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Thanks for taking the time to share your thoughts! A prospective Plaintiff may be able to leverage the facts in this case as to arguments about the resulting injustice that would occur by the court rigidly following a general SOL statute.
“Charles is an accomplished and knowledgeable legal professional, and I look forward to working with him to advance FHFA’s important mission,” FHFA Acting Director Sandra Thompson said. “His expertise with legal issues related to finance and housing will support the agency’s capacity to ensure the agency’s regulated entities serve as the backbone of a fair, equitable, and sustainable housing finance system.”
In other words, HOW MUCH OF THE GSES' ASSETS CAN I TRANSFER TO LOW INCOME BORROWERS VIA SUBSIDIZED LOANS UNDER "THE PUBLIC IT SERVES" MANTRA AND WITHOUT VIOLATING THE 5TH AMENDMENT TAKINGS CLAUSE?
This could end up being Great Financial Crisis 2.0, can't wait for that!
https://www.housingwire.com/articles/another-trump-era-official-out-at-fhfa/
"The FHFA also announced Charles Yi will join the regulator as its senior advisor for legal affairs and policy. Yi was most recently a partner at white shoe law firm Arnold & Porter Kaye Scholer, famed for being the only large law firm to defend government employees targeted by Wisconsin Sen. Joseph McCarthy’s loyalty proceedings. Prior to his time at Arnold & Porter Kaye Scholer, Yi was general counsel at the Federal Deposit Insurance Corporation. Yi will provide expertise, guidance and coordination to ensure the Agency meets its goals and obligations, per a prepared statement from the FHFA.
“Charles is an accomplished and knowledgeable legal professional, and I look forward to working with him to advance FHFA’s important mission,” FHFA Acting Director Sandra Thompson said. “His expertise with legal issues related to finance and housing will support the agency’s capacity to ensure the agency’s regulated entities serve as the backbone of a fair, equitable, and sustainable housing finance system.”
https://www.housingwire.com/articles/forbearance-rate-declines-to-2-15/
"Fannie Mae and Freddie Mac loans in forbearance declined three basis points to 0.97%, below the 1% level for the first time since the beginning of the pandemic. Meanwhile, Ginnie Mae loans decreased by 7 bps to 2.65%
The most notable decline was in the private-label securities (PLS) portfolio, which dipped eight basis points to 5.13%. The share of independent mortgage bank loans in forbearance fell six basis points to 2.43%. For depository servicers, the percentage declined 4 bps to 2.07%."
Uncle Suggy bailouts for regular people and not Wall Street: https://www.housingwire.com/articles/servicers-prepare-for-10b-homeowner-assistance-fund/
So, will shareholders who have been harmed by the governmental lawful action of the net worth sweep be time barred from recovery under a Takings Clause Claim?
GREAT LETTER! It would not surprise me if we got better results by having hard working Americans, retirees, pensioners, and community bankers lobby their representatives in Congress to change the status quo than having the courts try to rule in favor of billionaire hedge funds.
They were still being implemented in several states (e.g., CA, NY,WA, etc.) and cities.
The National Eviction Moratorium was created and passed by BOTH parties in Congress in the Cares Act and when it expired the billionaire POTUS in charge, trying to "win over" the common man's vote (probably SAME reason he calculated NOT to release the gses at the end ) figured it's unconstitutional but a short term solution, same thinking as your favorite POTUS currently in charge !
The Eviction Moratorium will likely do more harm than good, but as Americans we think, "Don't just stand there DO SOMETHING!"
And 18 months later most are starting to end, I think fhfa wants them to go to the end of the year.
Here's what happens when politicians create Eviction Moratoriums:. https://www.cnbc.com/2021/11/01/rents-are-bouncing-back-what-to-do-if-you-expect-a-big-increase-.html
"And over the last few months, DaCosta, a Pilates instructor, has been seeing the open apartments in her building go for rents just as high, if not higher, than they were priced pre-Covid. By her calculations, her current rent of around $1,900 could easily go up to $2,300 or more. That would force her to move.
“It’s just too much,” she said."
