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Good article Mr. Fence!
I'm with you brother!
Amen to that!
I know, I'm not selling either cause i know as soon as i do, the price will explode. Im holding, i got a lot of money in this.
Then why do they keep coming out with all these talks of a wind down? it is killing the share price!
Good Article! Thanks Obi!
New Bill downpayment REQUIREMENTS -
(C) Downpayments which shall be equal to not less than 5 percent of purchase price, and--
(i) in the case of such mortgages with downpayments equal to not less than 5 percent but less than 30 percent of the purchase price, the mortgage is covered by private mortgage insurance purchased at the time of origination in an amount sufficient to cover each loan to the equivalent of not less than a 30 percent downpayment; and
(ii) such mortgage insurance is issued by an entity that is subject to regulation as a mortgage guaranty insurer by the State of domicile of such entity or by the Federal Insurance Office (which regulation includes risk-based capital and reserve requirements).
Fannie Mae Downpayment Options
Flexible 100TM and Flexible 97®
Fannie Mae’s Flexible products let lenders offer borrowers more options for low down payment mortgages and more flexibility for borrowers’ sources of funds for down payment and closing costs.
Key Product Features
No downpayment (Flexible 100) or 3% down (Flexible 97)
Borrowers must make a minimum contribution of at least $500 of their own funds (Flexible 100 only), or 3% from flexible sources of funds (Flexible 100 or 97), toward downpayment and/or closing costs. In addition to borrower’s own funds, allowable flexible sources include gifts, grants or unsecured loans from relatives or nonprofits, employer assisted housing or secured borrowed funds
Loan amounts up to the conforming limit with no income cap and no homebuyer counseling required
Flexible loans are underwritten by Desktop Underwriter®, providing fast recommendations and streamlined documentation
This bill already failed twice! http://www.mortgagenewsdaily.com/12092011_gse_reform.asp
Awesome article ! Thank you! You made my day!
hopefully it opens at $20.00 tomorrow morning so i can celebrate and say "i got rich, QUICK!" lol!
This is not going to be an overnight stock get rich quick scheme.LOL. Be patient, there are a lot of things that need to happen first for another run. One of the bills needs to be shot down might do it.
I wish i could!
Obama administration pushes banks to make home loans to people with weaker credit
By Zachary A. Goldfarb,April 02, 2013
View Photo Gallery - : Obama administration struggles to help homeowners:?A look at the Obama…
The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.
President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.
In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.
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Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.
Officials are also encouraging lenders to use more subjective judgment in determining whether to offer a loan and are seeking to make it easier for people who owe more than their properties are worth to refinance at today’s low interest rates, among other steps.
Obama pledged in his State of the Union address to do more to make sure more Americans can enjoy the benefits of the housing recovery, but critics say encouraging banks to lend as broadly as the administration hopes will sow the seeds of another housing disaster and endanger taxpayer dollars.
“If that were to come to pass, that would open the floodgates to highly excessive risk and would send us right back on the same path we were just trying to recover from,” said Ed Pinto, a resident fellow at the American Enterprise Institute and former top executive at mortgage giant Fannie Mae.
Administration officials say they are looking only to allay unnecessary hesitation among banks and encourage safe lending to borrowers who have the financial wherewithal to pay.
“There’s always a tension that you have to take seriously between providing clarity and rules of the road and not giving any opportunity to restart the kind of irresponsible lending that we saw in the mid-2000s,” said a senior administration official who was not authorized to speak on the record.
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The administration’s efforts come in the midst of a housing market that has been surging for the past year but that has been delivering most of the benefits to established homeowners with high credit scores or to investors who have been behind a significant number of new purchases.
“If you were going to tell people in low-income and moderate-income communities and communities of color there was a housing recovery, they would look at you as if you had two heads,” said John Taylor, president of the National Community Reinvestment Coalition, a nonprofit housing organization. “It is very difficult for people of low and moderate incomes to refinance or buy homes.”
Before the crisis, about 40 percent of home buyers were first-time purchasers. That’s down to 30 percent, according to the National Association of Realtors.
From 2007 through 2012, new-home purchases fell 30 percent for people with credit scores above 780 (out of 800), according to Federal Reserve Governor Elizabeth Duke. But they declined 90 percent for people with scores between 680 and 620 — historically a respectable range for a credit score.
