Agency and, by extension, the public it serves. This feature of an
FHFA conservatorship is fatal to the shareholders’ statutory claim.
The third amendment was adopted at a time when the companies had
repeatedly been unable to make their fixed quarterly dividend pay-
ments without drawing on Treasury’s capital commitment. If things
had proceeded as they had in the past, there was a possibility that the
companies would have consumed some or all of the remaining capital
commitment in order to pay their dividend obligations. The third
amendment’s variable dividend formula eliminated that risk, and in
turn ensured that all of Treasury’s capital was available to backstop
the companies’ operations during difficult quarters. Although the
third amendment required the companies to relinquish nearly all of
their net worth, the FHFA could have reasonably concluded that this
course of action was in the best interests of members of the public who
rely on a stable secondary mortgage market. Pp. 13–15."
I think the Executive and Legislative Branches (and the industry) are content with the status quo and the Wild Card is if ever the Judicial Branch finally figures out what happened here and provides some Justice for the shareholders.
We'll see what happens.
Who ever heard of a 14 year conservatorship with the GSES making $20B to $30B per year?
Absolutely crazy!
Response to Do Not Understand: Actually, manufactured homes are not so bad when attached to a concrete slap or basement and the construction methods are as good as stick built on site housing. Typically they save builders some costs, although transporting a house in several pieces has got to be expensive.
Sandra said they are looking at Auxiliary Units (aka Granny flats) and manufactured homes as potential ways to alleviate what she described as an "acute housing supply" problem.
Her personal favorite appears to be Low Income Housing Tax Credits (issued by Congress) which allow multifamily investors to help justify making ling term investments in low and moderate income multifamily housing.
With interest rates jacked up so high now by the Fed (and probably going higher), the housing supply problem may self correct as mortgage rate increases have priced out many hard working American Families.
I suspect Maxine is just trying to help her targeted voter base, but it was reassuring to hear Sandra Thompson mention before joining FHFA she worked for FDIC and then say that a 14 year conservatorship was unusual as normally financial intermediaries are either rehabilitated or liquidated.
Of course later she said UST and the Federal Reserve will have to be consulted prior to release and most importantly capital will need to be rebuilt.
I didn't get an impression that she was in any hurry to release but more like stick with the status quo (which the FM WATCH loves!)
Also of note is what we've heard from FHFA directors over the last 4 administrations, that they are waiting for the US Congress to decide on the future direction of the US Housing Secondary Mortgage Market.
Here's a crazy idea, FHFA should follow HERA and rehabilitate and release the GSES!
Frank Nothaft, long time Freddie Mac Chief Economist passed away, WSJ obituary: "Amy Crews Cutts only heard Frank Nothaft curse once in the more than two decades she knew him: when he learned a junior staffer was at risk of deportation because of visa issues.
Dr. Nothaft was "like a dog with a bone" seeing the case resolved, said Ms. Crews Cutts, who worked as deputy chief economist under Dr. Nothaft at Freddie Mac. The staffer was soon rehired and permitted to stay in the U.S., thanks in part to Dr. Nothaft's pressing of the case with Freddie Mac attorneys.
"It's easy to just say, 'That junior researcher made a mistake,' " she said. "Frank would always say 'we' made a mistake or otherwise throw his body in front of any danger that might come the way of junior staff."
Dr. Nothaft joined Freddie Mac, the government-sponsored corporation that buys mortgages and packages them into securities, in 1986. He was chief economist from 2001 to 2015, providing research and guidance to industry executives trying to make sense of the housing crash that spurred the 2008 financial crisis .
"We didn't have any models—I don't think anyone really had any models—to forecast the extent and severity of the home-price crash," Dr. Nothaft said in a 2021 interview with a Duke University researcher . "Looking back, I can explain and understand what happened, but it was hard to imagine going through it."
He died on June 5 while running a 5K race in McLean, Va. The suspected cause was a heart arrhythmia, his wife, Lisa Greenfield, said. He was 66.
Dr. Nothaft gained a reputation for his diligence as a researcher. He had a natural ability to communicate complex trends to industry leaders and everyday home buyers alike, colleagues said.
"Everyone knew that if he was presenting a paper, it was going to be good," said Mike Fratantoni, chief economist at the Mortgage Bankers Association. "And if he was discussing a paper, he was going to find the problems."