Oh yeah like this is actually going to keep rents low (the politicians are just trading short term gains for long term losses in the rental housing market): "There’s a growing movement across the country to regulate rent increases. In Oregon, for example, most hikes are limited to 7%, plus inflation. Many cities in California have a cap, too.
While many landlords are free to raise your rent at renewal as much as they’d like, some have to provide you with notice. Landlords in Seattle, for example, are required to alert their tenants 180 days prior to any change, and most renters in Washington are guaranteed a 60-day heads-up."
Senator Mark Warner was a tech company entrepreneur I believe before he was Governor of Virginia (I think he self funds his campaigns). He may originally be from Connecticut and/or gone to Yale Law School. When I use to vote Democrat, I made a monetary political contribution to my friend who was running for Attorney General of Virginia and actually told him, "I think Mark Warner should run for POTUS". Realizing my colossal error of judgment as the years went by, I stopped voting for him. Next time I wrote in "Fannie Mae" as my write in candidate! Now I just vote for whoever is running against him....
Liked the piece espousing the big misconception that all the shareholders are opportunistic greedy hedge fund guys! I think Gary tried to force the "conservator" to give us a list of the shareholders of the gses, but apparently that is top secret government information and was prohibited by the judge...
Sorry, I meant to paste this link: https://www.cnbc.com/video/2021/10/28/mortgage-demand-has-come-back-valley-national-bank-ceo-says.html
I suspect that they've gotten to Senator Mark Warner as he seems to care less that Freddie Mac is located in his jurisdiction or that the twins were the largest charitable contributors in the area, or that the twins were created by FDR for his alleged target market constituents...
I agree, there is no Statute of Limitations on Constitutional Claims is there?
I hear you but I worked there for over 5 years and when people inevitably ask what do you do, they haven't a clue. I can hear Sherrod and Elizabeth right now, "And it's DESPICABLE THAT THIS ADMINISTRATION HAS CHOSEN TO ENRICH THESE EVIL SHAREHOLDERS WHO ARE MOSTLY EVIL HEDGE FUND GUYS'AND MORTGAGE BANKSTERS AT THE EXPENSE OF HARD WORKING AMERICAN FAMILIES!"
Next time you go to the store and are waiting in line, ask the person behind you, "Have you ever of Fannie Mae?". The average American doesn't have a clue, nor does Congress, SCOTUS, JB, and the financial media.
We could hire people to carry protest signs in front of FHFA HQ EVERY DAY OF THE YEAR, MAYBE SOME BULLHORNS, ETC. BUT THAT'S GOING TO COST SOME...
...and in August, along with Bernanke, I'd come to the conclusion that taking them over was the best way to avert a meltdown, keep mortgage fi nancing available, stabilize markets, and protect the taxpayer. The president had agreed."
Was the "conservatorship" a Taking for the convenience of the federal government to quell financial markets that were spiraling towards a Great Depression?
Why don't you get out your checkbook, get off the fence, and make an appointment with David Thompson or the attorney of your choice?
Few have the fortitude and financial resources to challenge Uncle Suggy on that legal proposition.
The only problem with the analogy is that most Americans think Fannie Mae is a chocolate company, haven't a clue what the Secondary Mortgage Market is, and almost all non shareholders like the idea of transferring funds with dubious legality from the "evil mortgage banksters/hedge fund guys" pockets to the UST so long as it keeps their federal tax bill lower coupled with more benefits from Uncle Sugar...
We need at least one court victory that calls out the governments bad acts (I think the Takings Clause imbedded in the US Constitution's 5th Amendment Bill of Rights looks promising) otherwise we risk bureaucracy by inertia and the federal government probably enjoys having 100% control of the gses with zero liabilities on their balance sheet. Between Ginnie Mae, Fannie Mae and Freddie Mac Secondary Mortgage Market MBS is controlled almost exclusively by policy makers in DC.
The last thing the current administration in power wants to do is throw a bone to the mortgage banksters/evil hedge fund guys and with the Takings Clause claims still in the pretrial stage of litigation not many new investors will want to jump in with such uncertainty. Do you think that a trial judge ruling will be appealed?
Multi billion dollar Litigation just takes time....