“If the only people who can get a loan have near-perfect credit and are putting down 25 percent, you’re leaving out of the market an entire population of creditworthy folks, which constrains demand and slows the recovery,” said Jim Parrott, who until January was the senior adviser on housing for the White House’s National Economic Council.
One reason, according to policymakers, is that as young people move out of their parents’ homes and start their own households, they will be forced to rent rather than buy, meaning less construction and housing activity. Given housing’s role in building up a family’s wealth, that could have long-lasting consequences.
“I think the ability of newly formed households, which are more likely to have lower incomes or weaker credit scores, to access the mortgage market will make a big difference in the shape of the recovery,” Duke said last month. “Economic improvement will cause household formation to increase, but if credit is hard to get, these will be rental rather than owner-occupied households.”
Obama is for or against????
The administration’s efforts come in the midst of a housing market that has been surging for the past year but that has been delivering most of the benefits to established homeowners with high credit scores or to investors who have been behind a significant number of new purchases.
“If you were going to tell people in low-income and moderate-income communities and communities of color there was a housing recovery, they would look at you as if you had two heads,” said John Taylor, president of the National Community Reinvestment Coalition, a nonprofit housing organization. “It is very difficult for people of low and moderate incomes to refinance or buy homes.”
Before the crisis, about 40 percent of home buyers were first-time purchasers. That’s down to 30 percent, according to the National Association of Realtors.
From 2007 through 2012, new-home purchases fell 30 percent for people with credit scores above 780 (out of 800), according to Federal Reserve Governor Elizabeth Duke. But they declined 90 percent for people with scores between 680 and 620 — historically a respectable range for a credit score.
“If the only people who can get a loan have near-perfect credit and are putting down 25 percent, you’re leaving out of the market an entire population of creditworthy folks, which constrains demand and slows the recovery,” said Jim Parrott, who until January was the senior adviser on housing for the White House’s National Economic Council.
One reason, according to policymakers, is that as young people move out of their parents’ homes and start their own households, they will be forced to rent rather than buy, meaning less construction and housing activity. Given housing’s role in building up a family’s wealth, that could have long-lasting consequences.
“I think the ability of newly formed households, which are more likely to have lower incomes or weaker credit scores, to access the mortgage market will make a big difference in the shape of the recovery,” Duke said last month. “Economic improvement will cause household formation to increase, but if credit is hard to get, these will be rental rather than owner-occupied households.”
Josh Lehn's good comments...
First of all, I am an investor in FMCC, and have been since about 1 month prior to the government takeover.
I'm going to put my bias aside for now.
What I am seeing needs done to make dismissing Freddie and Fannie makes in my opinion, any possibility of a good outcome coming from it very bleak.
1. The government would have to find buyers for the 5 Trillion dollars in loans the GSE's custodian. They cannot merely write-off 60% of the nation's loan portfolio as paid. Who would be the buyers? The banks that Originated them, and possibly the Insurance company the government wants to create to replace them. In other words; How do you sell 60% of the mortgage market to 40% of the Mortgage market?
2. The government has to spend money to restructure, which most likely exceeds the cost of the GSE's entire portfolio, cost of labor, cost of capital, etc. Where does that money come from? It comes from us Taxpayers. How much will that cost us as tax payers on average? $16,500 + per person in the country which means some households will be liable for around $33,000 in additional taxes.
3. Removing a liquidity merchant from our Mortgage market will result in an economic downturn unlike we have seen since the 1930's. The reason Americans own homes at the rate and population we do, is because the loans to acquire them have been available. You cannot compare America's economy to other developed economies in an accurate representation, because our interest rate environment, population environment, work and labor force environment, and our inflation rate is lower than other developed countries. Without loans to facilitate home ownership, our real estate market is going to be crushed, and it makes up something like $26 Trillion of our country's asset classes. And without the assurance of assuming the risk of loans originated that the GSE's offered, Banks are not going to make loans.
4. Banks currently have better opportunities to profit than by making loans. Because a loan is a risky proposition, it has recently become a tool big commercial banks have moved away from implementing. The Fed has offered an interest rate on Bank reserves since 2010 in an effort to get banks to hold onto larger than required amounts of capital to insulate against the possible toxic assets lingering around. The rate at which the Fed offers its Reserve Interest Rate up until recently, has been higher than 30 Year Treasuries, and the Fed Funds Rate. And most importantly, there's no risk involved in holding reserves. In 2012, Commercial banks on average were holding 121% of their deposits in reserves. In other words, for every dollar a Saver invests with them in a checking account, they were saving $1.21. How do you hold reserves greater than liabilities? Not only do you not make new loans to qualified applicants, you call in loans!