Peers knew to look for a bow tie to find Dr. Nothaft at industry conferences. Once people began to associate him with bow ties, he started receiving them as gifts, his wife said. He amassed a collection of hundreds and never wore a clip-on, she said.
"He had one for every occasion," Ms. Greenfield said.
Frank Emile Nothaft was born on April 10, 1956, in Jersey City, N.J. He became an avid chess player, going on to become the captain of his high school team and a lifelong member of the United States Chess Federation.
Dr. Nothaft attended New York University, the alma mater of both of his parents. He graduated in three years with degrees in math and computer science before earning his Ph.D. from Columbia University.
He met his wife, Ms. Greenfield, via a roommate in Manhattan. They were friends for a number of years until Dr. Nothaft accompanied Ms. Greenfield to a wedding, where she witnessed his dancing skills. They married in 1981.
He began his career at the Federal Reserve in 1983, where he developed an interest in housing economics as an economist in the mortgage and consumer finance section. He prepared housing- and mortgage-market research for use by Fed officials responsible for setting monetary policy. At the central bank, he saw parallels between labor markets and the housing market.
When he joined Freddie Mac in the mid-1980s, it had yet to become a giant in the mortgage industry. During his time at Freddie Mac, he saw the company balloon in size, struggle during the financial crisis and eventually transition to government conservatorship.
Dr. Nothaft left Freddie Mac in 2015 to become chief economist at CoreLogic, the country's largest provider of information on home values, mortgages and other housing statistics for financial firms and real-estate brokers. Starting in the summer of 2021, he was part of a group of experts who delivered monthly briefings on the state of the U.S. rental and housing markets to White House officials.
Richard Green, director of the Lusk Center for Real Estate at the University of Southern California, said he had to budget extra time when he got lunch with Dr. Nothaft at Freddie Mac. So many people would stop to talk to him on the way that it would sometimes take 30 minutes to reach the cafeteria.
During the 5K last month, Ms. Greenfield noticed his time was slower than usual. She later learned he had stopped to talk with an old friend he spotted on the sidelines.
"That was Frank, he was a real people person," Ms. Greenfield said. "I was specifically pleased to find out that he was having a grand old time doing it."
He is survived by his wife, three sons, one granddaughter, his father and sister.
Write to Orla McCaffrey at orla.mccaffrey@wsj.com
Frank Nothaft, Former Freddie Mac Chief Economist, Communicated Complex Ideas Simply
Something about Rep. Sherman, he's a GSE privatization foe for sure, almost passionately! But he's only 1 House Representative! The GSES shareholders have seen POTUS'S and Legislators (now Judges?) ATTEMPT TO DRIVE A STAKE THROUGH OUR HEARTS, BUT YET HERE WE ARE.
For some reason, the $10T to $20T US MBS residential Mortgage Market needs the GSES and FHFA needs to follow HERA, so we'll see what happens....
Sandra doesn't lose sleep at night worrying about the shareholders !
ST kept saying today, that she thinks EVEN AFTER the GSES have enough capital rebuilt, it will be up to the UST and the Federal Reserve decision makers to come to a consensus on release and she's also (like her FHFA predecessors), waiting for the US Congress to determine the future of the American Housing Secondary Mortgage Market.
I don't think the Executive and Legislative Branches are going to do squat during her tenure as Director of FHFA and the judiciary seems clueless.
Meanwhile, we rebuild capital organically unless that creaking sound I hear from the US Housing Market is the beginning of a downturn....
Part of the problem is that many lawmakers in the House are wired into the state legislatures that can hard wire and lock the House members Congressional District via gerrymandering. Ever 10 years the US Census comes out and whichever party is in control of gerrymandering at the state level usually comes out ahead.
I think US Congressman Sherman is one of the most adamant foes of GSE shareholders, hell, he said flat out today, "They should be government federal agency's, and he's been hostile to recap and release for YEARS.
In today's testimony, ST said she took a stroll on the DC Mall grounds during some "manufactured housing industry sponsored event" and said these tornado magnets have come along way and she was impressed, she'll get back to people on what if anything the gses do going forward....
I know TH expressed an interest in seeing HOW the Stress Test methodology worked/assumptions etc. We will soon find out just how transparent Director Thompson is OR whether see holds her cards close to those mammaries !