The one unfortunate truth I have learned from this federal government fiasco is the answer to this Question: How do you know an elected official is lying? Answer: When they are moving their lips!
9/7/2008
Statement of FHFA Director James B. Lockhart at News Conference Announcing Conservatorship of Fannie Mae and Freddie Mac
Good Morning
Fannie Mae and Freddie Mac share the critical mission of providing stability and liquidity to the housing market. Between them, the Enterprises have $5.4 trillion of guaranteed mortgage-backed securities (MBS) and debt outstanding, which is equal to the publicly held debt of the United States. Their market share of all new mortgages reached over 80 percent earlier this year, but it is now falling. During the turmoil last year, they played a very important role in providing liquidity to the conforming mortgage market. That has required a very careful and delicate balance of mission and safety and soundness. A key component of this balance has been their ability to raise and maintain capital. Given recent market conditions, the balance has been lost. Unfortunately, as house prices, earnings and capital have continued to deteriorate, their ability to fulfill their mission has deteriorated. In particular, the capacity of their capital to absorb further losses while supporting new business activity is in doubt.
Today’s action addresses safety and soundness concerns. FHFA’s rating system is called GSE Enterprise Risk or G-Seer. It stands for Governance, Solvency, Earnings and Enterprise Risk which includes credit, market and operational risk. There are pervasive weaknesses across the board, which have been getting worse in this market.
Over the last three years OFHEO, and now FHFA, have worked hard to encourage the Enterprises to rectify their accounting, systems, controls and risk management issues. They have made good progress in many areas, but market conditions have overwhelmed that progress.
The result has been that they have been unable to provide needed stability to the market. They also find themselves unable to meet their affordable housing mission. Rather than letting these conditions fester and worsen and put our markets in jeopardy, FHFA, after painstaking review, has decided to take action now.
Key events over the past six months have demonstrated the increasing challenge faced by the companies in striving to balance mission and safety and soundness, and the ultimate disruption of that balance that led to today’s announcements. In the first few months of this year, the secondary market showed significant deterioration, with buyers demanding much higher prices for mortgage backed securities.
In February, in recognition of the remediation progress in financial reporting, we removed the portfolio caps on each company, but they did not have the capital to use that flexibility.
In March, we announced with the Enterprises an initiative to increase mortgage market liquidity and market confidence. We reduced the OFHEO-directed capital requirements in return for their commitments to raise significant capital and to maintain overall capital levels well in excess of requirements.
In April, we released our Annual Report to Congress, identifying each company as a significant supervisory concern and noting, in particular, the deteriorating mortgage credit environment and the risks it posed to the companies.
In May OFHEO lifted its 2006 Consent Order with Fannie Mae after the company completed the terms of that order. Subsequently, Fannie Mae successfully raised $7.4 billion of new capital, but Freddie Mac never completed the capital raise promised in March.
Since then credit conditions in the mortgage market continued to deteriorate, with home prices continuing to decline and mortgage delinquency rates reaching alarming levels. FHFA intensified its reviews of each company’s capital planning and capital position, their earnings forecasts and the effect of falling house prices and increasing delinquencies on the credit quality of their mortgage book.
In getting to today, the supervision team has spent countless hours reviewing with each company various forecasts, stress tests, and projections, and has evaluated the performance of their internal models in these analyses. We have had many meetings with each company’s management teams, and have had frank exchanges regarding loss projections, asset valuations, and capital adequacy. More recently, we have gone the extra step of inviting the Federal Reserve and the OCC to have some of their senior mortgage credit experts join our team in these assessments.
The conclusions we reach today, while our own, have had the added benefit of their insight and perspective.
After this exhaustive review, I have determined that the companies cannot continue to operate safely and soundly and fulfill their critical public mission, without significant action to address our concerns, which are:
the safety and soundness issues I mentioned, including current capitalization;
current market conditions;
the financial performance and condition of each company;
the inability of the companies to fund themselves according to normal practices and prices; and
the critical importance each company has in supporting the residential mortgage market in this country,
Therefore, in order to restore the balance between safety and soundness and mission, FHFA has placed Fannie Mae and Freddie Mac into conservatorship. That is a statutory process designed to stabilize a troubled institution with the objective of returning the entities to normal business operations. FHFA will act as the conservator to operate the Enterprises until they are stabilized.