5. The elimination of the GSE's would theoretically put all risk obligation from both past and future debt on the commercial banking system. In other words, our 200 Billion dollar Banks would become publicly traded Banks worth more like 700 Billion +, observe the consequences of making risky loans, which would reduce their willingness to lend, and suddenly "Too Big to Fail" becomes "Too Big to Exist."
Now, if you want my opinion as an investor:
The GSE's have been working and driving our economy since 1938. It took us 70 years to recognize a "housing bubble." Do we like the fallout of a bunch of bad loans? No. Absolutely not. But do we destroy 70 years of a successful industry which has been an American Icon and a source of great promise to new owners when it is becoming a competent and profitable industry because of around 8 years of bad lending by the banks it bought its portfolio from? I personally don't think so. If you were going to let if fail, you should have done so before you invested in keeping it alive. Now it's doing well and our inflation rates are stable, and Unemployment is improving as a result of it. Not only that, It's a company that could actually be used in a way that would reduce the national deficit, if a contract with the government was maintained, where the government was contracted a percentage of the loan profits in exchange for the aid it offered to keep the GSE's going.
Keep in mind a tight housing economy also doesn't just affect Housing; It affects all consumer staples, ownership, education. Raw materials are getting expensive relative to incomes, and the first thing any family thinks about is their house. Rent is an unsuitable substitute, because most rent is basically priced into whatever a payment on ownership would be - you are usually paying money merely to use on a scale equal or slightly less than what it would cost to own. If a family has to deal with 20% home inflation, but a 2-3% increase in wage, but has no bank willing to lend them money, the result is that family will buy a $2000 used car rather than a high end or middle ranged car that is used, and that they won't be able to pay $3-$4 for milk. If they cannot pay $3-$4 for milk, Guess what? Milk farmers suddenly have a situation where their cows cost more to feed and maintain than the farmer can make selling the milk. And this is the result you will see in food, consumer staples like clothes, construction, landscaping, technology.
The Goverment wants to destroy investors, destroy our economic dynamic for everything dealing with daily life, destroy our ability to sustain beyond taxation, and all because the names involved in the situation were the scapegoats of 2008.
That's my opinion, and I further believe a government with something like a 26% approval rating by its peers should have the qualifications to make this decision. They are not economists, financial experts in large, and they certainly don't understand consumer psychology as much as they should for being in the offices they are in.
P.S. I emailed both Bob Corker and Mark Warner requesting they create a public forum of discussion for this subject among the american people in large, because I believe this subject is greater than some 500 lawmakers because of the scale of the target. Neither one has responded to my request at all. This subject is probably even more important than a decision to go to war because it's a domestic issue that affects every person who calls themselves an American.
That website is trash! It is a day late and a dollar short. It is always late on it's suggestions. After a few days of gains it will say 86% BUY! But it will be too late to buy. You should have bought at $1.15!
FNMA 2005 common dividend - * a dividend on its outstanding common stock of $0.26 per share;
The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors. - Warren Buffet
http://seekingalpha.com/article/1465991-dont-buy-fannie-mae-or-freddie-mac
Not a bad article. Three possibilities expressed.....
Can you explain the warrants? What do we need to happen? The gov. owns 79.9% of the common shares? Would they sell at book value of $60?
IS he going to buy any more of the commons? DID he say? I know he bought 250 million of the commons a few months back..
IGNOR THE CROWD! GOOD MOTTO!
The Corker-Warner bill, which has attracted bipartisan support from several members of the Senate Banking Committee, would replace the GSEs with a largely private market backed by a catastrophic government guarantee.
Isn't that what they were before 2008? largely private market with gov. guarantee? I don't get it.
I would not be surprised to see sun $1.00 levels. But I'm prepared to go down with the ship. Which means I'm not selling no matter how low it may appear to get. I want to see the final outcome of all this, which could take a year or two. You got to think LOOOONNNNNNGGGGG! If everything pans out like many of us know that it will, Conservator ship will be over and dividends restored to shareholders. Then the price will skyrocket! If this stock ever goes to $56.00 i will be putting in my two weeks notice at work!