Maxine was looking sweet today, liked her hairdo and her Dynamite jewelry and DC Summer wardrobe. "Sister, is your man taking care of you, whatcha doing after the hearing.... HeeeHeee! !
ST to Davidson: "The new Office of Finance Technology in Mortgage Market, give me mo' money and power!"
ST to Gottheimer: "Give me mo' LITC and I will increase housing supply!" "Credit scoring model is very complex and I need mo' time!"
ST to Loudermilk: "We'll finalize the new gses new permissible projects rule, WHEN WE'RE DAMN GOOD AND READY!". Capice? "Racial Equity Housing Plan is okay, according to Sherrod Brown's right hand man, head of MY Office of General Counsel." "I have no control over interest rates and safety and soundness are my 1st priority along with sustainable lending."
ST to Axne: "Sister, I hear you, Tenant protections and Mobile Homes (aka tornado magnets) are important!"
ST to Gonzalez: "I'll look into construction loans. You want mo' housing supply? We're thinking mo' mobile home financing, BUT GIVE ME MO' LITC AND IT WILL HELP!". "7.5T is a lot, in 18 months they've built 80B in capital, mo' capital rebuilding and mo' CRTS ARE THE ANSWER..."
ST to Fla. Rep. Bill Posey, "It's up to Congress to determine the future direction of the American Housing Mortgage Secondary Finance market." "We are working to rebuild capital and reduce risk." "GSES play a countercyclical role and they do step up when necessary, 2008 & 2020."
ST: "A lot of risk was removed when home borrowers just refinanced, coupled with the runup of housing prices have considerably derisked the mortgage credit risk."
ST to Luetkemeyer: "Other factors need to be considered, UST, Federal Reserve, just meeting capital standards alone, WON'T BE ENOUGH."
ST: "I have spoken to POTUS about affordable housing and housing issues."
ST to Vargas: "Housing supply issue is acute, exasperating affordability issue. We've expanded LITC and affordable MF loans. 96% of forebearance loans are performing."
ST to Barr: " WE LOVE CRTS!" Sweetheart, YOU'RE GIVING AWAY UNNECESSARILY CAPITAL NEEDED FOR REBUILD!
ST to Barr: "Mortgage loan limits are determined by statute."
Sherman to ST: "The gses should be federal government agencies, the shareholders have no right to rehabilitation. Don't enrich the evil shareholders"
ST to Williams: "We are working diligently to make sure the gses are safe and secure and this is a PREREQUISITE TO EVENTUAL RELEASE." "Congress can decide on the future direction of the Secondary Mortgage Market and we will continue to rebuild safety and soundness." "We believe tenant protections are important.". "2nd and Vacation loans are part of risk management."
ST to Foster: "Give me the power to regulate 3rd party service provider oversight!"
ST to French Hill (nice Seersucker suit on this rather balmy hot DC afternoon, sir!): "WE WILL RELEASE THE RESULTS OF OUR STRESS TEST IN AUGUST."
ST to Beatty (nice floral arrangement, did Sherrod send those?): "The housing trust fund and capital magna fund are statutory, and would need to be increased by statute. Safety and soundness are important and I take my job very seriously."
ST to Rose: "safety and soundness AND access to equitable credit are NOT mutually exclusive." "CONservatorship has lasted too long and unprecedented, no easy answer, certainly whenever the Congress decides on the future direction of the Secondary Mortgage Market in America, the right decision makers can get together.""1st Loss Capital NOT taxpayers should absorb losses. My priority is to make sure they are sound, not quick answer, the Federal Reserve and UST need to be considered."
End of Round 1
ST: "No one expected the gses to be in CONservatorship for close to 14 YEARS!"
ST: "Allowed to retain capital $80B so far, $300B + required."
ST: "CRTS ARE IMPORTANT"
Maxine seemed to think releasing the gses was not a good idea during Director Calabria's reign...
https://financialservices.house.gov/events/eventsingle.aspx?EventID=409650#Webcast
Patrick McHenry: "Since the GSES were NATIONALIZED under the Bush administration...". Nice bow tie !
2 separate idealogical views and the GSES are caught in the middle!
RELEASE THE GSES FROM CONSERVATORSHIP!