The Boards of both companies consented yesterday to the conservatorship. I appreciate the cooperation we have received from the boards and the management of both Enterprises. These individuals did not create the inherent conflict and flawed business model embedded in the Enterprises’ structure. I thank the CEOs for their service in these difficult times.
The goal of these actions is to help restore confidence in Fannie Mae and Freddie Mac, enhance their capacity to fulfill their mission, and mitigate the systemic risk that has contributed directly to the instability in the current market. The lack of confidence has resulted in continuing spread widening of their MBS, which means that virtually none of the large drop in interest rates over the past year has been passed on to the mortgage markets. On top of that, Freddie Mac and Fannie Mae, in order to try to build capital, have continued to raise prices and tighten credit standards.
FHFA has not undertaken this action lightly. We have consulted with the Chairman of the Board of Governors of the Federal Reserve System, Ben Bernanke, who was appointed a consultant to FHFA under the new legislation. We have also consulted with the Secretary of the Treasury, not only as an FHFA Oversight Board member, but also in his duties under the law to provide financing to the GSEs. They both concurred with me that conservatorship needed to be undertaken now.
There are several key components of this conservatorship:
First, Monday morning the businesses will open as normal, only with stronger backing for the holders of MBS, senior debt and subordinated debt.
Second, the Enterprises will be allowed to grow their guarantee MBS books without limits and continue to purchase replacement securities for their portfolios, about $20 billion per month without capital constraints.
Third, as the conservator, FHFA will assume the power of the Board and management.
Fourth, the present CEOs will be leaving, but we have asked them to stay on to help with the transition.
Fifth, I am announcing today I have selected Herb Allison to be the new CEO of Fannie Mae and David Moffett the CEO of Freddie Mac. Herb has been the Vice Chairman of Merrill Lynch and for the last eight years chairman of TIAA-CREF. David was the Vice Chairman and CFO of US Bancorp. I appreciate the willingness of these two men to take on these tough jobs during these challenging times. Their compensation will be significantly lower than the outgoing CEOs. They will be joined by equally strong non-executive chairmen.
Sixth, at this time any other management action will be very limited. In fact, the new CEOs have agreed with me that it is very important to work with the current management teams and employees to encourage them to stay and to continue to make important improvements to the Enterprises.
Seventh, in order to conserve over $2 billion in capital every year, the common stock and preferred stock dividends will be eliminated, but the common and all preferred stocks will continue to remain outstanding. Subordinated debt interest and principal payments will continue to be made.
Eighth, all political activities—including all lobbying—will be halted immediately. We will review the charitable activities.
Lastly and very importantly, there will be the financing and investing relationship with the U.S. Treasury, which Secretary Paulson will be discussing. We believe that these facilities will provide the critically needed support to Freddie Mac and Fannie Mae and importantly the liquidity of the mortgage market.
One of the three facilities he will be mentioning is a secured liquidity facility which will be not only for Fannie Mae and Freddie Mac, but also for the 12 Federal Home Loan Banks that FHFA also regulates. The Federal Home Loan Banks have performed remarkably well over the last year as they have a different business model than Fannie Mae and Freddie Mac and a different capital structure that grows as their lending activity grows. They are joint and severally liable for the Bank System’s debt obligations and all but one of the 12 are profitable. Therefore, it is very unlikely that they will use the facility.
During the conservatorship period, FHFA will continue to work expeditiously on the many regulations needed to implement the new law. Some of the key regulations will be minimum capital standards, prudential safety and soundness standards and portfolio limits. It is critical to complete these regulations so that any new investor will understand the investment proposition.