My theory.... The stock market is a business. it is the market makers business. It is not designed for us. It is for them. They set up the bid/ask price. Their objective is to make a profit like any other business. Their are some factors that they can't control, like institutional holders of a stock. However as the price is falling, as of today, they are buying, or "accumulating". Many traders and investors buy into this facade of seeing a stock that they perceive to be loosing value, so they decide to sell. Market Makers can also see your sell stops, which in my opinion is not a wise idea to set up. Let's say they see
100 million shares for sale at $.99 - well maybe their plan is to try to get it down to that price. However, remember that their are only a certain amount of shares in anyones given hands at this time. So in a sense i see it as a game of poker or cards. We don't know how many shares are in the possession of the market makers right now. But their business model, in my opinion, is to buy and accumulate as the price is falling and then once they feel they have enough they can start to sell to us again . It is actually the opposite of what most, and i mean the masses, do. I don't know how many market makers are assigned to this particular stock- it can be up to 50. If you have level 2 you might understand this better. Just because i put in a "buy" order does not mean i am buying the stock from another trader or investor. The market makers could be selling me some of their supply in which we don't know how much is in . I think and think about this a lot, in fact my whole way home today. All the charts and technical analysis is just what is being presented to us as signs candlesticks and numbers. But what is really creating this info? There is another side to the stock market that we don't see. The market makers are on this side setting all this up for us investors to see and "perceive" and get a sense of where the market is going. Don't worry this stock will go up! It will go up when the MM's have accumulated enough shares. A good report on FNMA will come out one day and the masses perception will change as the mm's offer less shares at a certain price. As this happens the stock will appear to be going up, so after a few days people will say "AH the run is here!" And buy buy buy. All they are doing is buying the MM's shares at a higher price making millions of dollars for MM's.- This is what they call the "Profit Release". We call it a "run". Anyway thats my take on the whole thing.
Good point indeed! FNF never originated loans period! I? repeat they DO NOT ORIGINATE LOANS! SO THEY DID NOT AND COULD NOT HAVE ORIGINATED ATL-A AND SUBPRIME LOANS! Whatever wise ass came up with the idea of alt a and subprime is to BLAME!
Best article yet!
Hensarling’s weak case for his bill (which he will presumably repeat on Aug. 13 in an address at the George W. Bush Presidential Library and Museum) did not win over two of his own committee Republicans, and seems unlikely to prevail.
By securitizing mortgages, Fannie and Freddie make it possible for banks to issue mortgages on what would otherwise be, when you think about it, great terms for the borrower but lousy terms for the lender (30 years? At fixed interest rates? To a borrower who might turn out to be a deadbeat?). Indeed, the 30-year mortgage didn’t exist before President Franklin Roosevelt created Fannie Mae during the Great Depression. When people bought houses, they typically took out two or three mortgages, each at a higher interest rate than its predecessor, and these mortgages had to be paid off or renegotiated within five or six years. That limited severely the home buyers’ market, and when the crash came in 1929 the highly-leveraged housing sector fell especially hard.
I disagree. Yes, the MM's can direct the price to a certain extent, however it doesn't mean they can just take it down to $1. It depends on how many shares they have in their own personal inventory. Also more importantly how many shares are locked up in hedge funds and traders possession. Once shares are taken off the market and held, that makes the price hold. Fairholm capital has purchased $250 million of the commons. These are locked away and i don't think he is going to sell them anytime soon. Just my opinion.
This article was written in 1999.
There will always be naysayers in any given stock. Pay no attention to them. If you feel it in your gut, go with it. Push past the crowd. This stock was trading at .22 cents a few months ago and look where it is now. Investor sentiment is building. Stay strong.
That's why it's fun to be a speculator! Everyone here is just speculating ! Any village idiot will buy shares at $20 or higher AFTER C-ship has ended. Once it's deemed "safe". Can't wait to see what those fools from the motley fool are going to be saying!
Just curios what brings you to FNMA? News on record profits? Well, we are all here expecting a big move next week. But if not i'll still hold.
Last run started - 82 million vol.
May 14, 2013 0.96 1.20 0.96 1.20 82,251,100 1.20
the day it topped was 272 million vol.
If i were a billionaire i would buy 300 million shares and start the run myself!
I agree. This whole FMNA system was designed by the government to provide liquidity to the housing market. And they have done a wonderful job. Over 2.9 trillion since 2009! Don't get me started about government flood insurance. All these people wanting competition among the private market, yeah, thats all great and all, but it does come at a cost. Who has flood insurance not provided through FEMA and how much do they pay?
So what are the commons going to be worth after all this liquidation supposedly happens?