MmmHmm, Maxine was ripping into Dr. Mark Calabria!!!!
Navy, do you know if Glen has posted a link on this?
We don't even know what Janet's views of this defacto nationalization are, she hasn't really made any public statements and the UST personnel dealing with the GSES hasn't said anything substantive publicly.
Don't think UST has spent much time on the GSES because the status quo invites government inertia and they've got their hands full with other domestic and overseas priorities.
The current and pending litigation needs to work its way through the federal judiciary in order to plan for release, it seems to me, what do you think?
You ain't kidding! Even the Supremes bought the bogus Death Spiral, FULL LINE AND SINKER! And that's AFTER Plaintiff shareholders pryyed the smoking guns from inside the government's possession after expending years in Litigation and millions to obtain the clear and convincing evidence to refute the Death Spiral argument.
Merika, my kinda place !
Whatcha gonna do bout it!
I say we keep suing Uncle Suggy until he takes some personal responsibility for his abusive and coercive behavior. I know you and all the other shareholders are not optimistic, BUT REALISTICALLY AND CONSTRUCTIVELY, WHAT OTHER CHOICES DO WE HAVE?
Why do you think the FHFA wants to keep the CONservatorship going on forever? Unlimited budgeting for the federal agency with ZERO accountability from our ELECTED representatives in Congress!
Given the status quo, we should rebuild the necessary capital within only 33.75 years!
What do you recommend we constructively do about it? We are in a perpetual CONservatorship and waiting on the benevolence of the enslavers of our economic property rights doesn't seem like the best strategy....
Makes sense, thanks Guido! You know who really messed up was the man from the video clip you sent to the hsfc! Mr. "the GSES don't need no stinkin' capital" Mel Watt. The federal government has really screwed up this 13+ year temporary CONservatorship badly and how many hsfc members will call that out to Sandra Thompson on Wednesday?
Zero!
I hear you Navy! Franklin Delano Raines spoke out a wee bit at that NY or Washington forum quite some time ago, I think you had provided the link. OTHER THAN THAT BOTH HIM AND DANIEL MUDD HAVE CONTINUED PRETTY MUCH IN SILENCE, I WISH THEY'D SPEAK UP!
The unfounded and disproven claim that the GSES caused the Great Financial Crisis, still exists today, the FM WATCH people love it!
Why does Messrs. Raines and Mudd remain silent? Could it be that the insurance companies who may have paid out any settlement money made them sign an agreement, "to never speak about this again." ?
Don't know, Tim Howard probably has a better guess than me, can someone ask him on his blog, I've never posted over there.
Well, when I worked at Fannie Mae between 1988 and 1993, the CEO, David Maxwell left after being there for a dozen or so years. He told me one time, "The biggest risk for the stock is political risk".
He was spot on. To alleviate or hedge some of that risk he hand picked Jim Johnson (may he rest in peace) to succeed him. Here's a picture of David and Jim: https://www.washingtonpost.com/local/obituaries/james-a-johnson-executive-who-transformed-fannie-mae-into-political-powerhouse-dies-at-76/2020/10/18/48dd95a8-0d88-11eb-b1e8-16b59b92b36d_story.html
JJ was Walter Mondale's campaign manager and plugged into DC politics. Read the article. JJ's successors, Franklin Delano Raines (FDR-I sh*t you not!), and Daniel Mudd were also very well paid Washington insiders/influencers.
Needless to say these men played hardball politics and used a portion of the companies wealth to set up and fund the Fannie Mae Foundation, which handed out benefits left and right to politicians who saw things their way.
I remember, Franklin Delano Raines, testifying one time in Congress, pointing out the nice painting behind the Senator and asking him if he liked it! Pretty cocky dudes!
The industry created FM Watch in an attempt to mute some of the power and weight the GSES threw around in DC:. https://www.washingtonpost.com/archive/business/1999/06/18/fear-of-fannie-and-freddie/d8fb9253-800a-4ba9-965d-696c1556b8db/
The private sector financial intermediaries have wanted a piece of the action for a long time and got it in spades when the PLS MBS took off, the rest is history, BUT MANY INFLUENTIAL PEOPLE DON'T LIKE THE GSE MODEL and that continues today via the "free financial press" who don't have much incentive to dig deep and find out what exactly happened here and possibly upset their major customers like Wells Fargo and a whole host of others as the FM WATCH crowd are making bank at the expense of keeping the status quo at the GSES.