This decision was a tough one for the FHFA team as they have worked so hard to help the Enterprises remain strong suppliers of support to the secondary mortgage markets. Unfortunately, the antiquated capital requirements and the turmoil in housing markets over-whelmed all the good and hard work put in by the FHFA teams and the Enterprises’ managers and employees. Conservatorship will give the Enterprises the time to restore the balances between safety and soundness and provide affordable housing and stability and liquidity to the mortgage markets. I want to thank the FHFA employees for their work during this intense regulatory process. They represent the best in public service. I would also like to thank the employees of Fannie Mae and Freddie Mac for all their hard work. Working together we can finish the job of restoring confidence in the Enterprises and with the new legislation build a stronger and safer future for the mortgage markets, homeowners and renters in America.
Thank you and I will now turn it back to Secretary Paulson.
And the scam continues right in front of everyones noses, with the blessing of the highest court in the land saying the almighty powerful 4th branch of government via FHFA can do as it pleases!
This travesty has gone on for far too long and the federal government refuses to accept responsibility for aggregious actions like the nws, their defacto Nationalization, and on and on.
I think we all ignored Judge Sweeney's advice when she said at one of the hearings years ago, not to bet on the outcome of litigation!
There's more than just the legal angle here. While I feel confident that the shareholders cause is just and the governments overreach and bad acts may result in some shareholder relief, the status quo of keeping the gses' as wards of the federal government is not sustainable.
Why? Just to name a quick few:
1. Because HERA was NOT enacted with the intent to nationalize the gses'.
2. The government will not be able to attract the top shelf talent needed to effectively run the two largest financial behemoths in the world.
3. Siphoning off hundreds of billions from the gses' into the ust simply increases the costs to low and middle income Americans for homeownership in contradiction of the main reason they were created.
4. The financial establishment will tire of the 180 degree turns in policy and lack of stability in the Secondary Mortgage Market that comes with changing administrations.
I think technically there was a tiny window of time to challenge the initial government confiscation of our now 13+ year old private property.
BUT PERHAPS IF THE SHAREHOLDERS COULD SHOW A JUDGE THAT THE INITIAL CONSERVATORSHIP WAS DONE UNDER DURESS AND UNDUE INFLUENCE BY THE FEDERAL GOVERNMENT GIVING THE BOARD OF DIRECTORS NO ABILITY TO SAY NO AND IF THAT CAN BE SUPPLEMENTED WITH DOCUMENTED EVIDENCE THAT THE FEDERAL GOVERNMENT PLANNED A TAKEOVER AND WOULDN'T ACCEPT NO AS AN ANSWER THAT MIGHT WORK.
This strategy may have been considered in the beginning but was ruled out as too risky and costly.
I'm not sure what if any is the Statute of Limitations for challenging a conservatorship done under duress or if HERA allows it somehow.
Oh yeah and the attorney ain't gonna do it pro bono so bring a 7 or 8 figure check to your initial consultation.
That's right, slow progress. But massive battleships insuring $7.2T of most Americans most important and beloved asset - Home Sweet Home, that is the lynch pin of the Secondary Mortgage Market, will just take some time to turn around...
I doubt our "fearless leaders" in the federal government (on BOTH sides of the aisle!) have seriously come to grips on their biggest policy error of thinking the two biggest American home loan insurers could operate with ZERO capital.
I agree these government attorneys and/or outside counsel representing the federal government are simply advocating for their side of the V. If they peeled back the onion a little they would be able to ascertain the veracity of their bogus narrative, especially as it relates to the nws and the death spiral argument.
The mattress king in Houston bet big again on the Astros, this time, $39 million, he lost a bet when the Nats played them a couple years ago didn't he !
Guess who just invited DJT to tonights game in Atlanta (not a bad political move on the mlb commissioners part since both Houston (sign stealing) and Atlanta (all star game) are not super happy with the mlb.
https://amp.cnn.com/cnn/2021/10/30/politics/donald-trump-game-4-world-series-braves-astros/index.html
Technically it's Senator Warren and Brown's antagonists (I giggle when either one says, "Wall Street" because we ALL KNOW WHAT THEY'RE GOING SAY NEXT!), the "EVIL HEDGE FUND GUYS" who are bankrolling long term the battle against the federal government and their unending resources, time, and influence from signing all the federal judges paychecks. The jps (like us) are just trying to exercise their perpetual options on the gses' but hell ya THE JPS WILL EAGERLY BE THE FIRST TO THROW THE COMMON UNDER THE BUS IF IT MEANS MORE SUGAR FOR THEM, WOULD YOU NOT DO THE SAME?
People don't usually invest their money for altruistic purposes do they?
You seem like a wee bit opinionated fella, why don't you file your own lawsuit against Uncle Suggy?
https://amp.cnn.com/cnn/videos/politics/2021/01/31/elizabeth-warren-reddit-game-stop-wall-street-sec-sot-sotu-bash-vpx.cnn
Senator Warren on "those evil banksters":
You are an inspiration to us all!
Why the federal government refuses to accept responsibility for their bad acts here is disconcerting to say the least.
Hearing the federal government lawyer arguing to Federal Appellate Judges that the NWS was implemented to save the federal governments investment from a "Death Spiral" and not for purposes of nationalizing two private corporations, which the facts clearly support, is disturbing.
So long as the federal government continues believing and arguing in the federal courts that their bad acts were justified, I can't see the quick recapitalization and exit from conservatorship occurring.
I think 100% control over the gses' with zero impact on the federal balance sheet coupled with a string of federal government victories from the federal judiciary will keep the status quo going for some time.
Do we even know what the views and/or plan of the current administration are?
Have they even had time to figure out exactly what they will do?
Great job Bryndon! The status of this now 8+ year lawsuit?
Also, any idea if federal courts routinely offer compensation for attorney fees and costs incurred by Plaintiffs harmed by Unconstitutional actions by the federal government?
Freddie's 3Q21 10q: "Total equity increased primarily due to our net income in YTD 2021 combined with our continued ability to retain earnings as a result of the increases in the
applicable Capital Reserve Amount and the resulting changes in our dividend requirement to Treasury on the senior preferred stock."
Currently $25B need $50B more to get @ 2.5% assuming $3T in assets.
CEO Hugh R. Fratner: "A solid track record of consistent rent payments has rarely been included on credit reports, limiting the ability to use rent payments when assessing the creditworthiness of a first-time mortgage applicant."
That's because my cousin, "Shady Dude", will gladly "verify" your rental housing history for a "reasonable and responsible" fee, just go to www.shadydude.com for a free quote...
The CEOs in the conference calls this morning were ALL ABOUT how the twins will appease their government overlord, with a new focus on affordable housing and filling in the societal gap on minority homeownership under cover of "responsible lending". Nice touch that the ceo's aren't EVEN ALLOWED TO ANSWER ANY QUESTIONS FROM THE MEDIA!
Let's just hope they don't repeat the GFC by creating ill prepared borrowers with zero to nothing down whom will end up being a servicers nightmare and will exercise their option to mail in the keys or force the lender to evict once the inevitable downturn in housing takes place...
Here's a depressing fact for us shareholders, the twins just had net income of $7.8B, have 1.8B shares outstanding for net income of $4.33/share AND NOT A DIME GOES TO THE BENEFIT OF THE SHAREHOLDER OWNERS!
AMERIKA! MY KINDA COUNTRY !
Thanks Golf! Earnings should be pretty good tomorrow morning. I guess in theory anyway an organic capital rebuild for awhile will help towards a path to release from conservatorship.
How many corporations are in conservatorship that make billions per year in net income? In a country where the people are controlled by the government FOR the government! Amerika, my kinda country !
https://www.cnbc.com/2021/10/28/pending-home-sales-fell-unexpectedly-in-september.html
Sales may have dropped due to higher mortgage rates. The average rate on 30-year fixed-rate mortgages fell below 3% in July and stayed there until the first week of September, according to Mortgage News Daily. Then it began rising and crossed over 3%, ending the month at 3.15%.
Buyers are also still contending with very high home prices. Price gains have been close to 20% year over year. There was a sign, however, in August that the market was cooling, with fewer bidding wars and slightly more supply coming up for sale.
“Contract transactions slowed a bit in September and are showing signs of a calmer home price trend, as the market is running comfortably ahead of pre-pandemic activity,” said Lawrence Yun, NAR’s chief economist. “It’s worth noting that there will be less inventory until the end of the year compared to the summer months, which happens nearly every year.”