The Wall Street Journal should be all over this defacto Nationalization of two private corporations. Instead, Andrew Hackerman, quotes the biggest frickin douchebag in this whole sorry arse Gubmint drama, Jim Parrott, like he's some kind of revered industry expert.
I highly suspect Robert Murdoch and/or his editorial board at the WSJ, CAN'T SAY ANYTHING NEGATIVE ABOUT THE NATIONAL ASSOCIATION OF REALTORS. Why?
Because WSJ'S parent corporation, Dow Jones, is RENTING REALTOR.COM, a trademark website that probably brings that old fart Murdoch millions in revenue per year.
I'm sure that the NAR, MBA, NHBA, et. al, LOVE THE STATUS QUO!
Guaranty Fees are TRIPLE what they were when the GSES we're private corporations! Who pays for that? Hard working American Families and it unnecessarily adds to everyone's housing costs!
Jim Parrott is an idiot for "making sure that they never go pretend private again" and "Salting the Earth with the shareholders CARCASSES!". What happens when you steal $308B from private corporations and give it to the UST in exchange for NOTHING? The tripling of costs for Americans to access the implicit federal government guarantee.
https://www.urban.org/author/jim-parrott
Thank you for letting me vent!
You may now resume your regularly scheduled activities !
To date, with the exception of one reporter from the NY Times, 5 years ago, the "free world financial press" has been clueless and totally struck out on answering the question of why 2 formerly private corporations who made close to $35B last year in Net Income are still in a 13+ year conservatorship.
For the US taxpayers, the transfer of our economic rights to the US Treasury has resulted in 100's of BILLIONS of dollars flowing straight into the federal fisc for NOTHING.
Of course they could care less!
Why do you think they SHOULD care when the US government does a defacto Nationalization of two formerly private corporations and it goes unchecked by the federal courts?
This 13+ year "temporary CONservatorship" by the government is Exhibit A in explaining why Americans confidence in their government is at 65 YEAR LOWS! Look at this chart by Pew Research, absolutely horrible!
https://www.pewresearch.org/politics/2022/06/06/public-trust-in-government-1958-2022/
It's a shame that Uncle Suggy has gotten away with this crime for so long, especially considering close to $100 million has been spent in Litigation expenses and da Gubmint is unable to accept ANY culpability for their atrocious behavior to the shareholders and remains as recalcitrant as ever.
You mustn't disparage the Great one, WE ALL WILL BE LOST WITHOUT HIS GREAT WISE WAYS AND WISDOM !
Wow, how many fnma shares have they liquidated since Collins, and what do you guesstimate the avg daily volume was since then?
Again I appreciate you keeping your positions and not bailing post Collins and contributing to the board even though we can agree to disagree on some aspects of this most bizarre chapter in American financial history.
No, actually I think it would bring the two sides together and uniting us against the real reason we are all here, Fighting Federal Government Overreach!
I appreciate your enthusiasm and I like the idea but I still run quite a few businesses and other important life events and really just don't have the time, but could probably squeeze in some hours of bullhorn shouting and sign carrying whenever I get an occasional window of free time.
Someone would have to figure out how to organize it, including possibly obtaining permits from the DC gubmint, creating a website so we can sign up for 1 or 2 hour protest blocks, and perhaps most importantly figuring out how people could donate without worrying about their funds being misspent.
The high school kids sounds fun in theory but once trying to exercise this simple idea in DC, you will see that it will soon evolve into a job.
It'd be nice if there were turn key protest programs run by businesses that citizens, nonprofits, corporations, and institutions could turn to, but I've never heard of that before....
Counsel from each side will likely give the Judge an estimated trial time, likely in days or possibly a week or more. A lot depends on what if anything the opposing sides agree to stipulate and how many expert witnesses and other witnesses will be called.
Uncle Suggy has a hard time convicting sophisticated financial crimes because the average attention span of a typical American is about that of a fly and weeks of mind numbing testimony from financial experts is pretty damn boring.
Let's hope our lawyers develop a theme for the trial and are able to convince the Jurors that the government has misbehaved badly here and restitution is appropriate and necessary to put the shareholders in the same position they would have been in but for the breach of the implied contract.